Long Live the Federal Power Act's Bright Line

Abstract

This Article interprets a trio of recent Supreme Court cases that addressed jurisdictional disputes in energy markets to identify which policies respect the Federal Power Act’s (FPA’s) system of distributing jurisdiction and which do not. While judges and scholars have construed these cases as establishing that the FPA gives states and FERC “concurrent jurisdiction” over energy markets, they have failed to define what that means or provide a coherent framework for understanding when state or federal policies violate the FPA’s jurisdictional silos.

This Article provides that framework. It argues that three recent Supreme Courts cases lay the foundation for a doctrinally coherent and normatively compelling interpretation of the FPA. Specifically, these three cases do not, as scholars have maintained, reflect a doctrinal shift away from the venerable “bright line” jurisdictional division that has characterized energy markets since 1935. Those cases instead apply the bright line to the twenty-first century electricity sector, which has been transformed by technological innovations and by regulatory attempts to introduce competitive forces to the electricity sector. The FPA continues to prohibit state and federal energy regulators from interfering with matters reserved to the other’s exclusive jurisdiction. The Court has simply explained how the FPA applies to technological and economic developments that have created situations that implicate the regulatory responsibilities of state and federal energy regulators simultaneously. Rather than create regulatory gaps that would prevent energy regulators from supervising transactions over which the FPA expressly grants them jurisdiction, the Court has prohibited only those unusual policies that (a) set a rate in a market that is outside of that regulator’s sphere of jurisdiction, (b) “aim at” or “target” matters that the FPA reserves to the other sovereign, or (c) render it impossible for FERC to control matters within its recognized regulatory domain. Recognizing that the bright line is alive and well resolves the doctrinal confusion that has plagued courts and clarifies which energy policies are permissible and which are not.