Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Climate

FERC Is Already Split Over the End of Chevron

America’s energy regulators are hashing it out in the comments.

Tangled power lines.
Heatmap Illustration/Getty Images

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.”

Green

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
AM Briefing

ICE Chills EV Manufacturing

On PJM pressure, Orsted’s approval, and a carbon storage well milestone

An ICE agent.
Heatmap Illustration/Getty Images

Current conditions: Hurricane Kiko, now a Category 3 storm, is expected to bring heavy rainfall to Hawaii this week as wind speeds roar up to 125 miles per hour • Dry air in the Caribbean is stymying any tropical storm from gaining wind intensity • Tropical Storm Tapah strengthened to a typhoon over China on Monday morning.


THE TOP FIVE

1. ICE arrests hundreds of South Koreans in Georgia battery plant raid

U.S. immigration authorities arrested hundreds of South Korean workers at a Hyundai battery plant in Georgia, in a move already prompting geopolitical blowback that could threaten efforts to reestablish manufacturing in the United States. After U.S. Immigration and Customs Enforcement officers conducted their biggest workplace raid since President Donald Trump took office again on Thursday, the South Korean government chartered planes to ferry detained workers back home. At an emergency meeting in Seoul, South Korean Foreign Minister Cho Hyun said his government was “deeply concerned,” and that he would consider flying to the U.S. to meet with the Trump administration. Most of the 475 people arrested at the electric vehicle battery plant — a joint venture between automaker Hyundai and the battery company LG Energy Solution – were South Korean nationals. Videos of the arrests showed the workers’ wrists and ankles wrapped in chains as they were led away.

Keep reading...Show less
Yellow
Electric Vehicles

How EVs Could Help Lower Everyone’s Electricity Costs

Using more electricity when it’s cheap can pay dividends later.

An EV charger ATM.
Heatmap Illustration/Getty Images

One of the best arguments for electric vehicles is the promise of lower costs for the owner. Yes, EVs cost more upfront than comparable gas-powered cars, but electric cars are cheaper to fuel and should require less routine maintenance, too. (Say goodbye to the 3,000-mile oil change.)

What about the societal scale, though? As the number of EVs on the road continues to rise, more analysts are putting forth the argument that EV ownership could lead to lower energy bills for everyone, even the people who don’t buy them.

Keep reading...Show less
Green
Economy

Trumponomics Is Starting to Have Some Ugly Effects

The energy sector — including oil and gas — and manufacturing took some heavy hits in the latest jobs report.

A worker and a graph.
Heatmap Illustration/Getty Images

We got a much better sense of what the American labor market is doing today. And the news was not good.

The economy added only 22,000 jobs last month, far fewer than economists had predicted, according to a new release from the Bureau of Labor Statistics. The new data also shows that the economy gained slightly more jobs in July than we thought at the time, but that it actually lost 13,000 jobs in June — making that month the first since 2020 to see a true decline in U.S. employment.

Keep reading...Show less