Following the Supreme Court’s momentous decision last term in Loper Bright Enterprises v. Raimondo, much of the scholarly discussion has focused on how that decision changes administrative law. Many assume that, with the overturning of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. and its rule of deference to agency interpretations of the agency’s governing statute, the relationship between the federal judiciary and every federal agency has fundamentally changed. But at least one regulatory authority has emerged untouched from Loper Bright’s upheaval: the Federal Energy Regulatory Commission’s (FERC’s) authority to regulate certain rates, charges, and practices made in connection with our federal energy systems.
FERC is one of the most powerful agencies in the federal government because it is charged with regulating our interstate energy systems. Among other things, it has long had the authority to ensure that all rates and charges made with respect to wholesale sales of electricity and natural gas and the transport of those commodities in interstate commerce are just, reasonable, and nondiscriminatory— what is known as FERC’s “ratemaking authority.” By two statutes, the Federal Power Act (FPA) and the Natural Gas Act (NGA), Congress granted FERC the power to ensure that rates in these fields are “just and reasonable.” That broad standard gives FERC significant authority to adjust rates to fit the ever-changing needs of our energy systems.
As this Article explains, FERC’s “just and reasonable” ratemaking authority survives Loper Bright, whether one thinks about it within Loper Bright’s framework or outside of it. Within Loper Bright’s framework, FERC’s ratemaking authority could be understood as a clear example of the Supreme Court’s carveout for statutory provisions that “delegate[] discretionary authority to an agency.”1 As the history of FERC’s authority shows, Congress plainly intended to confer broad discretionary authority on FERC.
But FERC’s ratemaking authority may be better understood as falling outside the Loper Bright framework altogether. At the heart of both Chevron and Loper Bright is the notion of statutory ambiguity— indeterminacy in the meaning of a term or phrase chosen by Congress. Chevron and Loper Bright take opposite approaches to such ambiguity, creating dueling presumptions about which body—courts or agencies—should have primacy in fixing the meaning of a term susceptible to multiple interpretations. But the “just and reasonable” rate standard overseen by FERC is not ambiguous in the sense envisioned by the majority decision in Loper Bright or the Chevron doctrine. Rather, the ratemaking provisions of the NGA and FPA are legislative shorthands directing FERC alone to wield a particular kind of power—the ratemaking power. This unique governmental power derives from more than a century of historical practice across a wide variety of institutions spanning the American legal system. By the time Congress included the ratemaking provisions in the federal energy laws in the 1930s, the concept of ratemaking had been concretized through decades of constitutional and legislative development at both the state and federal levels. And shortly after the passage of both Acts, the Supreme Court issued two decisions in which it specifically laid down the scope of judicial review of FERC’s ratemaking authority, with respect to both its constitutional and statutory boundaries. These decisions provided the framework for judicial review before the passage of the Administrative Procedure Act (APA), continued to guide courts’ review of FERC’s ratemaking authorities after the passage of the APA, and have been used by courts to evaluate FERC’s actions both pre- and post-Chevron.