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Tag Archive: Supreme Court of the United States

U.S. Supreme Court Upholds Class Action Waivers in Arbitration Agreements

U.S. Supreme Court building.

U.S. Supreme Court building. (Photo credit: Wikipedia)

In a decision that could bode well for competitive retail energy suppliers, the U.S. Supreme Court on May 21, 2018 upheld employers’ arbitration agreements containing class action waivers. In a 5-4 opinion by Justice Gorsuch in Epic Systems Corp. v. Lewis, the Court deemed the arbitration provisions enforceable under the Federal Arbitration Act, 9 U.S.C. § 2 et seq., which requires courts to enforce an arbitration agreement unless there are grounds to refuse to enforce it under the Act’s savings clause (e.g. fraud, duress, or unconscionability).

In Epic Systems Corp., the employees challenging the arbitration agreements argued that mandated individualized proceedings (i.e. class action waivers) conflicted with language in the National Labor Relations Act, rendering the agreements unenforceable. The Court rejected the employees’ arguments, holding: “Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.”

While this case involved employment contracts rather than retail energy supply contracts, the Court’s precedent upholding arbitration agreements with class action waivers is a good sign for retail energy suppliers concerned about potential class action claims.

If you have questions or would like to learn more issues to consider when preparing retail energy supply contracts, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

Supreme Court Halts Clean Power Plan

On Tuesday, February 9, 2016, the United States Supreme Court held in a five to four decision to halt enforcement of the Environmental Protection Agency’s Clean Power Plan by the Obama administration until its legal challenges are resolved.  The challenge to the Clean Power Plan was brought by a group of 27 states and various utilities, coal miners, companies and business groups.  The Court’s ruling means the EPA will not be able to enforce its September 6, 2016 deadline for states to either submit their emission reduction plans or request a two-year extension until the lawsuit battles its way through the court system.  This overrules the DC Court’s refusal to grant the stay, which we discussed here.

The Supreme Court’s ruling came after the United States Court of Appeals for the District of Columbia denied the request in January.  The DC Circuit will commence its review of the merits of the challenges to the Clean Power Plan on an expedited basis, with oral arguments to begin June 2. Contact our energy regulation lawyers to get more information on this issue or talk about how the Clean Energy Plan might affect your business.

U.S. Supreme Court: Demand Response is Here to Stay

On January 25th, the Supreme Court issued a landmark decision for the electricity industry, and particularly for demand response providers, settling considerable unease and speculation as to the future of the demand response industry. The term “demand response” generally refers to programs allowing individual customers or groups of electricity customers to curtail their energy usage during times of peak demand, and receive a payment for such reductions. The Supreme Court explained demand response as follows: “wholesale market operators can sometimes—say, on a muggy August day—offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production.”

The 6-2 decision in Federal Energy Regulatory Commission v. Electric Power Supply Association et al., with Justice Scalia joined by Justice Thomas dissenting, upheld the Federal Energy Regulatory Commission’s (“FERC”) Order 745, which sets the rules for demand response pricing. Order 745 requires that demand response be compensated at the full price paid to power generators – the locational marginal price (“LMP”). The Supreme Court’s decision overruled a decision by the Court of Appeals for the District of Columbia Circuit that: (1) FERC lacked authority to issue Order 745 because the Order regulates the retail market; and (2) alternatively, Order 745’s compensation scheme, paying full LMP for demand response, is arbitrary and capricious under the Administrative Procedure Act. The D.C. Circuit’s decision was overruled on both counts.

The threshold issue was whether FERC has jurisdiction to regulate demand response compensation. On that issue, the Supreme Court found that FERC’s regulation of demand response compensation is consistent with its authority to regulate wholesale market rates. FERC’s demand response compensation scheme is exclusively directed at the wholesale market. Any natural consequences of such wholesale market regulation at the retail level do not render the regulatory scheme unlawful as exceeding FERC’s jurisdiction. As the Supreme Court explained, “every aspect of FERC’s regulatory plan happens exclusively on the wholesale market and governs exclusively that market’s rules.” Moreover, FERC’s demand response compensation scheme is consistent with the Federal Power Act’s “core purposes of protecting ‘against excessive prices’ and ensuring effective transmission of electric power.”

The Supreme Court also rejected arguments that Order 745 overcompensated demand response by setting compensation for demand response at LMP. The alternative pricing methodology, supported by Order 745 opponents, would deduct the savings customers would receive from not using power from the LMP (the LMP-G (generation) formula). Instead, Order 745 will remain in effect, and demand response will continue to be compensated at the full LMP, where demand response offers satisfy FERC’s “net benefits” test, ensuring that accepted demand response offers will save consumers money.

This decision paves the way for continued investment in demand response programs, promoting system reliability and lower electricity prices by allowing demand response to offset higher-cost generators that would otherwise raise wholesale market prices. The long-awaited decision is critical to the future of demand response. As a member of the Advanced Energy Management Alliance (“AEMA”), GreeneHurlocker shares the enthusiasm of its demand response clients and the AEMA on this decision. (A copy of the AEMA’s press release is attached here.)

For questions about the Supreme Court decision or assistance with any demand response matters, please feel free to contact one of GreeneHurlocker’s energy and regulatory lawyers.

D.C. Court of Appeals Denies Stay of EPA’s Clean Power Plan

The U.S. Court of Appeals for the D.C. Circuit on Thursday declined to halt the implementation of the EPA’s Clean Power Plan (“CPP”). The CPP, which requires states to submit proposals to reduce carbon emissions from power generation facilities, was promulgated by the EPA on August 15, 2015 under Section 111(d) of the Clean Air Act. Opponents of rule, including West Virginia and 23 other states, immediately filed suit in federal court, arguing that the rule exceeded the EPA’s legal authority under Section 111(d). The group also asked the appellate court to halt the implementation of the CPP while their legal challenge is pending. The states argued that implementation of the rule would cause “irreparable harm.”

Thursday’s decision means that the rule will remain in effect while the court considers the lawsuit. The court held that the petitioners “have not satisfied the stringent requirements for a stay pending court review.” The D.C. Circuit cited a U.S. Supreme Court decision holding that injunctions will only be granted when the petitioners demonstrate a “strong likelihood of success on the merits” and when necessary to prevent “irreparable harm.” While allowing the implementation of the CPP to go forward, the D.C. Circuit ordered that the lawsuit will be heard “on an expedited basis.” Oral argument on the merits is scheduled for June 2, 2016.  State environmental agencies have until September 6, 2016 to submit a CPP compliance plan to the EPA.

If you have an interest in the issue of the EPA’s Clean Energy Plan or questions about the court’s decision, we invite you to call any of our utility regulation and energy lawyers.