High Court Seeks Solicitor’s View On Energy Suit Seen As Crucial To ESPS

Source: By Inside EPA • Posted: Tuesday, March 24, 2015

The Supreme Court is asking the solicitor general (SG) to provide the administration’s views on whether the justices should review a set of appellate rulings that states say thwart procurement of new cleaner generating capacity, including renewable or gas generation that the petitioners say will be needed to comply with EPA’s proposed greenhouse gas (GHG) rule for existing power plants.

The justices’ request — in a March 23 order in Douglas R.M. Nazarian et al. v. PPL Energy Plus, LLC et al — appears likely to bolster petitioners’ efforts to overturn separate appellate cases that test whether states’ efforts to guarantee long-term revenues for new generation are blocked by Federal Energy Regulatory Commission (FERC) jurisdiction over wholesale power markets under the Federal Power Act (FPA).

The suite of cases is one of two issues the high court is currently considering reviewing that could decide the reach of the FPA, and possibly whether that law will impact EPA’s pending existing source performance standards (ESPS) to curb GHGs from the existing power sector, which relies in part on increasing natural gas dispatch and non-emitting energy.

In FERC, et al., v. Electric Power Supply Association, et al., the court is weighing a set of cases that will determine whether the commission has authority to craft a demand response compensation rule that supporters say could be crucial for states to comply with EPA’s ESPS.

In the instant cases — Nazarian from the U.S. Court of Appeals for the 4th Circuit and a related Sept. 11 ruling from the 3rd Circuit, PPL Energy Plus, LLC, et al., v. Lee Solomon, et al — the two lower courts asserted that certain state contracts were preempted by the FPA because they improperly set wholesale power rates.

The 4th Circuit agreed with a lower court in blocking a Maryland order requiring that electricity distributors enter into “contracts for differences” to support construction of a 725-megawatt natural gas power plant, and the 3rd Circuit ruling upheld a lower court ruling rebuffing a pilot program to provide a “multi-year pricing supplement” designed to provide subsidies for new power plant construction.

In petitions for review, some of the petitioners, like Maryland, argued that the appellate ruling “ties the states’ hands at the worst possible time,” given EPA’s proposed ESPS and the resulting need to procure cleaner, reliable power.

Several states, public power and consumer groups filed amicus briefs joining the calls for Supreme Court review. The groups include the National Association of Regulatory Utility Commissioners, the states of Connecticut, Iowa, Maine and Washington, as well as the American Public Power Association and National Rural Electric Cooperative Association.

But power generators rebutted the states’ calls, arguing that the appellate rulings allow “other avenues” for obtaining new generation, that there is no circuit split and that the case is not significant enough to merit review. The generators’ calls steer clear of reference to EPA regulations but argue more broadly that the petitioners are exaggerating the rulings’ impacts on state programs.

It was not immediately clear when the SG must file its brief.