FERC’s Regulatory Sunset Rule Paves Way for Smarter Energy Governance

A Quiet Revolution in Energy Regulation

While much of Washington remains gridlocked in partisan battles, the Federal Energy Regulatory Commission (FERC) has quietly implemented one of the most significant regulatory reforms in its history. The agency’s recently adopted “sunset rule” represents a fundamental shift in how energy regulations are managed—moving from a system where rules accumulate indefinitely to one where they must periodically justify their continued existence.

This groundbreaking approach to regulatory management could serve as a blueprint for other agencies struggling with outdated rules that complicate compliance and drain resources. FERC’s action demonstrates that regulatory reform doesn’t have to be controversial to be impactful.

The Legal Foundation and Implementation Strategy

FERC’s sunset rule, formally issued as Order No. 914, finds its legal basis in both President Trump’s Executive Order 14270 and the Commission’s independent rulemaking authority under multiple energy statutes. What makes this approach particularly innovative is FERC’s use of the “direct final rule” process—a streamlined procedure endorsed by the Administrative Conference of the United States for noncontroversial regulatory updates.

The Commission paired this direct final rule with a companion Notice of Proposed Rulemaking, creating a safety net that allows for seamless transition to traditional rulemaking if significant opposition emerges. This dual-track approach demonstrates thoughtful regulatory design that balances efficiency with due process. The implementation of this landmark regulatory framework represents a significant step forward in government efficiency.

Strategic Scope: Why FERC Started Small

FERC’s initial list of 53 regulations targeted for sunsetting is notably narrower than earlier internal drafts had contemplated. The final selection focuses exclusively on “outdated, seldomly used, or duplicative” provisions—consciously avoiding more controversial rules governing transmission policy and electricity market structure.

This strategic restraint appears deliberate and wise. By starting with genuinely obsolete rules, FERC minimizes political opposition while establishing precedent and process for potentially larger reforms later. The approach shows how incremental regulatory improvement can build momentum for broader changes without triggering the resistance that often accompanies sweeping overhauls.

Notable Regulations Heading for Retirement

Among the more significant rules scheduled for sunsetting are several that clearly illustrate why this regulatory refresh was needed:

18 C.F.R. § 2.21 concerning “Regional Transmission Groups”—made obsolete by the rise of regional transmission organizations
18 C.F.R. § 2.25 addressing ratemaking treatment of emissions allowances—a relic from the pre-deregulation era
Multiple provisions tied to the Powerplant and Industrial Fuel Use Act of 1978, most of which was repealed decades ago
Various redundant reporting requirements that duplicate information collected elsewhere

These changes reflect how industry developments have rendered certain regulations unnecessary while maintaining essential consumer and market protections.

Beyond the Immediate Impact: Process Benefits

The value of FERC’s sunset rule extends far beyond the specific regulations being retired. The very process of systematically reviewing existing rules—forced by the executive order—has likely generated insights that will inform future regulatory improvements. This systematic approach to regulatory management represents a significant departure from business as usual in Washington.

As agencies across government grapple with similar challenges, FERC’s example demonstrates how continuous regulatory improvement can become embedded in agency operations rather than occurring as occasional, disruptive overhauls. This methodology could influence how other regulators approach their own rulebooks amid escalating US-China cyber tensions over critical infrastructure protection.

The Broader Implications for Regulatory Governance

FERC’s action raises important questions about why other agencies covered by the same executive order—including the Environmental Protection Agency and Department of Energy—haven’t followed suit. The Commission’s success in implementing sunset provisions suggests that regulatory inertia can be overcome with the right combination of legal authority, strategic approach, and political will.

The sunset rule also demonstrates how thoughtful regulatory design can accommodate both stability and adaptability. By requiring periodic reexamination rather than automatic permanence, FERC has created a system that can evolve with changing market trends and technological realities while maintaining regulatory certainty.

Looking Forward: A Model for Other Agencies?

FERC’s regulatory sunset approach offers a potential template for other agencies struggling with accumulated regulatory clutter. The methodology—starting with genuinely noncontroversial rules, using appropriate legal processes, and building in procedural safeguards—could be adapted across the regulatory state.

As government agencies increasingly focus on recent technology and digital transformation, the need for regulatory frameworks that can adapt to changing circumstances becomes more pressing. FERC’s example shows that such adaptation doesn’t require sacrificing thoroughness or due process.

The success of this initial foray into systematic regulatory review may well determine whether similar approaches spread to other domains. Just as related innovations in one sector often inspire changes in others, FERC’s regulatory sunset rule could become a model for smarter governance across the administrative state.

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