FERC and the Fight in the Weeds

Here’s a quick update on two pending Supreme Court items, both of huge interest to a vast range of commercial actors and actually the country.

Non-event: still no decision in Comptroller v. Wynne,  a “dormant” Commerce Clause case over the double taxation of income earned in interstate commerce. Next to Zivotofsky v. Kerry,  the Jerusalem passport case, Wynne is the only case still open from the Court’s November arguments. As I wailed here and here, the Court’s highly unusual cert grant in Wynne—to a state court, in a case involving no lower court splits and on a ruling that affirmed the “no double taxation” rule followed by virtually all states—suggests an eagerness on the part of some justices to make a perfect mess of this area of constitutional (common) law. The long wait confirms that apprehension. Catholics celebrate May as the month of their Holy Mother, plus there’s Pentecost. Regardless of religious affiliation we’ll all need all the divine assistance we can get on this one.

Big, huge event: the Court granted cert in FERC v. Energy  Power Supply Association (consolidated with a second case), on the following questions:

  • Whether the Federal Energy Regulatory Commission reasonably concluded that it has authority under the Federal Power Act […] to regulate the rules used by operators of wholesale electricity markets to pay for reductions in electricity consumption and to recoup those payments through adjustments to wholesale rates.
  • Whether the Court of Appeals erred in holding that the rule issued by [FERC] is arbitrary and capricious.

A MEGO (My Eyes Glaze Over) case, or a mega-case? Both: it’s fiendishly complex, both AdLaw-wise (statutory interpretation, a federal common law rule, Chevron I and II, the extent to which federalism precepts should govern complicated statutory schemes, arbitrary and capricious) and in substance. The rules at issue govern FERC’s so-called “demand-response” regs—very roughly, a regulatory scheme to incentivize the non-consumption of energy (“negawatts,” as FERC calls it) and to price the transactions among producers and consumers. EPSA says that the scheme has FERC messing with retail transactions, which the operative statutes reserve to the states. FERC says, not so.

I’ll have extensive comment on future occasions (briefing, argument, decision). Beyond the nasty legal issues and the fact that there’s a million ways to mess this up, a biggish question lurks underneath.

A serious Progressive politics requires full government control over two resources whose private deployment might cause freedom to break out: capital and energy. A forward-looking government that can’t actually nationalize those resources has to first reduce their supply and then allocate what remains. For capital, there’s the Fed and Dodd-Frank. For energy, there’s the EPA and 111(d) and FERC and Order 745, issued under statutes and programs you’ve never heard of. Eventually, that project will produce open conflict in the desert.  For now there’s FERC and the fight in the weeds.