COMMODITIES 2025: DOGE ambitions of scaling back regulatory state under Trump to face legal tests

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The so-called Department of Government Efficiency, led by entrepreneurs Elon Musk and Vivek Ramaswamy, could amplify President Donald Trump's longstanding calls to reduce regulations affecting oil and gas development.

But a question circulating in Washington is whether the newly formed external body's grand ambitions will run headlong into complex realities and legal limitations that have slowed prior Republican efforts to reform government and rewrite rules.

Musk and Ramaswamy outlined their "efficiency" agenda in an opinion piece in The Wall Street Journal on Nov. 20, 2024.

They promised to present the president with a list of rules they believe exceed agencies' authorities under recent Supreme Court rulings -- suggesting that the incoming administration could pause enforcement and begin rescinding those rules.

The pair also detailed plans for significant personnel cuts at federal agencies and additional cost savings based on legal theories that the president has the power to halt expenditures authorized by Congress, contrary to the limitations imposed by the 1974 Impoundment Control Act.

"What is clear is that DOGE will have the remit to review any perceived regulatory overreaching," according to Jim Noe, a partner at Holland & Knight. That review could focus on Biden-era rules but also go back through the last 15 or 20 years to cover "a spate of regulatory requirements being imposed on all aspects of the energy industry from oil and gas to offshore wind to power generation to pipelines," he said.

Noe also expected to see a "strengthened cost-benefit analysis" on energy regulations, initially focused on regulatory burdens on the fossil fuel industry, particularly on oil and gas. He said DOGE is likely to work closely with the White House Office of Management and Budget.

Noe said targeted rules are likely to include those that have expanded over the years, such as those implementing the National Environmental Policy Act. More recent targets include the US Environmental Protection Agency's regulations on greenhouse gas emissions under Section 111(d) of the Clean Air Act.

"I think coming up with the wish list is easy. The challenge will be not the 'what do we want to do,' but 'how do we want to do it,'" Noe said. "That's going to be the focus of the second 100 days of the Trump administration."

DOGE officials could not be reached for comment on this story.

Musk, nonetheless, made an early show of the power of his megaphone on X on Dec. 18. Amid Congress' efforts to pass a continuing resolution to keep the government funded, Musk released a series of posts pressuring Republicans to withhold support for a 1,500-page bill, putting a halt to that legislation's progress.

Process hurdles

Several policy observers expect that rescinding any rules will require the lengthy notice and comment processes mandated by the Administrative Procedure Act. Certain policy targets will also need congressional action, complicated by narrow margins in the House and the requirement for 60 votes in the US Senate -- unless the action is included in budget reconciliation.

"There's no magic wand to eliminate the administrative state unless you can get Congress to actually reduce agencies' obligations," said Sean Marotta, a partner at Hogan Lovells. "Everyone has big ideas for how they're going to reform the government, but it always runs into problems of how do you operationalize it at the agencies and make it stand up to judicial review."

If the administration pauses enforcement of some energy-related rules, environmental nonprofit organizations and other opponents may quickly file lawsuits. The reviewing judges may or may not agree with the new administration's position that such rules exceeded statutory authorities.

Christopher Guith, senior vice president of the US Chamber of Commerce's Global Energy Institute, said that there is a legitimate legal question regarding which rules still comply after the Supreme Court's decisions in West Virginia v. EPA and Loper Bright v. Raimondo, which scaled back judicial deference to agencies.

"Every agency has to go and do a kind of wholesale review of their existing regulations and guidelines within those regulations and broader guidance," Guith said. "It's going to take the better part of a decade for everyone to fully understand what the new rules of the road are."

Musk and Ramaswamy also proposed requiring federal employees to work in person five days a week, hoping to prompt voluntary departures. Workforce cuts could impact not only agencies enforcing regulations but also those issuing permits to enable developments.

Some policy experts view DOGE as providing significant rhetorical support for the Trump administration's deregulatory efforts.

Travis Fisher, director of energy and environmental policy studies at the Cato Institute, said Musk brings "a certain level of attention and authority" to an exercise of scaling back the federal government that has frustrated conservative administrations dating back to Ronald Reagan.

"My hope is that the DOGE twins influence Congress to help repeal the [Inflation Reduction Act]'s energy subsidies, given that Elon Musk has come out in favor of removing all subsidies," Fisher said.

Enforcement, conflicts

The prospect of DOGE cutting back on agencies has raised worries in some quarters that it could hamstring important federal enforcement -- or involve DOGE leadership in conflicts of interest.

Richard Glick, former chairman of the Federal Energy Regulatory Commission, said he had "great concerns about the Office of Enforcement" at FERC, given his view that the commission under the first Trump administration was lax on enforcement in energy markets.

"There's just a great concern that if they try to eliminate the Office of Enforcement or greatly downsize it, market participants might be able to manipulate the market more easily, which obviously is bad for consumers," Glick said.

Tyson Slocum, director of Public Citizen's Energy Program, said he believes that much of the DOGE efforts may be about reducing enforcement staff at the Environmental Protection Agency and other agencies.

"It's tough to undo regulations, but eliminating enforcement staff accomplishes the same goal far quicker," Slocum said. "If an agency no longer has the staff resources to enforce regulations, then the regulations don't get enforced. It's a form of deregulation."

Slocum said he expected Musk to focus on those agencies and rules that he personally objects to because of his companies' run-ins with regulators.

On Dec. 12, Musk publicly criticized outgoing Securities and Exchange Commission Chairman Gary Gensler on X about an SEC enforcement case related to Musk's purchase of Twitter. The same day, Ramaswamy commented on X about "redundant federal agencies" covering the same turf, citing the SEC and the Commodity Futures Trading Commission as examples.

Robert Glicksman, an environmental law professor at George Washington University, outlined potential legal limitations on what DOGE might be able to carry out and how quickly.

He said it is unclear whether DOGE will have to follow the Advisory Committee Act requirements for open meetings. Despite the title, DOGE is an outside body rather than an official government department.

Efforts to withhold enforcement also would have to stand up to judicial scrutiny.

Regarding the civil service cuts DOGE desires, Glicksman noted that Trump may need to follow a regulatory process to remove civil service protections.

An effort to withhold spending approved by Congress using the legal theory that the Impoundment Control Act of 1974 was unconstitutional would also have to be litigated in court.

"If the goal is to destroy agencies, they may not care about the niceties of legalities too much, and they be willing to test what they do in court. If they want to make lasting changes, they have to do it by the books," Glicksman said.

Ramaswamy, for his part, has posted a steady stream of posts on X outlining his outlook on DOGE and its critics.

"There is no such thing as 'orderly change' when it comes to downsizing the government. Structural reform is, by its very nature, messy," he posted on Dec. 14.