As attacks on the administrative state abound, the federal government’s ability to respond to climate change is at a crossroads. The Intergovernmental Panel on Climate Change has been clear about the reality of climate change—human activity is responsible for deteriorating climatic conditions, and global temperatures are on track to eclipse 1.5°C of warming as early as 2030. Currently, the United States electric grid is undergoing a major transition due, in part, to massive federal investments in aging infrastructure and clean technologies and declining costs for renewable energy.
As the federal agency responsible for regulating the U.S. electric grid, the Federal Energy Regulatory Commission (FERC or Commission) will drive how the U.S. addresses climate change by how it incentivizes and advances the integration of renewable energy to the electric sector. FERC exercises a significant influence on the transformation of the electric grid. However, humankind is not the only stakeholder who faces an existential threat: FERC’s regulatory authority over the electric grid in the face of climate change may be equally threatened by the major questions doctrine.
FERC’s main issue is whether implicitly addressing climate change by supporting renewable development and integration on the electric grid is one of the “extraordinary cases” that requires hesitation before FERC exerts its authority under the Federal Power Act (FPA). The trouble for FERC is that its circumstances mirror those of West Virginia v. Environmental Protection Agency (EPA), where the Supreme Court held that EPA overstepped its jurisdiction in crafting the Clean Power Plan’s “generation shifting” program. That program would have resulted in a transformation of the electric grid as a result of a major reduction in higher-emitting producers and an increase in lower-emitting producers. This would have occurred in two phases. First, a reduction in coal-fired power plants, paired with a simultaneous ramp-up of natural-gas-fired plants, would result in a net reduction in carbon emissions. The second building block of EPA’s generation shifting program would have involved a shift from other coal and gas plants to renewable resources, such as wind and solar. This would have jumpstarted the renewable revolution.
Yet, EPA lacked the sole decisionmaking authority on climate policy absent an affirmative allocation of authority by Congress. Under the major questions doctrine, a clear congressional authorization is necessary for agencies to take actions of vast “economic and political significance.” EPA’s program was struck down because the agency “‘claimed to discover in a long-extant statute an unheralded power’ representing a ‘transformative expansion in [its] regulatory authority.’” Although the electric grid and the energy provision are likely issues of vast “economic and political significance,” FERC’s regulatory history and historical use of the FPA give reason to believe that FERC is immune from major questions scrutiny for their own generation-shifting actions.
This Comment analyzes FERC’s regulatory authority in light of West Virginia and proposes that FERC can do what EPA cannot with respect to generation shifting. Part I considers the threat of climate change and the effects of the U.S. electric sector on climate change. Part II offers a comprehensive description of FERC’s jurisdiction under the FPA. Part III assesses the major questions doctrine by analyzing the Court’s decision in West Virginia, the factors that invoke a major questions issue, and how federal courts have applied and may apply the major questions doctrine. Part IV articulates how FERC can implicitly regulate climate change without invoking major questions doctrine scrutiny by relying on its regulatory history as a basis to continue using § 205 and § 206 of the FPA to eliminate market barriers and support competition in energy markets.
The energy sector, specifically electricity generation, represents the United States’ largest emitting sector and is the main driver of the “contribution [of the United States] to climate change.” It naturally follows that reductions in emissions from the energy sector can play a major role in combatting climate change. Therefore, the link between the climate crisis and the U.S. energy sector is undeniable.
Climate change poses an existential threat to humankind. The impacts of climate change will vary based on differences in geographic locations and the implementation of mitigation measures. However, one thing is certain: climate change will impact ecosystems, economies, and communities worldwide. Its effects encompass rising temperatures, altered weather patterns, rising sea levels, and increased frequency of extreme weather events like hurricanes, floods, and droughts.
In the United States, climate change manifests in diverse ways across regions. Devastating wildfires and the intensity and frequency of hurricanes stand out as some of the most observable U.S. climate impacts. In the United States alone, the cost of climate and weather disasters reached $92.9 billion in 2023. Climate change can have an operational impact on the electric grid itself. For example, Winter Storm Uri “caused a massive electricity generation failure” in Texas in February 2021. Other weather events led FERC and the North American Electric Reliability Corporation to thoroughly investigate grid reliability improvements. Climate change can both physically impact the electric grid and cause significant energy demand, which, in turn, can deplete overall electricity supply, causing blackouts. In addition to those costs, global economic output is expected to decline as the world adapts to the realities of climate change. Ultimately, any global warming in excess of 1.5°C will likely result in irreversible risks to the global economy, food output, water supply, regional conflict, and more. Additionally, vulnerable, marginalized, and indigenous communities will be disproportionately affected by these changes. It is imperative that the United States be a leader in the fight against climate change by supporting comprehensive climate policies, investing in resilient and reliable infrastructure, and managing the nation’s electric grid efficiently and equitably.
The Biden Administration announced that climate considerations would be a central feature of the President’s policy agenda as one of its first actions in office. The Administration’s primary climate efforts are exemplified by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Both laws, at the time of their enactment, represented the largest investment in clean energy infrastructure in American history. The Infrastructure Investment and Jobs Act primarily focuses on modernizing the electric grid, investing roughly $21.3 billion in delivering clean power, $21.5 billion to support clean energy demonstration programs, $6.5 billion in energy efficiency and weatherization projects, and $8.6 billion to support domestic clean energy manufacturing. Similarly, the Inflation Reduction Act invests substantially in clean energy and clean manufacturing by creating roughly two dozen tax provisions designed to incentivize deploying clean energy.
The Administration has remained committed to “catalyz[ing] an American clean energy manufacturing and deployment boom” throughout its term. In May 2024, President Biden announced a series of tariff increases on Chinese imports, particularly iron and steel products used in solar cells. The tariffs are designed to support domestic manufacturing of solar products, with the simultaneous benefit of hampering Chinese control of the solar supply chain. The U.S. solar supply chain has grown immensely in the last four years, supporting the installment of 32.4 gigawatts of solar capacity in 2023, representing a “[fifty] percent increase over 2022 installations.” The tariffs represent the trend toward unilateral, executive action to address climate change and the changing energy landscape.
State climate policy can play an important supplemental role in federal initiatives. States continue to play a major role as leaders in the fight against climate change, as twenty-four states are part of the U.S. Climate Alliance, and twenty-three states have some form of 100% clean energy goals. The vast majority of the public supports these types of actions, and many American citizens demand more to combat climate change. Achieving any meaningful reduction in carbon emissions to combat climate change requires a transformation of the energy system.
The U.S. energy sector has historically contributed significantly to climate change due to its heavy reliance on fossil fuels like coal, oil, and natural gas for electricity generation. These resources release large quantities of greenhouse gases (GHGs)—primarily carbon dioxide—that exacerbate the warming of the planet. Until recently, the electric sector was the largest source of domestic GHG emissions. Although U.S. GHG emissions from energy consumption have fallen by 18% over the course of the last two decades, due in large part to changes in electricity generation, major reductions are still needed to meet U.S. goals. All models limiting warming to 1.5°C, or 2°C at worst, require immediate and sustained GHG reductions in all sectors of the economy this decade. Reaching this goal requires transitioning from fossil fuels to renewable sources or other low-carbon energy alternatives like fossil fuels with carbon capture and storage.
To limit the impacts of climate change, the U.S. electric grid requires a transformation towards cleaner and more sustainable energy sources. Shifting from fossil fuels to renewable energy sources like wind and solar energy, paired with battery storage and other technologies, can significantly reduce carbon emissions. Fortunately, declining costs for renewable energy have gradually made them either comparable to higher-emitting resources (such as fossil fuels) or the cheaper of the two options. Ongoing cost reductions, paired with federal incentives, continue to pave the way for renewable power to continue to integrate expeditiously into the U.S. energy portfolio. But much more needs to be done—and fast.
Despite no mandate to craft the U.S. response to climate change, the Commission is tasked with overseeing the implementation of an electric grid, which undeniably bears climate-related ramifications. The FPA provides that the transmission of electric energy in interstate commerce and the sale of such energy at wholesale in interstate commerce is necessary and in the public’s interest. In addition, all rates and charges demanded by public utilities in connection with the Commission’s jurisdiction shall be just and reasonable. Finally, the FPA provides that no public utility shall make or grant undue preference or advantage to any person or entity.
FERC has consistently used two primary sections of the FPA to regulate utilities and energy markets: § 205 and § 206. Section 205 requires that all rates and charges for the wholesale sale and transmission of electric energy are just and reasonable and do not grant any undue preference to any person or subject. Section 206 operates under a similar standard; however, it is remedial in nature. Section 206 provides that if “any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory or preferential,” the Commission must “determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order.” Sections 205 and 206 are the primary modes of enforcing the FPA and are often used by the Commission.
The baseline of FERC’s regulatory authority derives from the fact that electric power is “clothed with the public interest.” As common carriers, public utilities forfeit some private rights and become subject to public regulation. Munn v. Illinois outlines this key principle: the government may regulate private property if the property at issue affects the public interest. There, Midwestern grain farmers were forced to store their grain with a limited number of companies who controlled prices until they could move the grain out of Chicago. Similarly, the nature of the electric sector—a natural monopoly—invites regulation.
A natural monopoly occurs when a single company can supply a particular good or service to an entire market more efficiently than multiple competing firms. The electricity sector is often described as a natural monopoly because the costs associated with generation, transmission, and distribution produce a barrier to entry for new firms. Until the late nineteenth century, electric utilities were vertically integrated, and one utility provided all of these resources, as opposed to competing in a free marketplace. This framework—where one or more companies control the marketplace—mirrors the problem facing grain farmers in the nineteenth century, which gives rise to the need for public regulation.
One key objective of public utility regulation is to force the utility’s price to be closer to the competitive price. If left unregulated, the monopoly holder would inflate prices to increase profits; the regulated monopolist, on the other hand, is limited to charging reasonable prices as set by regulators. The grant of a monopoly right provides economic stability to the monopolist by insulating them from the threat of competition while simultaneously requiring them to provide service. This obligation to provide service is known as the duty to serve—operators of essential public services with state-granted monopoly powers must provide equal, adequate, and nondiscriminatory service to anyone requesting their services. In return for fulfilling a public service, public utilities can charge a just and reasonable rate for their services.
The just and reasonable standard does not have a settled definition. For most of the twentieth century, public utility law applied the just and reasonable standard through a cost-of-service-based approach, meaning that utilities were afforded the opportunity to get a fair return on investment to cover reasonably incurred costs. In essence, the rate of return should be sufficient to support the utility’s business model. This includes what is necessary to “maintain and support [the utility’s] credit and enable [the utility] to raise the money necessary” to provide effective public service. Therefore, the general baseline for the just and reasonable standard is that in exchange for delivering reliable and affordable electric energy and supporting the public interest, utilities are entitled to a fair and equitable return on investment.
The key takeaway from the historic cost-based service approach is that it was an inherently economic test. It grounded the electric sector in a space focused on reliability and cost-efficiency. Electric reliability and fair rates, both for the utilities and consumers, are still the central pillars of energy regulation, but as the electric grid has shifted, so has the way FERC interprets its FPA authority. Now, one of the key principles of FERC’s regulatory philosophy is “enhancing competition.”
The Commission has shifted its regulatory focus from ensuring just and reasonable rates for regulated monopolies to a deregulated, or restructured, competitive marketplace for the sale and transmission of electric energy. This “impulse to restructure” was driven by a belief that regulating monopolies through a cost-of-service approach made it difficult for smaller, independent firms to enter the energy markets at any stage—generation, transmission, or distribution. Deregulating the energy market and eliminating barriers to market competition became the new cornerstone of FERC’s interpretation of the just and reasonable standard. FERC relied on the same statutory authority to develop a new standard of review—“[i]nstead of judging whether an individual firm’s action is unjust, unreasonable, or discriminatory, it decides whether features of the wholesale markets’ operation contribute to this effect.”
The push toward competition began with the Public Utilities Regulatory Policy Act of 1970 (PURPA). PURPA explicitly encouraged the development and deployment of renewable resources, like wind and solar, by requiring utilities to purchase power from certain “qualifying facilities.” Incorporating the just and reasonable standard, Congress directed FERC to promulgate rules to incentivize alternative energy resources and reduce reliance on fossil fuels. FERC’s ultimate scheme implementing PURPA was affirmed because it was just and reasonable, benefitted the public interest by incentivizing small power producers—typically renewable resources—and served the nation by facilitating the transition away from fossil fuels. The introduction of new technologies to the electric grid made it apparent that competition may yield more efficient and reliable outcomes for consumers.
The Commission officially embraced competition in the energy markets through the implementation of the Energy Policy Act of 1992 and Order 888. FERC’s initiatives related to transmission also reflect the transition to competition. Historically, transmission entities bundled all services. However, Order 888 required all utilities owning and operating transmission lines to file open access nondiscriminatory transmission tariffs with FERC. This unbundled transmission required transmission services to be separated and transmission utilities to offer their competitors fair rates for use of their transmission lines. Order 888 is a prime example of FERC exercising its § 205 and § 206 authority. Pursuant to § 205, FERC found that the operation of the transmission market (bundled services) was unjust, unreasonable, and unduly discriminatory because it prevented certain entrants from accessing transmission lines. By using its remedial authority under § 206, FERC proposed and issued Order 888.
New York v. FERC held that FERC properly construed its statutory mandate under the FPA. Critically, the Court grappled with the history of the energy sector in a way that is unique to FERC. It noted that the landscape of the electric industry had changed since the enactment of the FPA, when electric markets were distinctly separated into retail and wholesale markets. New York v. FERC’s significance rests in its approval of FERC’s construction of its FPA authority to restructure energy markets as more competitive.
After Order 888, which first recognized the potential for regional transmission planning, FERC proposed the creation of Regional Transmission Organizations/Independent System Operators (RTO/ISO) in Order 2000. An RTO/ISO is a regional, independent system operator. Although voluntary, participation in an RTO/ISO is encouraged because, in FERC’s view, competition in wholesale electricity markets is the best way to provide reliable service and serve the public interest. RTOs/ISOs do two key things: they serve as a grid operator by overseeing and managing transmission systems, and they also operate competitive markets for electricity by hosting competitive auctions to set wholesale prices for electricity. Under this new market model, competition is central.
FERC’s oversight of the wholesale competitive energy markets is guided by several key principles, including a goal of ensuring a fair playing field by removing barriers to new technologies and promoting competition. Several FERC Orders exemplify that principle. For example, Order 2222 removed barriers preventing distributed energy resources, like solar energy and battery storage, from competing in electric markets. Order 2023 proposed major regulatory changes to the interconnection process. The Order was a response, in large part, to the severe backlog of renewable energy projects in the interconnection queue. Order 841 required the removal of barriers to energy storage resources, and it required RTOs/ISOs to “recogniz[e] the physical and operational characteristics of electric storage resources.” Order 745 removed barriers for demand response to participate in wholesale energy markets by requiring market operators to compensate demand response providers appropriately. Order 764 eliminated rules that prevented variable resources like wind and solar from accessing the necessary transmission services. Although not the primary purpose, these Orders have resulted in major shifts in the country’s electric grid.
FERC’s regulatory initiatives supporting renewable energy sources have not gone without judicial scrutiny, though. In one of the most impactful Supreme Court cases evaluating the FPA, the Court upheld Order 745. The Court recognized that FERC’s authority under the FPA is specifically designed to grant FERC the power to improve how the electric market functions. More specifically, the Court held that the FPA’s language grants FERC the authority over any “rules or practices that directly affect” wholesale rates. Furthermore, it is within FERC’s power under the FPA to take actions to reduce prices and enhance reliability in the wholesale energy market.
FERC v. Electric Power Supply Association was a response to the Commission’s efforts to eliminate barriers for demand response to participate in wholesale energy markets. Through two major orders, FERC paved the way for demand response to participate in these markets. First, Order 719 recognized the ability of demand response to reduce wholesale power prices and found that markets that did not allow demand response to bid into the energy markets were unjust, unreasonable, and unduly discriminatory or preferential. Second, in an effort to more fully effectuate the goals of Order 719, the Commission issued Order 745, which required comparable compensation for demand response and generation providers. This required that demand response providers be compensated at a fair price.
Writing for the majority, Justice Kagan found that since the compensation scheme in Order 745 “directly affect[s]” the wholesale rate of energy, Order 745 was within FERC’s statutory authority. This endorses a key principle of the FPA: FERC may use its statutory mandate to eliminate barriers to market competition for technologies that can improve energy markets. The critical ripple effects of this holding suggest that under the FPA, the Commission can “facilitate the participation of new technologies” that reduce emissions and support the electric grid’s transition to a cleaner future. Others have provided a clear framework for applying this new standard: “FERC may regulate those practices which impact the wholesale markets directly or are integral to the proper functioning of the wholesale markets, but not practices that are only remote or insignificant in their connection to these markets.”
In applying this standard, scholars have identified several potential factors that guide FERC’s regulatory authority. Of importance to this analysis are two ideas that may pave the way for additional regulatory action to support renewable energy development. First, FERC can address “system adequacy by regulating the quantity of inputs to the markets.” This standard may allow FERC to “increase[] amounts of electricity generated from renewable sources” because it may be “necessary to hedge against potential outages at fossil-fuel fired plants.” Second, FERC may regulate “market-wide features to remedy discrimination against one resource in favor of another.” This is essentially what FERC did to facilitate demand response in Order 745. The Commission has also acted in this manner to support energy storage resources in wholesale markets. In short, through a series of orders designed to improve competition in wholesale energy markets, FERC has established a regulatory precedent for using § 205 and § 206 to promote the development of renewable energy growth.
In June 2022, the Supreme Court finally ushered in the major questions doctrine after several decades of hinting at limiting administrative agencies’ ability to address major questions of policy. In a landmark decision, the Court struck down EPA’s “generation shifting” program in the Clean Power Plan (CPP) by noting the rule’s “economic and political significance,” stressing “reason[s] to ‘hesitate’” when an agency claims “‘to discover in a long-extant statute an unheralded power’ representing a ‘transformative expansion in [its] regulatory authority.’” The new doctrine fails to provide any sort of “model of clarity” but rather establishes a “grab bag of factors” to consider before triggering the doctrine.
The major questions doctrine represents one of many ways the Court has whittled away at agency deference. Most recently, in Loper Bright, the Court said goodbye to the cornerstone of agency deference when it overturned Chevron. However, some form of reliance on agency decisions survives. Courts may pay “careful attention” to an agency’s regulatory history when that agency is exercising its applicable expertise. While courts may now use their own “independent judgment” in reviewing agency action, the court may turn to the “agency’s ‘body of experience and informed judgment.’”
While the interplay between West Virginia and Loper Bright is imprecise, an agency’s regulatory history certainly carries weight. One interpretation of Loper Bright would suggest that an independent court will be more unlikely to rely on an agency’s interpretation in major questions cases. Another hint at incorporating West Virginia’s factors into the Loper Bright analysis. Therefore, a brief survey of major questions cases can shed light on the future of executive agencies’ “power to persuade.” That survey suggests that while lower courts vary substantially in applying the major questions doctrine, the “economic and political significance” of an agency rule and an agency’s regulatory history drive the inquiry.
The major questions doctrine was formally established by the Supreme Court in its recent West Virginia holding. The focal point of West Virginia was the Obama Administration’s CPP, which sought to reduce carbon emissions in the power sector. The statutory justification of the CPP was § 111(d) of the Clean Air Act, which gave EPA the power to set the “best system of emission reduction” for power plants. Traditionally, the agency set standards that required plants to reduce pollution and operate cleaner and more efficiently. However, under the CPP, the agency required that facilities reduce electricity production, subsidize clean technologies, or purchase carbon offsets. The agency itself referred to this as a “generation shifting program” that would transform the energy industry and spur the development of clean technologies. In the end, the CPP “empower[ed] [EPA] to substantially restructure the American energy market,” leading to its demise.
The CPP, at the time, represented “the single most important step America has ever taken in the fight against global climate change.” However, the CPP was not knocked down simply because it attempted to combat climate change; instead, EPA’s rule suffered from more mechanical defaults that, when taken together, provided reasons to hesitate. First, the rule relied on a seldom-used provision of the Clean Air Act. Second, implementing the rule would have resulted in a transformation of EPA’s regulatory authority. Other factors included the financial effect on consumers, Congress’ refusal to pass legislation achieving similar goals, and scant regulatory precedent. This hodgepodge of factors offers little guidance—creating a “know it when you see it” doctrine.
There is no uniform definition of what constitutes “vast economic and political significance.” As for political significance, the standard appears to include issues of “earnest and profound debate across the country.” For example, in a case striking down a license for nuclear waste storage, political significance turned on whether the issue had “been hotly politically contested” and was a “subject[] of public concern.” Another potential indicator of political significance may include legislative history, particularly whether Congress has resisted enacting legislation substantively similar to the challenged agency action. In FDA v. Brown & Williamson Tobacco Corp., the Court pointed to six other statutes addressing the public health concerns of tobacco use, all precluding the type of regulatory action exercised by the FDA in regulating tobacco products. There is no bright line rule defining political significance, but at a minimum, it likely refers to “sweeping pronouncements” on “societal controversies.”
As for economic significance, the overarching rule prohibiting regulations of a significant portion of the American economy seems clear on its face. In practice, though, judges have varied remarkably in what they consider economically significant. Predating the formal proclamation of the major questions doctrine, economic significance was thought to require “billions of dollars.” This conception of economic significance likely holds. Several cases have invoked the doctrine where “billions of dollars” are involved. However, courts are inconsistent in evaluating whether that monetary amount reflects the required spending, economic impact, financial burdens, compliance costs, or possible fiscal benefits. Furthermore, there seems to be some regional or market constraints on the economic factor, as reflected by the refusal to extend the doctrine where only nine projects in a remote part of Alaska were affected. In addition, it is unlikely that agency action that only has millions of dollars of impact qualifies as economically significant. While there are some guideposts, what is economically or politically significant enough to qualify as a major question is not certain.
The major questions doctrine precludes “‘discover[ing] in a long-extant statute an unheralded power’ representing a ‘transformative expansion in [its] regulatory authority.’” In other words, the historical precedent and regulatory history of an agency’s statutory interpretation provide meaningful guideposts to triggering the major questions doctrine. Predating the formal proclamation of the major questions doctrine in West Virginia, the Court relied on the Occupational Safety and Health Administration’s (OSHA’s) historical use of emergency exceptions to notice-and-comment rulemaking when evaluating a COVID-19 vaccine mandate. Noting that this statutory provision had only been used nine times in OSHA’s history, the Court concluded the mandate exceeded the agency’s authority. Similarly, in West Virginia, the majority heavily relied on the fact that EPA had very rarely used § 111(d) of the Clean Air Act to regulate pollution prior to the CPP. The existence, or lack thereof, of a regulatory history of similar agency authority continues to be a turning point in major questions analysis.
Lower courts have run with Justice Roberts’s explanation that the major questions doctrine turns on “the history and the breadth of the authority that [the agency] has asserted.” In Ready for Ron v. Federal Election Commission, a political committee petitioning for Governor Ron DeSantis challenged the Federal Election Commission’s (FEC’s) conclusion that the petition was the equivalent of an in-kind contribution and could not be delivered to the Governor. In rejecting the plaintiff’s major questions doctrine claim, the D.C. District Court concluded that the FEC’s decision was consistent with “historical precedent.” The FEC had consistently interpreted federal election campaign laws in a similar manner. Conversely, in a case challenging President Biden’s executive order requiring federal contractors to be vaccinated, the Fifth Circuit struck down the mandate, finding it to be a substantially different use of the Procurement Act.
The major questions doctrine is designed to prevent an administrative agency from “substantially restructur[ing]” a particular market or regulatory scheme. Substantially restructuring a market or regulatory scheme appears to be a high bar. The U.S. District Court for the Western District of Texas rejected a major questions doctrine challenge to the Department of Labor’s (DOL’s) rules pertaining to the wages of “tipped employee[s],” in part, because the rule “relied on the same authority . . . which has governed the industry for decades.” In another challenge to labor laws, a DOL regulation was upheld because it “was consistent with [DOL’s] approach for over seven decades.”
Although the labor laws were also defended for not invoking major questions of economic and political significance, a similar regulatory analysis was used in cases that have been the subject of serious political turmoil. For years, access to medical services for abortion and student loan forgiveness have been central to U.S. policy and legal debates. Despite the public perception of these issues being of economic and political significance, the major questions doctrine was not triggered in two cases addressing these issues based on historical precedent. In GenBioPro, Inc. v. Sorsaia, there was a challenge to restrictions on the sale of mifepristone. The judge did not invoke the major questions doctrine, relying in part on the regulatory history of the FDA. He noted that:
“[T]he seminal major questions cases all involved novel agency interpretations of long-standing ambiguous regulatory provisions as major grants of authority to reconfigure large aspects of the economy,” and, in contrast, FDA’s rule “does not ‘effect a fundamental revision of the statute, changing it from one sort of scheme of regulation into an entirely different kind.’”
In Sweet v. Cardona, a class action brought by student-loan borrowers, the Ninth Circuit upheld the Department of Education’s (ED’s) use of settlement authority. The judge considered that the ED had similarly used its settlement authority at least seven other times. The court did not invoke the major questions doctrine since there was a historical precedent for the agency’s assertion of authority.
Lower courts’ reluctance to invoke the major questions doctrine shows that agency action requires substantial economic and political effects and a departure from consistent historical regulatory authority to trigger a major questions doctrine review. Without clear association to the economic and political significance and regulatory history factors, major questions doctrine is not a death knell to agency action.
Through an emphasis on FERC’s regulatory history using § 205 and § 206 to promote competition and, in turn, facilitate renewable energy growth, FERC can offer a strong preemptive defense to potential major questions scrutiny. Given FERC’s ratemaking authority under the FPA and the recent restructuring of energy markets to provide for increased competition, FERC can avoid implicating the major questions doctrine by creatively crafting regulatory initiatives that implicitly address climate change, emphasizing the economic benefit that renewable energy will yield in wholesale energy markets.
FERC is unique in that its charter likely puts it on a path to inherently regulate issues of economic and political significance. The U.S. electric sector holds significant political and economic importance due to its critical role in powering the nation’s economy and supporting various industries. Politically, the electric sector is subject to intense regulatory scrutiny and policymaking at both the federal and state levels. The sector’s transition to cleaner and more sustainable energy sources is a key focus of political campaigns and is subject to fierce debate. For these reasons, it may fall under the major questions doctrine’s political significance factor. However, in the last several years, Congress has designed major legislation to support renewable energy. This differs dramatically from sectors in which Congress has refused to legislate, which, in some cases, has led courts to be more willing to invoke the major questions doctrine. On its face, the electric sector seems to be of political significance, but given the uncertainty in defining this factor, it is possible that a court may not automatically consider changes to the electric sector to be of vast political significance, depending on the totality of circumstances of any given regulation.
From an economic standpoint, the U.S. electric sector is a vital component of the nation’s infrastructure, supporting economic growth and development. The transition to a more diverse and sustainable energy mix presents economic opportunities, fostering innovation and investment in renewable technologies. Additionally, the electric sector plays a key role in job creation, with employment ranging from traditional energy production to emerging fields like renewable energy development and smart grid technology. It seems that the electric sector would be considered economically significant, but challenges may abound based on the actual monetary impact of any individual rule. Standards in the lower courts vary dramatically, and FERC may be able to skirt economic significance by taking action to regulate climate change step-by-step, as opposed to any one broad-sweeping regulation.
Regardless of whether any FERC action is of political or economic significance, FERC can avoid major questions doctrine by pointing to its historical precedent under § 205 and § 206 addressing climate change through supporting renewable energy. FERC has used the FPA to regulate the electric sector since the early twentieth century, and in the last couple of decades, the Commission has used its authority to support renewable energy growth. The Commission has used the just and reasonable standard, the “directly affects” standard, and more to radically transform the electric grid. One would be hard-pressed to say that any action removing barriers to competition in the wholesale energy market is unheralded. Policies of this sort fit within FERC’s general pro-competitive mission of eliminating barriers to market participation for new technologies. FERC should continue to use § 205 and § 206 to regulate activities that directly affect wholesale markets for the purpose of ensuring a competitive energy market. In doing so, the Commission can implicitly provide solutions to the climate crisis without invoking the major questions doctrine triggered by EPA’s generation shifting program.
Specifically, it is possible that the agency could consider a carbon adder (essentially a carbon tax) on technologies bidding into energy markets. Or, the agency could issue a rulemaking that required energy projects to include the environmental analysis involved in the permitting process to transfer energy costs when bidding into the wholesale markets. Ultimately, whatever path FERC chooses, so long as it regulates activities that directly affect wholesale markets for the purpose of removing market barriers for new entrants and increasing competition in energy markets, FERC can likely avoid major questions implications since that behavior is rooted in an extensive regulatory history.
If FERC is to actively aid the fight against climate change, the Commission must be careful to frame its policies supporting renewable generation resources as exercising its obligation to remove barriers for new entrants and ensure competition in energy markets. Given FERC’s ratemaking authority under the FPA and the recent restructuring of energy markets to provide for increased competition, FERC can avoid implicating the major questions doctrine by creatively crafting regulatory initiatives that implicitly address climate change and emphasize the economic benefit that renewable energy will yield in wholesale energy markets.
Since FERC has used § 205 and § 206 of the FPA consistently to remedy unjust and unreasonable market features, its strongest case to avoid major questions is to continue to use this particular authority. In addition, so long as FERC’s policies “directly affect” wholesale markets, its action will fall clearly within the Commission’s statutory mandate. Therefore, FERC can avoid major questions implications by using § 205 and § 206 to require wholesale markets to remove barriers for renewable resources.
I would like to thank the entire Administrative Law Review for providing the institutional support in completing this piece. Thank you to Stacy-ann Robinson for teaching me to be a fearless climate advocate. Thank you to Laura Sherman for your mentorship and advocacy on behalf of clean energy. Thank you to my family, particularly my parents, Molly and Mike Beauregard, for your unconditional love and support. Lastly, to my partner, Nina Oleynik, for championing our shared vision of a sustainable future.
