Energy regulators’ power to address planet-warming emissions is in the crosshairs in federal courts in 2024.
In one of the year’s biggest cases, the Supreme Court could rein in the Federal Energy Regulatory Commission’s ability to use 50-year-old laws to take bold action on emerging problems like climate change.
At issue in Loper Bright Enterprises v. Raimondo — a high-profile legal battle that will ripple through all federal agencies — is whether the justices should overturn the Chevron doctrine, which for 40 years has given regulators at FERC and elsewhere the benefit of the doubt in lawsuits over their rules.
“It should be one of the most closely watched energy-related cases of 2024,” Joel Eisen, a law professor at the University of Richmond, said of Loper Bright.
The justices could deal a second blow to FERC this year in a securities case that has the potential to hinder the agency — and other federal regulators — from enforcing its own rules.
Beyond the Supreme Court, federal judges in 2024 may also require FERC to take a closer look at the climate impacts of the natural gas pipelines and export facilities it approves.
As the nation’s chief regulator of electricity and natural gas transmission, FERC has come under increasing pressure in recent years to stop approving projects that will be significant contributors to rising global temperatures.
How courts decide those disputes “will definitely have reverberating effects, especially if FERC loses,” said Moneen Nasmith, a senior attorney at Earthjustice, which represents environmental organizations challenging the agency.
“What we really want FERC to be doing,” she said, “is talking about these emissions in a way that truly indicates that they understand how bad a project may be for the climate.”
Here are some of the biggest energy cases to watch in the coming year.
Supreme Court action
In two upcoming cases — Loper Bright and Securities and Exchange Commission v. Jarkesy — the Supreme Court could transform FERC’s approach to approving renewable energy projects and using its in-house judges to punish violators.
While Loper Bright and its companion case, Relentless v. Department of Commerce, originated from disputes over a NOAA Fisheries rule requiring herring vessels to pay the salaries of on-board overfishing monitors, conservative challengers have also used a FERC case to raise similar complaints about the Chevron doctrine.
Chevron, which was established in a 1984 Supreme Court case, directs courts to defer to agencies’ interpretations of ambiguous statutes — as long as judges find that their reading of the law is reasonable.
While Chevron has recently fallen out of favor with the conservative-dominated Supreme Court, lower benches still use it to uphold federal rules, as they did in one case concerning FERC’s approval of a Montana solar and battery storage facility. That case spurred a separate but related Supreme Court petition that the Biden administration has asked the justices to put on hold until they resolve Loper Bright.
A Supreme Court ruling nixing Chevron would mean “an end to a thumb on the scale for agency reasonableness,” Eisen said. “Agencies like FERC could not expect that their conclusions about what statutes mean would be routinely upheld.”
The Supreme Court will hear arguments in Loper Bright on Jan. 17 and are expected to issue a ruling in the case by early summer.
Energy lawyers are paying close attention to another Supreme Court case that, on its face, has nothing to do with FERC — but could undercut the agency’s ability to handle legal matters internally.
In Jarkesy, which the justices are expected to decide by the summer, the court is reviewing the SEC’s authority to use in-house judges to handle enforcement proceedings.
Depending on how broadly the court rules in the case, the decision could ripple through FERC, EPA and other federal agencies that rely on in-house courts. During oral arguments in November, the justices appeared ready to place at least some limits on agencies.
States v. feds
Courts in 2024 could also recalibrate the balance of power between federal and state regulators to decide how much new fossil fuel infrastructure the nation can afford to build as global temperatures rise.
Environmental advocates are pushing FERC to seriously consider states’ findings that new fossil fuel infrastructure is not needed — rather than issuing approvals on the basis that shippers have agreed to purchase gas from projects.
“There’s more than a trend developing,” Megan Gibson, general counsel at the Niskanen Center, said of the clash between FERC approvals and state climate objectives. “It’s becoming practice, which is deeply concerning.”
One lawsuit brought by Gibson on behalf of the New Jersey Conservation Foundation claims FERC failed to account for the Garden State’s legal mandate for utilities to reduce natural gas consumption when the agency approved an infrastructure expansion project to deliver fuel to residents in three mid-Atlantic states.
Republican FERC Commissioner James Danly said in January that conflicting reports about the need for the expansion project’s gas in New Jersey “on balance do not outweigh the persuasive evidence of need represented by the executed agreements to take service.”
The U.S. Court of Appeals for the District of Columbia Circuit is expected to hold oral arguments in the case this year.
A similar legal battle is currently brewing over an energy project on the other side of the country.
Environmental groups and state officials in Washington state and Oregon have asked FERC to reconsider its October approval of a $75 million gas pipeline expansion project to serve parts of the Pacific Northwest.
The states have provided a study to FERC demonstrating that gas from the project is not needed and have argued that the expansion runs contrary to their climate goals.
FERC’s climate authority
Federal judges could also play a key role this year in pushing FERC to decide when gas projects under its purview would contribute “significant” climate pollution.
The D.C. Circuit is poised to rule in the first half of 2024 on the first in a string of lawsuits over whether FERC can punt decisions on the climate impact of the projects it is approving. The delays have come as FERC has yet to finalize its own policy statement on how to decide the severity of a project’s contribution to planet-warming emissions.
Cases that center on FERC’s authority to consider climate change include a lawsuit over pipeline upgrades for a Louisiana natural gas export facility, a challenge to an upgrade project designed to serve New York City, and a fight over FERC’s approval of new infrastructure in Kentucky and Indiana.
Republican FERC Commissioner Mark Christie has said the agency’s options for assessing the climate impact of gas projects is limited.
If FERC rejected a project based on its estimated climate impact, he said, it would raise concerns from the Supreme Court, which has recently inhibited federal agencies from regulating issues of political and economic significance — without explicit permission from Congress.
“Congress could amend the [Natural Gas Act] to give this Commission such clear authority and guidelines on when and how to use it,” Christie wrote in 2022, “but it has not.”