Three different and recurring intersections of regulations and litigation highlight the past week. The United States Supreme Court (SCOTUS) added another case to the oral argument calendar with potentially significant regulatory implications. The Department of Labor (DOL) finally submitted a proposal to revise the executive and administrative exemptions under the Fair Labor Standards Act (FLSA) for executive and interagency review. And the Environmental Protection Agency (EPA) moved forward with overdue and litigated revision to the Renewable Fuels Standard (RFS).
Wholesale & Retail Electricity: SCOTUS granted certiorari in the dual cases of FERC v. Electric Power Supply (U.S. No. 14-840) and EnerNOC, Inc. v. Electric Power Supply Association (U.S. No. 14-841) to review the decision of the United States Court of Appeals for the District of Columbia Circuit in Electric Power Supply Association v. FERC. At issue is the Federal Power Act (FPA) authorization for the Federal Energy Regulatory Commission (FERC) to regulate the transmission and sale of electric power in interstate commerce. Historically, wholesale energy demand has been managed by increasing capacity, but in recent years wholesale-market operators have also paid consumers for not using (or reducing) electricity at specific times (“demand response”) – and most consumers have been asked to participate at some level. FERC adopted a formula by rule for compensating demand response. The FPA divides authority between FERC (wholesale) and State Public Utilities Commission (PUC)s (retail). The D.C. Circuit held that FERC overstepped the FPA’s jurisdictional bounds into the exclusive jurisdiction of PUCs to regulate the retail market in regulating demand response programs.
SCOTUS consolidated the cases and reformulated its own question for the parties to brief:
Whether [FERC] reasonably concluded that it has authority under the [FPA] to regulate the rules used by operators of wholesale electricity markets to pay for reductions in electricity consumption and to recoup those payments through adjustments to wholesale rates.
Whether the Court of Appeals erred in holding that the rule issued by the Federal Energy Regulatory Commission is arbitrary and capricious.
SCOTUS may have granted certiorari because of the importance of the issue (including to your electric bill), without regard to further clarifying agency authority for and judicial deference to agency determinations of their own jurisdiction after City of Arlington v. FCC. With increasing regulation adversely affecting capacity increases, demand reduction response become more critical.
► John Elwood, in his Relist Watch column at SCOTUSblog, suggests the case is “unspeakably dull,” but any multi-agency administrative law turf question – whether Federal / State or just between an Executive agency and an independent agency (i.e. pollutant emissions from emergency generator usage in the demand response programs by the EPA and FERC). This case may not be so entertaining as some, but it bears watching as it could alter the way the alphabet soup is stirred. As with all late Term grants, argument will be held in the Fall, with a decision potentially next Winter.
FLSA Overtime Regulations: DOL, at long last, submitted a draft proposed Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees rule to the Office of Management and Budget (OMB). Under the current regulations, most employees earning more than $455 / week, $23,660 / year, are exempted from the 40 hour / 1½ overtime pay requirements, particularly under the job-based exemptions summarized in the rule title. Past suggestions could more than double the exemption threshold. The FLSA inclusion / exclusion of specific jobs or (portal to portal) time has become a staple of SCOTUS decisions in recent years, and a font of regulatory precedent, most recently in Perez v. Mortgage Bankers Association. Over a year ago, the President of the United States (POTUS) directed DOL to rethink the exemptions, and DOL long ago missed their management deadline.
► One of the odder aspects of this proposed rule may be the perception of its economic significance: The Fall 2014 Unified Agenda list the rule as economically significant; the OMB docket lists the rule is not economically significant. The latter may be an error (and may be changed at any time) – it is difficult to fathom how this proposed rule would not have an impact of $100 million on the economy – but if the docket is correct, then DOL has substantially lowered its expectations and the changes in the proposed rule. Not only could this rule propose substantially increase in the threshold, but DOL could ameliorate numerous past SCOTUS decisions on substantive FLSA inclusions and exclusions and it is unsurprising that a recent DOL blog post suggested that exemptions would be narrowed.
Renewable Fuel Standards: EPA took two steps that appear to following up on a consent decree in which EPA agreed to propose RFS volume requirements for 2015 by June 1, and finalize volume requirements for 2014 and 2015 and resolve a pending waiver petition for 2014 by November 30, 2015. First, EPA withdrew the economically significant Renewable Fuel 2014 Volume Standards final rule from executive and interagency review at OMB. At the same time, EPA submitted an economically significant proposed Renewable Fuel Volume Standards, 2014-2016, rule to OMB. The RFS establishes the annual standards for cellulosic, biomass-based diesel, advanced biofuel, and total renewable fuels that apply to gasoline and diesel produced or imported by year.
► The RFS continues to be haunted by the reality of availability of sourcing for ethanol for fuel blending. EPA was given a statutory task and it may be unfair to target EPA for the amounts to be blended – EPA cannot create the various means or ethanol, and requiring a certain volume for blending may make little difference if the volume does not exist. Nonetheless, like many regulations, the RFS has become a political and legal football of various stripes as particular interests seek economic advantages from high or low, or at least certain, required levels.
The post Monday Morning Regulatory Review – 5/11/15: Wholesale & Retail Electricity; FLSA Overtime Regulations; and Renewable Fuel Standards appeared first on Federal Regulations Advisor.