1

Dear Roundtable participants,

Earlier this year I was inspired to write about a little-known provision of the Department of

Energy Organization Act of 1977. That provision allows the Secretary of Energy to propose a

rule for the Federal Energy Regulatory Commission’s expedited consideration. After years of

obscurity, the provision was invoked late last year by Energy Secretary Rick Perry in an attempt

to subsidize coal-fired power plants in wholesale energy markets. I subsequently encountered

other “entanglements” between the two agencies that have been little-studied but that have the

potential to alter the distribution of power between them—perhaps significantly.

In the past few months, the paper has grown from a focused, narrow exploration of the

relationship between the DOE and FERC into something broader. It is now ambitiously titled

“The Statutory Separation of Powers and the Politics of Energy.” I am curious to hear your

reactions to the broader idea that Congress does, and should, have a separation/balancing

framework in mind when allocating authority among agencies.

I apologize for the draft’s length. If you are not particularly interested in energy regulation I

suggest skipping Part I (which I may eventually fold into Part II in any case). You can also easily

skip the discussion of the nondelegation doctrine in Part II(A)(1).

Of course I am interested in any and all reactions, but I am especially eager for your responses to

these three questions:

1 – Did I convince you that the statutory separation of powers is a different phenomenon from

the constitutional separation of powers? And have I successfully distinguished it from the

variants suggested by Liz Magill, Neal Katyal and Jon Michaels? If not, how might I do this

more effectively (if you think it can be done at all)?

2 – Can I get away with a single, albeit hefty, case study in this paper? Or do I need to reorient

the project so that its claims are more modest?

3 – Can you think of other examples of the phenomenon I describe? I am primarily interested in

separation schemes in which entanglements are left between agencies, and in “nested” agency

scenarios like FERC and DOE in which an independent agency is officially housed within an

executive agency.

Thank you in advance for your feedback. I look forward to seeing you in Ann Arbor!

Sharon

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The Statutory Separation of Powers and the Politics of Energy

Introduction

In the mid-1970s, Congress was faced with a choice. As retribution for the United States’ support of

Israel in the Arab-Israeli war of 1973, Arab oil producers imposed an embargo on shipments to the United

States. The embargo led to widespread gasoline and electricity shortages.1 In response, Presidents Nixon,

Ford, and Carter each took steps to consolidate federal energy authority in an executive agency subject to

control by the President. The recent emergency lent urgency to these actions, which were accompanied by

the usual laundry list of justifications: the relative speed, decisiveness, and coordination of the executive

branch.2 Ultimately, however, with President Carter’s proposal for a new Department of Energy to

coordinate federal energy policy before it, Congress balked.

Congress had no desire to set up “an all pervasive, all-powerful czar of energy in this country”3

through legislation. Instead, the Department of Energy Organization Act of 1977 (DOE Act) separated

federal authority over energy between two new agencies: one an executive department, the other an

independent commission. These two agencies, the Department of Energy (DOE) and the Federal Energy

Regulatory Commission (FERC), were each granted key powers to shape and regulate federal energy

markets. Clark Byse, author of the Act’s most through commentary,4 was an advocate for stronger, more

centralized executive energy authority. “One is tempted to protest,” Byse said of the division of authority

between the DOE and FERC, “that this is a hell of a way to wage war: in the sunshine with an eviscerated

commanding general.”5 And yet Congress remained firm.

The debates on the bill were peppered with references to the well-worn concept of separation of

powers and its corollary, checks and balances. To take just one example, Senator Charles Percy (R-Ill.),

the ranking Republican on the Senate Committee on Government Operations, explained on the floor that

the legislation set up a “carefully constructed balance of power between the Secretary and [an

independent agency].”6 The DOE Act’s separation and balancing of powers was inspired by, but was not

identical to, its constitutional cousin. The constitutional separation of powers operates primarily at a

1 In the 1970s, oil-fired power plants accounted for about 20% of fossil-fired electric power generation in the

United States. That percentage declined rapidly in the wake of the oil crisis and is in the low single-digits today. See

Energy Information Agency, Competition Among Fuels for Power Generation Driven by Changes in Fuel Prices,

https://www.eia.gov/todayinenergy/detail.php?id=7090. 2 See, e.g. President Ford’s Address to the Nation on Energy Problems (May 27, 1975) (berating Congress for

“doing nothing positive to end our energy dependence” and vowing “decisive[]” action, promising to “now do what I

can do as President.”), http://www.presidency.ucsb.edu/ws/?pid=4942; President Carter’s Department of Energy

Remarks Outlining Proposed Legislation to Create the Department (Mar. 1, 1977) (emphasizing the speed and

cohesion that the new department would bring to energy policy),

http://www.presidency.ucsb.edu/ws/index.php?pid=7097. 3 123 Cong. Rec. S 7919 (daily ed. May 18, 1977) (statement of Senator Glenn). 4 Clark Byse, The Department of Energy Organization Act: Structure and Procedure, 30 ADMIN L. REV. 193,

195-96 (1978). 5 Id. at 200. Byse does not ascribe the congressional reluctance to centralized energy authority to any particular

motivation, though he proposes several. He suggests that a general distrust of the Presidency after Watergate may

have contributed to congressional uneasiness, as well as proposing that the distrust may have been of President Carter

himself, an “outsider,” and his team. Id. at 202-203. 6 123 Cong. Rec. S 7917 (daily ed. May 18, 1977) (statement of Senator Percy). In this version of the bill the

President was also permitted to veto the Board’s action if he disapproved. S. 826, 95 th Cong. § 205 (1977).

3

structural level.7 By contrast, in the DOE Act, Congress engaged in what this article calls the “statutory”

separation of powers: the division among agencies in the federal bureaucracy of authority to oversee

specific subject-matter areas (and the creation of entanglements, or checks, between them).

Legal scholars writing about delegation have focused largely on the constitutional separation of

powers and its limits on congress’s authority to create particular administrative arrangements.8 Political

scientists, by contrast, have focused more squarely on how congress exercises its discretion to delegate

within constitutional limits.9 More recently, legal commentators have tackled this subject as well, asking

both what authority Congress delegates and to whom it makes those delegations.10

What commentators have missed, however, is that horizontal distribution of statutory authority

among agencies can be motivated by a desire to separate and balance powers. Within the vast field of

discretion left after constitutional constraints are imposed, Congress is free to decide what powers to

delegate to administrative agents. It is also free to divide that authority among administrative agents in

whatever way it chooses. Congress has, at least on occasion, exercised this discretion with the ethic of

separation of powers in mind.

This Article does not argue that separating and balancing powers among agencies is the primary, or

even a dominant, motivation for Congressional delegation decisions. But it argues that it should be.

Congress should consider not only how its delegations will add to or subtract power from the three

constitutional branches of government, but how to avoid concentrations of power in single administrative

actors. The statutory separation of powers is not merely a safeguard of constitutional separation of

powers. 11 Instead, the statutory separation of powers is an independent strategy that operates within the

constitutional separation of powers’ discretionary space. It is a design principle in its own right.

7 See, e.g. Jack M. Beerman, An Inductive Understanding of Separation of Powers, 63 Admin. L. rev. 467, 473

(2011) (asserting that separation of powers analysis focuses on “various specific procedural and structural provisions

contained in the Constitution”). This is largely, though not exclusively true. Various provisions of the Constitution

authorize particular branches to take various substantive actions. Article I is most notable in this regard, as it confers

authority on Congress to make laws governing specific subject matter (including the coining of money and the

establishment of rules on naturalization and bankruptcy). U.S. Const. Art. I Sec. 8. 8 See, e.g. Aziz Z. Huq, Removal as a Political Question, 65 Stan. L. Rev. 1 (2013); Kevin M. Stack, Agency

Independence After PCAOB, 32 Cardozo L. Rev. 2391 (2011); Gillian Metzger, Privatization as Delegation, 103

Colum. L. Rev. 1367 (2003); Eric A. Posner and Adrian Vermeule, Interring the Nondelegation Doctrine, 69 U. Chi.

L. Rev. 1721 (2002); Peter L. Strauss, Was There a Baby in the Bathwater? A Comment on the Supreme Court’s

Legislative Veto Decision, 1983 Duke L.J. 789. 9 See, e.g. David Lewis, Presidents and the Politics of Agency Design: Political Insulation in the United States

Government Bureaucracy 1946-1997 (2004); Christopher R. Berry and Jacob E. Gersen, Agency Design and

Distributive Politics (2010); B. Dan Wood and John Bohte, Political Transaction Costs and the Politics of Agency

Design, 66 J. Politics 176 (2004); McNollgast, Structure and Process, Politics and Policy: Administrative

Arrangements and the Political Control of Agencies, 75 Va. L. Rev. 431 (1989); McNollGast, Administrative

Procedures as Instruments of Political Control, 3 J. L. Econ. & Org. 243 (1987). 10 See, e.g. Daniel A. Farber and Anne Joseph O’Connell, Agencies as Adversaries, 105 Cal. L. Rev. 1375 (2017);

Jody Freeman and Jim Rossi, Agency Coordination in Shared Regulatory Space, 125 Harv. L. Rev. 1131 (2012);

Jason Marisam, Duplicative Delegations, 63 Admin. L. Rev. 181 (2011) (arguing that duplicative delegation results

from blunt drafting techniques, inadvertence, and politics); Jacob E. Gersen, Overlapping and Underlapping

Jurisdiction in Administrative Law, 2006 Sup. Ct. Rev. 201. Much of this work takes as its subject the vertical

allocations of power between the federal government and the states. See, e.g. David S. Rubenstein, Administrative

Federalism as Separation of Powers, 72 Wash. & Lee L. Rev. 171 (2015). 11 See, e.g. Jessica Bulman-Pozen, Federalism as a Safeguard of the Separation of Powers, 112 Colum. L. Rev.

459 (2012).

4

The evils that the statutory separation of powers combats are related to those addressed by its

constitutional cousin: faction and tyranny. But they are confined to specific subject areas addressed by

various pieces of legislation. And statutory separation of powers also seeks to address a third problem: rapid

swings in policy that might adversely impact stakeholders.

A rich case study of the DOE and FERC, and an explanation of the separation and balancing of powers

between them, is the article’s centerpiece. Part I provides background on federal energy regulation and

exposes the idea of regulatory neutrality in this area for what it is: so much window dressing. It takes to

task, first, statutory delegations in the Federal Power Act (FPA) that do little to limit discretion or shape

substantive outcomes. It then argues that, in recent years, the myth of values-neutral “free market”

regulation has further obscured the normative choices underlying energy regulation.

Is the absence of determinacy and neutrality in federal energy regulation a problem? By one account,

yes. If we conceive of the bureaucracy as a mere tool of statutory implementation, then regulators have no

place imposing their preferences, partisan or otherwise, on our energy policy. But a more realistic account

of the role and functioning of agencies in the modern administrative state takes such influences in stride.12

One response to this reality is to encourage greater deliberation. Glen Staszewski, for example, suggests

that the proper response to the inevitability of politics in administrative law is to draw on deliberative

democratic theory.13 Energy scholars have proposed similar approaches to dealing with energy

partisanship and values pluralism.14

This Article’s approach also draws on democratic theory but is less sanguine about the potential for

deliberation and consensus. Instead, Part II proposes that Congress systematically consider separation and

balance of authorities when it delegates tasks to administrative agencies. This Part argues that the

constitutional separation of powers operates as both a constraint and as an influence on statutory design. It

operates as a constraint because it limits Congress’s choice among agency forms and power allocations. It

acts as an influence because the ethos of separation of powers does (and should) inform Congress’s

exercise of its delegatory discretion within the broad parameters set by the Constitution.

Part III presents the case study. It describes the history of the Department of Energy Organization Act

of 1977 (DOE Act) and its separation of powers between the DOE and FERC. It situates the division of

horizontal authority in historical context, explaining how the 1970s oil embargo and subsequent energy

crises shaped the Department of Energy Organization Act of 1977 and impacted its distributions of

authority between the newly created Department of Energy (DOE) and Federal Energy Regulatory

Commission (FERC). The resulting arrangement represents, either accidentally or by design, one possible

response to the relentless interest group conflict in energy policy: statutory separation of powers.

President Carter sought complete centralization of energy authority within the new Department of Energy.

Leery of an energy policy dominated by a single perspective, however, Congress insisted on the creation

of the Federal Energy Regulatory Commission to retain control over rate-setting. But it compromised,

12 Kathryn Watts has argued that agencies are susceptible to political influence and that we should embrace a form

of judicial review that rewards explicit disclosure of that influence. Kathryn A. Watts, Proposing a Place for Politics

in Arbitrary and Capricious Review, 119 YALE L.J. 2 (2009). While Watts focuses primarily on political influence

from outside the agency, the argument is equally plausible with respect to the internal policy or political commitments

of agency actors. 13 Glen Staszewski, Political Reasons, Deliberative Democracy, and Administrative Law, 97 IOWA L. REV. 849

(2012). 14 See, e.g. Shelley Welton, Grasping for Energy Democracy, 116 MICH. L. REV. 581 (2018); Hari M. Osofsky

and Jacqueline Peel, Energy Partisanship, 65 EMORY L.J. 695 (2016); Todd S. Aagaard, Energy-Environment Policy

Alignments, 90 WASH. L. REV. 1517 (2015).

5

leaving behind a series of entanglements between FERC and the DOE that recall the checks and balances

between the constitutional branches of government.

Notwithstanding the virtues of the approach, separating and balancing statutory powers is a tricky

business. Part IV emerges from the regulatory weeds to consider broader lessons from the DOE Act and

subsequent invocation of its statutory entanglements. It focuses on three areas in particular: the initial

allocation of powers, preventing lopsided aggrandizement, and adjusting and adapting power allocations

over time. In considering lopsided aggrandizement, this Part argues that certain types of separation and

balance, notably those that involve an independent agency “nested” within an executive department, are

particularly unstable. These instabilities and the tendency of executive agencies to read statutory

authorities expansively are particularly evident in energy regulation today. After lying virtually dormant

for many years, the entanglements Congress created between the DOE and FERC now threaten to undo

the careful balance it envisioned.

I. Part I – The Politics of Energy

A. Energy Faction

When it comes to energy policy, we are a nation divided. Polling shows that a majority of

Americans increasingly favor the development of alternative resources such as wind and solar to the

production of fossil fuels like coal, oil, and gas.15 Similarly, a majority prioritizes environmental protection

over energy production where the two conflict.16 Notwithstanding these clear trends, however, outcomes

are different when results are analyzed by party. While 81% of Democrats favor alternative to fossil fuel

sources of energy, only 45% of Republicans agree.17 And as recently as 2016, when asked whether stricter

environmental laws and regulations cost too many jobs and hurt the economy, 58% of Republicans said yes

while only 17% of Democrats agreed.18 Of course, our energy politics do not always align with party

membership. There are lines of fracture between industrial sectors, between industry and consumers, and

between areas of the country (among other divisions). On each side of these divides are people who feel

strongly that their position is correct and that their opponents are, at best, misguided.

Of course, disagreements, and even polarization, exist across the policy spectrum. But energy

polarization can be particularly virulent. For one thing, there is a lot at stake in energy decisions. Energy

underpins modern society, and few in America could imagine enduring the sustained or even sporadic

blackouts experienced in other countries (or even U.S. territories).19 Energy extraction, transportation,

production and use also create significant externalities both locally and globally. No matter what your

15 Gallup 2017; Pew 2016. 16 Gallup 2017; note that this has been true since at least 2002, with two brief moments in 2010 and 2011 where

the balance shifted slightly in favor of energy production. Percentages in 2018 are 59% who prioritize environmental

protection to 34% who prioritize energy production. 17 Pew 2017, http://www.pewinternet.org/2017/05/16/public-divides-over-environmental-regulation-and-energy-

policy/. The divisions are even more stark when party preference is subdivided according to whether respondents are

more conservative or more liberal Democrats or Republicans, with only 33% of conservative Republicans prioritizing

the development of alternative resources as compared with 88% of liberal Democrats. Id. 18 Pew 2016, http://www.pewresearch.org/fact-tank/2016/12/14/most-americans-favor-stricter-environmental-

laws-and-regulations/. 19 After Hurricanes Maria and Irma hit the island last year, Puerto Rico’s 1.5 million electricity customers were

without power for months. In April of this year, Puerto Rico experienced another island-wide blackout for several

days. James Wagner and Frances Robles, Puerto Rico is Once Again Hit by an Islandwide Blackout, N.Y. Times (Apr.

18, 2018).

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policy priorities, be they health, welfare, or economic prosperity, there is a good chance that the thing you

care about is related to energy policy.

Second, various fuels power not only our electricity grid but also our vehicles and industrial processes.20

Our choices among fuels come with tradeoffs and negative externalities are distributed differently

depending on the fuel type.21 Where electricity is concerned, for example, the expense of producing a

megawatt (MW) of power varies by fuel type. Power from new nuclear and biomass plants is considerably

more expensive on a capacity-weighted average than is power from new gas plants. Meanwhile, wind and

solar are rapidly catching up to and even, in some areas, eclipsing new gas facilities in terms of cost.22

Individuals have different tolerances for rising energy prices, and are thus more or less concerned with the

price of electricity and fuel.23

Different fuel sources also have significantly different impacts on human health and on the natural

environment. While wind and solar plants do not produce any pollution during their operation, coal plants

emit significant quantities of toxic air pollutants and greenhouse gases. Gas plants fall between these two

extremes, emitting fewer greenhouse gases and toxic pollutants than coal plants but more than renewable

facilities.24 As the statistics cited earlier demonstrate, individuals place different emphases on health and

environmental protection as compared with energy production. This is especially true when it comes to

health and environmental effects whose mechanisms are not universally accepted, including, especially,

climate change.

Finally, fuel priorities will impact the economies of particular sectors in the economy and particular

geographic communities. Each major fuel sector has its own political constituency.25 Attention has been

focused recently on the plight of coal communities in Appalachia and in western states such as Wyoming

and Colorado.26 Meanwhile, new political constituencies are forming around renewable generation

companies.27 Policies that encourage or discourage various fuel types impact not only the companies that

have invested in those fuel types: they impact the local communities whose livelihoods depend on those

companies.

20 https://www.eia.gov/energyexplained/?page=us_energy_home 21 The German and Dutch governments have employed a “values triangle” of “availability, affordability and

sustainability” that must be kept in balance. This has been dubbed the “trilemma” of energy policy. Edens at 11. 22 https://www.eia.gov/outlooks/archive/aeo17/pdf/electricity_generation.pdf. 23 See Morton B. Berman, Morlie Hammer Graubard and Dennis P. Tihansky, The Impact of Electricity Price

Increases on Income Groups, Rand Report (1972). 24 See, e.g. Lu Chen, Shelie A. Miller, and Brian R. Ellis, Comparative Human Toxicity Impact of Electricity

Produced from Shale Gas and Coal,51 Environ. Sci. Technol. 13018 (2017) (finding the human toxicity impact of

electricity produced from shale gas to be lower than the impacts from electricity produced from coal). Also note

methane leaks from production activities. 25 The natural gas sector was criticized for being insufficiently active in the drafting of the Waxman-Markey bill

that would have established a federal cap-and-trade system for carbon emissions. Since that time, however, the sector’s

political efforts have become more savvy. See, e.g. Peter Overby, With Little Clout, Natural Gas Lobby Strikes Out,

NPR (Sept. 24, 2009) (explaining that Waxman-Markey had incentives for coal but not natural gas because the natural

gas industry was slow to develop sophisticated lobbying in the wake of the boom in shale gas production). 26 See, e.g., Christina Simeone et al, Reimagining Pennsylvania’s Coal Communities: Stakeholder Perspectives

and Strategies for Economic Revitalization (Apr. 24, 2018), https://kleinmanenergy.upenn.edu/paper/reimagining-

pennsylvanias-coal-communities; 27 See, e.g. Leah Krauss, Solar World: Solar gets political, UPI (Jan. 18, 2007) (describing the creation of the solar

industry’s first political action committee and citing the Solar Energy Industry Association’s director of public affairs

for the proposition that the industry “is maturing as a political constituency and as a power player in Washington.”),

https://www.upi.com/Solar-World-Solar-gets-political/79881169164896/.

7

Of course, energy pluralism is one thing: a diversity of ideas, viewpoints, and even values can be

beneficial.28 When pluralism becomes polarization, however, productive debate can suffer and policies can

drift toward the extremes. Polarization may be driven from the top or bottom and is likely the product of

some combination of structural political features, such as gerrymandering, as well as shift in public views

caused by factors such as growing inequality.29 Political elites contribute to polarization by exaggerating

the trade-offs and playing on peoples’ fears.30 This is especially easy to do in an area as complex as energy.

For example, campaign-like advertising directed at the public and lawmakers and promoting “clean coal,”

which relied on what one commentator called “strategically incomplete” information, was instrumental in

producing tax subsidies for coal in the Energy Policy Act of 2005.31 While there is no such thing as truly

“clean” coal, since coal combustion, even with advanced controls, releases a variety of pollutants into the

environment, campaigns such as this one can easily mislead voters not familiar with the relevant

technology.32

B. The Myth of Impartial Administration

One possible response to polarization in energy policy is simply to say that while such polarization

might affect legislative policy, most energy policy is actually produced by regulators whose impartiality

and expertise guards against extreme outcomes. In other words, energy laws and regulatory institutions

might be seen as a bulwark of rationality in the face of energy partisanship. Clear laws, the logic goes, can

ensure that legislative choices are implemented without bias. Expert regulators can exercise their

discretion to select the “best” or “most rational” choice among residual options.

No one really believes this any more.33 Robert Hale, a prominent legal realist and one of the early

authorities on public utility regulation in the United States, argued persuasively in the first half of the

twentieth century that law, including the law governing energy utilities, is both indeterminate and

inherently coercive.34 According to Hale, therefore, regulatory arrangements do little more than allocate

entitlements among various groups in society. Even a concept as apparently concrete as the “physical

value” of utility assets, Hale argued, depends on the regulatory environment. Utility regulators are thus

28 John Stuart Mill; Isaiah Berlin; Galston; Popper. 29 See, e.g. John Voorhis, Nolan McCarthy and Boris Shor, Unequal Incomes, Ideology and Gridlock: How Rising

Inequality Increases Political Polarization, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2649215; McCarty et

al; Duca. 30 See Morris P. Fiorina and Samuel J. Abrams, Political Polarization in the American Public, 11 ANN. REV. POLI.

SCI. 563, 563-64 (describing growing elite polarization in American politics). 31 James S. Fishkin, Manipulation and Democratic Theory in Wayne Le Cheminant and John M. Parrish,

Manipulating Democracy: Democratic Theory, Political Psychology, and Mass Media 32 (2011),

http://cdd.stanford.edu/mm/2011/fishkin-manipulation-and-democratic-theory.pdf. 32 While definitions vary, “clean coal” typically refers to coal combustion that captures and sells or stores carbon

dioxide rather than releasing it into the atmosphere. It also frequently involves the use of efficiency measures or

scrubbers and other technologies that reduce the amount of pollutants released per unit of energy produced. See, e.g.

Rocky Mountain Coal Mining Institute, Clean Coal Technology, http://www.rmcmi.org/education/clean-coal-

technology#.WvnICIgvyUk. 33 See Richard Stewart, The Reformation of American Administrative Law, 88 HARV. L. REV. 1667, 1675 (1975)

(debunking the idea of agencies as mere “transmission belt[s]” putting legislative mandates into practice without the

exercise of much discretion). 34 I adopt here Mark Tushnet’s definition of legal indeterminacy, which proposes that “a proposition of law . . . is

indeterminate if the materials of legal analysis—the accepted sources of law and the accepted methods of working

with those sources such as deduction and analogy—are insufficient to resolve the question, “Is this proposition or its

denial a correct statement of the law?”” Mark Tushnet, Defending the Indeterminacy Thesis, 16 QUINNIPIAC L.R. 339,

341 (1996); Hale.

8

“forced by necessity to supply [their] own policies” to guide application of statutory standards.35 Hale’s

critiques have endured well, with Richard Epstein, one of the laissez faire economy’s staunchest

defenders, reluctantly acknowledging at the turn of the 21st century that Hale “has a low-key durability

that ranks him as one of the most formidable and persistent foes of laissez faire . . . .”36

Periodically, however, faith in the determinacy and neutrality of the regulatory project re-calcifies. In

energy law and regulation today, that faith seems to have collected into two channels: faith in the

determinacy of statutory edicts and faith in the neutrality of markets. A closer examination of each reveals

that energy regulation is, as it ever was, influenced in no small part by the subjective extra-legal

principles of its decision-makers.37

The operative language of energy statutes is almost maddeningly indeterminate. The broad standards

they offer to guide regulators' choices have little, if any, inherent content.38 The statutory language

governing utility ratemaking is a prime example. The Federal Power Act and Natural Gas Act require

only that rates and practices subject to FERC’s jurisdiction be "just and reasonable" and "not unduly

discriminatory or preferential."39 The courts interpret the former as requiring only that ratemaking

outcomes balance utility and consumer interests in some way.40 The latter is heavily dependent on

subjective assessments of commensurability that can be used to support divergent outcomes. Ultimately,

therefore, FERC can use this supposedly neutral statutory standard to justify decisions that are at least in

part the result of (conscious or unconscious) policymaker preference. This is not to say that facts and

evidence play no role in ratemaking. But, as Adrian Vermeule has put it, “[w]hen agencies set rates for

regulated utilities, the rate that will give a reasonable return is a question of policy sitting atop several

questions of fact.”41

To understand the role of policy in rate regulation, consider FERC Order 745, in which the

Commission dictated that demand response providers be paid the same price as generators (power plants)

in wholesale energy markets because any other approach would be discriminatory.42 Demand response

resources are individual customers or aggregations of customers who commit not to consume electricity

when they receive a signal that the electricity grid is under strain. When Order 745 proposed pricing

parity for these resources, generators objected. These resources, the generators argued, are not similarly

35 Robert L. Hale, Commissions, Rates, and Policies, 53 HARV. L. REV. 103, 1142 (1940). 36 Richard A. Epstein, The Assault that Failed: The Progressive Critique of Laissez Faire, 97 MICH. L. REV. 1697,

1698 (1999). While Epstein disagrees with Hale’s basic proposition that the laissez-faire economy in fact picks

winners and losers based on the political preferences of its designers and managers, he does admit “the widespread

support for Hale’s position, which has also been invoked by such distinguished scholars as Robert Gordon, Morton

Horwitz, Frank Michelman, Garry Peller, and Cass Sunstein.” Id. at 1698 n. 9. 37 My argument is not one of radical indeterminacy. FERC alone decides thousands of matters per year, most of

which are “garden variety” proceedings delegated to staff for resolution. See Sharon B. Jacobs, Administrative

Dissents, 59 WM. & MARY L. REV. 541, 558 (2017). These include, for example, review of required utility filings,

facility re-licensings, and requests for extension of time in various regulatory proceedings. 38 Notwithstanding its generality, the Supreme Court has spoken approvingly of the “just and reasonable” standard

in the nondelegation context. See Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 398 (1940) (noting that the

“just and reasonable” standard was sufficient to guide administrative rate-making). 39 16 U.S.C. § 824d-e. 40 FPC v. Hope Natural Gas, 320 U.S. 591, 602-603 (1944) (holding that review should focus on the total effect

of the rate rather than specific ratemaking methodologies). 41 Adrian Vermeule, THE PARLIAMENT OF THE EXPERTS, 58 DUKE L.J. 2231, 2238 (2009). 42 Federal Energy Regulatory Commission, Demand Response Compensation in Organized Wholesale Energy

Markets (Order No. 745), 134 FERC 61,187, ¶ 119 (2011). For another example, see FERC’s order on storage resource

access to wholesale energy markets. FERC, Electric Storage Participation in Markets Operated by Regional

Transmission Organizations and Independent System Operators, 162 FERC 61,127 (Feb. 15, 2018).

9

situated to the generators themselves, and thus offering them a different price would not unduly

discriminate.43 Commissioner James Moeller, dissenting from Order 745, agreed. He found that the

alleged “parity” in pricing was in fact a “preferential compensation scheme.”44 A megawatt of power

produced, Commissioner Moeller argued, was not equivalent to a megawatt of power not consumed.45

Ultimately, whether one system actor is deemed to be “similarly situated” to another actor depends,

among other things, on context. Looking only at the benefits resources provide to markets, as the

commission majority did, demand response resources do appear to be similarly situated to generators.

Including the additional factor of purchase decisions in retail markets makes them appear less similar.

Including still more factors might differentiate them further. No resources are identical. Therefore making

decisions about undue discrimination requires making decisions about what factors count. And that

decision is an inherently policy-laden enterprise.

In modern energy regulation, the competitive market offers additional illusions of impartiality. But

advocates of competitive markets in energy have sold us a bill of goods. It is possible, they tell us, to

leave all decisions about fuel choice, and by extension decisions about which values matter most in

energy policy, to Adam Smith’s invisible hand.46 The invisible hand thesis has been challenged,47 and its

first principles attacked, but that does not deter energy market enthusiasts.48 While FERC commissioners

disagree about many things,49 moreover, they are united in their support of competitive wholesale energy

markets.

The basic approach to pricing in most wholesale energy markets does appear to be fuel-neutral.

Simplifying somewhat, after determining how much electricity is required to satisfy customer demand in

its territory, the market operator holds a supply auction for that electricity. Electric generators (or demand

resources) then submit bids which are accepted in order from lowest to highest cost. The most expensive

bid to be accepted (or to “clear” the market) sets the price for all resources whose bids are accepted. This

becomes known as the “market clearing price.”50

This pricing mechanism seems not to discriminate by generation type. But design choices in

wholesale energy markets still put a thumb on the scale for certain types of generation. Choices made

about how prices are set and how bids are selected determine which generation resources will be

competitive and which will be uneconomic. In Order 745, FERC found that removing barriers to demand

response (by requiring that they be paid the market clearing price for their services) “facilitates greater

competition, with the markets themselves determining the appropriate mix of resources.”51 But in this

scenario it was hardly “the markets” determining the ideal resource mix. It was FERC deciding that

43 Opposition to Petition for Certiorari, FERC v. EPSA, 535 U.S. 1 (2002) (Nos. 14-840, 14-841), at 12. 44 FERC Order 745 at *35. 45 The argument is somewhat subtle. It hinges on the fact that demand response resources are being “compensated”

twice for their participation in wholesale markets: once when they choose not to consume electricity, and therefore do

not have to pay the retail rate for that electricity, and once when they receive compensation from the market. Id.

Interestingly, Commissioner Moeller also found that another aspect of Order 745, a requirement that the resource

demonstrate a price-lowering effect on the market by passing a net benefits test, unlawfully discriminated against

demand response resources. Id. 46 Adam Smith, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS IV.2.9 (1776). 47 Jonathan Schlefer, There Is No Invisible Hand, HARV. BUS. REV. (Apr. 10, 2012),

https://hbr.org/2012/04/there-is-no-invisible-hand 48 Smith himself was a less enthusiastic proponent of a pure “invisible hand” thesis than is often suggested. See

Stiglitz on Smith; https://www.newyorker.com/magazine/2010/10/18/market-man. 49 See Jacobs, Administrative Dissents, supra note __. 50 See PJM Learning Center, https://learn.pjm.com/electricity-basics/market-for-electricity.aspx. 51 Order 745 at P 59.

10

demand response was comparable in all the right ways to generation, and thus making it likely that

traditional generators’ share of the market would decline in favor of demand response resources.52

For another example, consider energy market operator PJM’s recent proposed revisions to its market

rules. PJM concluded that the prices in its market no longer “accurately reflect the true incremental cost

of serving load.”53 Thus, it proposed to move away from the marginal pricing system described above to a

system in which inflexible units (typically coal or nuclear plants) set the market clearing price.54 PJM’s

proposal makes clear that “the market,” in their opinion, should prioritize reliability over other values

such as carbon emissions reduction.55

Another development from PJM demonstrates how policy preferences shape market rules. FERC

must approve market rules from PJM and other regional market operators around the country under the

“just and reasonable” standard. PJM recently submitted two competing versions of revisions to another of

the markets it oversees, an unusual move reflecting deep division among its stakeholders. PJM argued

that both versions “represent a distinct, just and reasonable policy alternative” to address underlying

concerns with existing market mechanisms.56 Both versions provide more support for traditional power

plants including coal, gas, and nuclear in the face of competition from renewable resources, but they

would offer different levels of support and thus produce different fuel mixes. In addition, many of PJM’s

stakeholders (including utilities, generators and customers) preferred to maintain the status quo.57 While it

would be tempting to think that FERC regulators can resolve this dispute in the “correct” way under

existing law, selection among the various options, all of which likely satisfy the “just and reasonable”

standard, will inevitably come down to policy preferences rather than what the law “requires.”

C. The Dangers of Energy Factionalism and the Specter of Energy Tyranny

Because our energy politics are fractured, and because energy law and energy institutions reflect rather

than resolve these differences, we must come to terms with the consequences of division. President

Washington enumerated two of the most pointed dangers of faction in his farewell address. First, he

cautioned that“[t]he alternate domination of one faction over another . . . is itself a frightful despotism.”58

Although he did not elaborate, we can fill in the gaps. The reversal and re-reversal of policies on an electoral

schedule is both jarring and expensive. Second, Washington warned, partisanship can also lead “at length

to a more formal and permanent despotism . . . [S]ooner or later the chief of some prevailing faction, more

able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on

52 I do not mean to argue that this was the wrong decision by any stretch. I am strongly supportive of demand

resources and a shift from consumption to conservation, especially at times of peak energy usage. My point is merely

that the choice was, at bottom, a policy choice rather than one based on what “the law” or “the markets” required. 53 PJM Interconnection, Proposed Enhancements to Energy Price Formation (Nov. 15, 2017),

http://www.pjm.com/-/media/library/reports-notices/special-reports/20171115-proposed-enhancements-to-energy-

price-formation.ashx. 54 PJM anticipates that this change will result in price increases of 2-5 percent. http://www.pjm.com/-

/media/library/reports-notices/special-reports/20171115-proposed-enhancements-to-energy-price-formation.ashx. 55 Other regulators might make a different choice. A 2009 report by the UK Committee on Climate Change

questioned whether the UK’s own competitive energy markets could achieve target greenhouse-gas reductions and

recommended a return to comprehensive government regulation. https://www.economist.com/node/14649058. 56 Andrew L. Ott, President and CEO of PJM, Letter to Members and Stakeholders of PJM (Feb. 16, 2018),

http://www.pjm.com/-/media/about-pjm/who-we-are/public-disclosures/20180216-letter-from-pjm-president-and-

ceo-on-behalf-of-the-board-of-managers-regarding-capacity-market-reforms.ashx?la=en. 57 https://www.utilitydive.com/news/pjm-board-sends-competing-capacity-market-reforms-to-ferc/517318/. 58 Washington’s Farewell Address (1796) (referring to the dangers of the party system).

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the ruins of public liberty.”59 Though these comments post-date the drafting of the Constitution, they

encapsulate the framers’ fears.

Energy factionalism, unchecked, can be problematic in both of the ways that Washington described.

First, it threatens dramatic swings in policy with their attendant disruption. Such disruptions make the long-

term, capital-intensive investments required in the energy sector difficult.60 For a symbolic example,

consider the White House solar panels. President Jimmy Carter installed 32 solar thermal panels on the

building’s roof in 1979 to heat water.61 But in 1986, President Ronald Reagan had the panels removed

during a roof resurfacing.62 President George W. Bush quietly installed a solar electric system on the White

House grounds in 2002.63 And in 2014, nearly three decades after President Carter’s installation, President

Barack Obama returned solar panels to the White House roof.64 More substantively, these gestures mirrored

waxing and waning legislative and regulatory support for the solar industry. When President Reagan

removed the solar panels, his administration was also eliminating tax incentives for the wind and solar

industries and proposing large funding cuts for the Department of Energy.65 After several years of strong

growth, the solar industry is again facing uncertainty after the Trump Administration’s decision to impose

tariffs on solar panel components from China. More broadly, 39% of electric utility executives in a recent

survey found that regulatory uncertainty across energy industries was the single greatest challenge

associated with our changing fuel mix.66

Energy factionalism also threatens a version of energy tyranny in which the interests of the few are

given priority over public welfare.67 While the framers were primarily concerned with the risk of legislative

dominance,68 today the most significant threat of tyranny comes from the presidency, especially when it

comes to the regulatory project.69 Because we have a single rather than a plural executive,70 presidential

elections are a blunt tool for assessing policy preference. This, combined with the electoral system’s

59 Washington’s Farewell Address (1796). 60 See, e.g. James W. Coleman, Energy Market and Policy Revolutions: Regulatory Process and the Cost of

Capital in Klaus Mathis & Bruce Huber, eds., ENERGY LAW AND ECONOMICS (2018) (noting the disruption to capital

investment resulting from regulatory delay and uncertainty). See also Amy L. Stein, Reconsidering Regulatory

Uncertainty: Making a Case for Energy Storage, 41 FLA. ST. U. L. REV. 697 (2014) (distinguishing harmful from

unproblematic uncertainty that can be more easily resolved). 61 See David Biello, Where Did the Carter White House’s Solar Panels Go? Scientific American (Aug. 6, 2010). 62 Id. 63 See Andy Murdock, The Strange, Tumultuous Life of Solar Power at the White House, University of California

Carbon Neutrality Initiative (Apr. 18, 2017), https://www.universityofcalifornia.edu/longform/strange-tumultuous-

life-solar-power-white-house. 64 Laura Barron-Lopez, Obama Reverses Reagan, Puts Solar Panels on White House Roof, The Hill (May 9,

2014), http://thehill.com/policy/energy-environment/205683-solar-panels-return-to-white-house-roof-after-three-

decades. 65 See Biello, supra note __. 66 UtilityDive, 2018 State of the Electric Utility 7, https://content.industrydive.com/state-of-the-electric-utility-

2018/. 67 For a more literary framing of this problem, see John Wilson Croker, ed., The Works of Alexander Pope, Vol.

X.Thoughts on Various Subjects 550 (“Party is the madness of many, for the gain of a few.”). 68 See, e.g. James T. Barry III, The Council of Revision and the Limits of Judicial Power, 249, n.64 (noting the

Framers’ “fear of overly powerful legislatures.”). The presidential veto and division of the legislature into two houses

were designed to answer the risk of a dominant legislature. 69 See, e.g. Josh Blackman, Presidential Maladministration, 2018 U. ILL. L. REV. 397; Neal Kumar Katyal,

Internal Separation of Powers; Checking Today’s Most Dangerous Branch From Within, 115 YALE L.J. 2314 (2006). 70 For an argument that this was not inevitable, and an exploration of the merits of a plural executive, see

Christopher R. Berry and Jacob E. Gersen, The Unbundled Executive, 75 U. CHI. L. REV. 1385 (2008).

12

quirks,71 explains why our current President favors fossil fuel extraction while a majority of Americans

prefer the development of renewable energy sources.72 Whether the President’s enthusiasm for fossil fuel

is based on sincerely held beliefs or is in service of political ends, the fight for fuel dominance is currently

playing out at the sub-constitutional levels: administrative agencies are a key battleground for energy

interests and it is here that the danger of factional dominance is the greatest.

D. Ways Forward

If energy policy neutrality is a myth, and if what we are left with are interest groups battling it out on

a regulatory playing field, and if those disputes can produce harmful policy shifts and risk descending

into a kind of energy tyranny, what, if anything, is to be done? Commentators have suggested a variety of

solutions that draw on democratic traditions. These solutions fall primarily into two related categories:

pursuing deliberation and consensus and engaging workarounds.

Some commentators emphasize deliberation and consensus as the most promising paths forward.

Shelley Welton describes approaches to citizen participation in energy debates.73 Kristen van de

Beizenbos has explored the idea of community contracts between energy companies and members of the

public.74 Rob Verchick recommends strengthening “formal and informal relationships among public and

private actors at various levels of jurisdictional boundaries and across many sectors” in order to

encourage consensus.75

A related approach is to employ workarounds: to focus conversations on areas where productive

discussion is most likely. Hari Osofsky and Jacqueline Peel propose that we shift energy conversations to

areas where agreement is more likely, such as economic development and disaster resilience.76 Similarly,

Robert Verchick argues that if environmental advocates refocused their efforts from climate change

mitigation to adaptation, current impasses might be circumvented.77 Osofsky and Peel also suggest that

activity at the state and local level may be more productive than at the federal level where partisan

gridlock appears strongest.78 On a related question, Todd Aagaard proposes that energy and

environmental advocates focus on areas where their interests converge.79

This article takes a different approach. As Madison recognized with respect to party politics more

generally, energy factionalism may be problematic but it is also inevitable. It is a feature of a free society,

not a bug. Instead of (or in addition to) trying to mitigate factionalism, therefore, we should adapt our

institutions to it. Even if our goal is to achieve consensus, unless and until deliberative democracy has

unraveled our political knots, backstops are needed to ensure that federal energy policy does not degenerate

into a high-stakes game of ping-pong in which whichever political faction happens to control the energy

policymaking apparatus can impose its vision of the good on energy markets without restraint. The next

71 See Thomas H. Neale, The Electoral College: How it Works in Contemporary Presidential Elections, CRS

Report (May 15, 2017). 72 See Brian Kennedy, Two Thirds of Americans Give Priority to Developing Alternative Energy Over Fossil

Fuels, Pew Research Center (Jan. 23, 2017) (reporting poll that found that 65% of respondents favored the

development of alternative energy sources like wind, solar and geothermal over the development of fossil fuel sources

like coal, oil and gas while only 27% would prioritize the latter). 73 Shelley Welton, Grasping for Energy Democracy, 116 Mich. L. Rev. 581 (2018). 74 See Kristen van de Biezenbos, Contracted Fracking, 92 Tul. L. Rev. 587 (2018). 75 Verchick at 1012. 76 Hari M. Osofsky and Jacqueline Peel, 65 Emory L.J. 695, 702 (2016). 77 Robert R.M. Verchick, Culture, Cognition, and Climate, 2016 U. Ill. L. Rev. 969 (2016). 78 Verchick at __. 79 Todd Aagard, Energy-Environment Policy Alignments, 90 Wash. L. Rev. 1517 (2015).

13

Part therefore eschews consensus and workarounds in favor of a third approach also inspired by our

democracy: the constrained adversarialism of separation, checks and balances. These principles are

enshrined in our structural constitution. But another layer of the separation of powers—this one at the

statutory level—can provide additional protection from the problems of energy factionalism.

II. Part II – The Statutory Separation of Powers

As discussed in the previous Part, the problems with energy partisanship are remarkably similar to

those of faction as articulated by the Constitution’s framers. A faction, as defined by Madison, is a group

of citizens “who are united and actuated by some common impulse of passion, or of interest, adverse to

the rights of other citizens, or to the permanent and aggregate interests of the community.”80 Madison

bemoaned various effects of faction and entrenched views on the political process.81 And yet Madison

was not out to change human nature. Faction, and the political parties associated with some of its

iterations, Madison found inevitable. Instead of seeking to eradicate them, he sought to control them,

especially within government. His solution, borrowed from Locke and Montesquieu, was separation and

balance of powers within government.

“The separation of powers” is an idea that has assumed a prominent, if unstable, identity in American

legal discourse. The idea has deep historical roots.82 It is also the core design principle of our

constitutional system of government.83 By dividing power between the legislature, executive, and

judiciary, the founders sought to prevent any one branch from amassing sufficient authority to govern

without constraint.84

A key aspect of our particular brand of separation of powers is that it involves not just separation but

checks and balance. 85 Justice Jackson emphasized this feature of our constitutional structure in the

80 James Madison, Federalist 10. 81 Madison wrote with concern, for example, that public measures are “rarely investigated with that spirit of

moderation which is essential to a just estimate of their real tendency to advance or obstruct the public good.”

Federalist 37. Learned Hand later defined “the spirit of moderation” as a “temper which does not press a partisan

advantage to the bitter end, which can understand and will respect the other side,” and which “feels a unity between

all citizens . . . and . . . recognizes their common fate and their common aspirations . . . .” Learned Hand, The Spirit

of Liberty 125 (1959). 82 See BARON DE MONTESQUIEU, THE SPIRIT OF THE LAWS bk. XI ch. iv (1748) (articulating a theory of functional

separation of powers in government so that power may check power). Montesquieu’s theory was based on observations

about the English constitution, and was a rejection of Thomas Hobbes’ preference for consolidation of power in the

executive. See Thomas Hobbes, Leviathan. See also John Locke, Second Treatise of Government § 144 (1689) (“thus

the Legislative and the Executive Power come often to be separated”). [Also investigate: Nedham, Bolingbroke,

Blackstone, Rousseau, Siyés] 83 See James Madison, Federalist No. 47 (“No political truth is certainly of greater intrinsic value, or is stamped

with the authority of more enlightened patrons of liberty” than “the political maxim that the legislative, executive, and

judiciary departments ought to be separate and distinct.”). Jeremy Waldron opines that the separation of powers was

“accepted among the founding generation as an established touchstone of constitutional legitimacy.” Jeremy Waldron,

Separation of Powers in Thought and Practice?, 54 B.C. L. Rev. 433, 437 (2013) 84 Federalist No. 47 (“The accumulation of all powers, legislative, executive, and judiciary, in the same hands . .

. may justly be pronounced the very definition of tyranny.”). See also Myers v. U.S., 272 U.S. 52, 293 (1926)

(Brandeis, J., dissenting) (“The doctrine of the separation of powers was adopted . . . not to avoid friction, but, by

means of the inevitable friction incident to the distribution of the governmental powers among three departments, to

save the people from autocracy.”). 85 See, e.g. M. Elizabeth Magill, The Real Separation in Separation of Powers Law, 86 VA. L. REV. 1127, 1129-

30 (2000) (emphasizing the “maintenance of tension and competition among government departments” as crucial to

the constitutional scheme); Philip B. Kurland, The Rise and Fall of the ‘Doctrine’ of Separation of Powers, 85 Mich.

L. Rev. 592, 593 (noting that the constitution is based not just on a notion of separation of powers but of checks and

14

Youngstown Steel case, noting that the Constitution “enjoins upon its branches separateness but

interdependence, autonomy but reciprocity.”86 Madison wrote that unless the three branches “be so far

connected and blended as to give to each a constitutional control over the others,” separation crucial to a

free government could not be maintained.87 In addition, checks “act like a brake.”88 The idea of balance,

too, contributes more to the pacing of decisions than to their process. If authority is equally distributed

among actors, either can effectively act as a veto. Thus Ferdinand Hermens defines “balance” in this

context as “deadlock.”89

The “separation of powers” idea is unstable as an interpretive matter because it is broad enough to

include a variety of governmental arrangements. It is also unstable in its implementation. Power

distributions, once established, tend to shift over time. Unsurprisingly, therefore, federal separation of

powers in the United States looks very different today than it once did.90 Perhaps most strikingly, the

growth of the administrative bureaucracy has upset the original tripartite structure.91 Jon Michaels

suggests another significant evolution: that private actors wielding government authority should

themselves be understood as a pole of institutional power requiring their own counterweights.92

Although the idea of the separation of powers is most frequently invoked in the context of

constitutional structure, commentators have increasingly applied its logic to other government

balances). Balance between government authorities is not a necessary feature of separated systems generally. See,

e.g., Jeremy Waldron, supra note __ (distinguishing the principle of checks and balances from the principle of

separation of powers). However, it was a system involving both separation and balance that the framers admired.

Federalist No. 51 (adding to the idea of separation of powers the idea that there must be sufficient checks and

balances between the departments). Therefore, this article understands our separation of powers as including a

principle of checks and balances. See also Benjamin Ewing & Douglas Kysar, Prods and Pleas: Limited

Government in an Era of Unlimited Harm, 121 YALE L.J. 350, 411 (2011) Ewing and Kysar at 411 ("As many of the

Founders undoubtedly recognized, pure separation of powers is as impractical as it is undesirable, given the

impossibility of self-executing separation-of-powers principles."). 86 Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635, 72 S.Ct. 863, 870, 96 L.Ed. 1153 (1952) (Jackson,

J., concurring). 87 James Madison, Federalist No. 48. 88 Ferdinand A. Hermens, The Choice of the Framers, 11 Presidential Stud. Q. 9, 17 (1981). Checks may also

require that proponents of change justify their decisions either publicly or to another actor within government. Id. 89 Id. Of course, as Virginia Nourse has observed, the framers “did not spend most of their time debating precise

terminology.” V. F. Nourse, Toward A New Constitutional Anatomy, 56 STAN. L. REV. 835, 846–47 (2004). Instead,

“the debates were dominated by general constitutive or structural questions . . . [They were] filled . . . with questions

about rule by the few and the many, dependence and independence of political actors, and, inevitably, representation.”

Id. 90 Adaptations of the theory were necessary right from the beginning. See Gerhard Casper, An Essay in Separation

of Powers: Some Early Versions and Practices, 30 Wm. & Mary L. Rev. 211 (1989). 91 Some argue that the effect of bureaucratic expansion is to inflate the position of the executive vis-à-vis the other

branches. See Gary Lawson, The Rise and Rise of the Administrative State, 107 Harv. L. Rev. 1231, 1248 (1994)

(bemoaning the administrative state’s “destruction of [the] principle of separation of powers”). Cynthia Farina has

argued that the question of judicial deference to agency interpretation of statutes should be understood in a broader

separation of powers framework. Cynthia R. Farina, Statutory Interpretation and the Balance of Power in the

Administrative State, 89 Colum. L. Rev. 452 (1989). 92 Jon D. Michaels, An Enduring, Evolving Separation of Powers, 115 Colum. L. Rev. 515 (2015). We may never

agree on the number of actors that play some role in maintaining a more functional separation of governmental powers,

or at least those that serve some checking function. Nor do we need to. When put under a microscope, each of the

government “actors” inevitably breaks down into component parts. But one need not identify every last check to have

a larger sense of the forces at work. Michaels, for example, presents a compelling argument about rivalries within the

administrative state while acknowledging that his depiction is “an admittedly rosy and stylized one.” Jon D. Michaels,

Of Constitutional Custodians and Regulatory Rivals: An Account of the Old and New Separation of Powers at 241.

15

arrangements as well.93 Indeed, given what Jeremy Waldron has called the separation of powers’ status as

“an important principle of our political theory,”94 it would be surprising if the idea’s impact were not felt

in sub-constitutional domains. Neal Katyal, for example, suggests that we imagine an “internal separation

of powers” within the executive branch.95 Katyal argues that the executive branch has grown more

powerful than the framers intended, thereby disrupting the balance between the legislative, executive, and

judicial branches of government thought essential to preventing tyranny. To compensate, he recommends

the adoption of “second-best” mechanisms including robust civil service protections (so that civil servants

can check political appointees).96 Jon Michaels expands on this idea in his argument for an

“administrative separation of powers” between agency political leadership, civil servants, and civil

society.97

The ethos of the separation of powers, therefore, need not be confined to constitutional law.

Moreover, the source of separated powers need not be the constitution itself.98 This Part suggests the idea

of a statutory separation of powers: allocations of authority by Congress in a given substantive area

between agencies that set up a sub-constitutional system of checks and balances.99 In allocating power

among agencies, Congress may select from among the many delegative arrangements that do not run

afoul of constitutional separation of powers.100 This statutory separation of powers need not adhere

strictly to the founders’ conceptions.101 It may be complete or partial. It may be balanced or unbalanced.

And it may or may not empower agency actors to check one another. At a minimum, however, a statutory

separation of powers will seek to divide authority among administrative actors. In keeping with its

93 See, e.g. Michaels, supra note _ at 520 (referring to a “subconstitutional separation of powers” that keeps

administrative agencies in check). 94 Jeremy Waldron, Separation of Powers in Thought and Practice?, 54 B.C. L. Rev. 433, 435 (2013) (emphasis

removed). 95 Neil Kumar Katyal, Internal Separation of Powers: Checking Today’s Most Dangerous Branch from Within,

115 Yale L.J. 2314 (2006). See also Jon D. Michaels, Of Constitutional Custodians and Regulatory Rivals: An Account

of the Old and New Separation of Powers 235 (“administrative power is (already) divided and shared among three

sets of rivals: the politically appointed agency leaders who set the administrative agendas, the politically insulated

career civil servants who handle most of the agency’s day-to-day responsibilities, and the broader public legally

authorized to contribute to the development and implementation of administrative policies.”) Jon D. Michaels, Of

Constitutional Custodians and Regulatory Rivals: An Account of the Old and New Separation of Powers 235

(“administrative power is (already) divided and shared among three sets of rivals: the politically appointed agency

leaders who set the administrative agendas, the politically insulated career civil servants who handle most of the

agency’s day-to-day responsibilities, and the broader public legally authorized to contribute to the development and

implementation of administrative policies.”). 96 Id. at 2316 (2006). 97 Jon D. Michaels, CONSTITUTIONAL COUP: PRIVATIZATION’S THREAT TO THE AMERICAN REPUBLIC (2017). 98 In their article on intra-agency allocations of power, for example, Elizabeth Magill and Adrian Vermeule argue

that administrative law itself shapes power relationships between agency actors. Elizabeth Magill and Adrian

Vermeule, Allocating Power Within Agencies, 120 YALE L.J. 1032 (2011). 99 While not invoking the language of separation of powers explicitly, Anne O’Connell and Dan Farber have

promoted the benefits of checks both within and between agencies, arguing that inter- and intra-agency adversarial

relationships can produce better decisions, prevent abuse of power, and increase transparency. See Daniel A. Farber

and Anne Joseph O’Connell, Agencies as Adversaries, 105 CAL. L. REV. 1375, 1423 (2017). 100 Of course, proponents of any given delegation scheme must muster sufficient support from among Congress’s

membership and, if that support falls short of a two-thirds majority, from the President. 101 See, e.g., E. Donald Elliott, Why Our Separation of Powers Jurisprudence Is So Abysmal, 57 GEO. WASH. L.

REV. 506, 511 (1989) (arguing that even the courts need not slavishly adhere to the framers’ specific intentions with

respect to separation of powers and should instead be guided by its spirit).

16

constitutional counterpart, moreover, it is likely to include mechanisms that allow those actors to check

one another.102

There are, of course, important connections between statutory and constitutional separation of

powers.103 In allocating authority among agencies, Congress is both limited by the constitutional

separation of powers and influenced by it. It is limited because it frequently cannot, on its own, choose

how much substantive authority to bestow on particular government actors. Restrictions come both by the

Constitution itself, which puts certain arrangements out of bounds,104 and from the President, who may

veto legislation that he or she finds unpalatable. Unless there are sufficient votes to overcome a

presidential veto, therefore, congress must take presidential preferences into account in drafting

legislation.105 Congress is also influenced by separation of powers doctrine because that bedrock principle

of American governance cannot help but exert some force on those engaged in statutory design. Both the

limits imposed by constitutional separation of powers principles and the soft influence of the doctrine

make it more likely that statutes will themselves create regimes of divided authority. The next parts will

consider each of these influences in turn.

A. Constitutional Separation of Powers as Constraint

The constitutional separation of powers looms large over statutory separation of powers decisions.106

Congress is limited in its delegatory discretion by structural separation of powers provisions in the

Constitution. This section offers two examples of those restrictions: the nondelegation doctrine, and the

presidential veto. This veto may operate either as a check on Congress’ ability to separate and balance

statutory authority among agencies or, as in the case study presented in Part III, might itself produce a

statutory separation of powers design.

1. The Nondelegation Doctrine

The so-called nondelegation doctrine is the product of constitutional inference.107 In Article I,

section 1, the Constitution vests “[a]ll legislative Powers herein granted” in a “Congress of the United

102 This Part builds on the efforts of scholars who have explored relationships between agencies by describing

various checking and balancing arrangements in the bureaucracy. Commentary on the overlap of authority between

agencies, however, has largely ignored separation and balance as a possible justification. Jody Freeman and Jim Rossi,

in their comprehensive treatment of “shared regulatory space” frames overlap and fragmentation as a series of

“coordination challenges” most readily resolved by the President. Jody Freeman and Jim Rossi, Agency Coordination

in Shared Regulatory Space, 125 Harv. L. Rev. 1131 (2012). Anne O’Connell and Dan Farber speak of the benefits

that can accrue from conflict between and among agencies, specifically identifying the prevention of power abuse as

one positive consequence. However, they have in mind oversight by inspector generals within agencies and by the

public more broadly rather than the mitigation of power through checking and balancing. See, e.g. Farber and

O’Connell at 1429, n.306 (discussing inspector general oversight); id. at 1423, n. 268 (referencing agency separation

of powers without elaboration). 103 In a similar vein, Gillian E. Metzger emphasizes the important interrelationship between structural and

administrative separation of powers. See The Interdependent Relationship Between Internal and External Separation

of Powers, 59 Emory L.J. 423 (2009) (emphasizing the ability of internal executive branch constraints to enhance

traditional inter-branch checks and vice versa). 104 A deep literature takes as its subject the constitutional limits on legislative authority. [. . . ]. 105 Of course, Congress must also deal with internal divisions. See Byse, supra note 64 at 233-34 (“the DOE Act

is a classic instance of the compromise process and that those who seek reform must be prepared to settle for less

than the ideal.”) 106 Lewis at 37: “The bureaucracy reflects the agreements, disagreements, and negotiations of the branches over

time subject to the constraints of the courts and the Constitution.” 107 Not all agree that the Constitution contains such a restriction on legislation. Adrian Vermeule and Eric Posner

argue that “there just is no constitutional nondelegation rule, nor has there ever been.” Eric A. Posner and Adrian

17

States.”108 By negative implication, the argument goes, this vesting clause precludes the exercise of

federal legislative authority by any actor other than Congress.109 Thus, while Congress may create broad

rules of general applicability, its ability to delegate that authority to administrative agencies is limited. If

Congress wants to engage in lawmaking, it must avail itself of the procedures set forth in Article I,

Section 7 of the Constitution.110 In J.W. Hampton v. U.S., the Supreme Court held that Congress may

delegate ratemaking authority, previously considered a legislative activity, to agencies in the executive

branch so long as it offers an “intelligible principle” to govern how that authority is exercised.111 As

explained in a later case, if Congress provides clear standards by which delegated authority is to be

exercised, then Congress itself has “established the standards of legal obligation, thus performing its

essential legislative function.” If Congress has failed to do so, legislative authority has effectively been

transferred to another actor.112 In other words, so long as Congress does the actual legislating, and an

agency merely implements Congress’s directives, no legislative power is transferred and no constitutional

breach occurs.

The famous adage about the non-delegation doctrine is that the doctrine had “one good year.”

Nondelegation challenges have been successful twice, both times in 1935, resulting in decisions striking

down parts of President Franklin Roosevelt’s National Industrial Recovery Act (NIRA).113 In both cases,

the Supreme Court found that Congress had delegated too much policymaking authority to the President

and to executive agencies without providing sufficient constraints to govern its exercise. At issue in

Schechter Poultry was the NIRA’s delegation of the authority to the President to approve or prescribe

“codes of fair competition” in various industries.114 These codes were held to be equivalent to “codes of

law” in that the bound those subject to them without their consent and that their violation was punishable

as a crime.115 The President had virtually unbridled discretion to determine the content of such codes, and

this “sweeping delegation of legislative power,” the Court held, was therefore unconstitutional.116 In

Panama Refining, the Court struck down another NIRA provision, this one delegating authority to the

President to prohibit interstate and foreign sales of oil and petroleum products and to sanction violations

with fines, prison, or both.117 Unable to locate an intelligible principle for the authority’s exercise, the

Court declared that “Congress left the matter to the President without standard or rule, to be dealt with as

he pleased.”118 Thus, it effectively permitted the President to legislate and therefore ran afoul of the

nondelegation doctrine.119

Vermeule, Interring the Nondelegation Doctrine, 69 U. Chi. L. Rev. 1721, 1722 (2002) (arguing that the doctrine

lacks constitutional pedigree and that its consequentialist and functional justifications are unpersuasive). 108 Art. I, § 1. 109 Case law citation. 110 Crucially, these provisions require that laws be passed by both houses of congress (bicameralism) and that

they be presented for the president’s signature (presentment). Art. I, Sec. 7 (and/or cite to a journal article on

importance of these requirements generally or in context of delegation). 111 J.W. Hampton, J.R., v. United States at 275. 112 Schechter Poultry at 530. 113 Schechter Poultry and Panama Refining. 114 Schechter Poultry at 522-23. 115 Id. at 529. 116 Id. at 541-42. 117 Panama Refining at 406 (citing Section 9(c) of title I of the NIRA, 15 U.S.C. Tit. 1, §709(c)). 118 Id. at 418. 119 Id. at

18

Since 1935, however, the courts have allowed a broad array of delegations to agencies.120 They

have upheld delegations of authority to executive branch officials to implement emergency price controls

which “in his judgment will be generally fair and equitable and will effectuate the purposes” of the

statute,121 set air quality standards “requisite to protect the public health,”122 and set worker exposure

standards that “most adequately assure[], to the extent feasible . . . that no employee will suffer material

impairment of health or functional capacity . . . .”123 The sanction of these broad delegations has led some

to recommend reviving the nondelegation doctrine.124 To date, however, the Courts have not elected to do

so,125 and the prospect of reversing that trend in any significant way would be so disruptive of the modern

fabric of administrative government as to be highly unlikely.126

Thus, under the modern nondelegation doctrine, congress enjoys broad authority to delegate even

quasi-legislative tasks to administrative agencies. The question of how that discretion is exercised

therefore becomes of primary interest. One variant of the question is particularly relevant here: how

congress decides how to allocate delegated authority between agencies.127 Before turning to that question,

the next sub-part will discuss one further structural constraint on congressional discretion to delegate: the

president’s veto power.

2. The Veto Power

As noted in the previous section, Congress’ institutional position limits its ability to delegate as it

chooses. The nondelegation doctrine, itself a product of the constitution’s separation of powers, still

serves as a minimal check on how much authority Congress may delegate to administrative agencies.

Article II creates a different kind of check on delegation. In a series of cases, the Supreme Court has held

that Congress may not, via its structuring of administrative agencies, infringe on the President’s

constitutional functions. For example, the Court has invalidated restrictions on the President’s ability to

120 In part for that reason, Posner and Vermeule refer to the 1935 decisions as a “local aberration.” At 1722. 121 Yakus v. United States, 321 U.S. 414 (1944). The statute also required that consideration be given, in setting

prices, to prices prevailing within a two week period of 1941. Id. at ?? [citing §2(a) of the Emergency Price Control

Act of 1942]. 122 Whitman v. American Trucking; 123 American Textile Mfrs. Institute, Inc. v. Donovan¸ 425 U.S. 490 (1981) [PINCITE (quoting section 6(b)(5) of

the OSH Act)]. 124 See, e.g. Gary Lawson, Delegation and Original Meaning, 88 Va. L. Rev. 327 (2002); David Schoenbrod, The

Delegation Doctrine: Could the Court Give it Substance? 83 Mich. L. Rev. 1223 (1985). Others argue that the

nondelegation doctrine survives as a canon of statutory construction. Cass Sunstein has concluded that courts may

implicitly invoke the nondelegation doctrine when they apply, for example, canons of constitutional avoidance or the

canon against extraterritorial application. Cass R. Sunstein, Nondelegation Canons, 67 U. Chi. L. Rev. 315, 316

(2000). Such canons limit the scope of an agency’s interpretation of its delegated responsibilities that constrain agency

activity in much the same way as the nondelegation doctrine in that certain types of decision (those that apply U.S.

law extraterritorially, for example), must be taken in the first interest, expressly, by Congress. See also John F.

Manning, The Nondelegation Doctrine as a Canon of Avoidance, 2000 Sup. Ct. Rev. 223 (2000) (arguing that the

nondelegation doctrine operates through the canon of constitutional avoidance by steering agencies away from broad

constructions of statutory authority); John F. Manning, Textualism as a Nondelegation Doctrine, 97 Colum. L. Rev.

673 (1997) (contending that the textualist rejection of legislative history as an extrinsic source of statutory meaning is

on all fours with the nondelegation doctrine’s rejection of congressional circumvention of bicameralism and

presentment). But see Vermeule and Posner (arguing that such canons must be justified on nonconstitutional grounds

because the nondelegation doctrine is a mirage). 125 Hints from dissenting opinions. 126 See Farina, supra note __ at 105 (“[T]he idea of a vigorous nondelegation doctrine is a bipartisan nonstarter.”). 127 [bracket literature on selection of regulatory mechanisms as distinct from selection of regulatory actors – if

want to cite to some literature, see Lewis at p. 13]

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remove executive branch official who performs “core executive functions.”128 It has also found

unconstitutional various efforts to usurp or to circumvent, via delegation, authority expressly conferred on

the President.129

The President’s veto authority provides a more immediate check on delegation decisions, including

on efforts to separate authority by delegating to independent agencies. For example, President Ford was

able to prevent Congress from creating an independent agency to represent consumers during his

tenure.130 Because legislation to create the agency had passed the House with a very small margin (208-

199), its backers elected not to send it to President Ford for an all but certain veto.131 When congress

cannot reach broad agreement, the president’s design preferences are more likely to prevail.132

However, the president’s role in lawmaking might also lead congress to separate powers where it

might otherwise be disinclined to do so. Congress’ position as one branch of government in system of

separated powers creates distinct incentives to preserve and potentially enlarge its own influence vis-a-vis

the president.133 This frequently means delegating to an independent as opposed to an executive

agency.134 Congress has incentives to promote greater insulation, at least from the President. Thus, where

the president proposes the creation of a new, powerful executive department (as President Carter did in

the 1970s with the Department of Energy), congress might assert itself through the creation of a

companion independent commission (as it did in creating the Federal Energy Regulatory Commission).

B. Constitutional Separation of Powers as Influence

As the previous section suggests, there are few meaningful constitutional restrictions on Congress’s

ability to delegate authority to administrative agencies other than the prospect of a presidential veto.135

Consequently, attention has shifted in recent decades to understanding how and why Congress exercises

its capacious delegation discretion. There are several prominent explanations for delegation. The first is

managerial: Congress simply cannot pass and modify legislation quickly enough to deal with the myriad

128 Morrison v. Olson, 487 U.S. 654, 669 (1988); Myers 272 U.S. 52 (1926); Humphrey’s Executor; Morrison v.

Olson. 129 Buckley v. Valeo, 424 U.S. 1 (1976) (appointments clause); INS v. Chadha (legislative veto); 130 See Lewis at 86-87. President Ford offered, as a counterproposal, to enhance the consumer protection

responsibilities of existing executive departments and agencies. Consumer Agency Bill, CQ Almanac (1976),

https://library.cqpress.com/cqalmanac/document.php?id=cqal76-1186811. 131 Id. Lewis describes the president’s authority over congressional delegations as deriving from his veto authority,

from his chief executive position, and from the advantages of his status as a unitary actor. Id. at 19. 132 Lewis at 32. 133 As David Lewis has recognized, administrative design “is fundamentally the product of inter-and intra-branch

negotiations among political actors with individual interests shaped both by the institutional incentives of their branch

and by their policy preferences.” David E. Lewis, Presidents and the Politics of Agency Design 22 (2003). 134 Lewis at 19 (citing evidence that agencies created by executive action are much less likely to be insulated from

political control than those created through legislation). Of course, an institution of 535 members necessarily lacks a

single, unified incentive. And the idea that legislators will always prefer to delegate more authority to independent

than to executive agencies is overly simplistic. Relative congressional authority over agency decisionmaking is a boon

when legislators’ allies are in the majority, but when their opponents are in power it becomes problematic. See Lewis

at 13. Similar logic appears to affect legislators’ preferences about insulation from the president. In other words,

legislators are in favor of delegation to agencies over whom the president has greater control when the president’s

policy preferences are likely to align with theirs in the present or the future. Lewis at __ (18?). David Lewis has found

that members of congress tend to support presidential control when the president shares their policy goals and when

future presidential preferences are similarly likely to align with their own. Id. at 29-31. 135 Presidents, too, influence agency design. See David Lewis, Presidents and the Politics of Agency Design:

Political Insulation in the United States Government Bureaucracy 1946-1997 (2003). However, the focus here is on

legislative strategy as constrained by presidential veto authority.

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and constantly shifting problems in our modern economy.136 A related justification is that Congress lacks

the expertise to deal with modern regulatory problems.137 A more cynical set of justifications is political.

The most prominent strain of this set of justifications, public choice theory, postulates that Congress uses

delegation to avoid direct responsibility for unpopular decisions that benefit key supporters.138

Congress frequently separates authorities within and among agencies. Most commonly, Congress

separates adjudicative authority from prosecutorial authority to avoid bias or the appearance of bias. The

adjudicative agency is often given some degree of independence while the agency charged with

legislative and executive authority remains subject to greater presidential oversight. Pairs of agencies like

this include the Federal Mine Safety and Health Review Commission (adjudication) and the Mining

Health and Safety Administration (rulemaking and execution); and the Occupational Safety and Health

Review Commission (adjudication) and the Occupational Safety and Health Administration (rulemaking

and execution).139 Even if an agency combines all three functions, there are internal siloing requirements.

The Administrative Procedure Act of 1946, whose requirements apply to agencies unless Congress

expressly supplants them by separate statute, obligates agencies to maintain separation between officials

who investigate or prosecute a case and those who preside over its adjudication.140

Sometimes, however, Congress also divides a single type of authority--policymaking authority, for

example--over identical subject matter between federal agencies. Indeed, Jacob Gersen suggests that

“statutes that parcel out authority or jurisdiction to multiple agencies may be the norm, rather than an

exception.”141 Examples include EPA and the National Highway Transportation Safety Administration’s

joint authority over motor vehicle efficiency,142 EPA and FERC’s shared responsibility for hydroelectric

permitting, and the relationship described in greater detail below between FERC and the Department of

Energy.143 The relationships between agencies who share policymaking authority vary. Sometimes the

agencies have equal authority, and sometimes there is a hierarchy.144

Commentators have ascribed a variety of motives to this tendency to disperse control throughout the

bureaucracy. Some suggest that creating competition between bureaucratic agents makes it more likely

that Congress’s preferences will be adhered to.145 Another justification is that plural delegations enhance

agency expertise.146 If the delegation is truly redundant (if one agency’s authority precisely duplicates

136 See Peter H. Aranson, Ernest Gellhorn and Glen O. Robinson, Theory of Legislative Delegation, 68 Cornell

L. Rev. 1, 21-24 (1982). 137 Id. 138 David Schoenbrod argues that Congress “ducks the key conflicts” between interests when it makes broad

delegations to agencies. Schoenbrod, Power Without Responsibility at 10. David Mayhew argues that Congress

delegates because it allows them to take credit for popular decisions and to shift blame for unpopular ones. David

Mayhew, Congress: The Electoral Connection at 132-35. Schoenbrod at 90 (“a statute that delegates power to an

agency to set prices to the advantage of industry may succeed in shifting almost all the blame for the costs to the

agency . . . yet a sophisticated industry will still credit legislators for a substantial share of its benefit.”). 139 See also Daniel J. Gifford, Adjudication in Independent Tribunals: The Role of an Alternative Agency

Structure, 66 Notre Dame L. Rev. 965 (1991) (noting that several agencies rely on the federal courts for adjudication

of claims brought by the agency). 140 5 U.S.C. § 554(d). 141 Jacob Gersen, Overlapping and Underlapping Jurisdiction in Administrative Law . . . 142 See Jody Freeman and Jim Rossi, Agency Coordination in Shared Regulatory Space . . . 143 See Ann E. Carlson and Andrew Mayer, Reverse Preemption, 40 Ecology L. Q. 583 (2013). 144 See Gersen at __; O’Connell and Farber at __. 145 See Gersen at . . . 146 See Gersen at . . . suggesting that competition between agencies in a given jurisdictional space might

incentivize them to invest in expertise to avoid being deprived of their jurisdiction at a later date. See also Matthew

C. Stephenson, Information Acquisition and Institutional Design, 124 Harv. L. Rev. 1422, 1463 (2011); Jody Freeman

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another), the move could be a hedge against failure.147 Finally, overlapping delegations can facilitate

congressional monitoring of agency behavior.148

I wish to suggest another possible motive: fear about concentrated authority in government more

generally and about decisionmaker bias. Here, I do not mean the fear of bias toward the individual subject

of an investigation that leads Congress to separate adjudicatory from prosecutorial functions. Instead, I

refer to bias toward a particular policy approach of the kind discussed in Part I. This fear about policy bias

might make Congress reluctant to entrust policymaking in a given substantive area to a single agency. In

the next Part, I draw on the legislative history of the Department of Energy Organization Act of 1977 to

show that key members of congress involved in drafting that legislation were concerned about

concentrating authority over electricity regulation in any one administrative actor.

I do not hang my hat on this evidence of statements by single legislators, albeit powerful ones, in a

single statutory history. It is possible that other motivations, including those listed above, play a more

significant role in congressional delegation decisions.149 Whether or not concern over regulator bias

actually drives congressional delegation decisions as a descriptive matter, however, I argue here that these

concerns should cause congress to think more carefully about the way in which it delegates authority to

agencies. If all regulators are inevitably biased in some deep sense, then it makes sense to prevent any one

viewpoint from dominating regulatory governance in a given area. This argument will be taken up more

thoroughly in Part IV, where the benefits and costs of the statutory separation of powers are discussed in

greater detail.

III. Part III – Case Study: Federal Energy Agencies

Part II suggested that the Constitution supplies one possible answer to the problem of energy

partisanship: divide power between governmental actors to prevent dominance by any given faction.150

Intentionally or unintentionally, federal energy regulation models the statutory separation of powers. The

claim is not that Congress’s division of energy authority among federal agencies is representative of the

bureaucracy more broadly. Rather, Congress’s focus on separation of powers and checks and balances in

designing the energy bureaucracy under a unique set of circumstances offers a model that might be

replicated to positive effect. Like any real-world model, it is flawed. Those flaws will be introduced

below but taken up in a more detailed way in Part IV.

The focus here is primarily on authority over the generation of electric power and the regulation of

markets for electricity. The federal energy bureaucracy is charged with regulating everything from uranium

and Jim Rossi at 1142 (suggesting that combinations of agency expertise may produce better policy and that public-

interested policymakers may actively seek this outcome). 147 Freeman and Rossi at 1138. 148 See Freeman and Rossi at 1138 (citing Mathew D. McCubbins & Thoas Schwartz, Congressional Oversight

Overlooked: Police Patrols Versus Fire Alarms, 28 Am. J. Poli. Sci. 165, 166 (1984) (. . .). 149 David Lewis argues that members of Congress approach delegation questions primarily from the perspective

of reelection rather than an “aggregate picture of administrative rationality.” Lewis at 16, 37. This is because members

of Congress are rewarded by their constituents for responding to key interests, not for “providing public goods like a

well-organized and effective administrative state.” Id. at 27. And yet even Lewis acknowledges that legislators are not

wholly insensitive to arguments about ideal administrative structure. Id. at 28. .149 As I argue below, there is reason to

think that Congress thinks strategically and perhaps idealistically or theoretically about structure. When they do so,

ideas about the separation of powers and checks and balances as design principles can influence their delegation

decisions. 150 Baron de Montesquieu, The Spirit of Laws (1748); James Madison, The Federalist Papers No. 47 (1788). As

Part III will argue, this approach has its pitfalls as well as its advantages, the balance of which is governed by specific

design decisions.

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mining to oil pipelines. But it is with respect to electricity, and to some extent natural gas, that Congress’s

delegations of authority most closely approximate a statutory separation of powers. These authorities also

address most squarely the area of greatest controversy in U.S. energy policy today: the choice between

fossil-fuel plants and lower-emitting resources. This Part will therefore concentrate on authorities to

regulate electricity and natural gas.

This separation of powers can be traced to the energy reorganization of the 1970s, when President

Carter sought to impose centralized executive control on federal energy policy. Congress yielded to some

extent to the rhetoric of exigency that followed the oil price shocks of 1973-4 but refused to accede to all

of the President’s requests. The Department of Energy Organization Act of 1977 thus split control over

energy decision between the cabinet-level Department of Energy (DOE) and the independent Federal

Energy Regulatory Commission (FERC)

That division, however, was incomplete. Congress left behind a series of entanglements between the

two agencies. In particular, it left the Secretary of Energy, and by extension the President, key powers

over FERC to invoke if they so choose. While these authorities have been infrequently used, their

exploitation by the current administration seems increasingly likely. If we are to understand the balance of

power in the federal energy bureaucracy, therefore, we must understand not only the separation of power

between DOE and FERC but also the ways in which they might act as checks and balances on one

another. This Part explains the history and politics of the 1970s energy reorganization and its basic

allocations of power. Part III will examine some of the consequences of these design decisions in greater

detail.

A. Background

Prior to the 1920s, all regulation of electricity generation, transmission and distribution occurred at the

state or local level. In 1920, Congress passed the Federal Power Act (FPA) in response to the growing

number of hydroelectric projects on federal lands and waterways.151 The Act created the Federal Power

Commission (FPC), an independent five-member commission tasked with coordinating hydroelectric

projects (primarily dams and reservoirs).

In 1935, the Congress amended the FPA, expanding the Commission’s jurisdiction to interstate

transmission of power and to wholesale sales of power in interstate commerce.152 These amendments left

significant authority in the hands of the states to regulate intrastate power. Today, states retain authority to

coordinate electric utility planning, to site electric facilities, and to set the rates for retail power and for the

distribution grid.153 Gradually, other federal government actors joined the FPC in regulating various aspects

of the electricity system.154

During this evolution, the states maintained a vital role in energy governance. With the important

exceptions of hydropower and nuclear power, states retained control over the planning, siting, and

construction of power plants. They also set rates for power from those plants that was sold directly to end

users. And yet the federal government wields tools that can affect which plants companies choose to invest

in. The rates for wholesale sales of power determine how profitable those plants will be. As will be

151 Hydropower generated more than 40% of the United States’ electricity in the early 1900s. As late as the 1940s,

hydropower was responsible for 75% of electricity used in the West and Pacific Northwest. U.S. Bureau of

Reclamation, Hydropower Program, https://www.usbr.gov/power/edu/history.html. 152 The commission was given analogous authority over natural gas sales and transportation. 153 The distribution grid consists of the low-voltage lines that take power to end users. By contrast, the

transmission grid consists of high-voltage lines whose role is primarily to carry power across state lines. 154 [AEC, etc.]

23

discussed later in this section, the Federal Power Act and other statutes provide the federal government with

emergency authority that has been used to support individual plants.

B. The Department of Energy Organization Act of 1977

The impetus for reorganization of the federal energy bureaucracy in the 1970s was crisis. At that

time, the Organization of the Petroleum Exporting Countries (OPEC), whose founding members were

Iran, Iraq, Kuwait, Venezuela, and Saudi Arabia, controlled over 80% of the world’s oil exports.155 In

1973, the “October War” between Israel and its Arab neighbors led OPEC to cut supply and raise

prices.156 Saudi Arabia went further, banning all exports to the United States in retaliation for a military

aid package to Israel.157 The other Arab oil states soon followed Saudi Arabia’s lead.158 Gasoline prices in

the United States rose by 40% and long lines formed at gas stations.159

The embargo ended on March 1974 as the conflict drew to a close, but not before instilling in the

United States a deep sense of energy insecurity.160 The embargo had caught the United States totally off-

guard.161 It had also, as Daniel Yergin put it, “struck at [Americans’] fundamental beliefs in the endless

abundance of resources.”162 The medium-term response to the crisis was thus to pursue “energy

independence.”163 President Nixon imposed price restrictions designed to stimulate domestic

production,164 and in 1975 congress established the U.S. Strategic Petroleum Reserve and banned oil

exports.165

Another response was an executive (and to some extent legislative) desire to restructure the federal

energy bureaucracy in order to better situate the President, in particular, to prevent or respond to future

crises. The Nixon, Ford and Carter administrations all pursued some form of consolidated control over

energy policy. 166 At the same time, congress sought to keep at least some energy policymaking in

agencies with a degree of independence from the White House.

Federal energy agencies began to proliferate. In 1973, President Nixon created a Federal Energy Office

within the Executive Office of the President “to carry out all energy-related functions” of that office.167 One

155 ROBERT MCNALLY, CRUDE VOLATILITY: THE HISTORY AND THE FUTURE OF BOOM-BUST OIL PRICES 120

(2017). 156 DANIEL YERGIN, THE PRIZE: THE EPIC QUEST FOR OIL, MONEY & POWER 607-08 (1990). 157 See id. at 608; see also McNally at 131. 158 Yergin, supra note 43 at 608. 159 Id. at 616-17. 160 McNally, supra note 42 at 132. McNally writes that it “is difficult to overstate the depth of the gloom that

descended on western officials and business people in the 1970s at the prospect of massive future dependence on

Middle Eastern oil imports.” Id. 161 Yergin, supra note 43 at 588, 608. 162 Id. at 616. 163 McNally, supra note 42 at 133 (referring to Richard Nixon’s Nov. 7, 1973 address calling for energy self-

sufficiency by 1980). 164 Id. at 134. 165 Id. at 136. This was accomplished by way of the Energy Policy and Conservation Act of 1975, which also

established fuel economy standards for motor vehicles and conservation standards for appliances. Id. 166 Charles O. Jones and Randall Strahan, The Effect of Energy Politics on Congressional and Executive

Organization in the 1970s, 10 LEG. STUDIES Q. 153 (1985). Jones and Strahan applaud the instinct to consolidate,

arguing that “the principles of hierarchy suggest that a president should take command of a highly disparate apparatus

when it is challenged by a major event like the Arab oil embargo.” Id. at 153. For similar reasons, the authors are

critical of congressional resistance to this centralizing tendency, likening congress’s response to the crisis to “the

Oklahoma land rush” as new committees and subcommittees sought energy policy jurisdiction. Id. 167 http://www.presidency.ucsb.edu/ws/index.php?pid=4060. In addition to allocating scarce supplies of oil and

24

year later, in 1974, Congress transferred the Federal Energy Office’s responsibilities for oil allocation and

pricing regulations to a new independent agency, the Federal Energy Administration.168 It also created

several new agencies in the Energy Reorganization Act of 1974. The Energy Research and Development

Administration was tasked with coordinating federal research and development efforts relating to energy.169

The Nuclear Regulatory Commission, a successor agency to the Atomic Energy Commission, would

manage safety aspects of nuclear power regulation. Finally, the Act created an Energy Resources Council

in the Executive Office of the President to coordinate energy activities across agencies.170

This proliferation of energy agencies led, perhaps inevitably, to a consolidatory countermovement.

Today, the two federal agencies with primary authority over our electricity system are the Federal Energy

Regulatory Commission (FERC) and the Department of Energy (DOE). The story of their origins, status

and relationship is also the story of the politics of energy in the United States. Most of the energy

authorities dispersed among new agencies in the early 1970s were centralized, at President Carter’s

urging, in the new DOE. 171 This effort was part of President Carter’s more general project to reorganize

government. As a presidential candidate, Carter had stressed his comprehensive reorganization of the

state bureaucracy while governor of Georgia.172 He promised to clean up Washington and make the

federal bureaucracy more efficient if elected.173 While he succeeded in passing several reorganization

bills, his two most notable efforts were the creation of the Department of Education and the Department

of Energy.174 His success, however, was incomplete. Congress, skeptical of unfettered executive power,

refused to give the new Department unfettered authority over such key tasks as energy pricing and public

utility oversight. These responsibilities were instead vested in the new, independent FERC.

1. Separating Powers

The DOE Act was in some sense a divorce decree, in that it dissolved the Federal Power Commission

and divided its authorities between FERC and the DOE.175 This decree necessarily brought some of the

related products and gathering data on existing supplies and consumption patterns, this office, which consisted of more

than 2,000 employees, was also tasked with creating a plan to increase domestic energy supplies.

https://www.energy.gov/sites/prod/files/FEA%20History.pdf. 168 Roger Anders, The Federal Energy Administration (1980),

https://www.energy.gov/sites/prod/files/FEA%20History.pdf. The FEA was only authorized for two years, indicating

Congress’s skepticism about the best way to 169 Alice Buck, A History of the Energy Research and Development Administration (1982),

https://www.energy.gov/sites/prod/files/ERDA%20History.pdf. 170 https://www.fordlibrarymuseum.gov/library/document/0055/1668709.pdf. 171 President Nixon had sought a similar consolidation of executive energy policymaking in a new Department of

Energy and National resources, but Congress did not act on the proposal. Jones and Strahan at 155. President Ford

signed the Energy Reorganization act of 1974 which established the Energy Research Development Agency and the

Nuclear Regulatory Commission and authorized an inter-agency Energy Resources Council. Jones and Strahan at 157. 172 RONALD C. MOE, ADMINISTRATIVE RENEWAL: REORGANIZATION COMMISSIONS IN THE 20TH CENTURY 95

(2003); Jones and Strahan, supra note 53 at 158. 173 Id. Carter was perhaps overly ambitious in his streamlining plans, promising to cut 1900 federal agencies down

to 200 only to discover that there were only about 600 total administrative units in the executive branch. MOE, supra

note 56 at 96. 174 Harrison Wellford et al., Executive Reorganization: Six Lessons from the 1970s,

https://cdn.americanprogress.org/wp-content/uploads/issues/2011/06/pdf/exec_reorg.pdf. Separately, President

Carter was responsible for several reorganization plans relating to civil rights, disaster assistance, and nuclear power. 175 http://www.presidency.ucsb.edu/ws/index.php?pid=7098. Additional authorities from other government

agencies would also be transferred to the new Department, including authority over building efficiency standards, the

petroleum and oil shale reserve program, research and development on fuels and coal mining, and data gathering and

analysis. Id.

25

previously independent functions of the FPC within more direct presidential control.176 The thinking was

that such control would not only allow better coordination of overall energy policy but would also create

political responsibility for some of the more controversial decisions that the FPC was tasked with

(including responsibility for wellhead gas pricing and natural gas imports).177

Senator John Glenn, a co-sponsor of the bill, defended a strong Department of Energy, opining that

the bill was “as weak as it can be and still afford a hope of getting the job done.”178 Nevertheless,

Congress made several alterations that dampened the President’s authority. The most significant change

was the removal of electric and most natural gas ratemaking authority from the DOE.179 Ratemaking is a

crucial function that influences which utilities (including both generation and transmission) will succeed

and which will fail.180 The Senate Governmental Affairs Committee first proposed that this authority be

vested in an independent, three-member Energy Regulatory Board.181 Similarly, while the bill that

emerged from the House Government Operations Committee was more sympathetic to the

Administration, it was amended on the floor to give most of the Federal Power Commission’s regulatory

powers, including ratemaking, to an independent, five-member Federal Energy Regulatory

Commission.182 The sharing of responsibility for energy governance between the DOE and an

independent commission was a controversial aspect of the bill.183

176 In a nod to the need for independence in adjudicatory proceedings, President Carter’s proposal would have

established a quasi-independent Board of Hearings and Appeals within the Department which would be “free from

the control of the Secretary of Energy.” President Jimmy Carter, Department of Energy Remarks Outlining Proposed

Legislation To Create the Department (Mar. 1, 1977), http://www.presidency.ucsb.edu/ws/index.php?pid=7097.

President Carter also implicitly acknowledged the merits of some independence in energy decisionmaking when he

explained why his plan preserved an independent nuclear regulatory commission: “Because public concerns about

the safety of nuclear power are so serious, we must have a strong, independent voice to ensure that safety does not

yield to energy supply pressures.” http://www.presidency.ucsb.edu/ws/index.php?pid=7098. The President also

noted that the EPA should remain independent of energy decisionmaking in order to “voice environmental concern.”

And yet he did not believe that energy ratemaking should be similarly independent. 177 Grenier and Clark at 378. 178 See Clark Byse, The Department of Energy Organization Act: Structure and Procedure, 30 ADMIN L. REV.

193, 195-96 (1978). 179 [ . . . ] 180 To take just one example, FERC’s February 2018 rule requiring that energy storage providers be allowed to

bid their services into federal energy markets will shift business away from traditional energy generators in favor of

storage providers. FERC, Electric Storage Participation in Markets Operated by Regional Transmission Organizations

and Independent System Operators (Order 841), 162 FERC ¶ 61,127 (Feb. 15, 2018). For this reason, fossil-fuel

interests, who perhaps stand to lose the most market share as a result of the decision, were only lukewarm in their

support for the rule. See, e.g. Electric Storage Participation in Markets Operated by Regional Transmission

Organizations and Independent System Operator, Docket No. RM16-23-000, Comments of Duke Energy Corporation

(Feb. 13, 2017) (“applaud[ing]” the Commission’s efforts but cautioning that FERC’s rules “should not arbitrarily

favor new technologies, such as energy storage, over others . . . .”). 181 Id. at 198. A key feature of this Board was that it would be “bipartisan” and its members removable only for

“indefficiency, neglgect of duty, or malfeasance in office.” 123 Cong. Rep. S 7917 (daily ed. May 18, 1977)

(statement of Sen. Percy). Senator Metcalf criticized this arrangement, arguing that the proposed Board had “the

appearance of being independent, but in fact is not.” Id. at S 7957. His concerns related to the original proposal that

the Secretary have authority to set general rules affecting pricing and that the President be given limited authority to

veto decisions setting prices if they were deemed inconsistent with national energy policies. Id. 182 Byse, supra note 62 at 199 (noting that the amendment creating FERC was co-sponsored by a liberal democrat

who favored strict price control and a conservative republican who favored deregulation). 183 Edward J. Grenier, Jr. and Robert W. Clark III, The Relationship Between DOE and FERC: Innovative

Government or Inevitable Headache?, 1 Energy L.J. 325, 325 (1980).

26

The conference committee embraced the House proposal, establishing FERC as the locus of

independent energy regulatory authority in the federal government.184 However, they adopted the Senate

bill’s approach of specifically enumerating the powers to be transferred from the FPC to FERC, with the

remainder vested in the new Department of Energy.185 As discussed in more detail below, one result of

this choice was that the FPC’s authority to order certain electricity system actions during demand

emergencies was, by default, vested in DOE rather than FERC.186

Congress was too skeptical of vast presidential power to accede to comprehensive consolidation. “No

single official,” the Senate Committee on Governmental Affairs report stated, “should have sole

responsibility for both proposing and setting [energy] prices, especially where such person has a

multitude of other policy and administrative responsibilities.”187 The President had proposed that the DOE

be given authority to fix wellhead rates of natural gas, interstate rates of natural gas and electricity, and oil

prices.188 In the final bill, each of these tasks was instead given to FERC. FERC’s jurisdiction thus

includes rates for wholesale sales of electric energy in interstate commerce as well as the transmission of

energy in interstate commerce.189

Congress’s reluctance to bestow unbridled energy decision-making authority on the President was

framed in terms of the separation of powers. It was articulated most starkly by Representative John

Dingell (D-Mich.), a member of the President’s own party. Congressman Dingell harkened back to the

founders’ design decisions when he reminded his fellow members that “the age of kings expired with the

French revolution.”190 “I plead with this body,” he continued, “do not set up a new king here in

Washington.”191

This division of powers was vital, Senator Percy implied, in order to ensure that our government

remained “a government of law and not of men.”192 Senator Percy was described by the press as fearing

that “such tremendous economic power should not be vested in a single official.”193 Senator Javits

similarly defended S. 826’s approach to allocating energy planning authority in separation of powers

terms, noting that he had “done everything I can in the legislative art to weave together a check and

balance system of the Secretary, the President, and Congress.”194

Some members of congress were concerned about the invocation of emergency authority to justify

far-reaching executive powers. Senator Lee Metcalf (D-MT) protested that “[i]n the name of emergency-

one that is yet to be proved to this Senator-we are being asked, in essence, to delegate all Federal powers

184 The other source of independent agency decisionmaking in the federal energy bureaucracy is the Nuclear

Regulatory Commission, but their purview is confined to nuclear power. 185 Byse, supra note 62 at 200 (citing H. Rep. No. 95-539 (1977)). 186 Id. at 201 (noting no reasons given in Conference Report for the deletion). The conference committee also

declined to give the President authority to overrule FERC rules setting prices for oil or natural gas. Id. 187 S. Rep. No. 95-164 at 198 (1977). Senator Ribicoff reiterated these concerns on the floor. 123 Cong. Rec. S.

7915 (daily ed. May 18, 1977) (statement of Sen. Ribicoff). 188 Id. at 198.

189 16 USC §§824d-e. For a more detailed description of FERC’s jurisdiction, see The Honorable Joseph T. Kelliher

& Maria Farinella, The Changing Landscape of Federal Energy Law, 61 ADMIN. L. REV. 611, 612 (2009). 190 123 Cong. Rec. H5, 309-18 (daily ed. June 2, 1977) (statement of Rep. Dingell). 191 Id. 192 123 Cong. Rec. S 7917 (daily ed. May 18, 1977) (statement of Senator Percy). 193 Edward Cowan, Some in Senate Favor Keeping Energy Secretary Out of Pricing, N.Y. Times (Mar. 17, 1977),

https://www.nytimes.com/1977/03/17/archives/some-in-senate-favor-keeping-energy-secretary-out-of-pricing-

sole.html. 194 123 Cong. Rec. S 7932 (daily ed. May 18, 1977) (statement of Senator Javits).

27

over the price and allocation of energy supplies to the head of a new department, subject to the direct

control of the President . . . .”195 He objected to doing so “without any meaningful check or balance over

the administrative use of such powers.”196 Such a delegation of legislative powers, he concluded “may

result in standing the Constitution on its head.”197 This concern was also raised by members of the House

Committee on Government Operations in separate statements attached to their committee’s report.198

Congressman John Conyers (D-Mich.) supported the creation of an independent National Energy Board

with broad regulatory powers in order to “provide adequate countervailing checks and balances to the

centralized distributive power inherent in the proposed [Department of Energy].”199

Notwithstanding differences of opinion about how to allocate powers between the Department of

Energy and an independent agency, what is clear is that members of congress understood their design

decisions in a separation of powers frame. It is hard to write off the separation of powers discussions in

Congress around the DOE Act as pure turf wrangling since both houses of Congress were, like President

Carter, solidly Democratic. Even if a desire to preserve congress’ own authority at the expense of the

president was a major motivation, however, it merely shows the latent effects of the founders’ original

separation of powers decisions. In other words, structural separation of powers begets statutory separation

of powers.

2. Checks and Balances

As described in the previous section, the DOE Act separated authority over the power system

between FERC and the DOE. Yet the bill also left behind entanglements between the two agencies. Some

of these entanglements seem to have been adopted as a sop to the administration in exchange for the

creation of FERC. Others may be the result of accident rather than design. Collectively, however, these

entanglements are examples of the kinds of provisions that can operate as checks and balances in a

statutory separation of powers.

i. Section 403 Agenda-Setting

The Section 403 mechanism in the Department of Energy Organization Act was a compromise

position. As discussed above, President Carter’s initial proposal was to vest the new DOE with plenary

control over energy ratemaking. Congress ultimately rejected this consolidation of power, instead creating

an independent agency, FERC, and investing it with ratemaking responsibilities. Nevertheless, Congress

preserved some DOE authority over FERC policymaking by permitting DOE to propose rules for FERC’s

consideration.

Section 403 was likely the result of a compromise between those who favored consolidation of

national energy authority in the Secretary of Energy and those who preferred that an independent agency

maintain responsibility for energy pricing at least. The Section originated in the Senate version of the bill

that emerged from the Committee on Government Operations. Unlike the legislation originally introduced

in the Senate, the Committee amendment gave an independent Energy Regulatory Board authority over

most ratemaking.200 But while it removed ratemaking authority from the Secretary of Energy, it also gave

195 123 Cong. Rec. S 7956 (daily ed. May 18, 1977) (statement of Senator Metcalf). 196 Id. 197 Id. 198 H.R. Rep. No. 95-346, pt. 1 (1977). 199 Id. at 77-78. Congressman Clarence Brown (R-Ohio), one of only two dissenting votes on the committee,

explained that his opposition stemmed from the “inordinate powers” given to the Secretary of Energy “with respect

to the pricing of natural gas and the interconnection of power generating and transmission facilities.” Id. at 84-85. 200 S. 826, 95th Cong. § 205 (1977).

28

the Secretary the authority to propose rules and policies for the Board’s consideration.201 While the

reasons for the mechanism are not spelled out expressly, the fact that it accompanied the shifting of

ratemaking authority from the DOE to a new, independent agency suggests that it was designed to

mitigate the resulting diminution of the Secretary’s authority. By allowing the Secretary to propose rules

and policies to the independent regulator, the bill maintained a role for the Secretary in setting and

coordinating national energy policy.202

The House version of the bill created the Federal Energy Regulatory Commission in the place of the

Energy Regulatory Board, but it contained no mechanism for the Secretary to propose rules for the

Commission’s consideration.203 The conference committee then merged the House and Senate

approaches, keeping the Federal Energy Regulatory Commission as proposed by the House but including

rule proposal authority for the Secretary.

In the Senate’s initial version of the provision, the Act authorized the Secretary of Energy “to propose

prices or other rules for Board action, to set reasonable time limits for Board action and to intervene in the

Board’s proceedings.”204 The final bill’s language was similar. Section 403 of the DOE Act allows the

Secretary of Energy “to propose rules, regulations, and statements of policy of general applicability with

respect to any function” within FERC’s jurisdiction.205 Once the Secretary proposes a rule, regulation, or

policy statement, the Commission must act on it “in an expeditious manner in accordance with such

reasonable time limits as may be set by the Secretary . . . .”206 This allows the Secretary, for example, to

propose rules governing the functioning of wholesale electricity markets (as Secretary Perry recently

did).207

Section 403 does not require FERC to promulgate the rules or policies proposed by the Secretary. But

it does require FERC to consider the DOE’s proposal and to “take final action,” whether that be to decline

to promulgate a final rule or policy, to promulgate the rule or policy as proposed by the Secretary, or to

promulgate it with modifications. FERC’s final decision is still subject to judicial review if an interested

plaintiff can be found.208 FERC must therefore check all of the procedural boxes of the Administrative

Procedure Act, for example by providing for notice and comment on a proposed legislative rule and

support its final determination with a reasoned order.

The Secretary has only invoked Section 403 three times.209 The first time was in 1979, when the

Department of Energy’s Economic Regulatory Administration (ERA) proposed a rule to establish a

201 Id. at §403(a). 202 Indeed, this version of Secretary proposal authority interfered more significantly FERC’s autonomy than the

final bill. The provision’s original version would have required the Board to prioritize the Secretary’s proposal over

“any actual or contemplated adjudicatory proceeding on the same matter.” Id. at § 403(b). And it permitted the

Secretary “to direct the Board to give priority to any particular rule making proceeding.” Id. 203 H.R. 6808, 95th Cong. (1977).

204 Byse, supra note 62 at 199 (explaining that Section 403 authorized the Secretary to “propose rules . . . relating

to any function [assigned to the Board]” and requiring the Board to “consider any proposal made” and to “take final

action on it in an expeditious manner.”) 205 42 U.S.C. 7173(a). 206 42 U.S.C. 7173(b). 207 DOE, Grid Resiliency Pricing Rule (Proposed Rule), 82 Fed. Reg. 46940 (Oct. 10, 2017). 208 An order issued by FERC may be reviewed under 16 U.S.C. 825l. Where FERC takes no action, the APA

permits review of its inaction. See 5 U.S.C. §§ 702, 704, 706. 209 The DOE also considered proposing a rule for FERC’s consideration in 2000 that would impose mandatory

electric reliability standards on electric utilities in the wake of blackouts and brownouts in the summers of 1999 and

2000. Department of Energy, Interstate Electric Transmission System; Electric Reliability Issues, Notice of Inquiry,

29

procedure for issuing one-year certificates of public convenience and necessity for the transportation of

natural gas purchased by end users to displace fuel oil.210 FERC finalized this proposed rule, but admitted

that it was the result of policy rather than neutral expertise.211 The second invocation was in 1985, when

DOE proposed a rule setting certain natural gas prices at the wellhead.212 The proposal asked FERC to

increase and simplify its rate structures for “old” gas supplies (gas already in production).213 At the time,

producers were shutting in the old gas supply in favor of producing new gas, which commanded a much

higher price. While couched in the language of “just and reasonable” and “fair competition,” the proposed

rule furthered a political position that expanding natural gas supply from old reserves and simplifying the

complicated gas pricing system was worth a short-term increase in prices and the risk of disincentivizing

new exploration and production.214 FERC responded positively, if five days beyond the Secretary’s

deadline.215 It adopted the DOE’s proposed simplified pricing structure for “old” gas, raising the ceiling

price on such gas as suggested.216

The third invocation of Section 403 took place last year under Energy Secretary Rick Perry. The

Secretary proposed that “fuel-secure” power plants, defined as those with a 90-day supply of fuel on-site,

receive guaranteed payments in wholesale energy markets.217 Only coal and nuclear plants would qualify

as “fuel-secure” as defined by the rule. The DOE demanded action from FERC within 60 days, although

it subsequently granted the new FERC chairman’s request for an additional 30 days in light of

commission membership changes.218 FERC rejected the DOE’s proposal early this year, citing an absence

of legal justification for the proposal.219

65 Fed. Reg. 69753 (Nov. 20, 2000). No rule was proposed under 403, however, and the Energy Policy Act of 2005

conferred clearer authority on FERC to promulgate such mandatory standards See Energy Policy Act of 2005 §1201

et seq. 210 Department of Energy, Transportation Certificates for Natural Gas for the Displacement of Fuel Oil, 44 Fed.

Reg. 30323, 30323 (May 25, 1979). 211 Id. at 30324 (“The final rule is an attempt to balance a number of competing policy considerations . . . .”). 212 Department of Energy, Ceiling Prices; Old Gas Pricing Structure, 50 Fed. Reg. 48540, 43540 (Nov. 25, 1985)

(Notice of proposed rulemaking). The DOE gave FERC a six month deadline for taking action on its proposal. Id. 213 Id. Interestingly, the Department of Energy placed the burden of complying with procedural rulemaking

requirements on FERC since “the Commission is the agency which will take final action on this proposed rulemaking.”

It argued that FERC should comply with all such responsibilities in time to adopt a final rule on June 1, 1986. Id. at

48546. One might be forgiven for accusing the DOE of wanting to have its cake and eat it too in proposing a

substantive rule of its liking while eschewing any procedural obligations. 214 Id. at 48542. 215 Federal Energy Regulatory Commission, Ceiling Prices; Old Gas Pricing Structure, 51 Fed. Reg. 22168 (June

18, 1986) (Final rule). At the time, the Commission comprised two Republicans (Anthony Sousa and Charles

Trabandt) and two Democrats (Charles Stalon and C.M. Naeve). Commissioner Raymond O’Connor had left the

agency earlier in the year, leaving one position vacant. See FERC, Previous Commissioners,

https://www.ferc.gov/about/com-mem/prev-comm.asp. 216 Id. The Commission made one modification to the proposed rule, making it easier for buyers to renegotiate

other, higher-priced gas contracts if producers sought higher prices for “old” gas under existing agreements. In other

words, FERC intervened on the side of purchasers, whereas the original DOE rule was decidedly more favorable to

producers of “old” gas. 217 Department of Energy, Grid Resiliency Pricing Rule, 82 Fed. Reg. 46940, 46945 (Oct. 10, 2017). 218 Department of Energy, Grid Resiliency Pricing Rule, 82 Fed. Reg. 60134, 60134-35 (Dec. 19, 2017). 219 FERC, Order Terminating Rulemaking Proceeding, Initiating New Proceeding, and Establishing Additional

Procedures, 162 FERC ¶ 61,012 (Jan. 8, 2018).

30

Date Name FERC Action

1979 Transportation Certificates for Natural Gas for the

Displacement of Fuel Oil

Rule finalized

1985 Ceiling Prices; Old Gas Pricing Structure Rule finalized

2000 Interstate Electric Transmission System; Electric

Reliability Issues

DOE never proposed

2017 Grid Resiliency Pricing Rule Rule rejected

Table 1: Invocations of Section 403(a) authority by the Department of Energy

Section 403 permits the DOE to act as a check on FERC policymaking. As Clark Byse remarked in

his summary of the DOE Act, in Section 403 the conference committee essentially gave the Secretary “a

role in the Commission’s deliberations.”220 Senator Abraham Ribicoff, the bill’s sponsor, went further in

discussing the Senate’s version of the provision, noting that the provision enabled the Secretary to “play

an active role in all matters before the [Energy Regulatory] Board by proposing prices or other rules the

Board must then consider” and “setting time limits for the Board to act.”221 Thus Congress does seem to

have envisioned that Section 403 might be used to enhance the power of the Secretary of Energy vis a vis

FERC.

Thus far, the DOE has only occasionally subjected FERC to “exhortation and nudging” under Section

403. 222 Although the DOE has rarely invoked its authority under Section 403, consider the impacts on

FERC’s activity were it to do so more aggressively. In theory, the DOE could send a stream of proposals

to FERC for its “expeditious” consideration. In this way, the Secretary of Energy could effectively set the

agenda of an independent commission, crowding out FERC priorities to make way for the Secretary’s

own. The effects of such an effort on FERC’s independence, and the question of whether the federal

courts would step in to block it, will be taken up in Part IV, below.

ii. Section 404 Concurrence Requirement

Congress also gave FERC the ability to check DOE policymaking. DOE Act Section 404 requires

the Secretary to notify FERC of proposed rules, regulations, and statements of policy.223 FERC may then

determine whether the proposed action “may significantly affect any function within the jurisdiction of

the Commission . . . . ”224 If FERC decides that its jurisdiction may indeed be significantly affected by the

DOE’s proposal, the DOE must refer the matter to FERC. FERC must then seek public comment and

issue a recommendation after consultation with the Secretary of Energy.225 FERC may concur in adoption

of the rule or policy as proposed, concur in adoption of the rule or policy with changes, or recommend

220 Byse, supra note 62 at 202. 221 123 Cong. Rec. S 7915 (daily ed. May 18, 1977) (statement of Sen. Ribicoff). 222 See Byse at 202 (noting that the Energy Regulatory Board, which became FERC in the final version of the bill,

would be subject to such action at the hands of the DOE under Section 403). 223 42 U.S.C. §7174(a). This provision applies to actions of the Secretary taken pursuant to authority transferred

from the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power

Commission, and the Interstate Commerce Commission. See 42 U.S.C. § 7175; 49 U.S.C. §60501. 224 Id. 225 The time period for FERC action is not specified in the statute and, in practice, appears to have been set by the

Secretary.

31

that the rule or policy not be adopted.226 Crucially, DOE may not adopt the rule or policy in its original

form if FERC recommends changes or recommends that it not be adopted.227

Section 404 has been invoked even less frequently than Section 403. It is not even clear whether

the DOE has a consistent process for notifying FERC of its proposed rules, regulations, and policy

statements as required by the section. Certainly those notifications are not readily available in public

databases. The table below compiles available information on DOE notice and/or further action by FERC

under Section 404.

Date Name DOE Action FERC Action

1979/80 Proposed Rulemaking

Concerning Review and

Establishment of Natural Gas

Curtailment Priorities for

Interstate Pipelines

Notified FERC Took referral; subsequent

action unknown (but

likely inaction)

1986 Reports of Major Electric

Utility System Emergencies

Notified FERC Declined to take referral

1991 Security Skills Training and

Qualifications Standards for

Protective Force Personnel

Notified FERC Unknown (probable

inaction)

Table 2: Invocations of Section 404 authority by the Federal Energy Regulatory Commission

The provision, while rarely mentioned in court, was once characterized as “a limited veto power over

the Secretary of the DOE” by the Court of Claims in 1982.228 Perhaps FERC has only rarely invoked its

authority because most DOE rules and policies do not “significantly affect” its jurisdiction. Perhaps it has

exercised its discretion not to intervene in DOE processes out of deference. Or perhaps DOE has simply

failed to notify FERC of its proposed rules and policies, and FERC has allowed its right to review them to

go dormant through inaction and inattention. On this last point, one possible use of Section 404 is as a

sword in litigation. In one case, plaintiffs challenged a DOE policy statement on factors to consider in

licensing natural gas imports by alleging DOE had failed to refer it to FERC under Section 404.229

3. 202(c) Emergency Override

Invocation of emergency authority has always been an effective tool of chief executives seeking to

expand their reach. Consolidated presidential authority is often defended as necessary to permit swift,

coordinated action in the case of exigency. The Federal Power Act of 1935 contained an emergency

provision, Section 202(c), conferring on the Federal Power Commission (FPC) the authority to deal with

imminent threats to the electricity grid by ordering "temporary connections of facilities and such

generation, delivery, interchange, or transmission of electric energy."230 The federal government’s

authority over the electricity grid was at that time, and is today, limited, with the states retaining primary

226 42 U.S.C. §7174(b). 227 42 U.S.C. §7174(c). 228 See City of Fulton v. United States, 680 F.2d 115 (Ct. Cl. 1982) (involving a FERC-DOE conflict over a rate

increase on purchasers of power from Southwestern Power Administration). 229 Panhandle Producers & Royalty Owners Ass'n v. Econ. Regulatory Admin., 822 F.2d 1105, 1114, n.1 (D.C.

Cir. 1987). The court dismissed petitioner’s claim for failure to raise it on rehearing before the agency. Id. 230 Federal Power Act § 202(c)(1) (codified at 16 USC §824a(c)).

32

authority over generation facilities as well as intrastate transmission. Section 202(c) not only allowed the

FPC to act in an emergency to ensure sufficient energy supply but it prevented any interconnection

ordered from subjecting a public utility to federal regulation on an ongoing basis.231 Thus the original

utility of the section was to permit the federal government to override state authority on a temporary basis

without any permanent jurisdictional effects.

Section 202(c)(1) refers, not to the Secretary of Energy, but to the "Commission." And yet it is the

Secretary of Energy, rather than FERC, that exercises 202(c) authority today. The DOE has never

clarified the basis for its exercise of Section 202(c) authority beyond citing the statutory section in

conjunction with Section 301(b) of the Department of Energy Organization Act.232 That Section

transferred to the Secretary of Energy all of the functions of the Federal Power Commission not

transferred to the Federal Energy Regulatory Commission in Subchapter IV of the Act. Because

Subchapter IV does not expressly transfer FPA Section 202(c) authority to FERC, the argument goes it

was transferred to DOE. Subchapter IV does transfer general interconnection authority under 202(b) of

the FPA to FERC.233 FERC may therefore order a public utility to interconnect its transmission facilities

with those of another person involved in transmission or sale. It may also order a public utility to sell

energy or to exchange energy with such persons.234 But Section 202(c) is not mentioned in subchapter IV,

and thus emergency interconnection and sale authority, by default, resides with the Secretary of

Energy.235

There are limits on what Section 202(c) authorizes the Secretary to do and when the Secretary may

invoke those powers. Section 202(c) permits the Secretary to "order temporary connections of facilities,

and generation, delivery, interchange, or transmission of electricity," but only in the face of an

"emergency." The first type of emergency that triggers Section 202(c) is "the continuance of a war in

which the United States is engaged." No Secretary has referenced the war contingency in invoking the

section, however.236 A Section 202(c) emergency may also be the result of "a sudden increase in the

demand for electric energy, or a shortage of electric energy, or of facilities for the generation or

231 __ Cong. Rec. __ (daily ed. June 28, 1935) (statement of Sen. Lea) (“Permission is given for emergency

connections, without subjecting the companies to interstate regulation. With the consent of the Commission,

permanent connections may be made with a public utility for emergency purposes without subjecting the utility to

the jurisdiction of the Federal Power Commission."). 232 See, e.g., Department of Energy, Order No. 202-17-1 (DOE Act §301(b) (citing authority under Section 202(c)

of the Federal Power Act “and section 301(b) of the Department of Energy Organization Act, 42 U.S.C. §7151(b)). 233 42 U.S.C. 7172(a)(1)(B).

234 Federal Power Act § 202(b) (codified at 16 U.S.C. §824a(b)). There are limitations on this authority. FERC

may order such interconnections or sales only upon application of a state Commission or a person engaged in the

transmission or sale of energy, not sua sponte. FERC must first provide notice to each affected state commission and

public utility and provide them an opportunity for hearing. FERC must find that the interconnection or sale is

"necessary or appropriate in the public interest." Finally, FERC may not compel the sale or exchange of energy when

doing so would impair the public utility's ability to serve its customers. Id. 235 The House version of the Department of Energy Organization Act did expressly transfer Section 202(c)’s

emergency authority to the Secretary of Energy. H.R. 6808, 95th Cong. (1977) (transferring authority “. . . (4) under

section 202 (c) and (d) of the Federal Power Act (relating to emergency interconnections)”. Section 202(c) is also not

mentioned among the list of sections under which FERC may exercise power if it deems that exercise to be necessary

to the exercise of its other powers. 42 U.S.C. § 7172(a)(1). 236 Various environmental statutes contain “Act of God” or “Act of War” defenses that exempt actors from

responsibility for environmental releases caused by war or unforeseen natural events. The “act of war” defense in the

Comprehensive Environmental Response, Cleanup and Liability act, for example, has only been invoked once. See

U.S. v. Shell Oil Co.¸13 F. Supp. 2d 1018 (C.D. Calif. 1998) (exempting oil company from liability for response costs

of cleaning up a hazardous waste site created as part of World War II aviation gasoline program).

33

transmission of electric energy, or of the fuel or water for generating facilities, or other causes." Each

modern invocation of Section 202(c) has been on the basis of one of these scenarios. The Secretary is

afforded some discretion in determining whether one of these triggering events has occurred, since the

Statute states that that Section 202(c) authorities may be invoked “whenever the Commission determines

that an emergency exists” by reason of one of these events.

Even where an emergency has triggered Section 202(c) authority, the Secretary's actions are still

limited to ordering "temporary connections" of "facilities" and "generation, delivery, interchange, or

transmission of electricity." There is no express durational limit for emergency orders in general.

However, the title of the section indicates that the section’s purpose is to authorize "[t]emporary

connection and exchange of facilities during emergency."237 Thus, upon the end of the emergency, the

Secretary’s authority would expire.238 As can be seen in the Table below, however, Secretaries have

construed the term “emergency” broadly and have allowed 202(c) orders to continue for more than a year.

Within the parameters outlined in the section, the selection of a remedy is largely up to the Secretary.

She may order such “temporary connections” of “facilities” and “generation, delivery, interchange, or

transmission of electricity” as in her judgment “will best meet the emergency and serve the public

interest.” The section clearly authorizes the Secretary to order specific facilities to interconnect with the

grid. It also appears to authorize the Secretary to order specific power plants to generate electricity and to

require the distribution of that electricity over transmission and distribution systems.

The Secretary has invoked Section 202(c) authority eight times since 2000.239 This was done twice in

the wake of hurricanes, once in response to the California energy crisis, once in response to concerns

about the availability of electricity on Long Island, once in response to a major blackout, and once to

prevent a blackout in the D.C. area after a generator voluntarily shut down in order to address plant

emissions.240 Most recently, under Secretary Perry, the section has been invoked twice to override EPA

Administrative Orders related to the Mercury and Air Toxics Rule that would have required the

modification and consequent shutdown of coal-fired power plants in Oklahoma and in Virginia.241 The

provision was not invoked during President Obama's tenure.

237 16 U.S.C. §824a(c)(1) (emphasis added). 238 This alone would not necessarily ease concerns about perpetual emergencies and conflicts, such as the “war

on terror.” There are stricter limits for emergency orders that result in a conflict with an environmental law or

regulation. The Fixing America's Surface Transportation (FAST) Act of 2015 amended the statute to provide that such

orders expire after 90 days unless those orders are renewed or reissued for subsequent 90 day periods “as the

Commission determines necessary to meet the emergency and serve the public interest.” Fixing America’s Surface

Transportation Act, of 2015 §61002, Pub. L. No. 114-94, 129 Stat. 1312 (codified at 16 U.S.C. §824a(c)(4). 239 Department of Energy, DOE’s Use of Federal Power Act Emergency Authority,

https://www.energy.gov/oe/services/electricity-policy-coordination-and-implementation/other-regulatory-

efforts/does-use. 240 Department of Energy, Federal Power Act section 202(c) – Mirant Corporation, August 2005,

https://www.energy.gov/oe/downloads/federal-power-act-section-202c-mirant-corporation-august-2005. 241 Department of Energy, Federal Power Act Section 202(c) – Grand River Dam Authority, April 2017,

https://www.energy.gov/oe/downloads/federal-power-act-section-202c-grand-river-dam-authority-april-2017;

Department of Energy, Federal Power Act Section 202(c) – PJM Interconnection & Dominion Energy Virginia, 2017,

https://www.energy.gov/oe/downloads/federal-power-act-section-202c-pjm-interconnection-dominion-energy-

virginia-2017-0.

34

Date Name Emergency Duration

2000 California Independent System

Operator (generation)

California Energy Crisis 1.5 months

2002 Cross-Sound Cable Company

(transmission)

Availability of energy on Long

Island

1.5 months

2003 Cross-Sound Cable Company

(transmission)

Northwest/Midwest Blackout 9 months

2005 CenterPoint Energy (transmission) Hurricanes Rita & Katrina 1-2 days

2005 Mirant Corporation (generation) “Reasonable possibility” of

blackout

18 months

2008 CenterPoint Energy (transmission) Hurricane Ike 2 weeks

2017 Grand River Dam Authority

(generation)

Generator retirement/lightning 3 months

2017 Dominion Energy Virginia

(generation)

Generator decision to cease

power production

11 months

(and still in

operation)

Table 3: Invocations of Section 202(c) authority by the Department of Energy since 2000

At least some legislators realized in 1935 that Section 202(c) granted potentially expansive authority:

Senator Daniel Hastings (R-Del.) acknowledged on the Senate floor that the emergency authority granted

to the Federal Power Commission would enable it to do “all kinds of things . . . without the consent of

anybody.”242 During the debates on the Department of Energy Act of 1977, Representative Clarence

Brown similarly worried that transferring Section 202 authority to the Secretary of Energy would place

“this vast authority . . . into the hands of one person . . . .” 243 Indeed, it is not far-fetched to imagine an

administration invoking Section 202(c)’s emergency authority in the face of dubious “emergencies” in

order to make broader changes to the electricity system than it could otherwise accomplish.

IV. Part IV - Evaluating the Statutory Separation of Powers

The statutory separation of powers (and its correlative, statutory checks and balances), holds promise

as a way to defend against the dangers of faction and tyranny in the area of energy policy (and others like

it). But achieving (and maintaining) a working division of authority is no simple task. This Part will

analyze some difficulties with allocating and adjusting delegations across agencies. Throughout, it will

draw on the case study from Part III. However, it will also reach beyond that case study to theorize about

the implications of applying the statutory separation of powers approach more broadly. First, it will

explain why a stable balance of authority is so difficult to determine ex ante. It will then argue that, over

time, executive agencies are more likely to seek expansion of their own authority than are independent

agencies, thereby skewing the balance of power. At the same time, independent agencies are likely to see

both their authority and their independence eroded by executive aggrandizement. This may be especially

true for agencies, like FERC, that are “nested” within executive departments. Finally, this section

proposes possible solutions to the problems of ex ante balancing and lopsided evolution of the statutory

separation of powers. It examines congress, courts, and agencies themselves as potential sources of

adjustment and maintenance of the statutory separation of powers.

242 81 Cong. Rec. S 8682 (daily ed. June 5, 1935) (statement of Sen. Hastings). 243 H. Rep. 95-346, pt. 1 at 84-85 (1977) (minority views of Rep. Brown).

35

A. Instability of Initial Allocations

To some extent, any legislative balancing of statutory authorities will be imperfect. Let us stipulate

that the goal of legislative balancing is to produce an even balance of authority between agency actors.

This is, of course, unlikely to be the actual legislative goal in any given scenario. The precise balance

deemed desirable, however, is immaterial to the argument in this section: namely, that a legislature will

be unable, without the benefit of experience, to determine how to achieve their desired balance using

conventional tools of statutory drafting.244

There are three primary reasons for this inevitable imprecision. First is the problem of inherent

statutory ambiguity. This condition was discussed in Part I, which explained that it is difficult for

Congress to fix policy positions in advance while leaving minimal discretion to agents (even if Congress

wished to). The inherent ambiguity of language also means that Congress will have difficulty fixing

allocations of authority between agents.245 Consider Section 404 of the DOE Act, which gives FERC veto

authority over DOE policies and rules that “may significantly affect any function within the jurisdiction

of the Commission.”246 The scope of this significance requirement has yet to be interpreted by the

agencies themselves or by the federal courts. Whether the requirement is read broadly or narrowly will

either diminish or enlarge FERC’s check on DOE authority.

Second is the problem of discretionary versus mandatory authority. In order to preserve flexibility,

Congress may phrase its agency checks and balances in permissive rather than mandatory terms. In

Section 404 of the DOE Act, for example, Congress left FERC room to decline to exercise its veto

authority. The statute allows FERC, “in its discretion,” to determine within a period of time set by the

Secretary whether one of its functions may be significantly affected by a proposed policy or rule. FERC

may determine that its functions are not so affected, and there is even an interpretive argument to be made

that FERC may decline to make a determination altogether.247 At the time, at least one early commentator

believed that Section 404 would be a potent defense against DOE power. Writing in 1980, Alfred Aman

used Section 404 as an example of the ways in which FERC could “substantially offset” power granted to

the DOE.248 But Congress could not have foreseen in 1977 how aggressive FERC would be in assessing

“significance” (to date, not very) nor how defensive DOE might be in resisting expansive FERC

interpretations. As a result, Congress could not know how effectively FERC could check DOE actions

under Section 404. In fact, as discussed above, FERC has rarely invoked this provision.

Finally, the problem of statutory multiplicity means that any assessment of the balance of authority

between two administrative actors must be the result of a complicated netting calculus that takes into

account various checks and balances across sections within a single statute and potentially across a

variety of other statutes.249 Consider again the case of energy regulation. While Congress established a

244 Elizabeth Magill cautions that the incentives of various governmental actors are notoriously difficult to

determine. Magill at 631. If Congress is unable to identify correctly the tendencies of various administrative actors,

its ability to achieve a particular balance of authority will be even more difficult. 245 This is true even under the best of conditions. And statutory precision may not always reflect he best of

conditions. See Aman at 525 (“The DOE Act was not sufficiently clear when it came to defining the relationship

between the Secretary and the Commission in general.”). 246 42 U.S.C. 7173(a). There are certain other limitations on FERC’s veto authority, as discussed in Part III. 247 But see Mass v. EPA. The language here is slightly different, however. 248 Alfred C. Aman, Institutionalizing the Energy Crisis: Some Structural and Procedural Lessons, 65 Cornell L.

Rev. 491, 524 (1980). 249 See, e.g. Michael Ting, [Strategic Theory?] at 274 (“Others have also pointed out that increasing the number

of components can lead to unpredictable interactions between them, ultimately hindering organizational

effectiveness.”). Elizabeth Magill makes a related argument about the difficulty of assessing how much power is held

36

separation and balance of authorities between FERC and DOE in the DOE Act, other delegations already

on the books allow the Department of Energy to circumvent that balance. The responsibility for setting up

wholesale markets is FERC’s. These markets determine the compensation that power generators receive

for their energy. And yet a determined Department of Energy, and a determined President, can bypass

authority in order to provide additional compensation to certain types of plant. Two options that have

been mentioned recently as potential avenues of support for coal are the Fixing America’s Surface

Transportation (FAST) Act of 2015 and the Defense Production Act of 1950.

a. FAST Act

The Fixing America's Surface Transportation (FAST) Act of 2015 also authorized the Secretary of

Energy to act in the case of a “grid security emergency” to “issue such orders for emergency measures as

are necessary in the judgment of the Secretary to protect or restore the reliability of critical electric

infrastructure . . . during such emergency.”250 The President has authority to declare a grid security

emergency.251 However, the section limits “grid security emergencies” to emergencies caused by “a

malicious act using electronic communication or an electromagnetic pulse, or a geomagnetic storm event .

. .” or “a direct physical attack on critical electric infrastructure . . . .” Because of the narrow description

of emergency, this section does not give the Secretary of Energy significant authority to reshape the

electricity grid or electricity markets on her own initiative. If such an emergency were to occur, however,

there are few limits on the nature of the Secretary’s response.

The potential for proliferation of emergency authority to augment executive power should not be

discounted. A final rule issued by the Department of Energy in January, 2018, implementing FAST Act

emergency authority reminded the reader that “[t]he authority granted in [this section] supplements the

Secretary’s existing authority, under section 202(c) of the FPA, to order temporary emergency measures .

. . .”252 While no Secretary has yet invoked the FAST Act, sources suggest that this administration might

do so in an effort to promote coal-fired plants.253

b. Defense Production Act

Congress passed the Defense Product Act in 1950 at the start of the Korean War. The Act gives

the President authority to mobilize domestic industry to ensure adequate production in support of the war

effort.254 While the provisions were initially time-limited, Congress has regularly reauthorized many of

them, most recently through 2019.255 The key surviving provisions give the President authority to 1)

by each branch of government for purposes of determining what constitutes excessive aggrandizement. Magill at 636.

250 Sec. 61003(a), amending FPA 215(b) (codified at 16 U.S.C. 824o-1). 251 Id.

252 Department of Energy, Grid Security Emergency Orders: Procedures for Issuance, 83 Fed. Reg. 1174 (Jan. 10,

2018). 253 See John Siciliano, Utilities Warn Rick Perry to Keep ‘Thumb’ Off the Energy Scale, Wash. Examiner (May

3, 2018), https://www.washingtonexaminer.com/policy/energy/utilities-warn-rick-perry-to-keep-thumb-off-the-

energy-scale. Energy law experts predict that such an effort would be overturned in litigation. See David Roberts, Rick

Perry’s “Review” of the Energy Grid is Just What it Looks Like: A Bid to Save Coal, Vox (May 24, 2017),

https://www.vox.com/energy-and-environment/2017/5/24/15671436/rick-perry-grid-review (citing comments by Ari

Peskoe, Director, Electricity Law Initiative, Harvard Law School Environmental and Energy Law Program). 254 At least one commentator suggests that President Truman believed the Act necessary, at least in part, because

of the supply disruptions of the late 1940s caused by labor actions. These were the same set of circumstances that led

to the famous “Steel Seizure case.” See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952) (striking down

the President’s seizure of a steel mill and restarting production in the face of a labor strike). 255 128 Stat. 1896; Pub. L. 113-172 (Sept. 26, 2014), https://www.gpo.gov/fdsys/pkg/PLAW-

113publ172/pdf/PLAW-113publ172.pdf.

37

demand that the government be given priority for certain products; and 2) provide subsidies and

incentives to certain industries deemed essential to defense.

Energy Secretary Rick Perry has reportedly been looking “very closely” at the DPA as a source of

support for the coal industry and for coal-fired power specifically. It would not be the first time the Act

has been invoked to regulate the electric power sector. Both President Clinton and President George W.

Bush invoked the Act’s prioritization provisions with respect to electric power and gas supplies during the

California Energy Crisis.256 In fact, the modern version of the Act designates energy a “strategic and

critical material.” While Secretary Perry has not explained which DPA provisions might be used to

support the coal industry, it is likely that he is focused on Title III, which authorizes loan guarantees and

government purchases as a means of supporting industries with a connection to national defense.257 This

Title has already been used to support domestic manufacturing capacity for thermal batteries for defense

systems.258

Because of statutory ambiguity, uncertain exercise of discretionary authority, and statutory

multiplicity, initial allocations in a statutory separation of powers will unavoidably be unstable. Not only

do these three conditions lead to rough initial allocations of authority, they also lead to shifting balance

over time.

B. One-Way Aggrandizement

While some aspects of authority shifting may be difficult to discern in advance, one is predictable. It is

that where an independent commission and an executive agency sharing authority in a given subject area,

the executive agency is far more likely to push the boundaries of their authority than is the independent

commission. The result is that, over time, the balance of power will shift in favor of the executive agency.

The first reason that executive departments will seek to expand their influence more aggressively than

independent agencies is structural. In his litany of the advantages of commissions over hierarchical agencies

in PHH v. CFPB, Judge Brett Kavanaugh emphasizes that commissions provide internal checks on

decision-making.259 Independent commissions, which dominate the landscape of independent agencies,260

are typically made up of an uneven number of commissioners each of whom has an equal vote. Frequently,

there is also a requirement that no more than a bare majority of commissioners be from a single political

party.261 These requirements mean that agencies must deliberate to reach consensus and that there will be

multiple viewpoints represented in the decisionmaking process. Because of these internal checks,

administrative commissions are less likely to agree on a policy direction than are hierarchical executive

departments. This, in turn, makes extension of authority in a given direction less likely or, at least, less

linear. By contrast, in an agency like the Department of Energy, policy is made by the Secretary of Energy

and carried out by agency staff. If the Secretary wishes to adopt an aggressive understanding of the

Department’s authority, he or she may do so.262

256 Daniel H. Else, Congressional Research Service, Defense Production Act: Purpose and Scope 2 (May 14,

2009). 257 The funding for these supports can come either from a special Defense Production Act Fund or from general

Defense appropriations. Else at 3. 258 Department of Defense Fiscal Year (FY) 2015 Budget Estimates 3 (Mar. 2014). 259 PHH Corp. v. CFPB, 839 F.3d 1 (2016), rev’d en banc, 881 F.3d 75 (D.C. Cir. 2018). 260 Id. 261 [ . . . ] 262 There are some internal checks even within a hierarchical agency. The agency’s attorneys and other career

staff can provide important feedback to a department head, for example. Ultimately, however, the Secretary determines

departmental policy.

38

Structure also means that independent agencies are less likely to be captured by a single interest group.

To influence an independent commission effectively, interest groups must capture a majority of

commissioners.263 By contrast, interest groups can influence an executive agency by targeting the agency’s

single administrator.264 The final reason that executive departments are more likely to expand their

authority over time is that they are subject to more direct influence by the President.265 I put to one side the

related question of whether the constitutional balance of authority has shifted in favor of the executive over

time.266 Whether or not that is true, the President may influence policy choices by executive agencies more

easily than policy choices by independent commissions. Because of this influence, and because Presidents

have an electoral interest in implementing their policy platforms, they are more likely to seek an expansion

of agency authority than are independent commissions.267 Whether we call this tendency aggrandizement

or “forceful . . . assertion of regulatory priorities,” it is likely to shift power to effect change to the executive

agency.268

The relationship between FERC and the DOE offers an example of the tendency of an executive

agency to expand its own authority at the expense of an independent commission. Although they do not

all work to transfer authority from FERC to the DOE, the net result of the entanglements between the two

agencies described in Part III has been to give the president more power over FERC-jurisdictional

decisions. Although Congress may have included these provisions with the best of intentions, their use by

various administrations and the Trump Administration in particular suggests that their effect may be more

powerful than Congress anticipated. First, Section 402 of the DOE Act permits the Secretary of Energy to

propose rules and policies that fall within FERC’s exclusive jurisdiction. FERC must consider these

policies within a time frame set by the Secretary of Energy, although it need not ultimately adopt them.

This provision, I argue, gives the President at least partial agenda-setting authority over FERC. The

second provision, which appears in Section 202(c) of the Federal Power Act and which the DOE Act

assigned (perhaps by default) to the Secretary of Energy, authorizes the Secretary to require the

generation or transmission of electricity in an emergency. Emergency, however, is defined broadly

enough that a determined Secretary could invoke this authority to override both FERC and other

government agencies, including the EPA, that have responsibility for day-to-day regulation of power

facilities. Finally, the Fixing America’s Surface Transportation Act of 2015 (FAST Act) gives the

Secretary of Energy additional emergency authority to act in the face of physical or virtual threats to the

263 See Lisa Schultz Bressman & Robert B. Thompson, The Future of Agency Independence, 63 Vand. L. Rev.

599, 611 (2010); Rachel Barkow, Insulating Agencies, 89 Tex. L. Rev. 15, 38 (2010) (“[O]nly one person at the apex

can also mean that the agency is more easily captured.”); Robinson, On Reorganizing the Independent Regulatory

Agencies, 57 Va. L. Rev. 947, 962 (1971) (“[T]he single administrator may be more vulnerable” to interest group

pressures “because he provides a sharper focus for the concentration of special interest power and influence.”). 264 There are suggestions that this is precisely what took place when Peabody Energy, the nation’s largest coal

producer, met with Energy Secretary Rick Perry to present their “action plan” to save coal. See Lisa Friedman, How

a Coal Baron’s Wish List Became President Trump’s To-Do List, N.Y. Times (Jan. 9, 2018); Steven Mufson, An

American Energy Plan Straight from Coal Country, Wash. Post (Dec. 8, 2017). 265 [ . . . ] 266 See, e.g. Daryl J. Levinson, Empire-Building Government in Constitutional Law, Harv. L. Rev. 956 n. 166

(collecting sources). 267 Presidents are aided in their efforts to direct executive agencies by the large number of political appointees

embedded in such agencies. See David J. Barron, From Takeover to Merger: Reforming Administrative Law in an

Age of Agency Politicization, 76 GEO. WASH. L. REV. 1095, 1096 (2008). 268 Gillian E. Metzger, The Interdependent Relationship Between Internal and External Separation of Powers,

59 EMORY L.J. 423, 425 (2009) (““[N]o clear line separates forceful presidential assertion of regulatory priorities and

presidential aggrandizement.”).

39

electricity grid. Especially when taken together, these three entanglements shift authority away from

FERC and toward the DOE (and thus toward the president).

In September 2017, Energy Secretary Rick Perry invoked section 403 of the DOE Act in an attempt

to subsidize coal and nuclear power plants in wholesale energy markets. These markets are regulated by

the independent Federal Energy Regulatory Commission (FERC), not the Department of Energy (DOE).

But by proposing a rule for FERC’s consideration under section 403, DOE obligated FERC to spend

months evaluating its rulemaking proposal and reviewing the 1,500 comments filed in response.269 That

attempt failed when FERC declined to finalize the DOE’s proposed rule. But the DOE is now actively

pursuing other options to create coal (and potentially nuclear) subsidies. It has invoked its Federal Power

Act section 202(c) authority twice to allow coal plants to remain open notwithstanding their violation of

environmental requirements and is considering more extensive use of that provision.270 And it may use

the sections of the Defense Production Act discussed above to subsidize the coal industry and coal power

production more broadly.271

Each of these moves expands authority granted to DOE in ways that Congress likely did not intend or

foresee. And each of these moves does so at the expense of FERC’s authority to regulate wholesale

energy markets. By contrast, FERC has declined to invoke Section 404 to review DOE policies or rules.

DOE’s aggrandizement has thus shifted the balance of authority when it comes to the energy mix away

from FERC.

C. Effects on Independence

The statutory entanglements that result from Congress’s efforts to check and balance power between

agencies can tip power in favor of executive agencies in yet another way: by eroding the independence of

independent agencies and bringing them within the ambit of their executive counterparts. This risk of

power-shifting from an independent to an executive agency can be exacerbated if the independent agency

is “nested” within its executive counterpart.

1. Erosion of Agency Independence

There are many reasons to value agency independence beyond concerns about separation and balance

of authority. Independence from direct political control means that independent agency decisions can be

relatively more expert and neutral than those from executive agencies. The most obvious reason for this is

that, while presidents can typically remove the heads of executive agencies for any reason at all, the heads

of independent agencies may only be removed “for cause.”272 Thus agency heads have more discretion to

make decisions that may not align with presidential priorities.

Of particular concern when it comes to agency independence are agenda-setting provisions like the

one in DOE Act Section 403. While this provision does not require the independent FERC to take any

final action, it does obligate the agency to spend time and resources considering DOE’s proposals. The

provision allows an executive agency to effectively commandeer the resources of an independent

269 See Letter from FERC Chairman Kevin J. McIntyre to Energy Secretary Rick Perry (Dec. 7, 2017),

https://www.ferc.gov/DOE-letter.pdf. 270 See Robert Walton and Gavin Bade, FirstEnergy Asks DOE for Emergency Action to Save PJM Coal, Nuke

Plants, UtilityDive (Mar. 29, 2018). 271 See Gavin Bade, Perry: DOE “Looking Very Closely” at Defense Production Act to Save Coal, Nukes,

UtilityDive (May 9, 2018). 272 See Jennifer L. Selin, What Makes an Agency Independent?,

https://www.vanderbilt.edu/csdi/research/CSDI_WP_08-2013.pdf.

40

counterpart.273 That authority is all the more coercive because agencies operate with such limited

resources. Indeed, Eric Biber has argued that courts are particularly deferential to agency resource

allocation decisions because they recognize this pervasive feature of administrative governance.274 One

might argue that, like the “nudges” that have become so popular in regulatory governance as a form of

non-intrusive policy implementation,275 consideration requirements like Section 403 are a good

compromise between directive authority and total autonomy. This provision lessens FERC’s

independence in potentially significant ways and should lead us to clarify our thinking on what agency

“independence” means more generally.276

Kirti Datla and Richard Revesz are undoubtedly correct that agencies rarely, if ever, exist in purely

“independent” or “executive” form.277 Instead, they exist on a spectrum from more or less independent.

We can identify where an agency falls along this spectrum by reference to a list of structural and

functional features.278 But the types of statutory entanglements described here have not been singled out

for discussion. The argument is not that FERC’s status as an independent regulator is somehow incorrect,

only that in understanding “independence” we must be aware of statutory levers of authority that an

executive agency might be able to wield over an independent counterpart.

2. Nested Agencies

The statutory entanglements between DOE and FERC, and the legislative history that produced them,

further provide an opportunity to think about the meaning of agency independence in a nested agency

scenario. An agency is “nested” within another agency if it is located “within” that agency by statute.279

The relationship is particularly intriguing if, as here, the nested agency is ostensibly independent while

the host agency is executive. 280 Examples include not only FERC and DOE, but also the Indian Gaming

273 Cf. Mississippi v. FERC, 456 U.S. 742 (1982) (considering and rejecting argument that congressional

requirement that states consider various utility pricing reforms violated the 10th Amendment). 274 Eric Biber, The Importance of Resource Allocation in Administrative Law, 60 Admin. L. Rev. 1 (2008); See

also Eric Biber, Two Sides of the Same Coin: Judicial Review of Administrative Agency Action and Inaction, 26 Va.

Envtl. L. J. 461 (2008). 275 See Richard H. Thaler and Cass R. Sunstein, Nudge (2009). 276 Proponents of the new Department of Energy often elided the question of consolidation and of agency

independence. President Carter argued, for example, that national energy policy “can neither be effectively developed

nor implemented without a single entity which can overview all of our energy-related programs and needs, and meld

these efforts together into a planned and concerted effort to resolve our national energy problems." He assumed that

consolidation meant consolidation in an executive department. But consolidated authority need not necessarily be

located in an executive department as opposed to an independent agency. Indeed, it is a separate question what

distribution of authority between an executive agency subject to presidential control and an independent commission

with greater insulation from presidential fiat is optimal. 277 Kirti Datla & Richard L. Revesz, Deconstructing Independent Agencies (and Executive Agencies), 90 Cornell

L. Rev. 769 (2013). 278 Id. See also Selin, supra note 138 (suggesting additional features to consider, including quorum requirements);

Vermeule, supra note 138 (proposing that conventions also play a role in defining an agency’s independence). 279 I do not refer here to bureaus or offices within an executive agency. Rather I mean an agency with some indicia

of independence and separate statutory authority from their “host” agency. 280 Representative Robert Drinan (D-Mass.) objected to the very situation of FERC within the DOE, arguing that

“by being located within DOE it seems to me that the Secretary of the Department would have a certain amount of

poweri n being able to influence the processes of the Commission.” H. Rep. 95-346, pt. 1 at 79 (additional views of

Robert F. Drinan). Drinan invoked the specter of an agency “swallowed up by a mammoth Department of Energy,”

unable “to achieve the prestige and importance which would be necessary to maintain true independence in making

energy pricing decisions.” Id.

41

Commission (which is located in the Department of the Interior)281 and the CFPB, which was established

““in the Federal Reserve system.”282

There is a considerable literature on what makes an agency “independent.”283 But there is little

theorizing on the specific relationship between independent and executive agencies in nested scenarios.284

While each nested agency pair will be idiosyncratic in terms of their entanglements, the case study of

DOE and FERC suggests that a key indicator of independence has been hitherto overlooked.

If Congress is creating agencies out of whole cloth in order to separate statutory authorities, as it did

with FERC, or if Congress is creating a new independent agency to balance an existing executive

agency’s authorities, it may be more efficient or more stylistically pleasing to nest the agencies. When

Congress created the Indian Gaming Commission, for example, it located it within the Department of the

Interior in order to effectuate a smoother transition between oversight of Indian gaming activities from the

latter to the former.285 Nested agencies can also share resources with their host departments.286

Nevertheless, nested agencies raise questions about the independence of the nested entity. Either by

design or by default, FERC was officially housed within the DOE. This structural feature, while rarely

discussed today, was top of mind in the years following the bill’s passage. Indeed, early commentators

opined that how to reconcile FERC’s “contradictory status as an independent regulatory commission

within a cabinet department” as “perhaps the most intractable problem” faced by the agency.287

Questions have been raised about the relationship between the head of an executive agency and the

heads of nested agencies. In the legislative history of the bill establishing the National Indian Gaming

Commission within the Department of the Interior, [??] wondered how the commissioners could be

subject to any oversight by the Secretary of the Interior if they were removable only for cause.288

Another question concerns sub-delegation. May the head of an executive agency that officially houses

an independent agency subdelegate responsibilities to that entity? If so, this represents a different kind of

281 Indian Gaming Regulatory Act, 29 U.S.C. §2704. 282 12 U.S.C. § 5491(a). See also 12 U.S.C. § 5493(3) (noting that CFPB employees may choose to participate in

the Federal Reserve System Retirement Plan). 283 Jennifer L. Selin, What Makes an Agency Independent?, 59 Am. J. Poli. Sci. 971 (2015); Kirti Datla & Richard

L. Revesz, Deconstructing Independent Agencies (and Executive Agencies), 90 Cornell L. Rev. 769 (2013); Adrian

Vermeule, Conventions of Agency Independence, 113 Colum. L. Rev. 1163 (2011); Lisa Schultz Bressman & Robert

B. Thompson, The Future of Agency Independence, 63 Vand. L. Rev. 599 (2010); Jacob E. Gersen, Designing

Agencies, in Research Handbook on Public Choice and Public Law (Daniel A. Farber & Anne Joseph O’Connell eds.,

2010); Marshall J. Breger & Gary J. Edles, Established by Practice: The Theory and Operation of Independent Federal

Agencies, 52 Admin. L. Rev. 1111 (2000); Neal Devins, Political Will and the Unitary Executive: What Makes an

Independent Agency Independent?, 15 Cardozo L. Rev. 273 (1993). 284 Emily Hammond has done some work on tensions between independent and executive actors with overlapping

or competing responsibilities. Emily Hammond Meazell, Presidential Control, Expertise, and the Deference Dilemma,

61 Duke L.J. 1763 (2012). But she takes the relationship between the Department of Energy and the Nuclear

Regulatory Commission as her case study. While this case study offers insights into 285 [ . . . ] 286 The IGC was authorized to [request funding and resources from the DOI], subject to reimbursement, in order

to effectuate its mission. [law on transfer of funds absent express authorization within a department?] 287 Grenier and Clark at 326. Grenier and Clark explored this question primarily in the context of natural gas rates

and prices. Id. While natural gas wellhead pricing was a major issue in the years immediately following the passage

of the DOE Act, however, the ultimate deregulation of gas wellhead pricing culminating in the Wellhead Decontrol

Act of 1989 has rendered the issue moot. Today, a far more interesting question is the one this article takes on: how

FERC and the DOE share responsibility for electricity ratemaking. 288 Legislative history of S. 1303.

42

agenda-setting authority. By overloading an independent agency with busy work, an executive agency

could keep the independent agency from making policy in other areas. For example, the Secretary of

Energy has delegated authority to approve the import or export of natural gas across borders under

Section 3 of the Natural Gas Act to FERC.289 Finally, there is the question of whether the head of an

executive agency may deprive a nested independent agency of resources. The answer to this question will

be statute by statute. In the case of FERC, the Commission has its own revenue stream from industry fees

and thus the Department of Energy cannot negatively impact its budget.

3. Agency Independence and the Statutory Separation of Powers

Erosion of agency independence is problematic for the statutory separation of powers if it negates an

independent agency’s ability to serve as an effective counter-weight to an executive agency with authority

over similar subject matter.

In passing the DOE Act, members of congress do not seem to have taken seriously enough the impact

of statutory entanglements on the erosion of FERC’s independence. During consideration of the DOE

Act, congress was clearly aware of the value that independent agencies can provide to government. The

House Committee on Government Operations noted in their report that “[a] special effort was made to

preserve the independence of action and decision of [FERC] and to insulate it from influences from other

parts of the Department.”290 And yet that section refers primarily to structural insulation (including

removal protections) and does not mention the entanglements of Part III.291 Senator Javits described the

Senate compromise as taking seriously those “who believe it is critical that there be a public participation

process with independent decisionmakers” when making energy pricing decisions.292 This independence,

Senator Javits asserted, would “guarantee that prices are not set entirely by those whose interests are

singly directed toward increased domestic production.”293 Again, however, Senator Javits overlooked the

potential influence of DOE on ratemaking through Section 402 and on the electricity sector more

generally through its emergency authority.

Representative John Moss (D-Cal.) was more cautious about the DOE Act’s arrangements. In his

supplemental views attached to the House Committee report, he noted that the very fact that independent

agency authority was being transferred to a new, executive agency was a worry. It is “[o]f the gravest

concern,” he wrote on behalf of himself and a bipartisan group of three other members, “that it is only the

authorities and not the protective structure of these independent agencies which is being transferred to an

executive department.”294 While Representative Moss expressed the utmost confidence in President

289 See, e.g. New Policy Guidelines and Delegation Orders From Secretary of Energy to Economic Regulatory

Administration and Federal Energy Regulatory Commission Relating to the Regulation of Imported Natural Gas, 49

FR 6684-01 (1984) (“the Secretary delegated to the FERC certain regulatory responsibilities for imports that it

exercises over domestic gas, including siting, construction of facilities, and ratemaking”);

https://www.ferc.gov/CalendarFiles/20180129123717-CP17-61-000.pdf (“In Delegation Order No. 00-004.00A,

effective May 16, 2006, the Secretary of the United States Department of Energy (DOE) renewed the delegation of

authority to the Commission to grant or deny authorization under section 3 of the NGA and, if applicable, a Presidential

Permit, for the construction, operation, maintenance, or connection of import and export facilities”). 290 H. Rep. 95-346, pt. 1 at 8 (1977). 291 Id. 292 123 Cong. Rec. S 7920 (daily ed. May 18, 1977) (statement of Senator Javits). 293 Id. 294 H. Rep. 95-346, pt. 1 at 75-76 (1977) (additional views of Rep. Moss).

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Carter and James Schlesinger, the presumptive Secretary of Energy, he underscored concerns about “the

creation of a governmental structure which can be abused.”295

Broad delegations like determining whether rates are “just and reasonable,” Moss continued, should

perhaps only be made to independent commissions. Citing those entities’ structural insulation from

politics, including limits on the President’s removal authority, independent staff, independent litigating

authority, and collegial decisionmaking by a bipartisan group of commissioners, various procedural

protections, and openness, Moss argued that regulation of “critical energy commodities” must remain

with an independent commission.296 Concurring, Representative Clarence J. Brown stressed that,

especially at a time of “passionate politics,” energy pricing must “be insulated from the politics of the

moment . . . in an environment well insulated from [the] political debate and free from the imbalanced

influence of special interests.”297 Ultimately, however, the entanglements congress left behind between

the DOE and FERC threaten to undermine the balance they struck.

D. Adjustment

As the previous sections suggest, it is difficult to calibrate a balance of authority between agencies with

any degree of precision ex ante. While we can predict that any shift in the balance is more likely to favor

an executive as opposed to an independent agency, the question of what to do about this drift remains. If

the ideas of separation and balance are to be preserved, some readjustment is needed.298 But who should

take charge of this recalibration?

Congress is the obvious first choice, but our recent experience of congressional inaction makes that

outcome unlikely.299 What of the other sources of rebalancing? The courts will play a key role. And agencies

themselves can assume a more active role in monitoring power relationships and reasserting themselves to

guard against encroachment.

The judiciary has assumed an unchallenged role as arbiter of the constitutional separation of

powers.300 It plays a key role in policing the statutory separation of powers as well. The degree of its

influence waxes and wanes with the relative authority it assumes over statutory interpretation. And yet

unless Chevron and its progeny are read to override the judiciary’s obligation to “say what the law is” (as

few both admit and condone),301 the courts retain final say over agencies’ respective roles in a given

statutory scheme.

As a threshold matter, it is far from clear that agencies should receive Chevron deference when

interpreting statutory checks and balances. Chevron deference only applies when agencies are interpreting

295 Id. The concern was only compounded, in Representative Moss’s view, by the fact that the authorities to be

transferred were some of the broadest delegations of legislative power to agencies (including the “just and reasonable”

standard). Id. 296 Id. 297 H. Rep. 95-346, pt. 1 at 84-85 (1977) (minority views of Rep. Brown). 298 For a related argument regarding the constitutional separation of powers, see Jon Michaels, An Enduring,

Evolving Separation of Powers, 115 Colum. L. Rev. 515 (2015). 299 See, e.g., Michael J. Teter, Congressional Gridlock's Threat to Separation of Powers, 2013 Wis. L. Rev. 1097,

1103-1104 (charting a significant fall in the number of laws enacted per congress since the 1970s). See also Sarah

Binder, Stalemate: Causes and Consequences of Legislative Gridlock (2003) (assigning each Congress a “gridlock

score” based on a ratio of legislative output to extensiveness of agenda and finding that gridlock has increased over

time). 300 List some representative examples and/or citations from law review articles. 301 Marbury and a list of Chevron’s defenders and critics.

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statutory language that they have been authorized to administer.302 Consider Section 403 of the DOE Act.

Neither FERC nor the DOE has been “authorized to administer” the DOE Act as a whole.303 Instead, the

statute divides authority between them. What of the individual provision? The Section gives DOE the

authority to propose rules and policies for FERC’s expedited consideration. But the Section is directed at

both agencies, permitting “the Secretary and the Commission” the authority to propose rules and

policy.304 Furthermore, the obligation to consider a proposal appears directed at the Commission, and not

the Secretary. Even where a proposal comes from the Secretary, the statute states that “[t]he Commission

shall have exclusive jurisdiction with respect to any proposal . . . and shall consider and take final action

on any proposal . . . in an expeditious manner.”305

Courts faced with the question of how Chevron applies to multiple-agency statutes have not reached

consensus.306 Some courts give less or no deference to agency interpretations in such cases,307 while

others select a lead agency and defer to its interpretation. And for some general statutes that apply across

agencies, such as FOIA or the APA, no deference applies.308 For now, therefore, given any particular

statutory entanglement, whether or not courts will defer to an agency’s interpretation depends on the

specifics of the entanglement itself and the deciding court.

When in doubt, however, it would be desirable for courts to assume the primary interpretive role

when it comes to agency entanglements, especially where the agencies involved disagree about the

correct interpretation of the text.309 In doing so, they could prevent aggrandizement through expansive

interpretation of agency authority that might disrupt the balance established by Congress. For instance,

the courts might interpret DOE’s emergency authority under Section 202(c) less expansively in terms of

the type of emergency that triggers it so that DOE cannot use the provision to circumvent FERC’s

authority to regulate energy markets.

Agencies too, and independent agencies in particular, should also assume a more active role in

monitoring and rebalancing power relationships. FERC, for example, could be more aggressive in

exercising the statutory entanglements that cut in its favor. As discussed in Part III, FERC has rarely

invoked its authority to comment on DOE policies and rules that affect its jurisdiction. If this is because

the DOE is not notifying FERC of such policies and rules (as required by the Act), litigants could bring

302 See, e.g. American Council on Educ. v. F.C.C., 451 F.3d 226 (2006) (noting that the courts may not substitute

their own interpretation of an ambiguous statute for an agency’s if the agency has been “authorized to administer the

statute in question.”) (quoting Citizens Coal Council v. Norton, 330 F.3d 478, 482 (D.C.Cir.2003). 303 See American Rivers, Inc. v. FERC, 129 F.3d 99 (2d. Cir. 1997) (declining to defer to FERC’s interpretation

of the Clean Water Act because it was not authorized to administer that statute). 304 42 U.S.C. §7173(a). 305 42 U.S.C. §7173(b). 306 See, e.g. Martin v. Occupational Safety & Health Review Comm'n, 499 U.S. 144 (1991) (resolving a dispute

involving multiple agency interpretations in a split-enforcement regime in favor of the Secretary of Labor); Daniel

Lovejoy, The Ambiguous Basis for Chevron Deference: Multiple-Agency Statutes, 88 Va. L. Rev. 879 (2002) (noting

disagreement among courts). 307 Lieberman v. FTC, 771 F.2d 32, 37 (2d Cir. 1985) (affording the interpreting agency less deference than if it

alone administered the relevant statutory provision). 308 See Collins v. Nat'l Transp. Safety Bd., 351 F.3d 1246, 1252-53 (D.C. Cir. 2003) (explaining that no deference

is given for interpretations of general statutes because the Chevron justifications of specialized expertise and the

potential to achieve unified interpretation are absent). 309 But see William Weaver, Multiple-Agency Delegations & One-Agency Chevron, 67 Vand. L. Rev. 275 (2014)

(proposing that courts be ultra-deferential to interpretations that are the product of more than one agency’s actions);

Catherine M. Sharkey, Agency Coordination in Consumer Protection, 2013 U. Chi. Legal F. 329 (2013) (suggesting

that courts provide extra deference to agency interpretations where two agencies with responsibility for the statute

concur).

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challenges in court. Otherwise, FERC could more aggressively exercise this check on DOE authority as a

way to counter-balance the Department’s expansionist efforts.

Conclusion

Given the indeterminacy of energy law and the inescapable influence of policy and politics in energy

decisionmaking, managing delegations to ensure that no one interest predominates in federal energy

regulation is an appealing approach. The Department of Energy Organization Act of 1977 offers a

compelling case study that highlights both the advantages of a statutory separation of powers as well as its

pitfalls. If its drawbacks can be addressed effectively, however, statutory separation of powers offers a

possible solution to the puzzle of decisionmaking in the presence of legal indeterminacy and values

pluralism. As Elizabeth Magill noted with respect to more complex divisions of powers between

government actors and across branches, “[t]his kind of fragmentation is complicated, even chaotic, but it

is also our assurance against threatening concentrations of government power.”310

310 M. Elizabeth Magill, Beyond Powers and Branches in Separation of Powers Law, 150 U. PA. L. REV. 603,

651 (2001).