Notice & Comment

D.C. Circuit Review—Reviewed: Clearing the Queue

Last week, the D.C. Circuit issued four administrative-law opinions. The first, Advanced Energy United v. FERC, involved the nation’s backlogged interconnection queue—a waiting list of proposed energy-generating facilities seeking to connect to the power grid. Before 2023, a developer seeking to connect a new facility would submit an interconnection request to the transmission provider, which operated the relevant portion of the grid. The transmission provider would then study the project to determine whether the grid required upgrades before the facility could connect. Over time, that system developed serious problems. Developers often submitted interconnection requests before they knew whether their projects would ultimately be built, only to withdraw them after the transmission provider had completed its studies. At the same time, transmission providers often took years to complete studies and faced no meaningful consequences for delay. The result was a massive backlog of projects awaiting approval to connect to the grid.

The Federal Energy Regulatory Commission (FERC) issued Order 2023 to reduce that backlog. Among other reforms, the order imposed penalties on developers who withdrew their interconnection requests, required transmission providers to complete their studies by firm deadlines backed by late fees, and standardized parts of the interconnection-study process. Various clean-energy developers and transmission providers challenged different aspects of the order, arguing that FERC exceeded its statutory authority, acted arbitrarily and capriciously, and violated other provisions of federal law.

In a per curiam opinion, the D.C. Circuit (Judges Millett, Walker, and Childs) rejected those challenges and denied the petitions for review. The court held that FERC acted within its authority under the Federal Power Act and reasonably concluded that the existing interconnection process had become unjust and unreasonable. The court further held that FERC adequately explained its policy choices, reasonably balanced the competing interests of developers, transmission providers, and electricity consumers, and permissibly exercised its technical expertise in adopting a comprehensive nationwide reform of the interconnection process.

In the second case, Environmental Defense Fund v. EPA, the D.C. Circuit considered a challenge to an EPA rule implementing the Clean Air Act’s New Source Review program. Under that program, an entity generally must obtain a permit before modifying a major stationary source of air pollution. To determine whether a proposed change qualifies as a modification, the EPA uses a two-step process. At step one, the agency asks whether the proposed change would itself cause a significant emissions increase. At step two, the agency asks whether any increase would be offset by emissions decreases elsewhere at the facility.

In 2020, the EPA promulgated a rule providing that, if a proposed change caused both emissions increases and decreases, the decreases would be netted against the increases at step one. If the project’s net increase wasn’t significant, the analysis ended and the proposed change would not proceed to step two. The Environmental Defense Fund and several other environmental groups petitioned for review.

In an opinion by Judge Henderson, the court denied the petitions. The court explained that, under the Clean Air Act, a modification is a change that significantly increases the amount of air pollution emitted by the source as a whole. Accordingly, if a proposed change doesn’t itself result in a significant net increase in emissions, it cannot significantly increase emissions from the source as a whole, making it unnecessary to proceed to step two.

The third case, Estate of Stephen M. Jennions v. CFTC, involved the Commodity Futures Trading Commission’s whistleblower award program. After the CFTC brought enforcement actions against five banks for manipulating foreign-exchange benchmark rates, Stephen Jennions sought a whistleblower award under the Dodd-Frank Act, arguing that information he had provided to the United Kingdom’s Financial Conduct Authority led to the Commission’s investigation. The CFTC denied his application, and Jennions petitioned for review.

In an opinion by Judge Wilkins, the court denied the petition. Under the CFTC’s regulations, a whistleblower qualifies for an award only if he provides original information that is sufficiently specific, credible, and timely to cause the Commission to commence an investigation. According to the court, however, the CFTC reasonably determined that Jennions didn’t satisfy that standard because his information wasn’t sufficiently specific and credible, and because the Bloomberg article—not Jennions’s submissions—caused the Commission to open its investigation.

The fourth case, Ute Indian Tribe of the Uintah and Ouray Indian Reservation, involved the Indian Reorganization Act of 1934, which authorizes the Department of the Interior to restore certain reservation lands to tribal ownership. In 2016, the Ute Indian Tribe asked the Department to restore approximately 1.5 million acres of unallotted reservation land in Utah to tribal ownership under the Act. The Department denied the request, the Tribe challenged the denial, and the district court granted summary judgment to the Department.

In an opinion by Judge Katsas, the D.C. Circuit affirmed. The court explained that the Act permits restoration of only those lands for which a tribe has compensable title. Because the relevant treaties, statutes, and executive orders gave the Tribe compensable title only to lands in its former Colorado reservation—not to the Utah lands at issue, the Tribe wasn’t entitled to restoration of those lands under the Act.