Overview
Order No. 872 made a number of revisions to FERC's PURPA regulations in order to grant states and non-regulated utilities greater flexibility and additional options for implementing PURPA. In Order No. 872, FERC found that these revisions did not require an Environmental Assessment (EA) because the rule did not authorize a particular project and any environmental impacts were not reasonably foreseeable. However, the Ninth Circuit found an EA was necessary to study the "possible effect on greenhouse-gas emissions" that might result from "shifting production away from renewable production and toward fossil-fuel production" because such impacts "undoubtedly fall within NEPA's zone of interests." (For now.) Prior to preparing the EA, FERC opened a comment period, receiving no comments. Comments on the EA are permitted and are due by October 16, 2025. Although summarized below, perhaps the most interesting thing about the EA is whether a presumably Republican-majority FERC will rule on the EA or await for the inevitable EPA finding that greenhouse gas emissions from fossil fuel-fired power plants do not contribute significantly to dangerous air pollution and declare the Ninth Circuit's order and the need for EA moot.
The new Republican FERC Commissioners are likely to be seated by the time an order is issued on the EA. Despite the fact that the full Commission would presumably support the EA's "no significant effect" finding, the contents of the EA could prove problematic for the Republican Commissioners. Citing years of federal government studies, the EA's contents reflect the long-held view that climate change is a clear and present danger. For example, the EA discusses various (pre-Trump Administration) US government sources’ conclusion that "climate change has resulted in a wide range of impacts across every region of the country and globe." Staff-cited government reports note that climate changes include "changes to water resources, agriculture, ecosystems, human health, and ocean systems." Staff also cites from government reports that oceans are rising and acidifying and weather events are becoming more frequent and severe. It thus may be difficult to place any stamp of seeming approval on the EA. Given the Order No. 872 Final Rule already is effect, by waiting for the EPA to eliminate the endangerment finding as relates to greenhouse gas emissions from power plants, waiting for an EPA Final Rule that moots the stated need for the EA in the first place may be an option for the Commission. In contrast, once a Republican-majority Commission is seated, they may face permitting/siting cases in which the EAs/EISs similarly reflect the EPA's historic position. In those cases, delay until EPA issues a Final Rule will be more problematic, as the EPA may take several months to rebut the significant comments opposing the Administration’s views on climate science before issuing a Final Rule.
A brief summary of the EA follows:
FERC Staff performed an EA limited to the effects of greenhouse-gas emissions, as the court instructed. As a first step, Staff examined the effects of Order No. 872 on QF development. Staff compared pre-Order No. 872 and post-Order No. 872 development of QF and non-QF generation. Staff used a time frame of 2014 to 2023. Staff limited their review to the impact of small power production QFs and not cogeneration QFs because several provisions of Order No. 872 apply only to QFs. Staff also limited the analysis to wind and solar QFs, because they represented 99.5% of all QF capacity installed between 2014 and 2023. Staff noted that the analysis is "subject to a significant degree of uncertainty."
The EA explicitly excluded analysis of impacts on geology, soils, water resources, vegetation, wildlife, cultural resources, land use, aesthetics, air quality, and noise. These exclusions are due to the inability to predict specific QF projects or locations affected by Order No. 872.
Staff described how the impact of Order No. 872 on development was speculative particularly because the order granted states and local utilities the ability to choose whether and how to apply some provisions. Staff explained that some changes might result in fewer QFs but that the order might provide a level of certainty on avoided cost rates that would encourage QF development.
Specifically, Staff provided analysis regarding the potential impact of the following regulatory changes: 1) variable cost rate options; 2) a more clearly defined Legally Enforceable Obligation standard; 3) the removal of the filing fee for protests of QF status; 4) simpler recertification requirements for rooftop solar developers; and 5) the mandatory purchase threshold reduction for renewable QFs. Staff’s conclusion for each of these elements was that the impacts were minimal, uncertain, or offset by other factors. Staff also found that the simplifying assumptions used to estimate the impact of QF regulations when PURPA regulations first issued could no longer be relied upon due to the increased complexity of the wind and solar markets, the effects of Covid-19 on facility development, the Infrastructure Investment and Jobs and the Inflation Reduction Acts, and state level renewable portfolio standards. Staff elaborated further that while it could identify new QF and non-QF capacity, it had no way to determine the extent developers relied upon Order No. 872 in making decisions.
Based on QF development over the 2014 to 2023 time periods, Staff ultimately estimated that Order No. 872 did not result in any decrease in QF solar facilities. As to QF wind, Staff estimated that there could have been a reduction in QF wind due to Order No. 872. Staff then estimated that the total reduction in wind, projected using a linear regression from implementation through 2026, was 6,216 MW, noting this could be an over-estimate due to other factors including falling solar prices. Having concluded that this reduction in wind capacity was the only possible impact, Staff moved onto estimating greenhouse gas emissions’ impacts of such a reduction.
Staff concluded that the potential reduction in wind generation, if attributed to Order No. 872, resulted in an increase of "approximately 0.1 percent of annual CO2emissions from power plants." Staff noted this calculation should be considered "an upper bound" and was "very conservative" or "overstated." Staff went on to state that, even with this value, they haven't identified a methodology to attribute the increase in CO2's physical effects on the environment. Nor was Staff able to identify an "established threshold" for significance of an increase in CO2 levels. Thus, ultimately Staff declined to characterize the potential change in CO2 as significant or insignificant.
Staff also examined cumulative impacts, examining only climate change. Staff explained it was unable to assess Order No. 872's contribution to climate change through any objective analysis of physical impacts attributable to Order No. 872. It concluded that "Order No. 872 is likely to have at most a negligible effect, if any, on overall GHG emissions from the electric generation sector generally. As stated above, staff's analysis is speculative and subject to a high degree of uncertainty."
