Supreme Court Decision in FERC Case Could Affect EPA

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By Rebecca Wilhelm

Oct. 5 — The U.S. Supreme Court’s treatment of a case asking whether the Federal Energy Regulatory Commission has authority to compensate demand-response programs in the wholesale electricity market might signal how the court will treat the Environmental Protection Agency in future statutory construction cases, legal scholars said in an Oct. 5 webinar.

FERC's authority to promulgate Order 745, which was designed to reduce electricity demand during peak periods, depends on the Supreme Court's interpretation of ambiguous language in the Federal Power Act, Jody Freeman, a professor at Harvard Law School, said during a webinar held by the Environmental Law Institute previewing the SupremeCourt's 2015-2016 term.

The government argues that the act extends jurisdiction to FERC over practices “affecting” wholesale electricity rates, which includes the power to regulate demand-response programs, Freeman said.

“We will see in the court’s handling of this case how is it feeling about deference at the moment,” she said.

The court's decision might indicate how the court will decide future challenges to EPA interpretations of the Clean Air Act and other environmental statutes, Freeman said.

The court will hear oral argument in the case on Oct. 14 (FERC v. Elec. Power Supply Ass'n, U.S., No. 14-840, oral argument scheduled 10/14/15; 190 ECR, 10/1/15; See previous story, 10/02/15; 191 DEN A-14, 10/2/15).

Curtailing Agency Deference

Last term the court curtailed agency discretion to interpret ambiguous statutory language when it ruled that the Clean Air Act required the EPA to consider costs before deciding it was “appropriate and necessary” to regulate emissions of mercury and other air toxics from power plants (Michigan v. EPA, 135 S. Ct. 2699, 80 ERC 1577, 2015 BL 207163 (2015); 83 U.S.L.W. 2005, 6/30/15; 124 ECR, 6/29/15; 125 DER, 6/30/15; 125 State Environment Daily, 6/30/15; 125 DEN A-1, 6/30/15; 83 U.S.L.W. 2005, 6/30/15; 46 ER 1993, 7/3/15; 15 EHSDSN, 7/6/15; 22 ECB 230, 7/20/15).

That decision was “a significant shift” from prior case law, Freeman said, and it suggests that the court is less willing to defer to agency interpretations, especially in important cases.

The court sent a similar message in King v. Burwell, Freeman said. Even though the court agreed with the government'sinterpretation of the Affordable Care Act, Chief Justice John Roberts made it a point in his majority opinion to say, “we often apply the two-step framework announced in Chevron,” and not, “we always” apply it (King v. Burwell, 135 S. Ct. 2480, 2015 BL 202885 (2015); 125 ECR, 6/30/15; 126 DEN A-1, 7/1/15; See previous story, 07/01/15; 46 ER 2016, 7/3/15; 24 EDDG, 7/16/15).

“He manages to send a signal that maybe the court will not be deferential in really important cases,” Freeman said. “When you put some of this language together with Michigan you wind up feeling a little nervous if you’re on the environmental side and a little bolstered if you’re on the industry side.”

‘Not Good News for the Government'

The Supreme Court “surprised everyone” when it granted certiorari Oct. 1 in Sturgeon v. Masica, Richard J. Lazarus, a professor at Harvard Law School, said during the webinar.

“No one really thought the court was going to take this case,” he said. “When the court takes a case like that, it's not good news for the government.”

The court will review whether Section 103(c) of the Alaska National Interest Lands Conservation Act prohibits the National Park Service from exercising regulatory control over state, native corporation and privately owned land that is physically located within the boundaries of the National Park System (Sturgeon v. Masica, U.S., No. 14-1209, certiorari granted 10/1/15; 46 ER 2963, 10/2/15; See previous story, 10/02/15; 191 DEN A-14, 10/2/15; 2015 WLPM, 10/8/15).

Specifically, John Sturgeon, an Alaska resident, argues that a regulation banning hovercraft use in all national parks should not be applied to Alaska's Yukon-Charley Rivers National Preserve based on the plain statutory language of ANILCA. Sturgeon challenged the regulation after park service officials prevented him from using his hovercraft on a state-owned river within the Yukon-Charley Preserve for a moose-hunting trip.

“You wouldn't think this is a cert issue,” Lazarus said. “There's no obvious reason to take this case.”