Category: Energy

FERC Issues Order Clarifying Data Center and Large Load Interconnection Procedures in PJM

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Emily S. Childress ●

The Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order on December 18, 2025, creating a framework for how large co-located loads, such as data centers, can connect to the grid in a timely, efficient, and fair manner.[1] In February 2025, the Commission initiated Docket No. EL25-49-000, a show cause proceeding under section 206 of the Federal Power Act (“FPA”), directing PJM Interconnection, L.L.C. (“PJM”) and PJM transmission owners to show cause as to why PJM’s governing documents addressing service arrangements between and among generators and co-located load remain just and reasonable and not unduly discriminatory or preferential.

The Commission’s Order—finding that PJM’s current tariff is unjust and unreasonable—directs PJM to implement revisions to clarify what steps entities must take to effectuate co-located load arrangements, to establish three new transmission services, and to create new behind-the-meter generation rules. The Order also seeks additional briefing on the appropriate rates, terms, and conditions of the new transmission service offerings. 

First, several key terms are important to understand in the context of the Commission’s Order. The Order defines “Co-Located Load” to mean a “configuration that refers to end-use customer load that is physically connected to the facilities of an existing or planned Customer Facility on the Interconnection Customer’s side of the Point of Interconnection to the PJM Transmission System.”[2] A “Co-Location Arrangement” refers to both the Co-Located Load and the associated generator. Other capitalized terms used throughout the Order are defined in PJM’s tariff.[3]

FERC v. States: Who Has Jurisdiction? 

Regulating large loads, such as data centers, requires involvement from local, state, and federal entities. FERC’s jurisdiction is limited; it can only regulate matters that Congress authorizes. Under the FPA, states have authority over any matters not expressly conveyed to the Commission.[4] The Order addresses the jurisdictional divide in the specific context of Co-Located Load, noting that FERC has authority to oversee the terms and conditions of generator interconnection to any Commission-jurisdictional distribution facility or transmission facility, and to ensure that rates for transmission service in interstate commerce are just and reasonable.[5] Concurrently, states retain exclusive jurisdiction over the specific terms of retail sales, generator siting, the generation mix, and transmission in intrastate commerce.[6]

Why PJM’s Tariff Is Not Just and Reasonable

The Commission ultimately found that PJM’s current tariff is not just and reasonable, and the Order focused on three key reasons for this: (1) a lack of consistency and clarity regarding serving Co-Located Load, (2) failure to properly allocate costs to the entities that cause the costs to be incurred and reap the resulting benefits, and (3) outdated behind-the-meter generation (“BTMG”) rules that do not account for large loads on the scale of data centers. 

To read the full client alert, please visit our website. 

[1] PJM Interconnection, L.L.C., 193 FERC ¶ 61,217 (2025) [hereinafter PJM Order].

[2] Id. at P 1 n.3. The Commission directed PJM to incorporate this definition into its tariff. Id. at P 164. 

[3] See PJM Governing Documents, Open Access Transmission Tariff, available at agreements.pjm.com/oatt/3898.

[4] Nat’l Ass’n of Regul. Util. Comm’rs v. FERC, 964 F.3d 1177, 1187 (D.C. Cir. 2020) (citing N. Nat. Gas Co. v. State Corp. Comm’n of the State of Kan., 372 U.S. 84, 91-93 (1963)).

[5] PJM Order at PP 171-174.

[6] Id. at PP 167-170.

Climate Change Environmental Groups Challenge President’s Executive Orders to Expand Energy Development

Margaret Anne Hill, Frank L. Tamulonis III, Stephen C. Zumbrun, and Melissa A. Scacchitti ●

We previously reported that President Trump issued a series of executive actions to fulfill his pledge to advance the United States’ domestic energy economy. These executive actions, such as President Trump’s Executive Orders Unleashing American Energy, Declaring a National Energy Emergency, and Reinvigorating…[the] Coal Industry…., now face legal challenges from environmental groups, led by Our Children’s Trust, a nonprofit law firm that exclusively represents youth plaintiffs against state and federal governments.[1] Presently, Our Children’s Trust seeks to enjoin these orders from taking effect because of their potential impact on climate change in the youths’ future. This post will provide a brief overview of the litigation and its pending timeline.

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Supreme Court Scales Back the NEPA Roadblock to Infrastructure Projects

Margaret Anne Hill and Stephen C. Zumbrun ●

Overview

On May 29, 2025, the U.S. Supreme Court issued a significant decision clarifying the scope of environmental review required under the National Environmental Policy Act (“NEPA”) for major infrastructure projects. The Court recognized and reined in what infrastructure practitioners have long understood: NEPA strayed far beyond its “procedural” and “informational” roots to become an obstruction to infrastructure projects across the country.

As brief background, a project developer filed an application with the Surface Transportation Board (“STB”) for a proposed 88-mile railroad line in Utah. The STB, pursuant to its NEPA requirements, issued a 3,600-page environmental impact statement (“EIS”) analyzing the environmental effects of the project and ultimately approved the railroad line. Groups challenged the STB’s approval, and the D.C. Circuit vacated the STB’s decision, ordering the STB to analyze the potential “upstream” impacts of the proposed railroad, which included possible increased oil and gas drilling activities in Utah, and potential “downstream” impacts of the railroad, such as increased oil refining in Texas.

The Supreme Court reversed the D.C. Circuit Court’s prior decision, finding that the D.C. Circuit: (1) did not afford substantial deference to the STB required in NEPA cases, and (2) incorrectly ordered the STB to review the environmental effects of projects separate in time and place from the actual 88-mile railroad under consideration.

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Unleashing American Energy: Trump Administration’s Latest Executive Orders

Margaret Anne Hill, Frank L. Tamulonis III, Melissa A. Scacchitti, and Stephen C. Zumbrun ●

New Executive Orders and Proclamation

On April 8, 2025, President Donald J. Trump issued three significant executive orders (“EOs”) and a fourth proclamation consistent with his pledge to “Unleash American Energy.” These Presidential actions, titled (1) Strengthening the Reliability and Security of the U.S. Electric Grid, (2) Protecting American Energy from State Overreach, (3) Reinvigorating America’s Beautiful Clean Coal Industry, and (4) Regulatory Relief for Certain Stationary Sources to Promote American Energy, seek to promote domestic oil, gas, and coal energy production. Each of these actions is discussed below.

Strengthening the Reliability and Security of the U.S. Electric Grid, EO 14262

This EO directs the Secretary of Energy to streamline emergency processes and to develop a uniform methodology for analyzing reserve margins across all regions of the bulk power system. The stated needs for the EO include aging infrastructure, increased need for electricity, and demand for energy use by datacenters.

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LNG by Rail: The D.C. Circuit Vacates a DOT Rulemaking and Outlines a Path for Challenges Yet to Come

Mark R. Haskell ●

In Sierra Club v. United States Dep’t of Transportation[1],a panel of the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated and remanded a final rule[2] issued by the Department of Transportation (“DOT”) permitting the transportation of liquefied natural gas (“LNG”) in approved rail cars. The final rule was subsequently stayed and never took effect.

DOT Rulemaking & the Sierra Club Decision

The rulemaking proceeding began with an executive order published on April 10, 2019. Then President Trump directed the Secretary of Transportation to propose a rule to permit LNG to be transported in approved rail cars within 100 days from the date of the executive order and to finalize the rule within thirteen months.[3]  DOT subsequently issued a proposed rule that would permit the transportation of LNG by rail in DOT-113 rail cars. The proposed rule proposed no limit on the number of cars to be used to transport LNG on a single train and imposed no mandatory speed limit. The proposed rule also included a preliminary environmental assessment finding that the proposed rule would have no significant environmental impact.[4]   

The proposed rule was challenged by environmental organizations, states, and the National Transportation Safety Board, all citing potentially grave risks related to potential explosions or fires related to transportation of LNG by rail and separately arguing that the proposed rule failed to mitigate those risks.[5] 

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Climate Change Litigation—State Tort Cases Move Ahead

Margaret Anne Hill and Stephen C. Zumbrun ●

Climate change-related litigation has been increasing in the United States for the past several years. Not only have the actual number of these types of cases increased, but the claims raised in these cases have been expanding—from state tort claims (nuisance, trespass, and negligence) to federal and state constitutional claims. These cases have been slowly working their way through the legal system, with a major consideration being: Should these cases be in state court, involving state tort claims, or federal court, involving federal statutes or federal common law, because of the major national policy implication of climate change that these cases have the potential to affect?

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DOE Releases Draft Roadmap to Address Interconnection Challenges for Clean Energy Projects

Brett A. Snyder and Lamiya N. Rahman  ●

On October 25, 2023, the Department of Energy (“DOE”) released a draft roadmap addressing challenges to the interconnection of clean energy projects to the transmission grid. The roadmap, developed by the Interconnection Innovation e-Xchange (“i2X”),[1] identifies short-term (1–2 year), medium-term (2–5 year), and long-term (5+ year) solutions aimed at addressing barriers to connecting solar, wind, and battery projects to the grid and maintaining grid reliability.[2]

As the roadmap notes, interconnection requests have dramatically increased in the past decade, with 2,500 to 3,000 new requests a year, reflecting 400 to 600 GW/year of proposed capacity.[3] At the same time, constraints on transmission capacity and issues in the interconnection process have caused large backlogs, delays, and interconnection costs, resulting in a “more difficult and costly energy transition for ratepayers, utilities, and their regulators.”[4]

DOE has also issued a request for information (“RFI”) to seek feedback from interconnection stakeholders regarding the draft roadmap. Responses to the RFI are due on November 22, 2023.

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In Order No. 2023, FERC Takes Step in Reforming Transmission Grid Policies by Enacting Generator Interconnection Reforms

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Jane Thomas

On July 28, 2023, the Federal Energy Regulatory Commission (“FERC”) unanimously approved Order No. 2023, a Final Rule designed to streamline the process by which generation resources can connect to the interstate transmission grid.

At a high level, the Final Rule substantially revises the current pro forma large generator interconnection procedures (“LGIP”) and agreement (“LGIA”) with the following updates: 

      • Replacing the current first-come, first-served process with a first-ready, first-served interconnection cluster study process.
      • Increasing the speed of interconnection queue processing by, among other things, imposing strict study deadlines and penalties on transmission providers.
      • Incorporating technological advancements into the interconnection process.

Order No. 2023 also makes changes to the small generator interconnection procedures (“SGIP”) and agreement (“SGIA”).

To read the full client alert, please visit our website. 

The Hydrogen Color Wheel: A Primer

Frederick M. Lowther ●

The international dialogue about climate change and the “net zero” world now includes a focus on hydrogen as an abundant source of energy useful in myriad ways (refining, fertilizer production, motive power, etc.) with potentially zero climate-harmful emissions. For those of us who took Chemistry 101 in high school, we know that hydrogen is by far the most abundant element in the Universe, representing an estimated 70 to 75 percent of all known matter. While that is an awesome number (giving rise to the common student question “How do we know that?”), the fact is that, here on Earth, hydrogen does not exist as a “free” gas—it is present here only in combination with other elements, notably oxygen, carbon, and nitrogen. Thus, to capture hydrogen for use in multiple applications, it must be separated from the paired substances (most commonly water (H2O) and natural gas (CH4)).

In the discourse around capturing hydrogen as a free gas, a color-coding terminology has emerged that rivals a paint store. I call it the “hydrogen color wheel” and it is the source of much confusion. While each of the color “codes” involves a somewhat detailed explanation, my goal in this post is to keep the detail short and within understandable limits.

Continue reading “The Hydrogen Color Wheel: A Primer”

Accounting for Change: FERC Proposes Accounting and Financial Reporting Reforms to Address Renewable Energy Assets

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman


The Federal Energy Regulatory Commission (“FERC” or “Commission”) recently issued a Notice of Proposed Rulemaking (“NOPR”) to address industry concerns that FERC’s current Uniform System of Accounts (“USofA”) does not adequately account for renewable energy assets. The NOPR, which was released during the last Commission open meeting, proposes the following four categories of amendments to the USofA, as well as conforming revisions to FERC’s accounting reports:

      • Creating new production accounts specifically dedicated for wind, solar, and other non-hydro renewable assets;
      • Creating a single dedicated functional class for energy storage accounts;
      • Specifying the accounting treatment of renewable energy credits (“RECs”) and similar instruments by codifying prior Commission guidance; and
      • Adding new dedicated accounts for hardware, software, and communication equipment within existing functions in the USofA.

Additionally, the NOPR requests feedback on whether the FERC Chief Accountant should issue accounting guidance related to hydrogen.

To read the full client alert, please visit our website. 

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