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Among the flurry of actions taken on January 20, 2025, President Trump issued an Executive Order entitled “Unleashing American Energy” (“Energy Order”) that aims to encourage the development of certain domestic energy resources, specifically focusing on natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy. Among other things, the Energy Order does or calls for the following key actions: (1) rescinds President Biden’s energy and environmental-related Executive Orders; (2) reduce regulatory burdens; (3) expedite and simplify federal permitting for certain energy projects; (4) restart and expand liquefied natural gas (“LNG”) export applications; (5) pause the distribution of funding appropriated through the Inflation Reduction Act of 2022 (“IRA”) and Infrastructure Investment and Jobs Act of 2021 (“IIJA”); and (6) eliminates the electric vehicle (“EV”) mandate. Each is discussed in more detail below, along with their potential implications moving forward.
Rescinds President Biden’s Energy and Environmental Executive Orders
Section 4 of the Energy Order revokes 12 Executive Orders issued by President Biden related to climate change, environmental justice, EVs, the IRA, and sustainability, as well as terminates the American Climate Corps. For each, the offices established by the Executive Orders are abolished, such as the National Climate Task Force and the State Department’s Climate Change Support Office. Section 4 also requires both the disposal of any funds or resources allocated to an entity or program abolished under the Energy Order in accordance with the applicable law and the termination as quickly as possible of any contract between the United States and a third party that was entered into for the purpose of carrying out projects initiated under the withdrawn Executive Orders.
Reduce Regulatory Burdens
A recurring theme in the Energy Order is streamlining federal processes and reducing regulatory burdens. In particular, Section 3 of the Energy Order requires all federal agencies to review and begin implementing action plans to suspend, revise, or rescind all previous agency actions that burden energy development by February 19, 2025, focusing on oil, natural gas, coal, hydropower, biofuels, critical minerals, and nuclear energy resources. The Energy Order requires federal agencies to notify the Attorney General of any actions pursuant to the Energy Order so that the Department of Justice may pause or resolve any ongoing litigation involving such actions. Section 9 of the Energy Order also directs federal agencies to “identify all agency actions that impose undue burdens on the domestic mining and processing of non-fuel minerals and undertake steps to revise or rescind such actions.”
When implementing the Energy Order, federal agencies will be able to quickly suspend, revise, or rescind guidance documents that are deemed to burden energy development because such documents are not subject to the procedural requirements of the Administrative Procedure Act (“APA”). However, to suspend the effective date of a regulation or revise or rescind a regulation that is deemed to burden energy development, federal agencies must comply with the APA, which requires at least publication of a proposal and a public notice-and-comment process. As we saw in President Trump’s first term, it is likely that agency actions to suspend, revise, or rescind regulations, especially those related to the environment and climate, will be heavily scrutinized and challenged by environmental groups and other stakeholders. When challenged, the federal agencies will not be able to rely on Chevron deference, which was overturned by the Supreme Court in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). Now, when a statute is ambiguous, federal courts are to exercise their independent judgement in determining whether a federal agency has acted within its statutory authority.
Expedite and Simplify Federal Permitting for Certain Energy Projects
Section 5 of the Energy Order directs the Chairman of the Council on Environmental Quality (“CEQ”) to issue guidance on implementing the National Environmental Policy Act (“NEPA”) and propose rescinding CEQ’s NEPA regulations by February 19, 2025, which are the same regulations that the D.C. Circuit recently held were not binding on federal agencies. (See our client alert for more details). Instead of regulations, CEQ is directed to issue guidance and coordinate the revision of agency-specific NEPA regulations, which will need to go through the necessary APA rulemaking process. The new framework design must “expedite permitting approvals and meet deadlines established in the Fiscal Responsibility Act of 2023 (Public Law 118-5),” which generally requires completion of an environment impact statement within 2 years and an environmental assessment within 1 year. The other aspects of NEPA practice are open for CEQ consideration. It is unclear how CEQ will address the various aspects of NEPA practice that have not been codified, such as the identification of “significant” environmental effects and requirements for interagency coordination.
Sections 5 and 6 of the Energy Order require that federal agencies use efficiencies in the federal permitting process by directing (1) the heads of all relevant federal agencies to undertake all available efforts to eliminate delays within their respective permitting processes, including using emergency authorities where essential for “the Nation’s economy or national security;” (2) all federal agencies to only adhere to the “legislated requirements for environmental considerations” and eliminate those beyond that; and (3) all federal agencies to “work closely with project sponsors to realize the ultimate construction or development of permitted projects.” At the same time, the Director of the National Economic Council and the Director of the Office of Legislative Affairs are required to jointly prepare recommendations to Congress to facilitate permitting reforms for energy infrastructure projects (such as pipelines), with a focus on regions that have lacked development in recent years, and provide greater certainty in the federal permitting process, including streamlining the judicial review of the application of NEPA.
Section 6 further disbands the Interagency Working Group on the Social Cost of Greenhouse Gases (“IWG”) and withdraws all IWG guidance, instructions, and all other issued documents. The Administrator of the Environmental Protection Agency (“EPA”) is directed to issue a report by March 21, 2025 that addresses the “harmful and detrimental inadequacies” of the social cost of carbon, including consideration of eliminating the social cost of carbon calculation from all federal permitting or regulatory decisions. In the interim, federal agencies are required to use emissions estimates from the 2003 version of Office of Management and Budget’s (“OMB”) Circular A-4.
Section 6 also directs the Administrator of the EPA in collaboration with the heads of other relevant federal agencies to reconsider and make recommendations by February 19, 2025 on the legality and continuing applicability of the “Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act,” Final Rule, 74 FR 66496 (December 15, 2009), which is the foundational action underpinning all of EPA’s greenhouse gas regulations.
Restart and Expand LNG Exports
Section 8 of the Energy Order directs the Secretary of Energy to restart the review of permit applications for LNG exports, which was paused in January 2024 during the Biden administration to study the environmental, economic, and national security implications of the increasing export industry in the U.S. The Biden administration’s pause was ended by a federal court in July 2024, requiring the Department of Energy (“DOE”) to restart the process of considering LNG applications but did not require that DOE approve any LNG applications. Notably, the DOE released a study in December 2024 that is accepting public comments until at least March 20, 2025. When finalized, the DOE study will likely be used by various opponents to continue to contest LNG applications.
Section 8 also directs the Administrator of the Maritime Administration (“MARAD”) to restart the review of applications for proposed deepwater ports for LNG export with a specific procedural history, which clearly applies to the Delfin LNG project. In 2017, MARAD approved the Delfin LNG project’s plan to build, own, and operate a deepwater port. However, after ownership and project plans changed, in 2024, MARAD denied the Delfin LNG project approval, citing “widespread changes” in the design, financing, and operation of the facility. In the Energy Order, MARAD is directed to determine by February 19, 2025, whether refinements to already-approved projects of deepwater ports for the export of LNG pursuant to the Deepwater Port Act of 1974 (“DWPA”) are likely to result in adverse environmental effects that are “seriously different” from the original project evaluation. If MARAD determines that the refinements are not likely to result in seriously different adverse environmental effects, then it shall issue a DWPA license no later than 30 days after the determination. If MARAD determines that the refinements are likely to result in seriously different environmental effects, then it shall issue an environmental assessment (“EA”) within 60 days of the determination, followed by a DWPA license within 30 days of the issuance of the EA. The Energy Order is silent on MARAD evaluating financing and the operation of such facilities.
Pause the Distribution of IRA and IIJA Funding
Section 7 of the Energy Order directs federal agencies to “immediately pause” the “disbursement of funds appropriated through” both the IRA and the IIJA, both of which were Biden-era laws that allocated billions of dollars in funding and incentives for renewable energy projects, among other things. Section 7 also requires all federal agencies to review IRA processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of appropriated funds for consistency with the Trump administration’s policies and submit a report with applicable findings and recommendations by April 20, 2025. The Energy Order provides that no disbursements of funds through the IRA or the IIJA are permitted until the Director of the OMB and Assistant to the President for Economic Policy have deemed them consistent with any recommendations they choose to adopt.
The OMB subsequently issued a Memorandum titled “Memorandum to the Heads of Departments and Agencies” on January 21, 2025, stating that the pause only applies to “funds supporting programs, projects, or activities that may be implicated by the policy established in Section 2 of the [Energy Order].” However, Section 2 of the Energy Order does not discretely list portions of the IRA or the IIJA for which money should be paused. It instead includes broader language to direct agency actions, highlighting issues such as encouraging energy exploration, protecting economic and national security, and eliminating the EV mandate (discussed further below).
As such, the scope of the proposed funding pause under the IRA and the IIJA is unclear. The legality of the proposed halt to such funding is also unclear. Any disruption in funding could have immediate effects on grant and loan recipients and their contractors, suppliers, and other consultants engaged on infrastructure projects funded by the IIJA and IRA. It is expected that the funding pause will lead to project-level legal disputes and challenges to its constitutional authority. Such legal challenges may arise under laws like the Impoundment Control Act of 1974, 2. U.S.C. 681 et al., which prevents the President from unilaterally withholding (or impounding) funds already appropriated by Congress without Congressional approval and sets forth the required procedures for same.
Regarding grants for clean energy programs, prior to January 20, 2025, the Biden administration stated that the vast majority of grants for clean energy programs appropriated under the IRA had already been obligated and were likely protected from being paused, clawed back, or otherwise halted by the Energy Order. Specifically, the Biden administration stated that 84%, or $96.7 billion in clean energy grants have been “obligated,” meaning contracts have been signed between U.S. federal agencies and recipients. Importantly, the bulk of the IRA’s incentives for clean energy and EVs derives from tax credits that can only be revoked by an act of Congress. As such, the Energy Order does not impact renewable energy tax credits.
Eliminates the EV Mandate
Section 2 of the Energy Order states that “it is the policy of the United States” to eliminate the “electric vehicle mandate.” Although there is no federal enforceable EV mandate, the Biden administration issued a non-binding Executive Order in 2021 that stipulates that EVs shall make up 50% of new cars by 2030. The target was never enforceable, but instead served as a catalyst for regulations and policies that would stimulate EVs. The Energy Order also states that it is the “policy of the United States” to terminate state emissions waivers that function to limit sales of gasoline-powered automobiles and eliminate “unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase.”
To implement these EV policies, the Trump administration will likely take actions to revise emission standards set by EPA and fuel economy requirements from the National Highway Traffic Safety Administration, which will require compliance with the APA. Modifying the EV subsidies and federal tax cuts will require an act of Congress, which is controlled by Republicans who may be keen to make such modifications. Additionally, the pause on IRA funds disbursements discussed above from Section 7 of the Energy Order pauses unspent government funds for EV charging stations made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program.
Undoubtedly, the implications of the Energy Order may be vast and wide-reaching. The Energy Order will reduce regulatory burdens for and push to streamline certain types of energy projects – particularly oil, natural gas, coal, hydropower, biofuels, critical minerals, and nuclear energy resources. It also revokes and disbands various federal offices and programs set up through executive actions taken by the Biden administration to promote environmental consciousness and renewable energy.
While the Energy Order calls for fast and sweeping changes, the implementing federal agencies are still bound by the process and requirements of applicable laws. The Energy Order itself explicitly states that it shall be “implemented in a manner consistent with applicable law and subject to the availability of appropriations.” For example, as noted above, regulatory changes will require adherence to the APA, federal agencies still must review their actions in accordance with NEPA, and certain changes will require Congressional actions. As we saw in President Trump’s first term, it is likely that all actions will be heavily scrutinized by a broad group of environmental groups, project proponents, and other stakeholders.
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