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Environmental Justice State & Regional Climate Strategies

CleanLaw — The Future of Environmental Justice

Massachusetts Attorney General Andrea Joy Campbell, Vernice Miller-Travis, and Hannah Perls discuss the Trump administration’s efforts to dismantle federal EJ initiatives and how states and communities are responding


EELP Senior Staff Attorney Hannah Perls speaks with the Attorney General of Massachusetts, Andrea Joy Campbell, and Vernice Miller-Travis, Executive Vice President and Environmental Justice Lead at the Metropolitan Group. They discuss the Trump administration’s efforts to dismantle federal environmental justice and equity programs, funding, and priorities, and what those changes mean for critical infrastructure, toxics-free housing, access to clean air and clean water, and more. They also discuss what states and community-based organizations are doing in this moment to safeguard public health and environmental protections in Massachusetts and nationwide.

Key Resources

Multi-State Guidance Concerning Diversity, Equity, Inclusion, and Accessibility Employment Initiatives, from 16 state attorneys general, Feb. 13, 2025

Toxic Wastes and Race in the United States, a report from the United Church of Christ’s Commission for Racial Justice, 1987

Searchable map of facilities invited by EPA to apply for Presidential exemptions from air pollution limits, compiled by EDF, April 30, 2025

Transcript

Hannah Perls:

Welcome to CleanLaw from the Environmental and Energy Law Program at Harvard Law School. I’m Hannah Pearls, a senior staff attorney with EELP, and in this episode I speak with the Attorney General of Massachusetts, Andrea Campbell, and Vernice Miller-Travis, executive Vice President and Environmental Justice Lead at the Metropolitan Group.

We discuss the Trump administration’s efforts to dismantle federal environmental justice and equity programs, funding and priorities, and what those changes mean for critical infrastructure, toxics-free housing, access to clean air and clean water, and more.

We also discuss what states and community-based organizations are doing in this moment to safeguard public health and environmental protections in Massachusetts and nationwide. We hope you enjoy this episode.

Thank you both for joining. Vernice, Madam Attorney General, just really appreciate you both taking the time to be on CleanLaw today to have this conversation, and I didn’t realize you two don’t know each other.

So this first question was designed for our listeners, but I think it’s also a great way for you to introduce yourselves to each other. You are both sort of lifelong public servants in the best sense of the word, and I was wondering if you could just talk a bit about what it is that has made you dedicate your life to public service and especially this focus on community health, on environmental justice, what gets you out of bed every day, and whomever would like to start. Madam Attorney General, Vernice?

AG Andrea Campbell:

I’ll be delighted to start. Hannah, thank you for your leadership. Thank you for having me. Vernice, it’s an honor and privilege to be on with you, and we are both young and fabulous Black women, and that makes me feel good. I am the first Black woman to serve as the attorney general of Massachusetts, and I carry that with a sense of purpose, seriousness frankly, in this moment in time that it deserves, also humility.

But I do think it’s worth sharing that my path to this office was certainly not a straight one. I was born and raised in the city of Boston, and if you know anything about Boston, you have to name every neighborhood you ever grew up in. So I grew up in the South End in Roxbury. I’m a public school kid, went to five public schools including Boston Latin School, and then went off to Princeton University and UCLA Law School, first in my family to go to college, first in my family to go to law school.

My life entangled in many ways with the criminal legal system, which absolutely informs our conversation today because we know this work is certainly intersectional, and sadly, my mom, when I was eight months old, died in a car accident, going to visit my father who was incarcerated at the time.

My father was incarcerated for the first eight years of my life. So I didn’t meet him until I was eight years old, and my brothers and I bounced around living in the foster care system, and sometimes with my grandmother who struggled with alcoholism. Then my father would get out of prison when I was eight and suddenly die when I was a sophomore at Princeton.

I talked to him one morning. He died the same evening when I was 19 years old. That trauma and tragedy would continue with the loss of my twin brother, Andre, who would die at the age of 29 on the custody of the Department of Correction as a pretrial detainee, as a result of receiving inadequate healthcare while in that system.

So issues of public health, issues of just basic public safety, issues of addressing communities that have ever felt left out or left behind, or people that have ever felt left out and left behind are near and dear to me, and really, a focus of the office, equity in its truest sense, not just because we do the work well through this equity lens and we know what it means, but most importantly, for me, it is personal and professional and an opportunity to turn pain into purpose.

We know if we have communities that are rich in health opportunities and opportunity, generally, we can do remarkable things, and folks can reach their true potential in their dreams. So really delighted to be on with you today.

Hannah Perls:

Thank you for sharing that background, and you had said know equity because we know what it means, and I definitely want to get into what that means. But, Vernice, I want to turn to you first and just give you a chance to share a bit of your story as well.

Vernice Miller-Travis:

Thank you for that really deep personal sharing. I am from the Harlem community in New York City. I was born in a public hospital, Harlem Hospital, where both my parents worked. My mother was a pediatric nurse there for 43 years, and my dad worked there supervising the part of the hospital where you go to get clinic appointments, follow up with doctors, et cetera, et cetera.

He worked at Harlem Hospital for 36 years, and Harlem Hospital was the sort of central institution in our community. You either worked there, or you knew somebody who worked there, or you certainly went there for healthcare, but it was also a village unto itself.

So because my mother worked there for so long and because I was born there, when I would come from school every day in elementary school, my school was about three blocks over from the hospital and we lived five blocks over from the hospital, and so my first stop would be in my dad’s office and drop my school bag, and then I would go upstairs on the pediatric children’s ward to see my mother.

Now, little kids are not normally allowed in that part of the hospital, but because I was the child of my father who was also a labor leader at the hospital, District Council 37, big union in New York City, municipal employees union, and my mother was Local 420 of the same union. I didn’t realize it at the time, but this sort of charmed life that I could sort of go anywhere and walk anywhere in the hospital without an escort.

But, really, my first stop when I would come into the hospital would be to go through the emergency room doors where the ambulances came through, walk right through a little kid, and stop at the desk of the head nurse there, Miss Vernice Williams, who was my mother’s first supervisor, and I was named after her.

So every day, when I would come to the hospital from school, I would stop to get a big jolly hug from her. Then I’d go see my dad, then I’d go see my mother. Growing up in a situation like that with lots of turmoil, so there was both a lot of poverty, a lot of violence, a lot of disease.

I was just telling someone yesterday that a dear friend of mine in New York who was a nurse also, that I had every childhood disease that one could have. Even though my mother was a nurse, we were just starting to inoculate children when they started school. This was 1965. But I got every childhood disease because we were still in the waning throes of the Black Migration from the South to the North, and lots and lots and lots of Black folk came from the South to Harlem in particular.

Harlem was a magnet for Black people from all over the world, and it was a wonderful thing to grow up there. My dad was West Indian, a Caribbean immigrant from The Bahamas. My mother was from Maryland, my mother, my grandmother. People from Africa, from the Caribbean, from every part of the United States, were magnetized and drawn to this community because it had such an extraordinary reputation for being a place where Black people could be relatively safe and could express their culture, their intellect, their hardworking nature, everything.

There were working class folks. There were immigrants. There were people from all around the world. There were professional folks in Strivers’ Row. There was up on the hill in Sugar Hill. There was the remnants of the Harlem Renaissance and the writers. Thurgood Marshall lived up on The Hill. So it was a pretty extraordinary place.

So about 350,000 people lived there when I was growing up, and I was sort of right in the middle of a lot of social change and social movement that my parents were also involved in. But most importantly, both of my parents worked for the city of New York, for the New York City Department of Health and Hospitals, and they worked there their whole entire lives. It was the only job my mother ever had.

So the notion of public service, and serving your people, and serving your community was just the thing that was in my household, was in my community, was among my father and mother’s friends, was flowing out of my church, my extraordinary, extraordinary teachers at public school, 100 Matthew Henson Elementary School, which was in between where I lived and the hospital. So my universe was five blocks.

Lenox Avenue is the street that I lived on, and it just was a magical, magical experience. Now, other people would look at it and say, “Wow, there was a lot going on, and it was really rough.” For me, when I look back at those times, everything that I am and everything that I’ve ever done in my life is because I grew up in that community and I was raised by that community in that village, and that’s how I got to be who I am.

Hannah Perls:

Oh, thank you both. I lack words. Just, I’m really grateful to you both for sharing that personal context, and we’re going to zoom out and talk about sort of legal terms. But just really, thank you both for sharing that story.

I wanted to come back to something that the Attorney General said about leaning into equity because we know what it means. This is a podcast about environmental justice, environmental justice in this moment, and I think the first thing we have to do, this is a law podcast after all, is define our terms.

So I want to ask you both, when you talk about environmental justice, whether it’s with your staff, or with community members, or with advocates, what are you talking about? What does environmental justice mean? What are environmental justice communities? Let’s break it down.

AG Andrea Campbell:

I’m absolutely happy to start, and I, too, have goosebumps hearing just Vernice’s story around New York Harlem. For a long time, and this is not related to environmental justice, I had a 917 number when I lived in New York and worked in New York as a paralegal when I was thinking about going to law school.

So post-Princeton was in New York. Several places including Harlem, went out to California and then eventually came back to New York. And so folks would joke, are you from New York or Boston? Because Boston’s 617. New York is 917, but that true sense of community in Harlem is real, and the Black history there is one that should offer us inspiration in this moment in time, of course, along with the history of Boston. So just delighted to be on in this conversation with you.

Equity, obviously, when we talk about it in the climate justice environmental context, we’re talking about environmental justice. For us as an office, it has been really critical to pull that apart. So I appreciate the question to get the average person to understand why they should care about what we’re going to talk about today.

It’s simple. It’s ensuring that every resident, everyone who is in our community has equal access to basic human needs. This includes clean water, clean air, freedom from the exposure to toxic chemicals, equal opportunity to enjoy nature, to go to a park, to share in this clean energy transition and not have it fall on the backs of certain communities, about making sure that communities and people have a say in the very decisions that will affect them.

So this bottom-up approach versus top-down that government tends to use. Then getting really specific in terms of data points that I think are relevant, at least from the Massachusetts perspective, when we talk about environmental justice, it’s really looking at the communities that have borne the brunt of the injustice, frankly. And largely coming from government, at times, that would have certain statistics created in certain communities that are actually, I think, quite horrific.

So even now, over one in 10 adults and children in Massachusetts live with asthma, and that’s higher than the national average. Some communities feel that more than others. Some communities are more proximate to pollution sources than others. Environmental justice, for example, in New Bedford where I am sitting in our New Bedford office, New Bedford has almost twice the asthma hospitalization rate of the Commonwealth as a whole. This is a community of color.

So it’s pulling apart, and I won’t go into every detail, I want to save time for other questions, really pulling apart these data points that lift up these communities, largely poorer communities, communities of color, that have borne the brunt of this climate injustice, this environmental injustice we have seen for decades, some may even say centuries, and making sure the lens in which we do the work in our office accounts for that and prioritizes those communities to have our folks at the table.

Most importantly, the solutions and the resources and the investment are also targeted to those communities first.

Vernice Miller-Travis:

So I would just echo what the AG has said. I had the great privilege shortly after college, before graduate school, of working at the United Church of Christ Commission for Racial Justice. United Church of Christ is a Protestant denomination. It is actually the church that is built on the remnants of the church established by the Pilgrims when they first arrived in Plymouth, Massachusetts.

This is the remnants of that church. I think they established a church called Church of the Brethren, and we are the modern remnants of that church. It’s a mostly white church, but it’s a very segregated church. But there are Black churches. There are Asian churches. There are Latino churches. There are white churches within United Church of Christ, and it’s a very small Protestant denomination, but very, very progressive.

At the time, the UCC was headquartered in New York City, in midtown Manhattan, and I went to college in Harlem. When I say that people will think I’m talking about City College, I’m actually talking about Barnard College and Columbia University, which is smack in the middle of the Harlem community. I became very politically active and wound up being on a national defense committee for these political prisoners in North Carolina called the Wilmington Ten.

One of the leaders of the Wilmington Ten was a minister in the United Church of Christ named Ben Chavis, and Ben Chavis, when he got out of prison, he and his other cohorts who were registering Black folks to vote in North Carolina and were arrested, and imprisoned, and convicted for fomenting a riot. I think they were literally registering Black people to vote, and they spent about four years in prison, and then were exonerated.

When Ben got out of prison, he came to Union Theological Seminary to finish his PhD. While he was in prison, he got his Master’s in Divinity from Duke University. So I don’t know what was going on in the North Carolina penal system, but he did manage to do that while he was in prison. A classmate of mine in college told me, she said, “You know, you’ve been working on that issue of trying to get the Wilmington Ten out of prison. Well, you know that Ben Chavis is coming to New York to go to Union Theological.”

The reason that that was so important is because Union Theological is directly across the street from Barnard College, and it’s also across the street from my home church, the Riverside Church, and I’m like, “Yeah, no, he’s not coming to New York.” They said, “Yes, he is.” So I spent the rest of that year, and I want to say that was probably 1980:

Every time I would walk from my apartment to campus, which was about three blocks, I would be scouring looking for Ben Chavis, right? Like, “One day, I’m going to run into this man on the street.” Sure enough, I ran into him on the corner of the block that I lived on. He lived on the same street, one block over closer to Union Theological Seminary, and I invited him to come and talk to the Black students’ organization. He did. We kept in touch.

For the next four years, I would call Ben every six months to say, “You know, need to hire me because I’m the future of the civil rights movement. You all are getting old, and you need some new blood, right?” One time, I called him, and Ben said, “Well, we’re getting ready to do this special project on toxic injustice, and I don’t know if you’d be interested, but why don’t you come and meet with our research director, Charles Lee? If the two of you hit it off, then you know can come and help us.”

I had no idea what toxic and injustice had to do with each other or why he would put them in the same sentence. But I didn’t care because I really wanted to work at a civil rights organization. I went down to Midtown Manhattan to meet Charles Lee expecting that Charles was going to be Black. Charles is Chinese American, and he was the research director at the United Church of Christ Commission for Racial Justice.

He explained to me this concept of what they were doing, this research project, and they were looking at three things, and to see if there was an interrelationship between these three things, the location of every hazardous waste site in the United States as captured by US EPA in the national priorities list, the residential zip codes in which those hazardous waste sites were located, and the racial composition of those residential zip codes to see if there was a relationship between those three things.

We found, in doing that research, that race proved to be the most statistically significant indicator in where these hazardous waste sites were located. We produced a report in April of 1987, Toxic Waste and Race in the United States. In that report, Hannah, we said that the environment is where you live, where you work, where you play, where you worship, everything in your life, everything is encompassed by the environment.

There is nothing that you can do and nowhere that you can go that the environment will not be right there with you, and we were casting a new definition of what the environment meant because up until that time, the environment meant some pristine place that you needed to go and see to travel to get to to see that natural landscape, to see that wonderful coastline, to see that beautiful forest, to see that prairie, to see those animals in their natural habitat.

But it didn’t mean Lenox Avenue and 140th Street. What we were trying to tell people is that the environment is right where you are, and everything, the water quality, the air quality, the presence of hazardous substances, industry, transportation sources, roadways, highways, byways. They all impact our lives as people of color decidedly differently than they do for the average white person.

So we came forward with this definition. The environment is about where you live, where you work, where you play, where you recreate, where you worship. It is everything that encompasses your day-to-day existence.

Hannah Perls:

I’m realizing my job is now very hard because somehow I have to summarize, which I don’t think can be done, Vernice. I always admire your ability to talk story, and there’s so many gems in everything that you say and the stories you tell.

I think what I want to do is we’re really going to dig into the Trump administration in the first 100 days, but grappling with this really big and personal definition of environmental justice, I think if we lean into the best version of what the Trump administration says environmental justice is, what we’re hearing from conservative judges who have been making decisions against environmental justice organizations and causes of action, I think that argument goes something like this, that under President Biden, federal agencies, including EPA and the Department of Justice used the terms environmental justice and equity as a proxy for unlawful race-based decision-making including in how they allocated funds and how they exercise their enforcement discretion.

What I hear you both saying, and this is an invitation to correct me, yes, the environmental justice movement is, of course, rooted in the civil rights movement, and it is responding to these grave and very real injustices created by racial discrimination, as Vernice, you were saying, the siting of polluting facilities, the choice to not enforce or not invest in certain communities, particularly communities of color.

And, what environmental justice as a movement looks like in practice is one outside of the federal government, which I know Vernice will talk about, and it’s also affirming basic democratic norms. So Attorney General Campbell, this is what I heard you say, it’s about working to ensure equal access regardless of your race, regardless of your income, national origin, language, disability, gender.

That equal access is both access to clean air, clean water, green space, the freedom from fear that your kids are going to get asthma walking to school, but also then, equal opportunity to inform those key decisions that affect your health. So equal access both to environmental benefits and also equal access to governmental decision-making.

So we’re now a hundred days into the second Trump administration, and I want to be really clear-eyed about the short- and long-term consequences of what Trump’s executive orders and agencies’ early actions mean for everyday folks, what impact will these actions have on people’s health, on the environment, and the critical services that we rely on every day.

So I tried to make this as quick a summary as possible, but please chime in if I’m missing anything critical here. So at the start of his second term, President Trump issued two executive orders addressing DEI, diversity, equity and inclusion. Just as a quick reminder for listeners, executive orders cannot create new legal obligations. These are basically authoritative memos to federal agencies on how to implement laws passed by Congress.

So for example, if Congress tells EPA to regulate certain types of air pollution under the Clean Air Act, the president could issue an executive order telling EPA what priorities to consider when it implements the law, but he can’t change the law and he can’t change or have any effect on states or industry. So Trump issued these two executive orders addressing DEI.

In those orders, he argued that the Biden administration forced “illegal and immoral discrimination” into all aspects of the federal government under the auspices of advancing DEI. President Trump then ordered all federal agencies to terminate their DEI programs, and he included environmental justice and equity into that mandate.

Now, notably, the orders do not define DEI or environmental justice. Since then, the administration has used this rationale of eliminating unlawful DEI, including environmental justice to scrutinize and claw back billions in federal funding across the government to walk back environmental enforcement actions, and of course, fire agency staff.

I’ll note, also, separately, President Trump issued an executive order declaring a national energy emergency, and federal agencies have used that emergency to now justify granting pretty significant exemptions for industry under current pollution and permitting rules. So here’s our overview.

Just to give a few examples of these changes to federal funding and enforcement, just to really make it concrete, in the first 100 days of the Trump administration, EPA has paused or terminated again billions with a B in federal funding. Much of that money was actually allocated by Congress under the Inflation Reduction Act and the Bipartisan Infrastructure Law.

A majority of that money, as of course, AG Campbell knows, was slated to go directly to state and local governments, of course, including nearly 40 million in Massachusetts for programs that reduce the incidence of asthma in rural communities, provide mental health services or improve air quality in schools, and of course, on January 28th, Massachusetts, along with 22 other states sued the Trump administration for pausing those funds.

I’ll also note on enforcement, EPA and the Department of Justice have revised their enforcement priorities and reversed course on several actions arguing that those enforcement actions were based on unlawful race-based preferencing. So this includes withdrawing a consent decree that would have required investigation of the failure of local government in Lowndes County, Alabama to provide basic sewage infrastructure to their constituents.

It also includes dismissing a suit against Denka, a company that operates a petrochemical facility in Cancer Alley in Louisiana for alleged violations of the Clean Air Act. I’ll also note again, though not explicitly tied to the administration’s anti-DEI initiatives. The administration recently granted over 40 power plants across the country, a two-year extension to comply with pollution standards governing mercury and other hazardous air pollutants. This is based on the argument that these rules, these pollution standards place a “unbearable burden” on coal generators.

Two-thirds of these facilities are in low-income census tracts that already suffer high exposure to toxic chemicals. This is, of course, just a sample of what we’re seeing so far. So I want to turn now, as we think about those first hundred days of the Trump administration, what do you both see as both the immediate and long-term consequences of these rollbacks in federal funding in enforcement, both in Massachusetts and nationwide? Maybe, Attorney General Campbell, we can start with you.

AG Andrea Campbell:

So we are in unprecedented times. I actually feel as though I have to tell folks and including folks who were intimately part of pushing back on the Trump administration in Trump 1.0, that this is not Trump 1.0.

Trump 2.0 is extremely different. It is faster paced. It is more egregious, more chaotic. It is more unlawful, more unconstitutional, and it absolutely is more cruel in, not only targeting specific people and specific demographics, but doing it with a fearmongering strategy that is atrocious to say the least.

There are people, even as we sit together in community on this podcast, that are living with real fear, and even when we hang up from this podcast, will be still living with real fear. So we are doing everything we can through our office and with other AGs across the country to fight back and to do it with a sense of urgency and without any fear whatsoever.

I have no fear, not just because of my personal narrative, but also what Vernice lifted up because we know our historical context and those who fought and died years before, decades before, centuries before for us to take our rightful place and even to sit and have this conversation with you, Hannah, and not be arrested while doing it.

So with that context of what’s really at stake, we have no time to waste. What we’re seeing, at least at the outset, was an administration that immediately was looking to target the hundreds of millions of dollars coming to Massachusetts for all types of environmental and climate purposes, whether that was efforts that we had in partnership with the federal government to improve public health, to monitor air pollution, to address asthma rates as we described, to ensure folks have access to clean and safe drinking water, to address PFAS, to address all the things and ways in which we want folks to move towards solar and other ways in which to improve their homes, all of the ways in which we would be able to work with our residents to be a part of our transition to clean energy, all of that funding under threat.

So as we were evaluating the executive orders and other actions being taken by the Trump administration, we joined efforts with other AGs across the country, not only lifting up the threats of what that would mean in terms of those billions of dollars cut to our states, but we knew if we collectively came together and fought back, we could win, and we did that. We fought and filed several lawsuits to address funding freezes.

As I just described, we’ve won a preliminary injunction to continue to have billions of dollars, not just flow to Massachusetts, but other states to address these programs and to make sure these funding initiatives and programs that help our residents dealing with these daily issues, that the money continues to flow.

Then lastly, the grants for climate Justice, the grants for environmental justice that go to individuals but also community-based organizations remain under threat. So we have had to continue to fight for them because these are infrastructure projects. These are also projects that create jobs, create opportunity, allow communities to build wealth, what complements the public health pieces of this.

Some may say, when we do this work, we should look at it only through a public health lens because it captures it all. But that being said, organizations also are in fear of losing their funding if, for example, they are pushing forward with DEIA initiatives and policies, if they are using the environmental justice terminology and using that frame.

So the conditions that the administration is also attaching to funding, we are also going after that, and I’m proud of the effort not only of our office, but the efforts of Democratic AGs. No Republicans can be found, not for lack of trying, but Democratic AGSs that are on front lines of creating real meaningful response through our litigation and other efforts to make sure this funding continues to come to Massachusetts and our respective states.

Hannah Perls:

Vernice, I’m curious if you would add anything just about the nationwide scope, what you’re seeing from the pause in federal funding from the enforcement discretion.

Vernice Miller-Travis:

So there are a couple of issues and AG Campbell certainly laid it out what it looks like in Massachusetts. So there are a few things happening. One, I feel like people of color are being targeted for who we are, and I really thought that we left that behind in the 1960s. I really thought that the evolution of civil rights law, of full enforcement of environmental laws, of human rights law having a framework and a footing within American jurisprudence, I really thought that we had transcended that space where targeting people for who they are and where they live was no longer acceptable in this country.

That’s what the Biden-Harris administration spent four years with the help of Congress trying to do is to eradicate the legacy and the indicia of that history, right? So the Attorney General mentioned that she’s in the New Bedford office of the Attorney General’s office in Massachusetts. I would imagine that the effort that the Biden-Harris administration laid forward to replace all lead service lines and in every community in the United States of America is something that’s really important to the state of Massachusetts and to communities on the ground.

I know it’s important to us in Maryland. I know it’s important to us in Baltimore city that has had a long legacy of lead poisoning and a differential impact of lead poisoning exposure to lead, and the developmental disabilities, and the school-to-prison pipeline that is fueled by children who are lead poisoned and misdiagnosed and where they end up, that that’s a really important thing that they have pulled back.

It was one of the first things that this administration decided to cancel, was that commitment to replace all lead service lines in the United States of America. So what was really important to me about it, Hannah, was one thing I wanted to see this administration do, or two things. I wanted to see every household in the United States have access to safe and clean drinking water, and every household does not have that. Also, I wanted to see every household have access to sanitary sewage systems, and every household does not have that.

When you live in a major metropolitan area, you take for granted that everyone has the same basic necessities that you have. Everybody does not even in that metropolitan area. So one issue that we saw just two weeks ago, the Justice Department decided to vacate a settlement agreement between the Department of Justice and the county of Lowndes County, Alabama and the Alabama Department of Environmental Management for allowing Lowndes County, Alabama, which is a heartbeat of the civil rights movement in Alabama. It’s exactly midpoint between Selma and Montgomery, Alabama.

This community majority-Black county has gone without having a sanitary sewage system for more than half a century, probably longer than that. The Biden-Harris administration rolled out a hundred billion dollars through the Bipartisan Infrastructure Law that President Biden got passed to replace and put in place water infrastructure in communities and on Tribal lands, and urban, and rural communities everywhere. Right?

I said, “If they don’t do anything else, if they just do those two things, I will be elated because it was 2021 through 2024. How can we still have communities in the United States that don’t have access to safe drinking water in their homes and sanitary sewage systems? We have to be able to at least do that. If we’re going to appropriate all this money trillions of dollars, let’s focus it there.” So they did. That was one of the things they did.

This administration, in their first hours in office, began to suspend that because it was targeted at underserved communities. Now, underserved communities does not mean communities of color. It means communities that have not received equal treatment before the law, and we had issue. You may remember, Hannah, when they defined these programs and these protocols that the administration was going to use, and they set out their metrics with the CEJST tool, and the EJSCREEN, and they declined to use race as a metric.

You may remember that Vernice just about lost her mind. On the very day that they did that, I was being interviewed by the New York Times, and I couldn’t contain myself. I was so angry in that interview. But they had a strategy that they were pursuing, that no one would be able to say that that administration was only pursuing these goals and investing this money in the places where people of color live.

It pertained to low-income white communities, working class white communities, white communities that had a history and a legacy of industrial pollution that had not been addressed. They were trying to go back and recreate history. Who have we left behind, and who do we need to invest in now? That administration stepped up to say, “It cannot be a part of the American legacy that we leave so many communities so far behind.”

So what this administration is doing is an obscenity. It’s an absolute obscenity. In a minute, everybody’s going to wake up to realize that your highway is not getting repaired, your energy system is not getting modernized, your drinking water is not going to be improved, your stormwater system and your sewer system are not going to be updated. So when climate change comes to visit you, and it visits Massachusetts often, you are going to feel the brunt of it, and there’s not going to be anybody in the federal government to help you.

Not only is there not going to be anybody to help you, but there won’t even be employees to answer the damn phone. So as the Attorney General said, we are in a particularly difficult moment, and that they want to pin it on race is really, really pernicious and dangerous. But for the rest of us, we got to wake up, we can’t allow those old tropes to put us in a bag and separate us. We all put this money in the till, and we all should get the money out. This is our money we’re talking about, our tax dollars at work or not.

Hannah Perls:

I want to go into one more executive order with AG Campbell.

So President Trump also issued an executive order on April 8th on protecting American energy from state overreach. This order commits the federal government to remove “illegitimate impediments” to the extraction and development of fossil and nuclear fuels. This would include, under the language of the order, state laws, programs, and also state lawsuits that address climate change, environmental justice, or greenhouse gas emissions.

Specifically, the order requires the Federal Department of Justice to take all appropriate action to stop the enforcement of these state laws. Now, Massachusetts is in litigation right now against ExxonMobil for allegedly misleading investors, and consumers, and failing to disclose the risks of climate change, as well as deceptively overstating the company’s efforts to address climate change.

Of course, Massachusetts also has numerous laws, rules and programs related to climate change and environmental justice. So what does this executive order on state overreach mean for Massachusetts?

AG Andrea Campbell:

First of all, before I even answer that question, I want to lift up something Vernice said, that is, not only should people wake up, they better wake up. Even if you’re following economic reports of late, and I feel like I’m becoming not only a lawyer, but also an economist in this moment in time, we are headed towards a recession caused by one man, and the chaos and confusion in Washington DC, and some of it, of course, executed through some really harmful environmental policies and a lack of understanding to say the least.

Similar to their attacks and efforts to dismantle DEI, this suggestion, that suddenly, all of these issues are about Black people and them getting ahead unfairly for some reason. So pushing back on this narrative that is out there that is absurd and reminding folks it is not just poor Black people that need this environmental justice work. It is poor communities, it is poor white communities.

Even in Massachusetts, I have to remind my own constituents that we have poor white rural communities that have similar maternal health results as Black women do. So this is our opportunity to come together as a collective and really fight back against the oppression we are seeing in the misinformation from this federal administration. This executive order is one example of that.

The team and I have joked, and I think we’ve said this, the irony in the title of the executive order is just one more example of the administration’s own policy of executive overreach and looking to usurp the authority of states. States have significant authority and power and the right to protect their own residents’ public health, their welfare, their life, their liberty and their safety.

In the Commonwealth, we will do everything in our power to defend our residents and our economy against the federal challenges that we are seeing, including the blatant violations of law and threats of violation. I will say we’re being creative and thinking outside the box, and I mentioned earlier some of the litigation efforts, but also even sending letters of advocacy or picking up the phone and calling some of these agencies that are still staffed or the lawyers in the Department of Justice.

We still have to engage with them when we file lawsuits. You still have to talk to the other side, under judges’ orders at times, to resolve things. And that collective power of AGs coming together across states, it is winning. I actually think if folks can push through the noise of all that is coming at them through all the talking heads, not on this podcast, but the talking heads who would suggest that the courts are not working. They are.

This is why they are seeking to undermine the efforts of legal institutions, of lawyers, targeting law firms and lawyers, targeting judges, saying ridiculous things to undermine the credibility of our judicial system and our constitution and checks and balances, because of our lawsuits and the thoughtful decisions from judges appointed by various presidents, Republican or Democrat, and their thoughtful decisions, we are winning.

That is significant because you need the law to push back against unlawful action and to protect the very things we’re trying to deliver to our residents. The noise that is often out there can make people feel a sense of hopelessness as if the law is not working. It is.

One point that I think is also worth lifting up as the administration seeks to work against us in all of the lawsuits that we have brought as we win these cases and win preliminary injunction and other types of relief for constituents. They have yet to really challenge the legality of our arguments. We’re saying, “What you’re doing is unlawful,” and they’re quiet on that.

Instead, they’re telling judges, “Well, they shouldn’t be in court. It’s not the right time. The issue isn’t ripe yet, or they’re in the wrong court.” Surface-level arguments that, frankly, should not win the day, but not the real substantive legal arguments that we’re bringing. They can’t challenge it because they know what they’re doing is unlawful as well as unethical. I’m sure we can find other adjectives as well, but we’ll keep fighting the fight, protecting our state’s authority and power while really pushing courts to hold this administration accountable.

Hannah Perls:

I want to shift gears to what that fight looks like. Obviously, attorneys are playing a really important role right now. This is a message we keep telling our students who are graduating, some who had federal offers that have since been rescinded and wondering, “What is the role that I play?” But you two are both deeply enmeshed in community advocacy and national advocacy.

What does it look like to fight back, and how do you see your role in continuing to advance, in particular, transparency, and accountability, and these robust environmental and public health protections for communities, those fundamental pillars of environmental justice work?

Vernice Miller-Travis:

Well, I would just say first to the Attorney General, I would imagine on a daily basis there’s a lot of weight on your shoulders, but a lot of us around the country are really looking towards the Democratic attorneys general to lead this fight, and you have stepped into it. You are leading this fight. You are lifting our spirits. You have been unequivocal in the ways that you have pushed back against this administration, and I want to thank you for that and also say, “Don’t you get tired.”

AG Andrea Campbell:

Absolutely not.

Vernice Miller-Travis:

We need you to keep doing what you are doing, and all of you are doing it so incredibly well. There have been some amazing cases, right?

AG Andrea Campbell:

That’s right.

Vernice Miller-Travis:

So we’ve got some amazing decisions that have come out. A great decision that just came out of Rhode Island that the suspended federal grant monies, not the terminated grants, but the suspended and frozen environmental justice grant monies must be expended. As of today, that money needs to start flowing today.

AG Andrea Campbell:

That’s right.

Vernice Miller-Travis:

That was brought by groups in Rhode Island and adjudicated by a judge that was appointed by Ronald Reagan. The man is 81 years old and still on the bench, and he put forth a blistering decision about how absolutely outside the constitution this administration is in what it’s trying to do and trying to usurp the authority of Congress.

So the lawyers are in the courts, the progressive organizations are pushing back. The Democratic attorneys general are really moving. Some municipalities are fighting. Some states through their attorneys general are fighting. The employees themselves, and the federal agencies are also fighting back and their unions.

Last but not least, are the people on the ground who are pressing back in every way that they can in community-based organizations, in allied organizations, in the big green groups. It feels like a moment like the civil rights movement, I imagine, felt for all the people that were involved in it. The lawyers had a particularly important role in that fight to represent their clients to the best of their ability, but to make sure that they were speaking in the voice of their clients.

I feel like, certainly, those of us in the environmental justice movement and our allies in the environmental movement and the civil rights movement, we are unrelenting. I would just say this to your audience and to the Attorney General, you know, it’s a fact that they wouldn’t be coming for us so hard if we weren’t so good at what we do.

AG Andrea Campbell:

Amen.

Vernice Miller-Travis:

Right? If we had not changed the character of this nation over the last 60 years, they wouldn’t be coming for us so hard. So that’s why the fight is so intense, because we are so good at what we do.

AG Andrea Campbell:

Amen. Amen. Amen. I’m inspired by that. I’m grateful. So thank you. I don’t have the luxury of getting tired, but I won’t get tired. I have actually been telling folks that, us, taking care of ourselves in this moment in time, is also a form of resistance. So if you have children, spend time with your children.

I’m an AG, but I’m a mom of two young, beautiful boys. I’m a wife. I spend time with my husband, go to places and spaces and spend time with people that bring you joy. My middle name is Joy named after my biological mother, and I feel like I have no choice but to stand in that and to stand in the blessings that I’ve been afforded and continue to be afforded knowing our historical context in this movement, and this environmental justice movement, like you said, is a part of the civil rights movement, and the human rights movement of this country, of other countries led in many ways by Black folk, and where they sacrificed not only their human bodies, but they gave all of their gifts in themselves never knowing if they would never realize their dream or maybe even take their rightful place.

So I think it’s incumbent upon all of us to just remember that historical context as we push ahead in this environmental justice work, knowing that it is a part of the civil rights movement. Back to the question that was asked, the civil rights movement had everyone play a role. Lawyers certainly will play a role, and it will be a unique one in this moment in time. Judges, the same thing, but organizers, nonprofit leaders, community-based organizations, private sector, every single person has to look themselves in the mirror and say, “What role am I going to play?”

It can be as a person marching in the streets, that collective power and showing up, makes a difference. It can be in your profession pushing back, and if you’re a part of an organization, saying, “We’re not going to cave in.” I’m not a Harvard alum, I’m a Princeton alum, but I like to think that Harvard and Princeton did not cave because people called them, exercised their power as alum, or as faculty, or as students to say, “Please don’t give in.”

We may lose some things, but it’s worth it. It’s worth it because of what else is at stake. The larger values and our larger constitution and footprint is at stake in this moment in time. So I do think there’s a whole host of ways for folks to plug in. We’re just playing one role, and we’re going to do it with a sense of courage and a sense of urgency and with no fear.

I have been joking, Massachusetts is small, we’re not New York or California, but we punch above our weight, and I feel like I’m Muhammad Ali everywhere I go. When you think about someone like that who lost everything in his prime and still kept keeping on, I think it’s an opportunity for all of us to think about what that looks like for our individual selves, for our organizations, and because they can’t win against collective power and a collective pushback that will not let their moral compass go away. But most importantly, their values not mean anything in this moment in time.

Vernice Miller-Travis:

Indeed. Amen.

AG Andrea Campbell:

Amen. Amen. I feel like I’m in church.

Hannah Perls:

Podcast church.

AG Andrea Campbell:

Mm-hmm.

Hannah Perls:

Is there anything that we haven’t touched on yet that you just want to get off your chest? Anything else you want to share?

Vernice Miller-Travis:

I guess I want to just weigh in on this notion of how we treat ourselves in this moment, and the people in our lives, and the people we’re in community with. People are really carrying a heavy burden, and I know, for me as a Black woman, for me as a woman, I feel like I’m being targeted, and I’ve never felt this way. In my entire 66 years of life, I’ve never felt that my government was coming for me. But I feel that way now.

But like the young man in Vermont who was released from custody yesterday, he said, “But I am not afraid of you.” So you have to take care of yourself. You should of course not be reckless. But fear is not what we need at this moment. We need a spirit of commitment, a spirit of lifting each other up, a spirit of knowing that we are right. I mean, literally, we are right. Right? Not just you’re wrong and I’m right.

The law affirms what it is that the attorneys general are fighting for, what it is that these grassroots organizations and their legal representatives are fighting for. They are right in the law. They are absolutely right. But it may not feel that way because we see so much power being amassed on the other side to come for us. But other people stood in our shoes a long time ago and made it possible for the AG and I and all of y’all to go to law school. Right?

AG Andrea Campbell:

Amen.

Vernice Miller-Travis:

Or to go to college, or to live where we wanted to live, and to do the things that we wanted to do, and to have careers, and pursue lives, and have children, marry people of the same gender. We made this space, and we will defend it with our lives. We will do everything we have to make sure that we give this legacy to the people who are coming behind us. We will not be defeated.

The way y’all are filing lawsuits and winning, I’m just encouraged every day. I never know what kind of decision is going to roll out from the cases that you’re bringing, and the judges are standing with you.

AG Andrea Campbell:

That’s right.

Vernice Miller-Travis:

Because you are right.

AG Andrea Campbell:

I’ll just add one other point or maybe just two. I absolutely agree on this, taking care of ourselves. We’re in this for the long haul, and the next couple of years are going to be long, and hard, and painful for many. It is absolutely important that we take care of ourselves in the midst of it. So we are doing the justice work, we are doing it with joy, and we’re doing it while joining together. That’s sort of become almost a mantra right now of our office’s work.

I will just add, states also can step up in this moment in time. I think federal governments, you’re going to step away. Okay, fine. We’re going to keep fighting, keep winning. At the same time, it presents a unique opportunity for states to step up their work in an even greater way to resource more organizations that are community-based in doing environmental justice work to put out advisories and information that would help people push past any fear when they go to implement DEI or other policies that are under attack and say they are still lawful to make sure we’re working with our folks in the state houses, in our respective states to expand legislative solutions, to expand rights or protect rights here in Massachusetts and other places.

We even had a recent environmental justice trust fund legislation we filed and pushed for that allows all of the state settlement dollars to go back into these EJ communities. That was huge. That was a legislative victory, thinking outside the box, the team thinking outside the box, the rising cost of utility bills. Okay, we’re just going to have to go to our state agencies that control that and advocate for reduced costs. So that this transition of clean energy isn’t on the backs of rate payers.

There are ways in which we can become really creative in this moment in time that also, I think, offer people hope and joy as we each do our part. So I think it’s also taking time to take a step back to think about where we in our respective states and organizations could do something that is out of the ordinary, take some risk to also have a greater impact than we ever had before.

When we come out on the other side of this, and we will, there is always light where righteousness is. We will, that it’s going to be bigger and better than they could ever imagined, and we will be stronger, and they will look at us and say, “What in the world did these people create?” Not just with me and others, but also with Vernice who is just… I’m in awe of you, and also stand on your shoulders too. But look out, here we come.

Vernice Miller-Travis:

Here we come.

AG Andrea Campbell:

Mm-hmm.

Hannah Perls:

I think I speak for all our listeners just to thank you for this extraordinary conversation, for the gift of your time, for your courage, and for the work that you’re doing. So just thank you both for being on CleanLaw and sharing your work.

AG Andrea Campbell:

Thank you, and thank you for having us. I was saying Vernice throughout the entire podcast. I must say though, I was thinking I should say Miss Miller-Travis, because I feel as though I was raised, frankly, Black elders, Black women elders that means something, and it is an honor and privilege to be on with you and know that you inspire me and so many others. It’s a two-way street, and I’ll have to come see you in person.

Vernice Miller-Travis:

And I you, and this conversation, it’s going to carry me for months.

AG Andrea Campbell:

The same. It will carry me for this whole year. But thank you all for having me. It’s been great to be on. Hannah, thank you as well.

Hannah Perls:

Thank you. Really, I think this has just been one of the best conversations I’ve ever had, the privilege of moderating. So just really grateful to you both for everything that you shared.


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Administrative Law Electricity Law Environmental Justice Power Sector Rollback Resources

CleanLaw — Unpacking the White House’s Legal Strategy for Attacking Environmental Protection

How the administration is using executive power to dismantle environmental safeguards, challenge state climate policies, and revive the coal industry

With: Ari Peskoe, Carrie Jenks, Jody Freeman


In this episode, EELP founding director and Harvard Law Professor Jody Freeman speaks with Carrie Jenks, EELP’s executive director and Ari Peskoe, director of EELP’s Electricity Law Initiative. They discuss President Trump’s most recent executive orders on climate, energy, and the environment — including challenging state energy and climate policies and revitalizing the coal industry — and what they are watching for as agencies begin to implement the administration’s directives to roll back environmental regulations.

Key Resources

Analysis of April’s executive actions

Rollback Resources

Regulatory Tracker

Federal Environmental Justice Tracker

Analysis of data centers’ energy demand

Transcript

Intro:

 

Welcome to Clean Law from the Environmental and Energy Law Program at Harvard Law School. In this episode, EELP founding director and Harvard Law Professor Jody Freeman speaks with Carrie Jenks, EELP’s executive director and Ari Peskoe, director of EELP’s Electricity Law Initiative. They discuss President Trump’s most recent executive orders on climate, energy, and the environment and what they are watching for as agencies begin to implement the administration’s directives to roll back environmental regulations; challenge state energy and climate policies, and revitalize the coal industry.

Jody Freeman:

Welcome to CleanLaw. Today we’re going to discuss the latest round of Trump administration orders that are focused on energy, environmental, and climate policy. My guests today are two of our main players at the EELP, Carrie Jenks, the executive director, and Ari Peskoe who directs our Electricity Law Initiative. Carrie, welcome.

Carrie Jenks:

Thank you.

Jody Freeman:

And Ari, great to see you.

Ari Peskoe:

Good morning, Jody.

Jody Freeman:

We are going to dive into the new executive orders that the president signed in April. But before we do that, we do need to go backwards first to set the stage, because there was a prior round of executive orders right after the administration took office, and the president in January signed these, focused on the energy climate and environmental policy of the administration. I wanted to start there with that first round and sort of explain why the first round is the predicate or the opening act really for the second round. The first order that is important for stage setting is declaring a national energy emergency, which President Trump did right out of the gate. And there was another order that was titled Unleashing American Energy.

There was another order called Putting America First in International Environmental Agreements, and that had to do with withdrawing us from the Paris Agreement, and then an order about unleashing energy production and development in Alaska. And then finally, there was an order withdrawing all areas of the Outer Continental Shelf from offshore wind leasing and pausing both onshore and offshore wind. And there was another very consequential order that really sought to roll back all environmental justice work in the administration, but all told, that set of initial orders from January. Carrie, can you give us sort of an overview of what you saw the president trying to do immediately after taking office?

Carrie Jenks:

So the initial executive orders we saw in week one were kicking off the deregulatory efforts by the administration. It was signaling to the agencies what steps to take. And so the agencies have been taking the past few months’ efforts to list out what rules to roll back, to look at what permits to pull back, and thinking through what efforts it can take under the energy emergency that the administration declared in that first week.

Jody Freeman:

So just as a reminder, and I’ll turn to Ari for this, declaring the energy emergency, it didn’t really do anything all by itself, right, Ari?

Ari Peskoe:

Well, I think it’s worth saying at the outset that there is no energy emergency. Just as an objective matter, energy production in the United States is at record levels, particularly fossil fuels, which obviously this administration is focused on. And certainly nothing in the power sector is allowed based on this generic national emergency declaration.

Jody Freeman:

So that might’ve been more of a performative moment in the executive orders, invoking the idea of an energy emergency, perhaps as an effort to convey to the public that the administration was going to take a number of steps that would be justified by this notion that there’s an emergency. And Ari, as you said, not really. We’re the biggest oil producer in the world and we don’t have any shortage at the moment of electric power, do we?

Ari Peskoe:

Right. And at the same time, they’re trying to cut off wind power development, which doesn’t really make a whole lot of sense, but the declaration is out there. Courts are not going to probably overturn that sort of declaration by the President of the United States. And I think you’re right that it was really just a signal to the administration and to the public that he intended to take some drastic actions.

Jody Freeman:

So this first set of orders included a number of directions to the agencies, and I think this is an important point to make, again, as background, just to situate everyone, or to remind people that executive orders by and large with some exceptions, don’t immediately have an important effect. Sometimes they do. For example, if the president can immediately rely on his foreign affairs power to sign an executive order and really change the playing field immediately. Most of the time executive orders in our field are directing agencies to undertake things. They direct agencies to look at regulations and consider rolling them back. They direct agencies to look at funding that’s being dispersed and consider pausing it, and so on. There are some aspects of these initial orders that did seem to have an immediate effect.

The first I would say is the pause on issuing grants, loans that had been approved under the Biden administration that had been contracted for, or what we call obligated. There was a fairly immediate freeze on these funds. And I just wanted, before we move on to the next set of orders, to catch us up on where we are now with that freeze of Inflation Reduction Act funding and infrastructure bill funding that had been passed during the Biden years. That money had been obligated for a number of clean energy projects and developments. And the question is, did the Trump administration effectively freeze all that funding? Carrie, can you give us your sense of where the lay of the land is?

Carrie Jenks:

Sure. I think the status is mixed at the moment. Some grants have been opened up and the money is moving, some grants are still frozen, and other grantees have received actual termination orders. There’s also a series of ongoing lawsuits challenging the continued freeze of those funds and the proposed termination of awarded grants. For example, the District of Rhode Island has enjoined several agencies from freezing, halting, or pausing the funding on non-individualized basis. The Southern Environmental Law Center filed a case and the court has held its first hearing in that case, but that case is ongoing in terms of how those grants will move forward. There’s also a case about the Greenhouse Gas Reduction Fund litigation that’s separate from these other grants. Six lawsuits have been filed and the DC District Court granted Climate United’s motion for preliminary injunction, but then the DC Circuit stayed that preliminary injunction. So at the moment, those funds also remain frozen.

Jody Freeman:

So the administration has had some success freezing these funds. And you remember the big controversy over Lee Zeldin, the EPA administrator saying that he was going to stop the greenhouse gas reduction funding, billions of dollars from being dispersed even though it was already contracted for and already sitting in the Citibank account. The Department of Justice sought to freeze the Citibank account. And of course, that led to a lot of drama. One of the AUSAs, as I understand it, a senior justice department lawyer resigned over being asked to open a criminal investigation with what she viewed as inadequate evidence of any fraud or misdeeds. And so that all unfolded in the press. And this was all about blocking the funding from getting out the door. And as you just said, Carrie, it looks like at the moment where the litigation is, that money is indeed blocked for the moment.

Carrie Jenks:

Exactly.

Jody Freeman:

The other piece of this I just wanted to highlight is in the first batch of executive orders, there was this direction to agencies to look at rules that might be rolled back, rescinded, repealed. And one of the most prominent is the endangerment finding, which is the Environmental Protection Agency’s scientific finding that greenhouse gases pose a danger to health and welfare. That scientific finding is the basis, the legal predicate for issuing greenhouse gas rules under the Clean Air Act. So Carrie, that direction to re-examine the endangerment finding was made in the first round of orders. Where are we on that?

Carrie Jenks:

So on the endangerment finding, EPA around mid-March put out a series of press releases and fact sheets. And the endangerment finding was one of those where EPA has signaled, yes, they are going to undertake a proposal and review of the 2009 endangerment finding. In the press release, EPA signals that it intends to argue that EPA must consider each of the six greenhouse gases individually and that EPA needs to consider cost. So we can talk about whether we agree or not on how they’re going to do that, but I think we’re going to start to see a proposal this spring or summer that reveals how the EPA intends to roll that back.

Jody Freeman:

And why does this matter? Because everybody talks about the endangerment finding, it winds up in media stories and sometimes people think, “Well, what’s the significance of this?” Why does this really matter?

Carrie Jenks:

So if we don’t have the endangerment finding, EPA has no legal hook to regulate any greenhouse gases under the Clean Air Act. So that would be the power sector rules reducing greenhouse gases, the car transportation rules, as well as oil and gas methane rules for existing sources. And so without that fundamental rule, the statutory obligation to reduce emissions from those sectors would be eliminated.

Jody Freeman:

So with that as table setting, that’s still in process. We don’t know what will happen. Will the Clean Air Act effectively be sort of knocked out or limited as a source of regulating GHGs in the US economy? That’s an open question. So let’s turn now to the new batch of executive orders that came out this month in early April. First, there’s a set of orders that are about deregulation. Again, an aggressive effort to eliminate or weaken climate and energy-related regulations. And we’ll talk about those in detail. It has to do with basically rescinding rules while skipping the normal legal process. The second thing these orders do is they invite the Attorney General of the United States to examine state and local clean energy policies and laws and do whatever she can to challenge them and ensure that those that the administration views as unlawful or unconstitutional are not enforced.

The third thing these executive orders do is they adopt a series of measures that are meant to support the coal industry by exempting coal plants from various regulations and by invoking certain emergency powers. So those are the three big headlines on these executive orders. Let me go in reverse order here and ask Ari to comment first on what I’m going to call the administration’s effort to prop up the coal industry. So Ari, can you get us started on what these orders do?

Ari Peskoe:

So I can focus on the one about coal-fired power plants.

Jody Freeman:

Great.

Ari Peskoe:

And go back to Trump’s first term, there were a couple of attempts to try to bail out uneconomic coal plants. And just take us another step back for one second, the reason that coal power plants are struggling is because they are very old, on average 45 to 50 years old, and they’re just not economic sources of producing power anymore. Natural gas prices and renewable prices have come way down and coal plants simply cannot compete on the market. So the EO tells the Department of Energy to “streamline” its regulations under section 202(c) of the Federal Power Act. And this section of the Federal Power Act empowers DOE to order actors in the power sector to take certain actions in the case of an emergency. And this is typically used for disturbances of a very short duration on the power system. Like for example, a hurricane comes in, and the Department of Energy can order certain power plants to be ready and produce power when needed.

And also importantly, it can allow those plants to exempt them from environmental rules so they can produce more power than they might otherwise be allowed to produce. Orders issued under this section are limited to 90 days, but often it’s much shorter duration than that. These are just a few days, typically, these sorts of emergency situations. But the administration here imagines using this section in a wholly new way. They want the Department of Energy to come up with a new methodology for evaluating whether each region of the country has sufficient power plant capacity to keep the lights on. And then they want to develop a separate protocol for identifying which are the power plants that are critical for maintaining that what’s called resource adequacy of that regional power system.

Jody Freeman:

So let me guess, Ari, because I think I know where you might be headed. The new methodology and the method of assessing what is critical in terms of supply is going to favor coal?

Ari Peskoe:

Well, that’s certainly a good guess, but they say this is all going to happen behind closed doors. And that’s one aspect of this that’s really problematic. They tell DOE to basically release its findings in 90 days, but there’s no opportunity for notice and comment on what DOE is developing. So I think given that this executive order was released on a day that featured other executive orders about coal, and at a press conference where the president repeatedly praised coal, I think we can guess that the results of this will be skewed in favor of economically struggling coal-fired power plants. And the last piece of this is once those plants are identified, those apparently needed plants, the Department of Energy can use its authority to basically prop them up to prevent them from retiring, order them to keep running.

Jody Freeman:

So this, again, as you alluded to at the start, is linked to a similar effort in the first term that failed. And as I recall, you and I wrote an op-ed about this effort in which Rick Perry, then the Secretary of Energy, directed FERC, the Federal Energy Regulatory Commission to adopt a methodology that would basically give an economic boost to coal in figuring out what to pay different energy sources that keep the lights on. And you and I wrote this really terrific, I’ll just say, op-ed saying why this was irrational and made no sense and FERC should not do it. And can you remind us of what happened? Because it’s very interesting that FERC at the time did not go along with the Secretary of Energy’s direction.

Ari Peskoe:

Yeah. So back in 2017, DOE invoked this rarely or never used provision of the DOE Organization Act that allows the department to propose a power sector rule to FERC that then only FERC can finalize. And the rule basically would’ve carved out coal and nuclear plants from the interstate power markets that FERC regulates, and would’ve subjected them to separate compensation that would’ve ensured their economic viability.

And to its great credit, FERC unanimously rejected it, even though it was a three Republican to two Democratic commissioners at the time. And they just said, “Look, this is just totally inconsistent with everything that FERC has done to develop competitive markets over the past 20 years.” So this time they’re taking a different legal path. Again, it’s the section 202(c).

I think there are numerous legal infirmities with what they’re trying to do, not to mention the sort of practical issues of basically going around all of the industry’s existing rules and market structures they already have that are aimed at keeping the lights on.

Jody Freeman:

So there’s already a sort of emergency response system, if you will, that’s in place with rules around what gets dispatched and what are the critical resources. Is that fair to say?

Ari Peskoe:

The industry has its standard protocols for maintaining resource adequacy, which the EO suggests ought to be reevaluated. And then after that, the power industry has its own set of emergency protocols, which again, this EO suggests maybe the Department of Energy needs to revisit and do all of that in 90 days without any public process.

Jody Freeman:

The public process piece is also unusual. Am I right that normally this kind of reconsideration of how you approach reliability in emergency situations, that would normally require a lot of input from industry and from the regional managers and so on?

Ari Peskoe:

Yeah. Normally there would be a public process about anything this significant, but it’s also I think, legally required because that executive order says this is all about streamlining the DOE’s existing regulations that they had on the books for about 40 years that implement 202(c). So you can’t change your regulations without going through a notice-and-comment period, at least as far as I’m aware.

Jody Freeman:

Yes. So that theme will reemerge, the sort of ignoring or sidestepping of the normal notice-and-comment process.

This particular order, the emergency authority under the Federal Power Act and section 202(c), it’s very technical for most people, right? Electricity regulation and the management of reliability on our grids is quite technical and inaccessible. And so it’s really helpful that you explained in these common sense terms.

Is there anything else people should know about this that is sort of not visible to somebody who’s not an expert?

Ari Peskoe:

Well, I would also add that typically DOE uses 202(c) to respond to the industry’s own requests for emergency help. So usually it’s the industry that sees an emergency coming like a weather pattern and asks DOE that, “Hey, we need you to take some action to exempt some power plant from some rule or to make sure it’s available.” And the statute allows DOE to act on its own without that sort of request from industry, but it’s extremely rare that DOE does that. So there’s just a couple extraordinary things happening here.

Jody Freeman:

Okay. Well, we expect these orders all to be subject to legal challenge, and we’ll be following them as they get challenged. Any prediction, Carrie, I’ll ask you for this, on who might challenge this emergency-related executive order and who do you expect to line up on what side of these issues?

Carrie Jenks:

Well, I think there’s no doubt that environmental NGOs will line up to challenge the rules. I think what will be interesting is, and Ari can probably speak to this as well, is how does this affect other power sector dynamics? Because I think some companies that own coal may want this additional time exemptions. Other companies that don’t own coal are competing against those companies. And I don’t think the power sector is united in terms of wanting this type of executive order and action.

Jody Freeman:

So it’ll be interesting to see ’cause it’s not a monolith. The industry is not a monolith. Different power companies own different resources. Right?

Carrie Jenks:

Exactly.

Ari Peskoe:

I would add though that in 2017, the industry was virtually unanimous in its opposition to that first coal bailout attempt and subsequent attempts that happened after that. And so far there’s been a very noticeable lack of response.

It was also the natural gas industry that lined up against the earlier bailout attempts, and I haven’t seen any public statements in opposition to this, so I find that a little troubling.

Jody Freeman:

You mean the absence of opposition is interesting?

Ari Peskoe:

Yes, that’s right.

Jody Freeman:

Okay. Well, we shall see this play out. Before we leave coal, there are a couple of aspects of the executive orders that are meant to assist coal that I wanted to turn to Carrie to talk about.

The first is the president using a provision of the Clean Air Act in section 112, which is the section of the Clean Air Act that focuses on toxic air pollution. The first set of requirements for mercury and air toxics had been set under the Biden administration and they require coal-fired power plants to control their emission of air toxics. And in this set of executive orders, there’s an effort to use an exemption to those rules to really relieve coal-fired power plants from the burdens of meeting these new Biden-era standards by the deadline. I think I have that right, Carrie, but can you talk about why that’s important here, what the Trump administration is trying to do with that exemption process?

Carrie Jenks:

Yeah. So what it’s trying to do is say that there’s a national security interest for these coal plants to continue to operate, and they’re using that blanket exemption for that. But as far as we can tell, there was no process by which companies explained why they might need that additional time to comply. The compliance deadline was under the Biden rule 2027. So they’re giving them additional time beyond that. And to justify it, they’re saying that technology does not exist in a commercially viable form sufficient to comply by 2027.

I will say though, that most companies are already in compliance with the emission standard. So I think that’s going to be a high hurdle for them to be able to justify. And we’ll have to see if companies therefore don’t maintain their equipment in a way that there is a public health consequence and more mercury emissions as a result of this extension.

Jody Freeman:

So this is really a kind of blanket effort to relieve coal plants of having to comply and has real public health consequences if that happens?

Carrie Jenks:

Yeah, potentially significant risks.

Jody Freeman:

Ari, back to you for one final piece of the coal orders if you’d be willing. There’s a discussion in one of the executive orders about data centers and the need for electricity. And can you just help us understand what’s going on there in that part of the executive order?

Ari Peskoe:

Yeah, so for about 20 years, power demand in this country on a nationwide basis was relatively flat, and that actually really harmed the coal industry because then you had this intense competition between coal and natural gas for the existing market that wasn’t growing. But over the past couple of years, we’ve seen projections of dramatic increases in electricity use in the coming decade, and that growth is being driven by data centers and in large part data centers designed to develop artificial intelligence technologies.

The Biden administration supported development of AI. The Trump administration has said that they support that as well. And so they are using this sort of race against China to develop AI as a justification for keeping these coal plants online.

Jody Freeman:

This is a naive question, Ari, but I’m going to ask it anyway. I thought big tech had made a lot of commitments to grow and develop AI in a way that was consistent with their greenhouse gas reduction and net-zero commitments, that they had said they would be interested in supporting their growing electricity demand with commitments to renewable energy. And now it looks like they’re backing off that, or maybe I’m just projecting here, but it seems like they may be backing off those commitments and saying, “No, we’re going to be open to using natural gas-fired power for our data centers, or maybe even nuclear power,” but how do you see that set of commitments that we thought big tech had made on climate policy?

Ari Peskoe:

So I think results vary here by company. I don’t want to group them all together because I think there are distinctions. But we certainly do see some of these very large technology companies going with natural gas-fired power for their data centers.

I don’t think any of these companies want coal-fired power. Part of this just gets to the fact that electricity is fungible on the grid.

So if overall demand is going up, you can’t necessarily attribute any particular source to a particular consumer. But at the same time, we have some of the utilities that own power plants saying, “We’re actually going to keep our coal plants online that we had planned to retire.” And the reason that they’re giving is because of data center growth. We are seeing a couple of examples of that.

Jody Freeman:

Yeah. I think whereas we had thought that perhaps tech on balance might support a shift to cleaner energy on the grid as part of growing, they would’ve been a new force to promote renewable energy, cleaner energy. It may turn out not quite that way.

Ari Peskoe:

I think it’s a mixed bag, and there’s just a lot of uncertainty as well about how quickly this demand from data centers is going to grow and the projections just keep changing.

Jody Freeman:

So let’s shift gears now and go to a different executive order. This one has to do with deregulation, the executive order directing agencies to identify categories of unlawful rules and essentially summarily rescind them without going through notice and comment. And the administration justifies this in the executive order by saying, “There are some rules that are just unlawful and we’re going to tell you which ones are.” And they cite to a list of Supreme Court cases as authority for this.

And the Supreme Court cases they list are a series of cases decided in recent years that on their face appear to constrain agency regulatory authority. They appear to rein agencies back in. But it’s not so obvious that all of these cases justify the administration taking this position that it can just decide what rules are unlawful and wipe them away without any process.

So the cases listed include cases like Loper Bright, West Virginia. I’ll get started by asking you, Carrie, to give us sort of an example of what the administration’s doing by citing these cases, invoking them as a sort of cover for just eliminating a set of rules. And then we can talk in more detail about why this is problematic.

Carrie Jenks:

Yeah, I’ll give one example that shows how broadly the administration is applying this precedent, which is Ohio versus EPA. And why I think it’s striking is that the Court was not deciding this case on the merits, but they decided to pause the implementation of the good neighbor rule. So this is the air transport rule among states.

And the administration in the executive order says the Court struck down EPA’s rule because of scientific and policy premise. But in fact, the Court only paused the implementation of the rule based on the fact that they said EPA failed to consider a comment. And so they kicked it back to the lower courts to decide the merits of the case. But I think it signals how broadly the administration is taking these Supreme Court rule decisions and applying them much broader than anyone thought.

They also did that in the Michigan case where they said EPA failed to consider cost, but that was just again, one section of the Clean Air Act that the Supreme Court decided appropriate required EPA to consider cost. I don’t think that you can say that EPA has to consider costs in every part of the Clean Air Act, but Congress hasn’t expressly required it.

Jody Freeman:

So in other words, the administration is citing a list of individual Supreme Court cases and saying they stand for certain propositions. And based on the administration’s view of those cases, they’re instructing the agencies to look at a bunch of regulations and decide whether the regulations are still legal. And if the administration decides, “You know, on our reading of the cases, these rules are no longer authorized. We’re going to read the statutes narrowly. We’re going to say they don’t authorize the agency to issue these rules. We’re going to go in after the fact and essentially wipe away those rules.”

And this is really an audacious thing because this is the administration saying, “We’re not going to go to the trouble of reconsidering the rules, going through notice and comment to redesign them and then let them be tested in the courts. We’re just going to decide. This is our reading of the Supreme Court cases and we think these rules are illegal and we don’t need any process. We’re just eliminating them.”

That to me is an approach that is in line with the sort of hyper aggressive view of the president’s power, not just to implement the law, but to interpret the law usurping the role we normally expect the courts to take. So I’ll give you one example of this, Carrie, and I’ll let you comment on it.

One of the cases they cite is this landmark decision, Loper Bright. And Loper Bright overturned an old principle called Chevron that people have now heard about. That principle basically stands for the idea that when agencies read a statute like the Clean Air Act or the Endangered Species Act, and the law that Congress passed is a little bit unclear or doesn’t address an issue, well, the agency has a little room to maneuver and can interpret the meaning that they think makes the most sense as long as it’s reasonable and the courts should uphold it.

Well, Loper Bright said, “No, we’re not going to defer to agency’s reasonable interpretations. We are going to decide, we the courts, what’s the single best meaning of each statutory provision? It’s up to us, the courts.”

Now, what Loper Bright did in addition is say, “Look, all the old cases decided under this Chevron decision that deferred to the agencies, those should not be disrupted. Those are good law. They have precedential value.” But the administration’s reading of the Loper Bright case seems to be the opposite. They seem to be saying, “Oh no, all the old cases no longer get treated as precedents. We’re going to treat all the instances where courts have deferred to agencies as basically unlawful rules and we’re going to eliminate them.”

Carrie Jenks:

I agree completely with your framing. The administration is essentially now saying, if the prior rules relied on or were upheld based on Chevron step two, then those rules are no longer valid. And, as you explained, that’s not what Loper Bright says. The Supreme Court said, “We’re not going to overturn all of the prior case law that relied on Chevron. Just going forward, the courts get to decide the best reading.” And so they’re going much broader than what the Supreme Court even told the administration they needed to do.

Jody Freeman:

And the final example of this, which I can’t resist giving because my internal administrative law professor is coming out as you can see. My final example of what they’re doing here is their reliance on the West Virginia case. So that’s a case in which the Supreme Court announced the major questions doctrine. And what that means is the Court has embraced a principle that says if an agency is addressing a really big deal kind of issue, if it’s something of real economic and political importance, the way they’re interpreting the statute, we the Court are going to look for very explicit authority from Congress to do the thing the agency wants to do. So if it wants to adopt a clean air rule that we think is extremely far-reaching, that has transformative impact that we think has big consequences, that we’re going to treat that as a major question. And the agency just can’t do it unless we can find explicit statutory authority.

That’s the major questions doctrine. And what the administration seems to be doing is saying, we’re going to read that West Virginia case the way we want and decide whether a bunch of rules already on the books are really big deal rules. And if they’re kind of major questions rules, we think we have the authority to just again, eliminate them without noticing comment. So again, another example of hyper aggressive reading of Supreme Court cases. That’s the potential here. That sounds like what they want to do in order to eliminate a bunch of regulations in a summary fashion. So Carrie, back to you on this. How do you see this playing out? What are we watching for as this deregulatory effort unfolds?

Carrie Jenks:

So I think we’re going to have to see how do agencies actually follow these executive orders. Do they say without notice and comment, we think it’s good cause and therefore we’re just going to repeal these rules? Or do they decide, given the legal risks that you were just articulating, that they will still go through notice and comment and then we’ll see how to finalize it. I think the showerhead example is one that is important to focus on. The only justification that they cited to repeal the Department of Energy’s efficiency standards was they were told to do so under the executive order. And so if we see other agencies do rules like that, I think we’re going to see quick challenges. But if they go through notice and comment, then we’ll have to watch and see how they justify these rollbacks.

Jody Freeman:

So I really like that. I just want to put a fine point on what you said. This executive order instructs the agency to rescind a Biden-era rule, an energy efficiency rule, but by skipping all the normal legal process, which means they don’t get industry input on what this means. They don’t get any public input on what this means. Maybe there have been investments made based on this rule, they’re going to be upset, but they’ll never know about that. And their position is there’s no need to explain or justify to a court why they need to rescind this rule. They’re just going to do it again, skipping normal process. So this is the administration taking advantage of an exception to the normal notice and comment requirement, which is called the good cause exception. And this is quite a kind of nerdy legal point to make.

But for those listening, I just want to understand the good cause exception is designed to be used in very rare circumstances. Courts have interpreted it narrowly so that agencies can’t just bypass notice and comment whenever they want to. They can only cite the good cause exemption in rare instances where there really is an emergency need to get a rule out quickly, and that just does not seem to apply here. And so it looks like the administration is trying to take advantage of a loophole and drive a truck through it. There’s real value in notice and comment, right? I mean, yes, there are occasions where it would thwart the whole point of the rule to go through notice and comment, like it would let the market know that something’s coming and then people could engage in arbitrage or strategic behavior. And so you definitely don’t want notice in common in those rare instances, but most of the time you benefit from it.

We want to hear from the regulated industry about how a rule will affect them. We want to hear from public interest groups, public health groups, the affected communities about say how the consequences the rule might affect public health or something local that we haven’t thought of. It makes the rule design process better to hear from the regulated community in those most closely affected. So it’s a radical thing in administrative law to say, well, we can just rescind rules with absolutely no process. Anything from either of you on this point about how they’re handling notice and comment?

Ari Peskoe:

Yeah, I mean, I just want to jump in on this showerhead rule for a second. I mean, it’s a little silly, but I think it’s also quite insidious of what they’re trying to do on a larger scale here. For whatever reason, the president has been talking about low shower pressure for years on the campaign. And so this is an issue for him. And the idea behind this order is that he wants it done and therefore it shall be done. And we’re sort of government based on the whims of an individual rather than the rule of law. And I think it’s quite troubling. And so hopefully we’ll see some legal action taken against this and courts will not sign off on this way of running our government.

Carrie Jenks:

I would also add, I think people think notice and comment is this long process that just slows down the government, but I think it’s important to highlight the purpose of notice and comment. There’s a huge value in giving the agency information, as you were saying about how does the rule impact them, what are other ways to design it. The agencies are never going to get everything right in the first instance. And so it’s a first draft that they put out with a proposal, comments from the regulated entities, from NGOs, from states, from other people that need to implement it and enforce it, helps them finalize a rule that is much more reasonable, much more grounded in fact and implications and impact that allows those rules to be much more durable. So I think it’s a process that takes a long time, but it is a process for a purpose.

Jody Freeman:

Yeah, I mean even when it comes to deregulation or rescinding rules, legal process matters, right? Even there, industry isn’t always thrilled about deregulation. It can really upset their expectations and their plans, and there are instances where they might lose money based on a bunch of investments they made banking on the old rules staying in place. So there’s a lot to lose when you skip this process. It’s not just like we want to go through notice and comment for its own sake. And just to go back to Ari’s point, the way in which this set of executive orders is so cavalier about how to change the regulatory landscape for business, for public health protection, for environmental protection that it can be done at the whim of a president and that all one really needs to know is the president wants it done. That’s how the showerhead order reads.

That’s a signal of a kind of imperial approach to governance. So let me go now to the final executive order, which is about the administration putting state climate and energy policies in the crosshairs. This order essentially instructs the attorney general Pam Bondi to take a look at state clean energy policies and to examine whether the administration considers them for one reason or another to be unlawful and do whatever is needed to make them unenforceable. And that sounds like a blanket invitation to the attorney general to just examine the policies at the local level and decide the ones they don’t like and challenge them either join lawsuits challenging their legality or launch lawsuits challenging their legality. It’s a clear shot across the bow that says, we’re on the lookout for things that we think don’t fit our agenda on energy dominance, fossil fuels as a priority, and we’re going to try to disable whatever the state governments are trying to do to advance climate and clean energy goals. So Ari, can you give us a little detail about this executive order and tell us how you think it might play out?

Ari Peskoe:

Yeah, as you said, the executive order tasks the AG, the attorney general, with just basically making a list of clean energy or climate policies to target as well as ongoing proceedings such as litigation where she might intervene on behalf of the government. So we’ve been tracking litigation against state clean energy policies for the past 10 years, and most of these cases argue that a state clean energy policy is preempted by federal law that either this is an area that only the federal government may regulate, or that there’s some conflict between how the federal government regulates it and how the state is trying to regulate it. And therefore the court should find that the state law is invalid.

Or there’s another theory based on what’s called the dormant commerce clause, that somehow the state is regulating interstate commerce in a way that’s impermissible under the doctrine. By and large, these attacks have failed. And there’s in fact one lawsuit that was actually filed by the first Trump administration against California’s cap-and-trade program that is trying to reduce greenhouse gas emissions. And that lawsuit failed. And yet this executive order specifically suggests they should go after it again.

Jody Freeman:

Yeah, I mean, it’s really interesting the order called Protecting American Energy from State Overreach. So clearly they’re signaling that somehow they think these state policies inhibit what they would call American energy dominance and that they need to be brought under control. And there’s a long list of policies they’re targeting. They’re specified in the executive order. The order instructs the attorney general to prioritize policies that address climate change, ESG, you know that is environmental, social and governance initiatives. They have a real antipathy to that. They’re also supposed to take a look at environmental justice policies and anything that affects greenhouse gases and carbon taxes. The other thing that’s in the crosshairs here is, what’s come to be known as climate superfund laws. These are state laws. A couple of states have adopted these that allocate a share of liability for climate-related damages to the fossil fuel industry and large producers of greenhouse gases in order to address the cost of climate-related harms.

And the administration seems to be targeting these because they are ideologically opposed to them, and states are experimenting with this approach in order to hold the fossil fuel industry and large emitters accountable. So I think the attorney general is going to be investigating, taking a look at these approaches. They have really not been litigated, so it’s possible to imagine that they would join lawsuits or file lawsuits to challenge them. Do you guys have any observations? Carrie, do you have a view about why those laws are sort of particularly in the sights of the administration?

Carrie Jenks:

I think the key point is what Ari was saying is that they’re new and so they haven’t gone through the litigation yet to test them out. And so I think this is where you will start to see litigation because it’s already ongoing and the administration’s probably going to join those suits or encourage others to join those suits. The other cases though, like the cap and trade programs and RGGI, there’s been a lot of litigation that’s already well settled. And so I think the superfund laws are new.

Jody Freeman:

Right. You’re talking about RGGI, the Regional Greenhouse Gas Initiative, which is an agreement among, I think it may be now 11 or so states that have all agreed to cap and reduce their emissions from the power sector. And those kinds of regional agreements at state policies are the ones that are being targeted. They were adopted many of these quite a long time ago, in the early 2000s when the federal government wasn’t really adopting greenhouse gas rules and states were trying to step into the breach and they’ve been quite active on climate and clean energy policy, at least a subset of states have been. And we’ve seen a lot of these initiatives be quite successful. And it looks like the administration is trying its best not just to roll back federal climate and clean energy policy, but also hamper the states from doing what they want to do to make progress. So it’s pretty aggressive in that sense, right, Ari? It’s not just sort of shutting down the federal government, but also trying to impede the states.

Ari Peskoe:

It is certainly aggressive to go after the states. States rights is often a cause championed by conservatives. But I would add that when you look at this EO, I think the conventional wisdom will be that they will try to litigate some of these policies in federal court and ultimately hope to get to the Supreme Court and see if they can create new law there. My concern, though is that there’ll be perhaps a little more creative in how they attack states and will they come up with some justification for trying to withhold federal funds for some program for states that have certain types of energy policies that they claim are detrimental to the national interest. And that will be a different litigation challenge than going after these clean energy policies directly where I think a lot of precedent is on the side of states that are enacting these policies.

Jody Freeman:

We’ve seen this strategy, withholding funds, as a really big weapon that the administration’s trying to wield here. In our domain, they’re trying to claw back or block the disbursement of funds that were appropriated by Congress under the Inflation Reduction Act and the 2021 infrastructure bill trying to block money that has already been obligated for development projects, plants, manufacturing facilities for local communities to do energy efficiency work, all these grants and loans and other subsidies that were on their way out the door already contracted for. We’re seeing an effort to block them to the extent possible, even so far as to freeze accounts held in banks that are meant to be dispersed to the organizations they were committed to.

And so far, the results of these lawsuits challenging the freezing of these funds have been mixed. It’s unknown ultimately how much of that money the government will be able to block. And Ari, now we’re talking about using federal funds in a similar way to try to obstruct what the states want to do to use them as a cudgel, as a lever against the states and say, we’re not going to give you a bunch of state funding we normally would give you unless you do the following things, unless you pull back on certain climate and clean energy policies.

And the question is going to be how successful will the federal government be in using that kind of threat? We’ve got Supreme Court precedent that puts some limits on this kind of use of grant monies in a way to punish states. Normally, those monies that the federal government wants to withhold, it has to be related to the offense or the problem that the federal government is complaining about. So you can’t withhold wholly unrelated monies. There’s also Supreme Court precedent, of course, on a doctrine called unconstitutional conditions, which means you can’t threaten to pull federal grants and monies on the premise or for the exchange of the recipient giving up their constitutional rights. You can’t say, hey, you can have this money, but you no longer have any First Amendment rights.

So we have certain Supreme Court precedents that will get in the way of the federal government using these threats just any way they wish. So it won’t be as easy perhaps as they want it to be. Ari any commentary on that.

Ari Peskoe:

I mean, I was speculating, but I think we’ve seen a lot of creative legal maneuvers that it could be seen as sort of negotiating ploys from the administration to try to put pressure on states or other private entities to change their policies. And so I certainly wouldn’t rule that out. Here it’s comforting to hear that the Supreme Court precedent is on the side of the states on this issue, but I wouldn’t put it past them to test the limits or at least try to put pressure on states in ways that we haven’t seen other administrations try to do.

Jody Freeman:

Yeah, I mean, even if there are going to be legal limits ultimately on them using federal funding as a lever on the way to those ultimate court decisions that might restrain them, there’s going to be a lot of pain. It’s true for universities too. It’s true for all their targeted funding threats. I mean, even if ultimately you win, on the way to winning there’ll be a period of time in which it may be harder to operate, you might have to do without those funds, there might be donors who don’t give what they normally give. And states, if funds are frozen, really will have a hard time with their state budget. So you can imagine there being a lot of pain, even though ultimately the administration might find itself restrained by the courts.

It also may prove difficult for the federal government to trample on the states to the extent they may want to and find sympathy in the Supreme Court. Many of the Justices care deeply about federalism, it’s such an important constitutional principle. And it’s not clear how the Justices will fall out in cases around federal preemption of state law, for example, and challenges to state policies for violating the Dormant Commerce Clause. These areas of jurisprudence don’t fall out quite as easily along sort of liberal/conservative lines the way we normally think about these Justices. And so it’s not clear that the Trump administration will win cases challenging the exercise of state power.

In fact, in the past, the states have done pretty well, haven’t they, Ari?

Ari Peskoe:

Yeah, by and large states are successfully defending their clean energy policies in court. So I’m not sure that there are new arguments here that haven’t already been tested. So we’ll just have to wait and see what they actually end up targeting here. And it could be that the power sector policies that I’m most familiar with, maybe those aren’t the first that they go after, maybe it is these climate liability laws or maybe it’s just that they want to make sure that they’re intervening in these various climate tort cases that have been making their way through the court systems over the past several years, and maybe they’re just going after something else entirely. It’s hard to know. As we said at the outset, these EOs sort of set up future action, and it’s certainly possible that some of these may fizzle out.

Jody Freeman:

So we have the first set of executive orders from January. We have the second round of executive orders now in April. And let me just ask you, how are you seeing this shape up now with a few months of experience watching what’s coming out of the White House and the administration? What are they trying to do in this domain, generally? It seems quite aggressive, the rollback of Biden-era and earlier climate and clean energy policies. But still there’s a lot left to unfold, and what they’re doing in this domain is a little bit less visible to the public than some other high profile areas like immigration. It’s more technical. It’s more complicated. So can you give us a sense of what people should be watching for as we look ahead?

Carrie Jenks:

So I think, like you said, we’re still waiting. So it’s going to be important to see what steps do they take to roll these out. Do they propose it? Do they go through a good cause exemption? But I would also add to what Ari was saying at the very beginning is they are wrapping a lot of this in energy emergency, and so they’re trying to justify this on a national security basis and therefore trying to take hold of more of the energy domain than they have in the past. And so I think it’s going to be important, as Ari said, to really pull apart how do they justify that we’re in an energy emergency, given how much energy we can generate in the US and how much oil and gas we’ve been producing. I don’t think we are in an energy emergency. And so rather than just accepting that as a fact, it’s going to be important to really look at that critically.

Jody Freeman:

And as we’ve said before, this will be a long process. These orders will unfold over time. The agencies have to implement the things they’ve been told to do. The orders largely aren’t self-executing, as we said at the beginning of the podcast, they don’t necessarily do anything immediately. They set a stage where agencies have to go and then take action to rescind rules or file lawsuits or challenge state policies or do whatever they’re going to do. So this will be a grind, it will require some patience. We’re going to see a lot of litigation, a lot of judicial decisions first in the lower courts, then moving up. Maybe there will be temporary restraining orders, maybe they’ll be reversed. So you have to be watching as this unfolds.

Ari, do you see the power sector behaving in a certain way now given that these orders have been issued? Are they changing what they’re doing? Are they in a wait-and-see mode? How do you see them reacting?

Ari Peskoe:

I mean, as I indicated, there hasn’t been a lot of noise from the power sector to try to oppose the new sort of coal bailout executive order that we discussed earlier. So I haven’t seen a lot of discussion from the industry yet. And again, maybe because these are just executive orders and they’re going to take a wait-and-see approach until they see exactly precisely how the administration is going to implement these directives.

Jody Freeman:

And Carrie, how do you see the environmental groups, the NGOs and the states reacting to this set of orders?

Carrie Jenks:

So the litigation is starting on some of those actions that have immediate effect, but they’re going to have to wait to challenge the actual rules, the final rules once they are issued.

I would also add, I think industry is quiet because in the end, the market is what will drive their decisions. An executive order doesn’t drive a different market outcome, it can’t change the market. And so how companies respond to the policy priorities of the administration is one thing, but how they respond to the market is actually what’s going to matter in the long run.

Jody Freeman:

What’s so interesting to me is to see whether the drive toward clean energy can really be arrested by what the administration is doing, or whether the market forces that are driving a cleaner power sector because of wind and solar costs dropping and natural gas being so plentiful, whether those forces just overwhelm the effort to pull back. We see the same in the auto industry globally anyway. The pursuit of electric vehicles, China’s way out ahead on this. There’s a lot of demand globally for these more efficient vehicles. Is that all just going to continue? Is that going to overwhelm any effort by the Trump administration? This is what I’m watching for. How powerful are the market forces? It’s hard to predict right now whether the US can really exert a strong, strong break on what’s happening because of technology and demand around the world.

So with that, let me just invite both of you, Ari and Carrie, to give us some closing words on this set of executive orders and anything else you’re thinking about at this 100 day mark of the administration?

Ari Peskoe:

Yeah, I think across the power sector what is noticeable is the effort to slow the momentum that I think had been building across the Biden administration at the federal level. That’s about numerous things that the Department of Energy was doing and supporting, for example, transmission development for clean energy deployment, what FERC had been doing along similar lines. And immediately all those efforts have been halted. And so a lot of great work is really just going to sit on a shelf. And even if projects, if they don’t have their funding rescinded, we’re going to see a significant slowdown in that sort of support. So I agree that the market is going to keep doing what the market is doing, but we’re really losing momentum that had been building.

Carrie Jenks:

I would agree. I think the pause and the hesitation to make investments is concerning. We’re about 100 days into this administration. Our first podcast we titled, It’s A Lot. I think now it is definitely more. But we’re still waiting for the rules to come out and industry has to wait until they know what the rules are. And I think even once we see the final rules, there’s still going to be a hesitancy to keep making investments until they know how the courts respond to them.

Jody Freeman:

So maybe since our first podcast on the first set of executive orders was called, It’s A Lot. Maybe this second podcast should just be called It’s A Lot More. Listen, it’s been great to do this with you guys. I always love to spend time with you and talk about what’s happening in climate, clean energy and environmental policy. Carrie Jenks is the executive director of our EELP. Ari Peskoe is the director of our Electricity Law Initiative at the EELP. You guys are both pros. You’re the best to work with. I’m so excited we got to have this conversation today. Thank you.

Carrie Jenks:

Thank you.

Ari Peskoe:

Thank you.

 


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Electricity Law

CleanLaw — Who Will Pay for Data Centers’ Massive Power Bills? It’s Probably You. 

Ari Peskoe and Eliza Martin discuss their new research paper on ways the public subsidizes the energy needs of Big Tech and offer some possible solutions

With: Ari Peskoe, Eliza Martin


Electricity Law Initiative Director Ari Peskoe and EELP Fellow Eliza Martin discuss their new paper, Extracting Profits from the Public: How Utility Ratepayers are Paying for Big Tech Power. As Amazon, Google, Meta, and other technology companies try to secure electricity for their new data centers, electric utilities are expanding their systems to serve them. Because utility companies profit by building infrastructure, serving data centers is a lucrative opportunity that is incentivizing utilities to offer attractive rates to Big Tech companies. Ari and Eliza discuss how rate-setting processes can shift utility costs among ratepayers and explain how rate structures, as well as contracts between utilities and data centers, could be transferring Big Tech’s energy costs to the public.

Transcript

Ari Peskoe:

Welcome to Clean Law. I’m Ari Peskoe, director of the Electricity Law Initiative and I’m here with Eliza Martin, Legal Fellow, and we are going to be discussing our new paper, Extracting Profits from the Public: How Utility Ratepayers are Paying for Big Tech’s Power. Thanks for being here, Eliza.

Eliza Martin:

Anytime.

Ari Peskoe:

So I got interested in this topic because data center energy demand has been the big issue for the past year or so in the power industry and the forecast for growth from data centers, these giant warehouses filled with power-hungry computer chips, has been astounding. So Eliza, what are some of the projections you’ve seen out there for how this industry might grow over the next few years?

Eliza Martin:

I mean it varies by utility, but we’re seeing in Texas, Encore has said that they have about 82 gigawatts of potential data center load. INM in Indiana has said they expect its system to rise from 2.8 gigawatts to seven. Georgia power anticipates its sales doubling. So it’s just like all of the existing investment that we’ve made into the utility system, just doubling or tripling that is what we’re seeing by 2030 or the middle of 2030.

Ari Peskoe:

Yeah. So we’re seeing some of these utilities who have built their demand growth over a century now saying that over the next five to 10 years, they think it might double, or even, in that Indiana example you gave, triple. But we should say that the utilities do have an incentive to inflate these projections. So why is it that a utility might want to give a sort of very rosy picture for growth in its service territory?

Eliza Martin:

Well, utilities make their profits by investing in capital infrastructure. So that’s like the transmission lines, distribution lines, like everything that we see, that’s how they make their profit. So they have an incentive to project that there will be a lot of growth and then try to build that growth because shareholders get a return on their investment or a chance to earn a return on their investment for capital infrastructure costs. So they have an incentive to say that there’s going to be a bunch of data center growth and then go build the infrastructure that they think that they need to meet that demand.

Ari Peskoe:

I’ll just add that these are publicly traded companies. Their stocks are worth more than a trillion dollars these days, though I haven’t checked quite recently enough to know that that’s still true. But they like to go and tell their investors about all the stuff they’re going to build because that’s how they profit. I get these emails on a daily basis from stock analysts about how data center growth is going to be fueling profits for the next 10 years. So these CEOs of these companies get paid based on the financial performance of the companies that they run, and so there’s a lot of incentives to push up the stock value, to promote earnings growth and to try to capture these data centers in order to fuel their profitability for the long run. So let’s get into some of the mechanics from the public’s perspective about what happens when the utility does build something, it builds a new power plant, for example, for utilities that do that sort of thing, or it builds another new piece of infrastructure to meet growth. How do we end up paying for the utility’s growth?

Eliza Martin:

The public ends up paying through the public utility commission or public service commission rate setting process. So generally the way that it works is a utility says we spent X amount of money this year on capital investments, on operation and maintenance costs, we have this amount of money that we need to recover from our captive ratepayers, so me and you, and then everyone fights about that amount of money. So the utility comes forward with this amount of money, parties are in the docket responding and saying, no, you should have lower utility revenue requirement. And then after the public utility commission sets the revenue requirement, then as part of that process, they allocate those costs across consumer groups.

Ari Peskoe:

So yeah, let’s stop there for a second. So we have this two-step process. One is setting the revenue requirement, which is a really utility friendly term. How much money does the utility want to collect from the public? And a key component of that is called the rate base. I’m bringing up that term because I think we’ll probably use it later. And that’s just the value of the utility’s capital assets, which is all the things that it has already built that are not fully depreciated plus whatever new stuff it has just built. And so the public is interested in these proceedings because we pay for the utility’s infrastructure. And so you have big energy users like industrial concerns, factory owners, they participate. You have some big retailers like Walmart in many states is a huge energy user, and they participate in these proceedings. And in pretty much every state there’s a rate payer advocate that’s a state government office that is there on behalf of residential ratepayers.

And so they’re all there arguing for a lower revenue requirement. Ultimately though the regulator then decides this is the amount that it’s going to be, and then there’s sort of like the food fight after that. This sort of cost allocation process can be a bit messy.

Eliza Martin:

Yes. And the cost allocation process is really about determining what amount of that big utility revenue requirement, how that pie should be split across all the different people, all the different groups of consumers. So Walmart or industrial consumers will pay a different amount of that pie, I guess, as opposed to like residential homeowners who will pay a different amount. And generally these amounts are theoretically supposed to align with the cost that the utility incurs to serve those people. So like to serve a bunch of homeowners, you need a lot of distribution infrastructure. So you need the lines and wires to deliver power to people’s homes, which can be spread across a longer distance versus if you’re serving a factory, you need different sorts of infrastructure, so your costs theoretically look different. But this is a really subjective process just because every party’s like looking out for themselves and trying to reduce their share of costs.

So well lawyered parties are usually going to do better in these cases because they’re really technical, they’re really long proceedings, and so if you have a good advocate who is diligent about looking through the utility filings, is diligent about trying to interrogate the other party’s claims, then you can end up reducing the amount of money that this group pays and then increasing another groups, but it’s kind of a fight.

Ari Peskoe:

Yeah. I’m going to go back to this high level principle you mentioned, cost causation, that the rates that a particular type of consumer class pays should align with the costs that the utility incurs to serve them. And so that principle ought to apply to growth. So if the utility is building out its system because society is demanding more energy than under this cost causation principle, then if you’re the sort of class of consumers that’s driving that growth, you should be responsible for paying those costs. So if we go back in time, the last time that the utility industry saw the kind of growth that some utilities are projecting now is back in the post-World War II era. In the 1950s and 1960s, electricity consumption in this country was growing at something like 10% per year. But there it was being driven by sort of all sectors of society. We had massive industrial growth, we had the build out of the suburbs, growth was everywhere, and so the costs of that growth were sort of shared among all rate payer classes.

Everybody was paying for it based on the idea that this growth was going to benefit everyone, population growth, economic development, the sort of things that are just sort of like hallmarks of Western civilization. But now we have this growth being driven by data centers and that seems to change things a little bit, or, at least in our view, ought to change how these costs are allocated. But our concern in the paper though is that utilities are interested in attracting these data centers to come to them, and one way they can do that is by offering discounted rates to the data center and surreptitiously sort of requiring everyone else to cover any shortfall of those discounts. And we can talk a little bit about sort of why we’re skeptical of the utilities, what about the utilities and their history makes us skeptical that they’re not doing this?

Eliza Martin:

Well, utilities have a long history of doing this. In the paper we get into like a couple of reasons why we’re skeptical that utilities are doing a good job on this because the rates process is really driven by utility companies. So they will exploit their advantage. Like, they’re the only ones with access to their cost information. They don’t open their accounting books for people in these rate cases. So there’s a history of utilities lying in their rate cases. There’s been some big scandals recently that utilities are only caught when there’s a federal investigation, First Energy in Ohio, this has been a big issue. But every year FERC, the Federal Energy Regulatory Commission, puts out its audit report and every year there’s instances of utilities lying in their rate cases about attribution of costs to certain accounts and there’s informational issues within that process. So that’s, I guess, one of the first reasons why we’re skeptical of utilities being, I guess, good Samaritans of this process. So there’s that.

And then I think the other issue is state PUCs are political economy bodies, but inherently state PUCs in every single state, they’re either elected positions or they are appointed by the governor. And state public utility commissions are generally underfunded, I think is fair to say, so they struggle with sort of responding to these claims that utility companies make if there’s not other good parties in the case that are challenging what utility companies say. And because state PUCs make decisions based on what’s in the record, what’s in the evidence, it can be difficult for a state PUC if there’s not other good parties in the proceeding to sort of challenge what a utility company is saying. So you have that aspect of it, but then you also have this issue, which is like a state PUC commissioner who maybe wants to be reappointed by the governor, they can be responsive to maybe the governor’s needs over a rate payer’s needs or vice versa.

If you’re elected and you want a donation from an industrial group or something, then maybe you’ll favor them over something else, which I think is just a classical kind of political economy story. So those are two of the reasons.

Ari Peskoe:

I’ll add just one more, which is many states have policies favoring investment of data centers. They want these investments in their states. And so if you’re a utility regulator, you’re a potential veto point through these rate cases and other proceedings we’ll talk about. But that’s a lot to ask of a utility commissioner to veto a billion dollar investment, one maybe that the governor has already been promoting. And so that might give utilities a little bit of extra leeway because there’s this political momentum for these deals to happen. And I think you mentioned the history of utilities exploiting their monopolies. One recent case we bring up in the paper is this Duke Energy case, which was a Fourth Circuit decision from 2024 where there was a natural gas developer that was trying to compete with Duke in North Carolina. The natural gas developer was going to sell its energy to municipal utilities. These are, for the most part, small towns in North Carolina that own their local distribution infrastructure, but relied on Duke to supply power.

And this natural gas developer was able to supply power at a much lower rate than Duke, and so it was picking off Duke’s customers. And when one of Duke’s larger municipal customers was getting ready to renew its contract or potentially sign with this new developer, Duke offered a major $300 million discount and some internal Duke documents disclosed through litigation revealed that Duke had come up with a plan to shift the cost of that discount to other Duke ratepayers. In other words, Duke was going to force its captive ratepayers to subsidize its competition with this new natural gas fired power plant. And so we see utilities do things like this, try to basically abuse their monopolies in this way, and we’re concerned that they may be doing the same sort of thing here with regard to data centers.

We talked about this rate setting process, but one of the, I think, main findings of our paper is that data centers often sign up with utilities for service through a process that completely bypasses the normal rate setting process. So these are called special contracts or secret contracts. Why don’t you talk a little bit about what you found about these deals between utilities and data centers.

Eliza Martin:

So these are contracts that essentially, like you said, allow any customer, I guess, that has a special contract, but what we saw was data centers, that will take service from a utility company with terms and conditions of service that aren’t otherwise applicable to any other party. So I guess theoretically like the origins of this are, you would have a large customer who maybe you can bring onto your utility system without having to add a bunch of new infrastructure to serve them so you have extra capacity, I guess, on the existing system. And so if you can bring on a customer without having to build out new power plants or having to build out new infrastructure, then theoretically that is good for everyone because it lowers your cost. But what we’re seeing with data centers are these terms and conditions that are otherwise not applicable to anyone, but the load is so big, like data centers are so enormous that there’s no way for a utility to serve these customers without having to build out their infrastructure.

So the result of that is that the utility can end up shifting costs because if it loses money on that contract deal, like what you were talking about with Duke, then it can use its monopoly to shift those costs to other ratepayers like you and me who don’t have a choice in where we go to get our electricity. So these data centers can choose where to locate. A utility can offer them a sweetheart deal, but we as ratepayers can’t, and then we get hit with the cost of it.

Ari Peskoe:

And I think one of your key findings here is that these are secret contracts. So why don’t you talk a little bit about the sort of confidentiality of these deals and what we do and don’t know about what’s in these contracts?

Eliza Martin:

Well, we don’t know a lot about what’s in the contracts. Basically a utility will file a contract with the public utility commission and claim that the information in the contract is proprietary. So they’ll make a claim for privileged treatment of the contract because on the theory that their terms of service to this data center need to remain confidential because otherwise another utility could undercut them and then you would lose that customer. The results of those confidential claims for treatment vary. In some states, you can’t even see the contract or it’s all blacked out basically. In other states, you can read the words, but there’s no pricing terms, there’s no information on the total load. So that makes it really difficult to understand the scale of the subsidy that’s potentially there. So basically we know that these exist, but it’s really difficult to measure the wealth subsidy that’s sort of being offered. So it’s a real problem because a public utility is a public service, I guess, and we have no idea what terms it’s offering to its customers that we’re potentially paying for.

Ari Peskoe:

Yeah, these are monopolies and we have a public body charged with regulating them to protect consumers. And that’s hard here. One reason you mentioned earlier is because there are not a lot of other parties participating in these proceedings, and I think that’s largely because even though these sort of special contract or secret contracts have existed for decades in many states, consumers often thought that they didn’t really have a direct interest in these proceedings because there would only be an indirect effect on prices. If this wealth transfer that we’ve been talking about was actually happening, it may have some small increase on future bills for everyone else. But what’s different here, I think, is the scale of these data center contracts. We know that these facilities are hundreds of megawatts that particular utilities have already announced, they have gigawatts of contracts already signed. And so the effect on other consumers could be quite significant.

And I’ll just bring up my favorite example here of a special contract, which is one where it’s far worse than the example of hypotheticals we’ve just been talking about because there is no regulatory review at all. It’s not even blacked out. So this is an example in Louisiana. The utility there is called Entergy. They’ve signed up a data center client with Meta. They signed a contract with Meta, the company that owns Facebook. And this is a facility that Entergy says it’s going to be building more than two gigawatts of gas-fired power plants for. And just to give a sense of what that means, on a hot summer day when it’s using the most energy, the city of New Orleans consumes about one gigawatt. So this is enough natural gas-fired power plants to power two city of New Orleans on a hot summer day. And Entergy has taken the position that it does not have to file this contract with the public service commission, with the regulators there.

Entergy has also said in the course of the proceedings where they’re trying to get approval to build these giant power plants, that it does not know how much electricity Meta is going to be using at this data center. So we don’t know how much of this two plus gigawatts of gas-fired capacity will actually be used by the data center and how much Meta is just trying to take advantage of sort of the political winds here to get additional gas-fired capacity through this sort of what it’s hoping is an abbreviated regulatory process. And this raises a huge concern that we talk about in the paper. It’s not just that utilities can transfer costs to ratepayers, they also transfer risk. And so there could be any number of reasons why Meta decides to try to back out from this deal, or maybe it only wants to build a facility that’s going to use half as much energy as it had originally anticipated. But if Entergy goes through with building all this infrastructure, it’s going to be at least $3 billion, and we don’t know the extent to which Meta is going to be on the hook for any of these costs.

And so you could have a situation where it’s just the people of Louisiana are left holding the bag for all of these infrastructure costs that are these stranded costs if Meta either disappears or just doesn’t use as much energy as it anticipates. This is another one of these hidden terms from these special contracts that could have huge consequences for ratepayers, and we just don’t know who’s holding the risk in these deals. So secret special contracts are one huge red flag that we raise in this paper. Another area we focus on is the fact that these cost allocation processes we’ve been talking about can happen at the state level and also happen at the federal level through the Federal Energy Regulatory Commission. So Eliza, maybe you could walk us through the sort of PJM regional transmission development process and how it’s potentially causing the public to pay for the data center build-out in Virginia and other parts of that region.

Eliza Martin:

So this is a normal process. We just highlight it in the paper because it has the potential to result in residential ratepayers paying a lot of transmission costs for data centers. So basically when PJM, which is this massive utility alliance in, I guess, the Mid-Atlantic, that stretches all the way to Chicago, so it’s kind of a behemoth. So PJM decides that it will be building a lot of transmission lines that stretch in the region. So it’s in the PJM region. They need to build transmission lines mostly to meet data center load growth in Virginia. So Virginia has had this explosion of data centers locate there, and as a result of all these data centers locating there, we need new transmission. PJM goes to FERC and FERC approves those transmission costs. So at that point, there’s a very complicated process at FERC where these transmission costs get allocated to the member utility companies within PJM. Then those member utility companies at the state level have agreements on how to allocate costs to its various rate payer groups.

So the results of this very complicated process just means that residential ratepayers in Virginia and Maryland are going to be paying a bunch of money for transmission that’s really just built for identifiable data center customers in Virginia. So this PJM example is $5.1 billion, which is an insane amount of money. And the fact that residential ratepayers are getting stuck with that bill because of Virginia’s policies about this kind of violates this idea that the group that’s causing this should be paying for this. Residential ratepayers in Virginia and Maryland aren’t the ones who need this transmission. It’s built for data centers. It’s not built for the broader public.

Ari Peskoe:

Yeah, I mean the premise behind the PJM cost allocation process is that new high voltage transmission is broadly beneficial, and so costs are spread out based on that premise. But then when it gets to the state level, as you were describing, some states are operating under very old models for how to share those costs at the state level. So in Maryland, for instance, the Maryland utilities will pay about 10% of that 5.1 billion, which is about 500 million, and under Maryland’s approach, residential ratepayers then pay for about two-thirds of that 500 million. So something like $300 million for regional transmission expansion, as you described, is largely being driven by data center growth. So that’s a mechanism that we talk about in the paper. There’s a couple of other subtleties about it that we don’t have to get into here about some stranded cost concerns related to that. Basically if some of the data center load fails to materialize, even if a utility has strong contractual commitments with its data center customer that might protect the utility’s own ratepayers through some of the mechanics of the regional process that neighboring utilities and their ratepayers could end up being stuck with some of these costs.

So there’s a lot of sort of mismatch between things that FERC is doing and things that are happening on the state level. There’s another issue involving FERC that we talk about in the paper as well, and that’s called co-location. I guess one of the main examples of this is where a data center locates next to a nuclear plant or sort of physically next to it and is literally connecting to the nuclear plant. Of course it takes more than just an extension cord. There’s some complicated, expensive infrastructure that goes into this, but there’s a contract between the nuclear plant owner and the data center and then the complexities involved here with how does that contract interact or not interact with the regional market. So what’s the state of debate on co-location now?

Eliza Martin:

Well, there’s a lot of different issues. It’s currently a live proceeding in front of FERC, so they may hopefully make decisions on it somewhat soon. But there’s a lot of different issues. So first, basically the phenomenon that you described were it to happen, were a data center customer to co-locate with a nuclear plant, you would essentially remove that entire generation asset. So all the power that this nuclear plant would normally be bidding into a competitive auction to supply a utility with its power, that entire generation asset is gone from the market. So because we run, in some regions, regionally, we run competitive auctions to supply power. If you take out a whole big chunk of that generation asset that normally clears the market, so that normally is sold to a utility company which then sells it to the customers, to ratepayers, or passes those costs on, if you remove that whole chunk of generation assets, then you have higher priced generation that will end up clearing the market.

So functionally that means dirtier generation of coal plants will probably clear the market or you just won’t have enough. So that’s another concern is you just will not have enough generation. So you’ll not only have wholesale power prices increase, but you could potentially have a shortage of generation.

Ari Peskoe:

Yeah, the bottom line there is that for consumers they’ll see higher power prices. And then there’s this other issue about who pays for the transmission system. So what’s the controversy there?

Eliza Martin:

So the controversy around who’s paying for transmission is up for debate in front of FERC because when co-location happens, a data center connects directly to the power plant behind the plant’s point of interconnection to the utility transmission network. So theoretically it’s a way to cut out the utility. No longer is the utility having to use its transmission or distribution infrastructure to move power from a nuclear plant to its customers. So there’s debate around, if that infrastructure isn’t being used anymore, should the data center customer be paying for it? And there’s a lot of technical issues like is it possible for a nuclear power plant to really ever be fully isolated from a utility transmission network? That’s up for debate, I guess, in front of FERC, but utilities are obviously upset about this arrangement because it cuts out potential profits for them. So they profit from having and operating their distribution and transmission network and making any of these upgrades that would be required.

Ari Peskoe:

So we have this competition between the utilities who want to sign up data centers as their customers and these nuclear generators who also want to have data center customers. And so this co-location fight right now before FERC is really pitting these two power sector interests against each other. We’ll see how FERC decides. FERC is probably going to issue some decision about the rules of the road in PJM perhaps over the summer that might inform what happens in other parts of the country. This transmission rate issue that you mentioned, Eliza, I think is really important for consumers. It’s an example perhaps of where new data centers could actually help reduce costs for consumers. Because if data centers are paying for part of the regional transmission system, then perhaps that means the rest of us can pay somewhat less. Although at the same time, data centers are also driving the need for a new transmission so it’s not clear how this all exactly will shake out for consumers.

We have some recommendations in the paper about what we think state regulators and state lawmakers ought to be doing. I would say that there’s sort of classic no silver bullet here sort of issue. There’s not one thing that regulators can do to protect consumers here. But if there’s one recommendation you wanted to highlight, what would you point to for something that either regulators or state legislators ought to be considering here?

Eliza Martin:

Get rid of special contracts for data centers. Shifting to a tariff proceeding obviously isn’t a foolproof issue because we still end up with these cost allocation fights, but the procedural processes around these secret contracts is just so egregious that it’s shocking that public utility commissioners and legislatures are okay with this happening still. So I guess that would be my one recommendation if I were in charge of anything.

Ari Peskoe:

Yeah, and unfortunately we’ve seen lawmakers go the other way. We have an example in the paper of a Mississippi law passed last year that’s designed to attract a $15 billion Amazon data center. And there the legislature says explicitly in the law that regulators have no authority to review the contract between the utility, Entergy, again, incidentally, and Amazon. The one recommendation I would highlight is about competition. In about 35 states, utilities are still the dominant owners of power plants, and these data centers, as we’ve been talking about, use a lot of energy, and to meet this growth, utilities are potentially making a lot of money by building new power plants specifically for these data centers. That’s an industry that is now highly competitive. And we can protect consumers by requiring the data centers to sign contracts with a generation company that completely takes consumers out of the contract. So those two parties, the data center, the independent generation developer can allocate the risks and costs between them and ratepayers would be totally isolated from the deal.

That would be the recommendation that I would highlight. But of course, utilities have been fighting against that sort of competition for a generation. But I think we have this moment, perhaps even this crisis, due to rising costs due to data centers that ought to cause legislators to take another look at this issue and perhaps see competition as one potential solution here. One last thing we talk about in the paper is about, you know, if we look at all these subsidies for data centers and we kind of say, well, are they worth it? And we have a long history of cost shifts in utility rates, some of them are unintentional because cost allocation is complex, some of them are intentional. The example we give in the paper is about state energy efficiency programs where a utility or a contractor will come to your house, for example, and give you a free home energy audit and will give you discounts on insulation and other things that can save an individual money on their energy bills.

And we justify those sorts of subsidies because the system as a whole benefits because if you lower energy consumption in one particular home, it can help reduce system-wide costs. And so is there any evidence, Eliza, that we’ve seen about whether these data center deals are good for ratepayers?

Eliza Martin:

Well, we have no public accounting of if they’re good or not. Virginia has started the process of trying to, I think, account for the impact of data centers on its infrastructure, but I think we still don’t have any answers about whether this benefits ratepayers. And for all the reasons that you mentioned about why this hurts ratepayers, maybe we should take a step back.

Ari Peskoe:

Yeah. The Virginia study came out I think the end of last year. It’s a great report from the Virginia legislature. The scope of the report, there’s a whole host of issues about data centers that we don’t touch in this paper. There’s clean energy issues about how we’re powering these data centers and whether it’s causing an increase in greenhouse gas emissions, the water consumption from these data centers is tremendous because it gets quite hot with all of that computing power in these warehouses and so you need a lot of water to cool the place down. There are backup diesel generators at these facilities which have their own environmental issues. There are issues about land use, about noise. So there’s a whole host of issues that we’re not touching in the paper that are covered in this report. And on the one issue that we are covering about utility rates, the legislature had commissioned a study that found that roughly speaking, so far, the data centers were paying for their energy costs, but they projected that that was no longer going to hold true in the immediate future.

As this growth really expands, it sort of found that residential ratepayers are going to be paying quite a substantial subsidy for data centers moving forward. The last issue that we’re concerned about in the paper is just with power sector reforms. The utility industry is beholden to a very old business model that, as we’ve described, rewards utilities for investing in large-scale infrastructure projects. And we have a lot of new technologies today that can try to sort of squeeze more efficiencies out of our existing system. Utilities generally disfavor them because they’re not capital investments that they profit from. There’s a whole host of new operational planning practices. It’s been a long effort to try to get utilities to build, sort of connect to each other in a way that’s going to benefit consumers by improving reliability, allowing more clean energy onto the system. These are all very complicated issues that people have been talking about for 10, 20 years, and now utilities just see these shiny data centers as an opportunity for massive, easy profits. And it’s just another reason to kick the can down the road on some of these hard-to-achieve reforms.

And so I don’t think we are particularly optimistic that data centers are going to be benefiting consumers. I think one conclusion that I take away from the paper is that the power system is really changing with these data centers. We could be looking at some utility systems where these are huge long-term customers and that might really change some of the dynamics in utility regulation as these data center companies may be looking to protect their long-term deals and kind of potentially change some of the dynamics at public utility commissions. This is going to be a big story to watch for a long time, I think. So Eliza, thanks so much for coming to talk about the paper today, and we hope folks will take a look at it. The link is in the show notes. We will see where this issue goes from here.

Eliza Martin:

Thank you, Ari.

 


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