FAIR Act
- Sponsor
- Rep. McGuire, John J. [R-VA-5]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Jul 22, 2025
Bottom line
This bill restricts state utility regulators from approving rates for electric utilities that incorporate certain DEI initiatives or non-pecuniary ESG considerations into their operations or rate-setting processes.
What it actually does
This bill amends the Public Utility Regulatory Policies Act of 1978 (PURPA) to prohibit state regulatory authorities from approving rates for electric utilities that engage in specific Diversity, Equity, or Inclusion (DEI) practices or consider certain Environmental, Social, or Governance (ESG) factors. It defines prohibited DEI practices as those involving discrimination or mandatory ideological training, and restricts ESG considerations unless directly tied to pecuniary impacts or required by law. The aim is to ensure utility rates are based solely on financial and operational efficiency.
Proponents argue
Supporters argue the bill ensures electric utility rates are based solely on pecuniary factors related to cost reduction, reliability, and direct legal compliance, preventing utilities from passing on costs associated with political or ideological agendas like certain DEI or ESG initiatives to ratepayers. They contend this will lead to fairer, more affordable rates and prevent discrimination or compelled speech in the workplace.
Opponents contend
Opponents would likely argue that the bill unduly restricts state regulatory authority and utility autonomy, potentially hindering efforts to promote diversity, address climate change risks, or improve corporate governance. They might contend that certain DEI and ESG factors, when properly managed, can enhance long-term utility resilience, attract talent, and ultimately benefit ratepayers, and that prohibiting their consideration could lead to less sustainable or equitable outcomes.
The bill is very short and can be read quickly, making it accessible for evaluation by an informed reader.
Section 2, amending Section 111(d) of PURPA by adding paragraph (22).
Prohibition on Approving Rates for Utilities Engaging in Certain DEI Practices
This provision forbids state regulatory authorities from approving rates for electric utilities if those utilities engage in specific Diversity, Equity, or Inclusion (DEI) practices. These prohibited practices include discriminating based on race, color, ethnicity, religion, biological sex, or national origin, or requiring employees to undergo training or assent to statements asserting inherent superiority/inferiority or oppression based on these characteristics.
Supporters argue
Supporters argue this provision prevents utilities from imposing potentially discriminatory or divisive DEI practices on employees and ratepayers, ensuring that utility operations focus on core services without ideological mandates. They contend it protects individuals from compelled speech and ensures fairness.
Critics contend
Critics might argue that this provision stifles legitimate efforts by utilities to foster inclusive workplaces and address historical inequities, potentially harming employee morale and diversity within the sector. They may assert that such DEI practices are vital for attracting and retaining a diverse workforce and promoting equitable service delivery.
Tradeoffs
The provision balances the desire to prevent perceived discrimination or ideological imposition in the workplace against the goals of promoting diversity and inclusion within utility companies.
Section 2, amending Section 111(d) of PURPA by adding paragraph (23).
Prohibition on Approving Rates for Utilities Considering Certain ESG Factors
This provision prohibits state regulatory authorities from approving rates for electric utilities if those utilities consider Environmental, Social, or Governance (ESG) factors when setting rates or making operational decisions that affect rates. It includes exceptions for compliance with specific federal or state laws, provided such compliance is limited to direct legal obligations and does not involve discretionary ESG considerations.
Section 2, amending Section 111(d) of PURPA by adding paragraph (23)(C).
Definition of Environmental, Social, or Governance (ESG) Factor
This section defines "environmental, social, or governance factor" (ESG factor). It includes environmental considerations like climate change policies and carbon emissions reductions (unless directly tied to pecuniary impacts or legal compliance), social considerations like corporate board quotas or supplier diversity programs based on protected characteristics (unless legally required), and governance considerations for advancing political/ideological objectives unrelated to pecuniary outcomes.