Unleashing American Energy: Deregulatory Executive Orders

Among other energy-related actions within the first two weeks of April 2025, President Donald Trump signed two executive orders on April 8 and 9 that have the potential to result in significant changes to US federal, state, and local regulation of energy project development.

SUMMARY

Reducing US Federal Energy Regulations — The Sunset Executive Order

At the federal level, President Trump signed an Executive Order (Zero-Based Regulatory Budgeting to Unleash American Energy) (the “Sunset Executive Order”) directing several federal agencies and sub-agencies (“Covered Agencies”),¹ including the Department of Energy, the Federal Energy Regulatory Commission (“FERC”), and the Nuclear Regulatory Commission, to insert “sunset” provisions into their regulations issued under specific energy statutes (“Covered Regulations”).

Specifically, each Covered Agency is directed to issue a sunset rule, to be effective no later than September 30, 2025, with a Conditional Sunset Date of September 30, 2026 for each Covered Regulation currently in effect, subject to potential extension of up to five years if, after a public notice and comment period, the Covered Agency finds an extension is warranted. Moving forward, each Covered Agency is directed to include in any new or amended Covered Regulation a Conditional Sunset Date that is not more than five years in the future, unless the Director of the White House Office of Management and Budget (“OMB Director”) exempts the new or amended Covered Regulation and the OMB Director determines that the new or amended regulation has “a net deregulatory effect.” Upon expiration of any Covered Regulation, the Covered Agency may not take any action to enforce the regulation and must remove it from the Code of Federal Regulations to the extent permitted by law. Importantly, the Sunset Executive Order expressly does not apply to “regulatory permitting regimes” authorized by statute.

Limiting State and Local Energy Laws — The State Energy Laws Executive Order

At the state and local level, President Trump signed an Executive Order (Protecting American Energy from State Overreach) (the “State Energy Laws Executive Order,” and together with the Sunset Executive Order, the “Executive Orders”) directing the US Attorney General (“AG”), in consultation with the heads of appropriate executive departments and agencies, to identify all US state and local “laws, regulations, causes of action, policies, and practices” (collectively, “State Laws”) that burden “the identification, development, siting, production, or use of domestic energy resources that are or may be unconstitutional, preempted by Federal law, or otherwise unenforceable” with a particular focus on any such State Laws that address climate change or involve environmental, social, and governance initiatives, or carbon or greenhouse gas emissions.

The State Energy Laws Executive Order requires the AG to submit a report to the Counsel to the President within 60 days of the date of the order (i.e., by June 7, 2025) that documents steps taken to cease enforcement of those State Laws, and recommends any additional presidential or legislative action necessary to prevent the enforcement of such State Laws.

Potential Implications for US Energy Project Development

The Executive Orders’ focus on streamlining US energy regulation and removing barriers to the development of domestic energy resources should be welcome news to US energy market participants. However, the remarkably broad nature of the Executive Orders introduces regulatory uncertainty and increased risk for energy project developers who rely on a stable regulatory environment for the development of capital intensive energy projects with long-term development horizons.

Perhaps most importantly, the full scope of the Executive Orders remains somewhat unclear. For example, the stated purpose of the Sunset Executive Order is to require sunset provisions to be included in regulations governing “energy production,” but the definition of a Covered Regulation simply refers to “a regulation” issued under the enumerated federal energy statutes—which, with respect to FERC, for example, includes regulations issued under the Natural Gas Act of 1938 (“NGA”) and the Federal Power Act of 1935 (“FPA”). Interpreted broadly, the Sunset Executive Order would capture within its scope the majority of FERC’s current regulation of the electric and natural gas industries other than, potentially, certain “permitting” authority over natural gas pipelines, liquefied natural gas facilities, limited electric transmission facilities, and non-federal hydropower projects.² Similarly, the State Energy Laws Executive Order expressly references greenhouse gas liability laws in New York and Vermont, as well as California’s carbon emissions cap-and-trade program, but leaves open the potential for the AG to challenge, or recommend further presidential or legislative action to remove, essentially any State Law that the AG determines “burdens” the development, use, or production of energy resources. The lack of clarity regarding the scope of the Executive Orders thus creates uncertainty regarding whether longstanding regulations that the energy industry either views as helpful or that provide an ordered process for energy project approvals could be inadvertently impacted by the Executive Orders.

Furthermore, while the Executive Orders have the potential to result in significant changes to US federal, state, and local regulation of energy projects, they are likely to be met with significant litigation challenging their implementation. Among other issues, because executive orders generally cannot override existing US federal law,³ each Covered Agency would need to implement the Sunset Executive Order in a manner consistent with the Administrative Procedure Act (“APA”) to mitigate the risk of US federal appellate courts overturning the agency action on appeal. The APA generally mandates a lengthy public notice and comment period and a well-reasoned final agency order to withstand legal challenges, which will likely prove difficult for Covered Agencies given the Sunset Executive Order’s aggressive timeline. Likewise, the State Energy Laws Executive Order implicates complex issues of federal preemption and state “police powers” over intrastate energy resources and policy that have been litigated for nearly a century.⁴

Due to the uncertain and evolving nature of these potential regulatory changes, US energy project developers and market participants should continue to comply with all current federal, state, and local energy laws and regulations promulgated thereunder pending final action from the Covered Agencies and the outcome of any associated legal challenges.  

The Mayer Brown Energy team will continue to monitor these and other developments impacting the US energy industry. Please feel free to reach out to discuss any aspect of this Legal Update with your regular Mayer Brown contacts or any member of our Energy team.

¹ The full list of Covered Agencies includes the Environmental Protection Agency; the Department of Energy; the Federal Energy Regulatory Commission; the Nuclear Regulatory Commission; the Office of Surface Mining Reclamation and Enforcement, the Bureau of Land Management, the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement, and the United States Fish and Wildlife Service, all within the Department of the Interior; and the United States Army Corps of Engineers, within the United States Army.

² FERC’s statutory jurisdiction under the FPA and NGA generally does not extend to electric and natural gas “production” matters. Instead, subject to certain limited exceptions, the FPA reserves for state authority “facilities used for the generation of electric energy,” and the NGA carves out from FERC’s jurisdiction “the production or gathering of natural gas.” See FPA, 16 U.S.C. § 824(b)(1); NGA, 15 U.S.C. § 717(b).

³ See, e.g., California v. EPA,72 F.4th 308, 318 (D.C. Cir. 2023)(explaining that “an executive order is not ‘law’ within the meaning of the Constitution or the APA.”); see also Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952) (explaining that “[t]he President’s power, if any, to issue [an executive order] must stem either from an act of Congress or from the Constitution itself.”).

⁴ See, e.g., Pub. Utils. Comm’n of R.I. v. Attleboro Steam & Elec. Co., 273 U.S. 83 (1927); Oneok, Inc. v. Learjet, Inc., 575 U.S. 373 (2015); FERC v. Elec. Power Supply Ass’n, 577 U.S. 260 (2016).