A North Carolina federal judge on Monday declined to block the Federal Energy Regulatory Commission from imposing nearly $1 billion in enforcement penalties against an energy efficiency aggregator, saying the company hasn't shown its constitutional rights have been violated.

In rejecting North Carolina-based American Efficient LLC's bid for an injunction, U.S. District Judge Thomas D. Schroeder said he was not convinced the company can successfully argue FERC's in-house enforcement proceedings rob it of a right to a jury trial under the Seventh Amendment.

American Efficient claimed FERC's enforcement case flouts the U.S. Supreme Court's June 2024 ruling in Securities and Exchange Commission v. Jarkesy , which limited agencies' use of in-house administrative courts to impose monetary civil penalties. But Judge Schroeder said in a Monday order that FERC can't actually compel a payment from the company until its enforcement case has been litigated in federal district court.

While a FERC administrative penalty might still have "real world impacts" on American Efficient's business, those impacts likely do not rise to the level of a constitutional violation, Judge Schroeder said in his order.

"The limited effect of an unenforced FERC assessment in future proceedings does not suggest that the assessment determines 'legal rights,'" Judge Schroeder said in his order. "And if FERC were to use an unenforced assessment to enhance penalties in a subsequent proceeding, then those subsequent penalties — and any facts supporting them, including prior assessments — must still be affirmed in a de novo trial before American Efficient would have any obligation to pay."

The fact that only FERC may trigger a federal jury trial — in order to enforce the penalties it has determined — doesn't appear to be an infringement on American Efficient's Seventh Amendment rights, Judge Schroeder said in his order.

American Efficient, a company that bundles energy efficiency resources and offers them in wholesale electricity capacity markets, launched its lawsuit against FERC in January, challenging a show cause order that accused the company of running an unqualified energy efficiency program in markets operated by PJM Interconnection.

The show cause order directed American Efficient to explain why it should not be liable for $722 million in civil penalties and the disgorgement of about $250 million in profits for alleged market manipulation and tariff violations.

American Efficient argued in its complaint that while FERC penalty decisions can be ultimately reviewed by federal courts, there is not an opportunity for a jury trial before liability is determined or penalties are assessed. In seeking an injunction, the company argued it could be forced out of business if FERC issues a final penalty order before its constitutional claim is decided.

A secondary claim raised in American Efficient's complaint challenged the structure of FERC itself. The company specifically alleged FERC's commissioners are unconstitutionally shielded from the removal authority of the president under Article II of the Constitution.

During oral arguments in October on American Efficient's injunction bid, Judge Schroeder questioned lawyers for the federal government about how they intended to defend FERC against the Article II claim, given the Trump administration's efforts to overturn tenure protections guaranteed for members of independent agencies under the 1935 Humphrey's Executor v. U.S. ruling.

But the judge did not address the claim in his Monday order denying the injunction.

A FERC spokesperson said on Monday that the agency doesn't comment on court proceedings. Representatives for American Efficient could not immediately be reached for comment.

American Efficient is represented by Seth P. Waxman and Kelly P. Dunbar of WilmerHale, Mark A. Hiller and Cary B. Davis of Robinson Bradshaw & Hinson PA, and Suedeen G. Kelly and John N. Estes of Jenner & Block LLP.

FERC is represented in-house by David L. Morenoff, Robert H. Solomon, Susanna Y. Chu and Jared B. Fish, and by Marianne F. Kies of the U.S. Department of Justice's Civil Division.

The case is American Efficient LLC et al. v. Federal Energy Regulatory Commission et al., case number 1:25-cv-00068, in the U.S. District Court for the Middle District of North Carolina.