It didn’t take long. On Tuesday (July 2), the U.S. Supreme Court implemented its overturning of Chevron deference late last week by granting a petition for review of a D.C. Appeals Court decision – Edison Electric Institute et al. v. FERC 22-1246 – rejecting the court’s decision in favor of the regulators and sending the case back to the appeals court, citing its Chevron ruling.
Travis Kavula, NRGenergy vice president and former member of the Montana Public Service Commission and president of the National Association of Regulator Utility Commissioners, commented on Twitter Tuesday morning, “It appears we may have the first energy-related agency action falling victim to Chevron’s being overturned: a long-running case about PURPA where a Montana solar-and-battery combo was said to be below the law’s 80 MW ‘power production’ limit to qualify as a ‘small facility.’”
The court ruled: “The petition for a writ of certiorari is granted. The judgment is vacated, and the case is remanded to the United States Court of Appeals for the District of Columbia Circuit for further consideration in light of Loper Bright Enterprises v. Raimondo 603 U.S. __ (2024).”
The case involves an interpretation of the 1978 Public Utility Regulatory Policies Act, a key statute in the revolution that has transformed the electric utility industry over the past 45 years. The act gives favorable treatment to qualifying “small power production facilities,” provided that they may not have power production capacity “greater than 80 MW.”
A Montana energy developer, Broadview Solar LLC, developed a solar project that had generating capacity of 160 MW, connected to a 50-MW battery storage facility that could provide power for up to four hours. Broadview petitioned FERC for qualification as eligible for PURPA because limits on its AC to DC inverters meant it could not deliver more than 80 MW to the grid.
In September 2020, FERC rejected Broadview’s petition. In March 2021, FERC reversed itself. Then FERC Chairman Neil Chatterjee, reversing a vote he cast in the September denial, said, “It’s not simply a solar array that instantaneously injects every megawatt it produces. And to treat it as such is an error. Today’s order appropriately accounts for the configuration of this hybrid facility and creates a path forward for other projects that may be similarly configured.”
“Because we conclude that the Commission’s interpretation of the statute is entitled to deference and that the Commission did not act arbitrarily or capriciously, we deny the Utilities’ petitions.” — D.C. Appeals Court Judge David Sentelle
Predictably, litigation followed, led by EEI, the chief lobbying group for large investor-owned utilities. When the case got to the D.C. appeals court, the court in February 2023 upheld FERC, citing Chevron deference, as the case clearly involved a knotty technical issue. Appeals Court Judge David Sentelle wrote, “Because we conclude that the Commission’s interpretation of the statute is entitled to deference and that the Commission did not act arbitrarily or capriciously, we deny the Utilities’ petitions.”
The losers then applied for Supreme Court review. The court punted in September 2023. At that time, the court gave a sneak preview of how it would act: “The petition for a writ of certiorari should be held pending the Court’s decision in Loper Bright Enterprises v. Raimondo, No. 22-45L1, and then disposed of as appropriate in light of that decision.”
Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program, commented on Twitter, “The DC Circuit could still reach the same result. But it can no longer rely on Chevron reference to get there.”
–Kennedy Maize