Energy Emergencies vs. Manufactured Crises: The Limits of Federal Authority to Disrupt Power Markets

Abstract

Because genuine emergencies demand a swift and decisive response, several federal laws consolidate limited emergency control over the energy industry in the Department of Energy (DOE) or the President, temporarily empowering them to override existing law and order actions inconsistent with the contracts, prices, or protocols that govern the industry’s day-to- day operations. These authorities, however, are narrow, as befits the nature of emergency response. Congress had specific types of threats in mind and limited the authorities granted to those needed to respond to a crisis. The relevant statutes outline the conditions under which federal actors may assert emergency powers and enumerate those powers with specificity. Since early 2017, the current Administration has flirted with invoking these powers to bail out coal-fired power plants. This paper examines statutes that provide federal agencies or the President with emergency powers over energy assets, including a law related to “defense critical materials�? that is discussed in a leaked Administration document that purports to justify a bailout. We answer three key questions about these federal laws: 1) What conditions allow DOE to declare an “emergency�? or to otherwise invoke these statutes? 2) What powers does DOE have under these statutes to alleviate emergency conditions or to respond to national security threats? And, 3) When do these statutory authorities expire once invoked? We conclude that these statutes do not provide the authority this Administration seeks to prop up economically failing coal plants. We first outline the extensive frameworks in place to ensure the reliability of the electric grid. Then we survey the statutory authorities available to respond to grid emergencies. Finally, we detail the Trump Administration’s proposals to support coal-fired generation and explain why the emergency statutes are a poor fit for these efforts.