Utility regulators, advocacy groups and at least one state are kicking off litigation against a federal order meant to spur long-term electric grid planning that could face new hurdles after the Supreme Court limited agency powers.
The Louisiana and Mississippi public service commissions were among the first to file a lawsuit last week challenging the Federal Energy Regulatory Commission’s Order 1920, which sets planning requirements for regional transmission development.
The order — which supporters call an important step in advancing access to renewable energy — has also faced broad opposition at FERC from rural electric cooperatives and states.
“We believe it is in the best interest of our consumers and our ratepayers and our state, and that’s why we have joined Louisiana in this filing, ” said Barton Norfleet, special counsel for federal energy affairs for the Mississippi Public Service Commission, in a statement explaining the body’s rationale for suing FERC.
Court watchers are on the lookout for how the Supreme Court’s recent decisions undoing a legal doctrine known as Chevron deference may undercut the transmission order in court. FERC’s opponents are likely to raise the high court’s decisions to bolster their arguments against the commission.
Challenges to the rule are streaming into appellate courts across the country.
Chevron deference directed courts to defer to agencies’ interpretation of ambiguous statutes, as long as those interpretations were reasonable. The Supreme Court stated in the Loper Bright v. Raimondo and Relentless v. Commerce decisions that it’s up to the courts to determine the best interpretation of the statute.
“Loper Bright takes one important tool away from FERC as it prepares to defend Order No. 1920,” said Anand Viswanathan, special counsel at the firm Jenner & Block, in an email.
The challenge to Order 1920 may be among the first energy-related examples of how the Supreme Court’s decisions will be applied by lower courts.
The state commissioners’ objections to FERC’s order likely would not be the case to introduce the claim to the 5th U.S. Circuit Court of Appeals because their rehearing request to FERC was limited to factual questions about the agency’s statutory interpretation, said Jennifer Danis, federal energy policy director at New York University’s Institute for Policy Integrity.
“That is not to say that other Order 1920 suits might not invoke Loper Bright or Chevron’s demise more squarely, and I suspect that many will try arguments related to that out for size,” Danis said in an email.
One of the cases where the argument may surface is a lawsuit launched by Texas Attorney General Ken Paxton (R) in the 5th Circuit. The attorney general had previously told FERC in a filing to the commission that the rule would “usurp the States’ exclusive authority over generation choices.”
Paxton’s office could not be reached for comment on the substance of its claims against the commission.
Lawsuits are also springing up in other circuit courts, ensuring there will be a judicial lottery to determine which bench will hear the case.
For example, the Public Utilities Commission of Ohio’s Office of the Federal Energy Advocate filed a lawsuit in the 6th U.S. Circuit Court of Appeals opposing FERC Order 1920.
A portion of the new challenges came from environmental groups that are seeking to tighten the commission’s planning requirements, like a new lawsuit filed by the Environmental Defense Fund in the 1st Circuit. Another suit in the 2nd U.S. Circuit Court of Appeals comes from the Natural Resources Defense Council, which largely supports the FERC order.
The Sierra Club is challenging the order in the 9th U.S. Circuit Court of Appeals. Appalachian Voices is leading a coalition advocacy groups suing over the order in the 4th U.S. Circuit Court of Appeals.
The Southern Environmental Law Center, which is representing the challengers in the Appalachian Voices suit, said in a statement that the lawsuit does not challenge FERC’s authority under the Federal Power Act to require long-term transmission planning and cost allocation.
More challenges to the order are still expected.
The effects of any decision on Order 1920 may be mitigated by the fact that FERC has shied away from relying on Chevron in recent years in anticipation of an adverse Supreme Court decision, he said.
“But FERC will face more pressure in the absence of Loper Bright to defend Order No. 1920 as not merely a permissible or reasonable interpretation of its authority under the Federal Power Act, but rather to show that it is the “best” reading of that statute,” Viswanathan wrote, referring to the law underpinning FERC’s authority to conduct transmission planning.
FERC does not comment on pending litigation as a matter of policy.
‘Hard to forecast’
Challengers to the rule are widely expected to cite a dissent of the order’s approval from FERC Commissioner Mark Christie.
Christie, a Republican, said in a public statement following the Supreme Court ruling that FERC Order 1920 was built on a “dubious legal foundation” that became more vulnerable after the justices’ ruling “doing away” with Chevron deference.
“As a practical matter, Order No. 1920 will not work in its current form,” Christie said in a June statement.
The U.S. Court of Appeals for the District of Columbia Circuit, in reviewing Order 1000 in the 2014 case South Carolina Public Service Commission v. FERC, relied on Chevron deference to find that section 206 of the Federal Power Act authorizes FERC to regulate transmission planning.
The decision “was built on what may be a foundation of sand,” Christie said, referring to Chevron.
Christie argued in his dissent that FERC went even further in approving Order 1920, the FERC commissioner said the order required a specific electricity mix, said Joel Eisen, a law professor at the University of Richmond.
The order would not have been upheld even if Chevron were in place now — and the chances are even slimmer under Loper Bright, said Eisen, summing up Christie’s position.
“It’s hard to forecast the twists and turns that litigation of major FERC orders will take. So it is impossible to predict today whether the eventual result would be based on Loper Bright,” said Eisen.
He said those opposing the order would likely be raising other types of challenges to the rule before the 5th Circuit or other appellate courts.
Other legal experts were not convinced the Supreme Court’s decision on Chevron would be a risk to FERC Order 1920.
“The [Supreme Court] said that to the extent there were earlier holdings made by the court in cases that relied on Chevron, that those will still stand,” said Christina Hayes, executive director of the nonprofit Americans for a Clean Energy Grid and a former FERC attorney.
Hayes described Order 1920 as being well within FERC’s jurisdiction to ensure that terms and conditions for transmission and wholesale rates are just and reasonable and nondiscriminatory.
The order directs utilities to look ahead 20 years and consider factors like the available resource mix, selecting facilities based on their economic and reliability benefits, replacing aging infrastructure and mitigating the costs of building new power plants, she said.
“If the courts were to evaluate the legal underpinnings of Order 1920, I believe that the courts would continue to uphold it, because the Federal Power Act so expressly provides federal jurisdiction over transmission,” Hayes said.
Correction: An earlier version of this article incorrectly listed the courts where challenges from the Environmental Defense Fund and Natural Resources Defense Council were filed.
