Harvard University is laying out what it considers a rock-solid legal argument against Energy Secretary Rick Perry's plan to boost coal and nuclear power plants.
It hopes its case will make the Perry proposal dead on arrival once the Federal Energy Regulatory Commission moves through the comment period and rules on the plan. But even the public comment period is not legally necessary, according to the law school's Harvard Environmental Policy Initiative.
"The commission has no legal obligation to accommodate" Perry's notice of proposed rule-making, the law school's environmental policy arm said in a five-page legal analysis filed with FERC Thursday. "Its simplest path forward is to reject the [proposal] because it is fundamentally inadequate to provide the basis for a final rule."
Harvard's analysis was sent ahead of the Oct. 23 deadline for submitting public comments on the proposed rule that would implement the Perry grid plan. The plan has attracted a growing number of detractors from nearly all segments of the energy industry, conservative and liberal think tanks, former FERC chairmen and members of Congress.
Perry's proposal seeks to provide market-based incentives for coal and nuclear power plants that are able to store 90 days of fuel onsite in the event of a severe supply disruption from a hurricane or other severe weather.
The core of Harvard's legal case stems from Perry's lack of basis for taking the action under the Federal Power Act, the law from which the commission derives its authority over the power grid.
"Critically, the [rule-making] does not propose that wholesale rates are currently unjust and unreasonable or unduly discriminatory," Harvard's comments read. "This glaring omission dooms DOE's proposal under section 206 of the Federal Power Act and allows the commission to issue a swift rejection without weighing in on the merits."
FERC must justify any regulation that provides cost recovery or incentives for fuel resources on the Federal Power Act's primary charge that the commission must protect energy prices from becoming burdensome on the consumer. Harvard argues that the Energy Department does not address this central tenant of FERC's authority in proposing the regulation and therefore the commission can reject it at any time.
The legal analysis refutes the Energy Department's argument that "wholesale markets do not price 'resiliency'" and therefore FERC must take action. Perry's resilience argument "does not substitute for an explicit proposed finding that current rates are unjust and unreasonable," according to the analysis.
On top of the legal flaws, the Energy Department "does not define 'resiliency,' nor has the commission ever used that word in connection with wholesale rates," the Harvard analysis said. So, there is no common definition to debate or discuss. Harvard goes even further by saying the proposal should not be considered adequate for public comment.
"DOE's bare assertion that rates do not account for undefined attributes does not provide adequate notice necessary for meaningful public comments," according to the analysis.
The analysis could provide a legal argument for challenging the Perry plan in court, although groups haven't reached that stage. Typically, lawsuits come after a regulation is finalized. Perry wants FERC to finalize the rule within 60 days of the proposal appearing in the Federal Register, which points to December.
A group of eight former FERC chairmen and commissioners also filed comments Thursday, calling the proposal "a significant step backward from the commission's long and bipartisan evolution to transparent, open, competitive wholesale markets."
"Pursuing the worthy goal of a resilient power system, the commission's adoption of the published proposal would instead disrupt decades of substantial investment made in the modern electric power system, raise costs for customers, and do so in a manner directly counter to the commission's long experience," the former FERC officials stated.