The U.S. Supreme Court is gearing up to deliberate on the Federal Energy Regulatory Commission’s authority to implement decisions during tied votes among its commissioners.
The Washington Examiner reported that the heart of the dispute centers on a 2021 FERC rule regarding renewable energy prices in wholesale markets, which was enforced despite a lack of majority approval among commissioners.
Earlier this year, the Ohio Public Utilities Commission submitted a petition to the Supreme Court challenging the enforcement of this rule.
The rule, catalytic in its potential to reshape energy markets, was issued under contentious circumstances where a decision could not be unanimously reached by FERC's commissioners; it was a stark 2-2 tie.
The Ohio Public Utilities Commission contests the validity of FERC’s decision to enforce a rule change about renewable energy pricing, asserting that this decision emerged from a deadlock among the commissioners. Such deadlocks typically challenge the notion of a clear mandate necessary for regulatory actions.
The disputed rule removed caps on prices for state-subsidized renewable projects like solar and wind power in the PJM Interconnection's wholesale auction, starkly contrasting a previous 2019 rule that benefited providers of coal and natural gas. This shift has sparked a significant debate on the fairness and legality of enacting policy changes without a full majority.
FERC, an independent body tasked with overseeing the interstate transmission of electricity, oil, and natural gas, typically operates with a set number of commissioners, each serving a five-year term.
Their appointments are staggered to ensure continuity, but occasional gaps can result in deadlocked votes during critical decision-making periods.
In this instance, when FERC voted on the 2021 rule change, the result was a tie. Despite this, the rule was still enacted, drawing sharp criticism and legal challenges from stakeholders who favored the previous regulations benefiting fossil fuel energies.
The enforcement of the rule following a tied vote was upheld by the U.S. Court of Appeals for the 3rd Circuit. The court referred to the Federal Power Act, revised by Congress in 2018, which presumably permits such actions under certain conditions. This has, however, led to broader concerns about the balance of power between Congress, federal agencies, and the judiciary.
According to legal arguments presented by Ohio's Public Utilities Commission and quoted by E&E News, there’s a significant governance issue at play.
They assert that the court’s decision to side with FERC’s tie as a legitimate decision-maker undermines necessary checks on an agency’s power.
The appeal emphasized the importance of an agency providing a defensible justification for its actions, citing that the "agency-reasoning requirement provides an important check on an agency’s power," and the allowance of decisions from deadlocked votes could expand FERC’s authority improperly.
Commissioner James Danly, at the time of the 2021 vote, criticized the decision as "deliberately ineffectual" and warned of the broader market impacts of this decision on other energy sources, predominantly coal and gas. He highlighted potential legal hurdles and novel issues that might arise if a deadlocked vote were considered valid for policy implementation.
The ongoing lawsuit underscores a pivotal legal debate on the bounds of federal administrative power and its interaction with judicial oversight. It strikes at the heart of how energy policies are shaped and the legal frameworks that govern them, especially in a rapidly evolving energy market where renewable sources are gaining prominence.
As the Supreme Court prepares to review this significant case, the implications for renewable energy integration into national grids and markets are substantial.
This hearing is not just about a single rule; it's about setting precedents for how federal agencies operate under conditions of uncertainty and governance challenges.
The outcome of this case may either validate FERC’s capacity to act despite internal disagreements or call for stricter guidelines on how and when such decisions can be enforced, potentially reshaping the energy landscape in favor of or against renewable energy depending on the Court’s final decision.