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America’s energy regulators are hashing it out in the comments.
As decades of administrative law were being rendered irrelevant last week by a landmark Supreme Court decision denying regulators deference in their interpretations of ambiguous legal statues, one such regulator, Mark Christie, already had some ideas about what do with this new development.
Christie, the Federal Energy Regulatory Commission’s sole Republican member, had taken issue with FERC Order No. 1920, which was unveiled in May and established a new set of rules requiring transmission planners to be more proactive in assessing their future needs and how to pay for them. The order was decided in a 2-1 vote along partisan lines and was largely hailed by environmental and climate groups, who saw it as a way to encourage building out the transmission necessary to bring more wind and solar onto the grid.
To some conservatives, however, the order would remove states from their rightful role in the transmission planning process and stick ratepayers with the cost of infrastructure they never asked for. The rule is already being challenged by state utility commissions, Republican state attorneys general, and the country’s largest regional transmission organization in a FERC process known as request for rehearing. Lawsuits will almost certainly follow.
Those lawsuits will play out on the new terrain laid out by Loper Bright Enterprises v. Raimondo, the Supreme Court decision rendered last week, which overturned a decades-old legal principle known as Chevron deference. Named for the 1984 case Chevron v. Natural Resources Defense Council, which established the notion that courts should defer to agencies’ interpretation of ambiguous statutory language to justify their rulemaking activity, Chevron deference formed the legal foundation for much of the U.S. regulatory apparatus.
In Christie’s lengthy and impassioned dissent to the order, however, he signaled that he thought that foundation might be crumbling.
“The final rule does not deserve a shred of deference under Chevron,” Christie wrote. Unlike past transmission planning rules that had survived legal challenge, this new order was “pretextual” and “heavy handed.” An earlier transmission case case that reached the Washington, D.C. Court of Appeals in 2014, South Carolina Public Service Authority v. FERC, upholding FERC’s ability to mandate transmission planning was, Christie wrote, decided in favor of FERC because it “upheld precisely because it was only mandating processes, not outcomes,” whereas the new rule “nakedly intends to produce very specific outcomes.” Christie was basically painting a red flag on the order for the bull of the judicial process to run through.
Once Chevron deference was no longer in force, Christie issued an update to that dissent, writing in a statement on Friday that the “most important legal lifeline that Order No. 1920 needed was pulled away today, and the final rule’s chances of surviving court challenges just shrank to slim to none.” He referred to outstanding petitions for rehearing the order as “devastating takedowns.” Without Chevron to lean on, he prognosticated, “the Commission can wait for a court to strike down” 1920, or it can answer “those many petitions asking for rehearing or amendments with a new opportunity for amendments.”
In other words, the order should not have had Chevron’s protection, but now that it doesn’t, it’s toast.
On Monday, the Commission’s Democratic Chairman Willie Phillips released a statement (because there was nothing else going on in the legal world that day) arguing that the Commission’s ability to regulate both planning and the distribution of costs “has long been recognized by bipartisan majorities of the Commission and U.S. Court of Appeals for the District of Columbia Circuit,” adding that “nothing in the Supreme Court’s Loper Bright decision overturning the Chevron doctrine calls that conclusion into question.”
He also gave a preview of how the Commission will likely defend the rule in federal court. Order No. 1920 “fits easily within the South Carolina precedent,” he wrote. “It does not promote particular public policies, does not dictate specific outcomes, does not include any selection mandate whatsoever, and employs only the lightest touch possible on cost allocation by simply restating the well-established cost causation principle.”
In conclusion, according to Phillips, Christie’s statement “does not provide a logical or reasonable basis for calling into question whether we have that authority in the first place.”
“It’s not every day that two FERC commissioners just decide to release their thoughts on the latest Supreme Court case,” Ari Peskoe, the director of the Electricity Law Initiative at Harvard Law School, told me.
FERC’s likely argument rests on two legal pillars. The first is that FERC gets its authority from the Federal Power Act, which calls for utility rates to be “just and reasonable” and not “unduly discriminatory or preferential.” FERC has argued that this gives it power over practices that directly affect rates, including transmission planning, which the D.C. Circuit affirmed in South Carolina.
In a separate 2016 case, the Supreme Court ruled that FERC could make rules on practices that directly affect wholesale electricity rates but not retail sales. This case did not depend on Chevron, with Justice Elena Kagan writing in her opinion that the justices “think FERC’s authority clear.” The combined D.C. and Supreme Court precedent, Peskoe said, adds up to FERC having “authority when something directly affects rates."
But in this new legal environment, these precedents may not be enough for a fresh case against FERC's transmission planning authority.
“What does happen now? Who knows,” University of Richmond law professor Joel Eisen told me. “What you would expect now is for litigants to say that any major FERC order, including this one, is inconsistent with the statutory authority that the agency has. They would cite Loper Bright to say that the court has to make an independent judgment that FERC has interpreted law to grant authority to do sweeping change to transmission planning, and that is simply no longer the case,” Eisen said.
Much of FERC’s more than 1,300-page order is devoted to detailed analysis of the electricity market as it stands now and how it will evolve over time, justifying the new transmission planning rules. It’s this record, Eisen said, that might let the order survive in a post-Chevron world, even when FERC asserting that the Federal Power Act gives it the right to set rules may be insufficient on its own.
“That may not have been done as an explicit nod to whether a court might uphold it under Chevron going forward. “It seems to me at least that in this new landscape, what will matter is the robustness of the agency grounded in its expertise,” Eisen told me. “The voluminous record supporting 1920 may be persuasive to a federal court.”
But, as Eisen and Peskoe both warned, which federal court may be as important — if not more so — than any argument FERC makes.
Will FERC's arguments about the nature of the electricity market and precedents relating to interpretation of the Federal Power Act fly in, say, a Texas federal court in the Fifth Circuit, where state utility commissions or Republican attorneys general may file suit? District and appeals court judges in the Fifth Circuit have shown great eagerness to throw out Biden-era rules, with a federal judge in Louisiana only this week blocking the Biden administration’s pause on approving new natural gas export terminals.
“If it goes to the Fifth Circuit,” Peskoe said, “that will be bad news.”
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On the environmental reviews, Microsoft’s emissions, and solar on farmland
Current conditions: Enormous wildfires in Manitoba, Canada, will send smoke into the Midwestern U.S. and Great Plains this weekend • Northwest England is officially experiencing a drought after receiving its third lowest rainfall since 1871 • Thunderstorms are brewing in Washington, D.C., where the Federal Court of Appeals paused an earlier ruling throwing out much of Trump’s tariff agenda.
The Supreme Court ruled Thursday that courts should show more deference to agencies when hearing lawsuits over environmental reviews.
The case concerned a proposed 88-mile train line in Utah that would connect its Uinta Basin (and its oil resources) with the national rail network. Environmental groups and local governments claimed that the environmental impact statement submitted by the federal Surface Transportation Board did not pay enough attention to the effects of increased oil drilling and refining that the rail line could induce. The D.C. Circuit agreed, vacating the EIS; the Supreme Court did not, overturning the D.C. Circuit in an 8-0 decision.
The National Environmental Policy Act, or NEPA, requires the federal government to study the environmental impact of its actions. The D.C. Circuit “failed to afford the Board the substantial judicial deference required in NEPA cases and incorrectly interpreted NEPA to require the Board to consider the environmental effects of upstream and downstream projects that are separate in time or place,” Justice Brett Kavanaugh wrote for the court.
The court’s decision could sharply limit the ability of the judicial branch to question environmental reviews by agencies under NEPA, and could pave the way for more certain and faster approvals for infrastructure projects.
At least, that’s what Kavanaugh hopes. The current NEPA process, he writes, foists “delay upon delay” on developers and agencies, so “fewer projects make it to the finish line. Indeed, fewer projects make it to the starting line.”
Map of the approved railway route.Source: Uinta Basin Railway Final Environmental Impact Statement
The Department of Agriculture is planning to retool a popular financing program, Rural Energy for America, to discourage solar development on agricultural land, Heatmap’s Jael Holzman exclusively reported.
“Farmland should be for agricultural production, not solar production,” a USDA spokesperson told Heatmap. The comments echoed a USDA report released last week criticizing the use of solar on agricultural land. The report said that the USDA will “disincentivize the use of federal funding at USDA for solar panels to be installed on productive farmland through prioritization points and regulatory action.” The USDA will also “call on state and local governments to work alongside USDA on local solutions.”
The daughter of a woman who died during the Pacific Northwest “Heat Dome” in 2021 sued seven oil and companies for wrongful death in Washington state court, The New York Times reported Thursday.
“The suit alleges that they failed to warn the public of the dangers of the planet-warming emissions produced by their products and that they funded decades-long campaigns to obscure the scientific consensus on global warming,” according to Times reporter David Gelles.
Several cities and states have brought suits making similar claims that oil and gas companies misled the public about the threat of climate change. Earlier this week, a German court threw out a suit from a Peruvian farmer against a German utility, which claimed that the utility’s commissions helped put his town at risk from glacial flooding.
The seven companies named in the lawsuit are Exxon Mobil, Chevron, Shell, BP, ConocoPhillips, Phillips 66, and Olympic Pipeline Company, a subsidiary managed by BP. None of them commented on the suit.
Tech giant Microsoft disclosed in its annual sustainability report that its carbon emissions have grown by 23.4% since 2020, even as the company has a goal to become “carbon negative” by 2030. The upside to the figures is that the growth in emissions was due to a much larger increase in energy use and business activity, not from using dirtier energy. In that same time period, Microsoft’s revenue has grown 71%, and its energy use has grown 168%.
“It has become clear that our journey towards being carbon negative is a marathon,” the report read. The company said it had contracted 34 gigawatts of non-emitting power generation and had agreements to procure 30 million metric tons of carbon removal.
The company has set out to reduce its indirect Scope 3 emissions “by more than half” by 2030 from the 11.5 million metric tons it reported in 2020, as its Scope 1 and Scope 2 emissions fall to close to zero. It will become “carbon negative,” it hopes, by purchasing carbon removal.
Microsoft attempts to reduce emissions in its supply chain by procuring low- or no-carbon fuels and construction materials. Last week the tech giant signed a purchasing agreement with Sublime Systems for 600,000 tons of low-carbon cement.
The Nuclear Regulatory Commission announced it had approved a 77-megawatt small modular reactor design. This is the second SMR design approved by the NRC, following approval of a smaller design in 2020. Both are products of the SMR company NuScale, and neither has yet been deployed. A project to build the earlier design in Idaho was abandoned in 2023.
The NRC review was set to be completed in July of this year. Coming in ahead of scheduled demonstrates “the agency’s commitment to safely and efficiently enable new, advanced reactor technology,” the Commission said in a press release.
Congress and the Biden and Trump administrations have pushed the NRC to move faster and to encourage the development of small modular reactors. No SMR has been built in the United States, nor is there any current plan to do so that has been publicly disclosed. NuScale’s chief executive told Bloomberg that he hopes to have a deal signed by the end of the year and an operational plant by the end of the decade.
Tesla veteran Drew Baglino’s Heron Power raised a $38 million round of Series A funding for a new product designed to replace “legacy transformers and power converters by directly connecting rapidly growing megawatt-scale solar, batteries, and AI data centers to medium voltage transmission,” Baglino wrote on X.
A conversation with Mike Hall of Anza.
This week’s conversation is with Mike Hall, CEO of the solar and battery storage data company Anza. I rang him because, in my book, the more insights into the ways renewables companies are responding to the war on the Inflation Reduction Act, the better.
The following chat was lightly edited for clarity. Let’s jump in!
How much do we know about developers’ reactions to the anti-IRA bill that was passed out of the House last week?
So it’s only been a few days. What I can tell you is there’s a lot of surprise about what came out of the House. Industries mobilized in trying to improve the bill from here and I think a lot of the industry is hopeful because, for many reasons, the bill doesn’t seem to make sense for the country. Not just the renewable energy industry. There’s hope that the voices in Congress — House members and senators — who already understand the impact of this on the economy will in the coming weeks understand how bad this is.
I spoke to a tax attorney last week that her clients had been preparing for a worst case scenario like this and preparing contingency plans of some kind. Have you seen anything so far to indicate people have been preparing for a worst case scenario?
Yeah. There’s a subset of the market that has prepared and already executed plans.
In Q4 [of 2024] and Q1 [of this year] with a number of companies to procure material from projects in order to safe harbor those projects. What that means is, typically if you commence construction by a certain date, the date on which you commence construction is the date you lock in tax credit eligibility, and we worked with companies to help them meet that criteria. It hedged them on a number of fronts. I don’t think most of them thought we’d get what came out of the House but there were a lot of concerns about stepdowns for the credit.
After Trump was elected, there were also companies who wanted to hedge against tariffs so they bought equipment ahead of that, too. We were helping companies do deals the night before Liberation Day. There was a lot of activity.
We saw less after April 2nd because the trade landscape has been changing so quickly that it’s been hard for people to act but now we’re seeing people act again to try and hit that commencement milestone.
It’s not lost on me that there’s an irony here – the attempts to erode these credits might lead to a rush of projects moving faster, actually. Is that your sense?
There’s a slug of projects that would get accelerated and in fact just having this bill come out of the House is already going to accelerate a number of projects. But there’s limits to what you can do there. The bill also has a placed-in-service criteria and really problematic language with regard to the “foreign entity of concern” provisions.
Are you seeing any increase in opposition against solar projects? And is that the biggest hurdle you see to meeting that “placed-in-service” requirement?
What I have here is qualitative, not quantitative, but I was in the development business for 20 years, and what I have seen qualitatively is that it is increasingly harder to develop projects. Local opposition is one of the headwinds. Interconnection is another really big one and that’s the biggest concern I have with regards to the “placed-in-service” requirement. Most of these large projects, even if you overcome the NIMBY issues, and you get your permitting, and you do everything else you need to do, you get your permits and construction… In the end if you’re talking about projects at scale, there is a requirement that utilities do work. And there’s no requirement that utilities do that work on time [to meet that deadline]. This is a risk they need to manage.
And more of the week’s top news in renewable energy conflicts.
1. Columbia County, New York – A Hecate Energy solar project in upstate New York blessed by Governor Kathy Hochul is now getting local blowback.
2. Sussex County, Delaware – The battle between a Bethany Beach landowner and a major offshore wind project came to a head earlier this week after Delaware regulators decided to comply with a massive government records request.
3. Fayette County, Pennsylvania – A Bollinger Solar project in rural Pennsylvania that was approved last year now faces fresh local opposition.
4. Cleveland County, North Carolina – Brookcliff Solar has settled with a county that was legally challenging the developer over the validity of its permits, reaching what by all appearances is an amicable resolution.
5. Adams County, Illinois – The solar project in Quincy, Illinois, we told you about last week has been rejected by the city’s planning commission.
6. Pierce County, Wisconsin – AES’ Isabelle Creek solar project is facing new issues as the developer seeks to actually talk more to residents on the ground.
7. Austin County, Texas – We have a couple of fresh battery storage wars to report this week, including a danger alert in this rural Texas county west of Houston.
8. Esmeralda County, Nevada – The Trump administration this week approved the final proposed plan for NV Energy’s Greenlink North, a massive transmission line that will help the state expand its renewable energy capacity.
9. Merced County, California – The Moss Landing battery fire is having aftershocks in Merced County as residents seek to undo progress made on Longroad’s Zeta battery project south of Los Banos.