2014 Court Opinion Case Summaries

Link on the case titles below or scroll down the page for cases.

Midland Power Coop. v. FERC, No. 13-1184 (D.C. Cir. Dec. 2, 2014)

Metropolitan Edison Co. v. Penn. Pub. Util. Comm’n, No. 13-4288 (3rd Cir. Sept. 16, 2014

Exelon Wind 1, L.L.C. v. Nelson, No. 12-51228 (5th Cir. Sept. 8, 2014)

West Deptford Energy, LLC v. FERC, No. 12-1340 (D.C. Cir. Aug. 26, 2014)

Southwestern Power Administration v. FERC, No. 13-1033 (D.C. Cir. Aug. 22, 2014)

South Carolina Pub. Serv. Authority v. FERC, No. 12-1232, et al. (D.C. Cir. Aug. 15, 2014)

Illinois Commerce Commission v. FERC, Nos. 13-1674, et al. (7th Cir. June 25, 2014)

Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146 (S.Ct., June 23, 2014)

Delaware Riverkeeper Network v. FERC, No. 13-1486, et al (D.C. Cir. June 6, 2014)

Electric Power Supply Ass’n v. FERC, Nos. 11-1486, et al (D.C. Cir. May 23, 2014)

 

Midland Power Coop. v. FERC, No. 13-1184 (D.C. Cir. Dec. 2, 2014)

In a decision issued on December 2, 2014, the D.C. Circuit Court of Appeals (the “Court”) dismissed a petition for review of a Federal Energy Regulatory Commission (“FERC”) Order directing Midland Power Cooperative to “reconnect” to an Iowa farm generating wind power (the “Sweckers”) and classified as a “qualifying facility” under § 210 of the Public Utility Regulatory Policies Act of 1978 (“PURPA”).  The Court held that it did not have jurisdiction to review the Order.  See Slip op. at 2.

After the Sweckers stopped paying for retail power in protest of Midland’s power purchase rates, Midland began to disconnect the Swecker farm, stopping both power purchases from and supply to the Sweckers.  See id. at 3.  The Sweckers challenged Midland’s disconnection, and FERC ordered Midland to reconnect to the Sweckers’ farm.  See id. at 3-4. 

Midland and a joint petitioner, National Rural Electric Cooperative Association (together, “Midland”), sought review of FERC’s Order to reconnect.  Though neither Midland nor FERC challenged the Court’s jurisdiction, the Court analyzed whether it had jurisdiction to review the Order through Federal Power Act (“FPA”) § 313(b) solely or through the FPA as it relates to PURPA § 210.  See id. at 4.    

The Court first held that it did not have jurisdiction to review the Order based solely on the FPA.  FPA § 313(b) in the United States Code grants the Court jurisdiction over “‘[a]ny party to a proceeding under this chapter aggrieved by an order issued by the Commission . . . .’”  Id. (quoting FPA § 313(b)) (emphasis in original).  FERC issued the Order pursuant to PURPA § 210, and since PURPA § 210 and the FPA are in the same United States Code chapter, this provision seemed to grant the Court jurisdiction.  Id. at 5.  However, the same provision in the Statutes at Large, controlling over the United States Code, instead granted jurisdiction to “‘[a]ny party to a proceeding under this Act aggrieved by an order.’”  Id. (quoting 49 Stat. 860 § 313).  Thus, the Court did not have jurisdiction over the Order because FPA § 313 “limits review to orders issued in proceedings under the [FPA],” and FERC issued the Order pursuant to PURPA § 210.  Id.

Midland also argued that “PURPA § 210(h) fits the orders here within the language of FPA § 313(b).”  Id. at 5.  Midland claimed that the Order created rules regarding disconnection for non-payment and appears to enforce those rules against Midland.  See id at 7According to Midland, PURPA § 210(h), which provides that certain qualifying facility requirements are “treated as [rules] enforceable under the Federal Power Act,” applied to FERC’s actions.  Id. (quoting PURPA § 210(h)(2)(A)).  Midland contended that the Order fell within the Court’s jurisdiction pursuant to FPA § 313(b) because it concerned the application of rules under the FPA.  See id.

Rejecting Midland’s second argument for jurisdiction, the Court held “that FERC never purported to adopt a general rule on disconnections by utilities whose customers refused to pay their bills” and there was “no rule-creating language in either of the orders.”  Id. at 8.  The Court also noted that PURPA § 210(h) only makes rules enforceable under the FPA “for purposes of enforcement,” and FERC was not seeking enforcement here.  Id.  Additionally, PURPA § 210(f)(1) only makes FERC rules enforceable that “relat[e] to the implementation of § 210 by state regulatory authorities vis-à-vis any ‘electric utilities for which it has ratemaking authority,’” and did not apply to Midland.  Id. at 7. 

The Court continued to explain that its prior decisions “have repeatedly emphasized Congress’s decision to leave § 210 enforcement to the district court . . . .”  Id. at 9.  In dicta, the Court observed that it would deny jurisdiction to avoid conflicts with district courts even if the Order actually created new rules.  Id. at 11.  The Court acknowledged that the Order could be construed as mandatory and potentially exposing Midland to significant penalties.  Id. at 12.  However, the Court found that the Order was declaratory because it contained no deadlines or consequences for non-compliance, fitting within the precedent denying jurisdiction.  Id. at 12-13. 

 

Metropolitan Edison Co. v. Penn. Pub. Util. Comm’n, No. 13-4288 (3rd Cir. Sept. 16, 2014.

A split panel of the Third Circuit (“Court”) affirmed an order of the United States District Court for the Eastern District of Pennsylvania dismissing an action against the Pennsylvania Public Utility Commission and its individual commissioners in their official capacities (collectively, “PaPUC”) by Metropolitan Edison Company and Pennsylvania Electric Company (collectively, “Companies”). The Court of Appeals agreed with the District Court that the Companies were barred by the doctrine of issue preclusion from seeking to overturn in federal court a decision of the Commonwealth Court of Pennsylvania that upheld a PaPUC ruling that denied the Companies recovery in their retail electricity rates of approximately $250 million of wholesale “line loss” charges the Companies paid to PJM Interconnection, LLC (“PJM”) under its FERC-jurisdictional tariff. Slip op. at 4-5.

After Pennsylvania introduced retail electricity competition, the Companies entered into a settlement with the PaPUC in 1998 that, among other features, extended statutory moratoria on increases in the Companies’ “Transmission & Distribution (T&D) Charges” to Pennsylvania retail customers through 2004 and on increases in their Pennsylvania “Generation rates” through 2010.  Id. at 12. In 2006, FERC directed PJM to modify its charges for recovering the costs of “line losses” of electricity sold and delivered to wholesale customers under PJM’s tariff. Id. at 15. The Companies incurred increased line loss charges after PJM’s subsequent adoption of a marginal loss methodology. Id.  In 2008, after the retail rate cap on their T&D Charges had expired, but while the cap on their Generation rates remained in effect, the Companies filed proposals with the PaPUC to include their increased line loss charges in their retail rates. Id. at 4, 16. Several customer groups opposed the Companies’ proposals on the ground that the increased line loss charges were generation-related costs the recovery of which was barred by the 1998 settlement. Id. at 17. The Companies responded that the line loss charges were, instead, transmission-related charges (for which the 1998 settlement’s rate cap had ended in 2004). Id. at 16.

After an evidentiary hearing and the submission of briefs, an administrative law judge (“ALJ”) of the PaPUC recommended approval of the Companies’ requests to recover the increased line loss charges, finding them to be transmission costs. Id. at 17. After briefing on the customer groups’ exceptions to the ALJ’s recommended decision, the PaPUC ruled against the Companies, “concluding … that the Companies’ line losses were generation costs subject to the … generation rate cap that was in effect through 2010.” Id. at 18.

The Companies then sought review of the PaPUC order in Pennsylvania’s Commonwealth Court. Sitting en banc, the Commonwealth Court unanimously upheld the PaPUC’s decision. Id. at 19. In particular, the Court noted, the Commonwealth Court considered and rejected the Companies’ claims (1) that the PaPUC’s classification of the line loss charges as generation costs violated the filed rate doctrine and FERC’s characterizations of such charges, and (2) resulted in an impermissible “trapping” of the Companies’ wholesale costs. Id. at 20-21. The Companies subsequently petitioned unsuccessfully for an appeal to the Pennsylvania Supreme Court and for a writ of certiorari from the United States Supreme Court. Id. at 21.

While their petition for an appeal to the Pennsylvania Supreme Court was pending, the Companies filed suit in the District Court against the PaPUC and its commissioners in their official capacities. Id. at 21-22. As described by the court of appeals, the Companies’ complaint “allege[d] that, by barring them from recovering the line-loss costs that PJM charged them under a FERC-mandated methodology, the PUC Order violates the filed rate doctrine, the Supremacy Clause of the Constitution, the Fourteenth Amendment, and the FPA, and, to the extent the [PaPUC] and the Commonwealth Court relied on the [Pennsylvania] Electric Competition Act, that statute, as applied, is pre-empted by federal law.” Id. at 23. The District Court granted the defendants’ motions to dismiss all of the Companies’ claims on the grounds of issue preclusion. Id. at 24. The Companies appealed from that ruling.

The Court’s majority emphasized that the issue before it was not whether the PaPUC was correct to classify the Companies’ line loss costs as generation costs, rather than transmission costs. Id. at 25. Instead, the majority insisted, the question on appeal was whether “the Commonwealth Court’s decision that the [Pa]PUC’s classification of line-loss costs did not violate the filed rate doctrine or impermissibly trap costs” precluded litigation of the Companies’ claims in their federal action. Id. at 25.

The Court stated that the preclusive effect of the Commonwealth Court’s judgment must be determined under the Full Faith and Credit Statute, 28 U.S.C. § 1738. Id. at 26. As interpreted by the Supreme Court, that statute, in turn, requires federal courts to apply state law to determine the preclusive effect of a state court’s ruling. Id. at 27. Evaluating the present case under a five-part test for preclusion stated by the Pennsylvania Supreme Court, the majority concluded that all of the Companies’ federal court claims were barred. Id. at 27. The Court noted that the Companies did not contest preclusion of their claim that the Commonwealth Court’s decision caused cost-trapping in violation of the FPA and the filed rate doctrine. Id. at 28. Though disputed, the Court reached the same conclusion regarding the Companies’ other claims. Id. at 32-33. The Court found the Companies’ claim that the state court’s ruling imposed a confiscatory rate in violation of the Fourteenth Amendment was based on their contention that the decision impermissibly trapped costs in violation of the filed rate doctrine, the same claim the Court determined was precluded by the Commonwealth Court’s decision. Id. at 32. Finally, the Court ruled that, even if it had not been waived by failure to present it to the District Court, the Companies’ claim that the Pennsylvania Electric Competition Act was unconstitutional as applied to them also was precluded. Id. at 32-33. The Court reasoned that this contention likewise depended on establishing that the PaPUC order violated the filed rate doctrine, a premise the Commonwealth Court had considered and unequivocally rejected. Id. at 32-33.

The panel majority then examined whether the Companies’ claims qualified for any exceptions to preclusion under the Full Faith and Credit Statute. The Court concluded that no such exceptions applied. Id. at 33.

The majority rejected the Companies’ argument that the state proceeding was legislative, rather than judicial, in nature, determining that it should rely on how Pennsylvania law characterizes the relevant proceedings and concluding that the proceedings at issue in this case were of a judicial character. Id. at 34-39. The Court similarly found misplaced the Companies’ claim that the Commonwealth Court “applied the wrong standard of review and placed a substantially more onerous burden of persuasion on them than the Companies would face in this action.” Id. at 40. Any complaint regarding the state tribunal’s standard of review, the Court stated, “was something to be remedied on direct appeal” and did not open the PaPUC’s decision “to collateral attack in federal court.” Id. at 42 (footnote and citation omitted). 

The Court finally considered the Companies’ contention that their claims were not precluded because the PaPUC and the Commonwealth Court lacked subject matter jurisdiction to determine that the Companies could not recover their disputed line loss costs in their retail rates. Id. The Court noted that the Companies had argued to both the PaPUC and the Commonwealth Court that they had no jurisdiction to prevent the Companies from recouping their line loss costs, and had repeated that argument in seeking review by the Pennsylvania Supreme Court and the United States Supreme Court. Id. at 44-45. The Court observed that the state tribunals’ determinations of their own jurisdiction generally would be treated the same as their other rulings for purposes of determining preclusive effect, but the Companies raised a question on which the court had not previously ruled: whether there should be an exception to preclusive effect for a tribunal’s determination of its own jurisdiction when a federal statute entirely preempts the state agency from taking action. Id. at 45.

The Court stated that federal courts generally hold a state judgment to be void for lack of jurisdiction only where the state court “lacked even an arguable basis for jurisdiction.”  Id. at 46 (citation omitted). Meeting this standard with respect to a state tribunal’s judgment on a federal question is difficult, the Court said, because the states generally have concurrent jurisdiction over federal questions except where the Supremacy Clause limits such authority. Id. at 46-47.  Thus, “the relevant question here is whether Congress divested state utility agencies or state courts of jurisdiction to hear cases requiring an adjudication of the filed rate doctrine's scope, and the answer to that is no.” Id. at 48. The Court thus rejected the Companies’ contentions that preemption of several different legal types precluded the PaPUC and the Commonwealth Court from determining that the Companies’ line loss costs were generation-related, rather than transmission-related. Id. at 50. In particular, the Court concluded that “the FERC orders that the parties point us to require PJM to calculate line losses in a certain way but do not make the kind of categorical statements that lead to pre-emption.” Id. at 53.

Finally, the Court observed, the Companies voluntarily elected to litigate their filed rate doctrine and preemption issues before the PaPUC and the Commonwealth Court, and admitted that they could have withdrawn those issues from the state tribunals and pursued them at FERC. Thus, the Court said, the Companies presented a “classic ‘heads I win, tails you lose’ approach” in an effort to “get a ‘do-over’ with a clean slate in federal court.” Id. at 65 (citations and footnote omitted). That option, the Court ruled, was not available to them. Id.

In dissent, Circuit Judge Roth asserted that, “Contrary to the Commonwealth Court's assessment . . . , FERC has clearly classified the component ‘line loss’ as a transmission related cost.” Id., dissent at 1 (citations omitted). In her view, the FPA clearly ousts state courts from “redefin[ing]” any rate element that FERC has defined. Id., dissent at 7. Therefore, the Commonwealth Court clearly lacked jurisdiction to depart from FERC’s classification of the Companies’ line loss costs. Id., dissent at 2. Accordingly, the dissenting judge would have reversed the District Court’s order dismissing the Companies’ claims. 

 

Exelon Wind 1, L.L.C. v. Nelson, No. 12-51228 (5th Cir. Sept. 8, 2014)

In a split decision issued on September 8, 2014, the U.S. Court of Appeals for the Fifth Circuit (“Court”) upheld certain regulations promulgated by the Public Utility Commission of Texas (“PUC”), under the Public Utilities Regulatory Policies Act of 1978 (“PURPA”), prohibiting wind subsidiaries of Exelon Corp. from forming legally enforceable obligations (“LEO”) adopting time-of-obligation rates for the purpose of selling power to Southwestern Public Service Company. 

Federal Energy Regulatory Commission (“FERC”) regulations issued under PURPA permit a Qualifying Facility (“QFs”) (i.e., an eligible generator), when establishing an LEO, to select from two different pricing options:  time-of-obligation or time-of-delivery.  See Slip op. at 5 (citing 18 C.F.R. § 292.304(d)(2)).  Exelon challenged both a Texas rule, 16 Tex. Admin. Code § 25.242(c) (“Rule”), which permits only QFs that generate “firm power” to enter into an LEO specifying the time-of-obligation rate, and a PUC order finding that Exelon’s QFs offered only non-firm power, and thus are restricted to time-of-delivery rates.  Id. at 5 and 8.  Exelon initially challenged the PUC order in state court, but it also petitioned FERC for an order declaring Texas’ firm power limitation inconsistent with PURPA and FERC’s regulations.  Id.  FERC held that its regulations require all QFs, whether offering firm or non-firm power, to be able to choose among the pricing options.  Id. at 8-9.  Exelon withdrew its state court action, and initiated an action in federal court to enjoin the PUC from enforcing the Rule. Id. at 9.  The district court found it had subject matter jurisdiction over all claims, and enjoined the PUC from enforcing its Rule. Id. at 10.   

The Court reversed and remanded the district court’s order enjoining the Rule, and vacated the district court’s finding of subject-matter jurisdiction over Exelon’s challenges to the PUC’s order.  Id. at 21-22.  First, addressing subject-matter jurisdiction, the Court found that it lacked jurisdiction over Exelon’s challenges to the PUC order that applied the Rule to Exelon’s facilities.  Id. at 16.  PURPA grants federal courts jurisdiction only over claims that a state has not lawfully implemented PURPA (implementation challenges), but leaves to the state court claims that a state has unlawfully applied PURPA to individual QFs (as-applied challenges).  Id. at 10-11.  The Court thus barred Exelon’s challenge to the PUC order addressing Exelon’s facilities, explaining that the PUC, in the order, expressly avoided a categorical ruling barring all wind facilities from obtaining LEOs.  Id. at 15.  In so doing, the Court also declined to defer to FERC’s characterization of Exelon’s claim as an implementation challenge, because the Court has an independent obligation to determine its own subject-matter jurisdiction.  Id. at 18.

By contrast, the Court found that Exelon’s challenge to the Rule is an implementation challenge properly within its jurisdiction.  Id. at 19.  Exelon’s challenge does not raise constitutional concerns, and is otherwise consistent with FERC v. Mississippi, 456 U.S. 742 (1982), the Court explained, because Texas opted to implement PURPA through regulations, rather than through case-by-case determinations in the state courts.  Id. at 21. 

Turning to the merits, the Court next addressed whether the Rule barring non-firm resources from obtaining an LEO with time-of-obligation pricing fails to properly implement PURPA and FERC’s regulations.  The Court first found that PURPA and FERC’s regulations do not specifically address this issue.  Id. at 23.  Next, the Court determined that it was constrained by its earlier decision in Power Resource Group v. Pub. Util. Comm’n, 422 F.3d 231 (5th Cir. 2005), to hold that under PURPA, it is Texas, not FERC, “that defines the parameters for when [QFs] may form [an LEO].”  Id. at 25. 

On this issue, the Court again declined to defer to FERC’s interpretation of its own regulation as requiring that all QFs be permitted to form LEOs and to choose among the two pricing options.  Id. at 26-27.  Exelon conceded that FERC’s interpretation was not entitled to deference, id. at 27, but the Court held that it could not, in any event, defer to an agency’s interpretation that conflicts with the Court’s own prior construction of the regulation.  Id.; (citing Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 982 (2005)); see also id. at 29-30. 

Finally, the Court noted that allowing all QFs, not just firm resources, to choose between the two pricing options, would render superfluous a separate section of FERC’s regulations, 18 C.F.R. § 292.304(d)(1), which provides that QFs providing energy on an as-available basis may select only time-of-delivery pricing.  Id. at 30-31.  In the Court’s view, “it makes sense that only [firm power resources] should be able to select between the rate options.”  Id. at 32. 

In a partial dissent limited to the merits of the Rule, Judge Prado explained that the majority opinion departs from the plain language of FERC’s regulation, which affords all QFs the option to form an LEO.  Slip op. dissent at 38.  And even if the plain language did not bar Texas’ restriction, Judge Prado concluded that the majority should have deferred to FERC’s expert interpretation of its own regulation.  Id. at 43.

 

West Deptford Energy, LLC v. FERC, No. 12-1340 (D.C. Cir. Aug. 26, 2014)

In West Deptford Energy, LLC v. FERC, the D.C. Circuit upheld West Deptford Energy, LLC’s (West Deptford) challenges to certain orders of the Federal Energy Regulatory Commission (FERC or Commission) in which FERC ruled that West Deptford would be required to bear certain costs to obtain transmission service from PJM Interconnection, L.L.C. (PJM) based upon a PJM tariff provision that had been superseded more than three years before PJM tendered an interconnection agreement to the customer  Under the Federal Power Act (FPA), “utilities are forbidden to charge any rate other than the one on file with the Commission, a prohibition that has become known as the ‘filed rate doctrine.’”  (Slip op. at 2) (citing NSTAR Elec. & Gas Corp. v. FERC, 481 F.3d 794, 800 (D.C. Cir. 2007)).  The Court found that FERC failed to provide a reasoned explanation why applying the superseded provision was consistent with the filed rate doctrine and prior FERC precedent, and remanded the orders to the Commission for further consideration.

The dispute arose out of a generator interconnection request submitted by West Deptford to PJM in 2006.  (Id. at 8).  Prior to West Deptford’s request, PJM had constructed network upgrades whose costs had been borne by two other generators.  (Id. at 7-8.)  The PJM tariff in effect at that time (the 2006 Tariff) permitted PJM to allocate the costs of a previously constructed network upgrade to a new applicant for interconnection services in the circumstances presented by West Deptford’s request.  (Id. at 8).  Accordingly, PJM proposed in its first study of West Deptford’s project to allocate the costs of the prior upgrade to West Deptford.  (Id).  In 2008, however, PJM revised its tariff such that a new customer in West Deptford’s circumstances would not be required to bear the costs of a previously constructed network upgrade (the 2008 Tariff).  (Id. at 8-9).  PJM performed two more studies of West Deptford’s interconnection request, the last coming in 2011, and continued to state its intention to charge West Deptford for the prior upgrade.  (Id. at 10). 

In 2011, PJM tendered a draft interconnection agreement that imposed the full cost of the prior upgrade on West Deptford, and when West Deptford refused to agree to that allocation, filed the unexecuted agreement.  (Id. at 10-11).  West Deptford argued that the 2008 Tariff should control cost allocation, but FERC held that the 2006 Tariff, which was in effect when West Deptford entered the queue in 2006, placed it on notice that it could potentially be liable for the upgrade costs.  (Id. at 11).  West Deptford also argued that if it were required to pay for the prior upgrade, its costs should be offset by auction revenue rights (ARRs) received and exercised by the two other generators, but FERC relied upon the 2008 Tariff to reject this claim as unripe.  (Id).  FERC upheld its decisions on rehearing.  (Id. at 12).

On appeal, the Court determined that FERC had failed to provide an adequately reasoned explanation for applying the superseded 2006 Tariff under the filed rate doctrine.  (Id. at 3).  First, the Court concluded that nothing in the 2008 Tariff or the Commission’s order approving it provided notice that the August 1, 2008 effective date would not apply to all generators who signed their interconnection agreements subsequent to that date.  (Id. at 15-16).  PJM made no such statement in the transmittal letter for the 2008 Tariff filing; it did reference that the next interconnection queue would begin on August 1, 2008, but FERC did not reference that statement in accepting the filing, and “failed to provide any explanation of whether and how the bare mention of the next queue date, without endorsement by the Commission at the time of acceptance, could have legally operative force for purposes of the filed rate doctrine.”  (Id. at 16).

Second, the Court reviewed FERC precedent involving the applicability of superseded tariff provisions, and concluded that prior to the instant case, FERC consistently held that interconnection agreements filed after the designated effective date of an amended tariff are governed by the amended tariff.  (Id. at 16-18).  FERC “failed to provide a reasoned explanation for why West Deptford’s interconnection agreement should be treated any differently than those in predecessor decisions,” and thus failed to justify its deviation from precedent.  (Id. at 18).  Although FERC asserted that it could reasonably apply a case-by-case approach in addressing effective date issues, the Court stated that this would require FERC to provide a reasoned explanation as to how such an approach would comport with the dictates of the FPA and FERC’s own statements regarding the importance of standardization of generator interconnection procedures.  (Id. at 19).  In addition, it would require a reasoned analysis that would justify treating West Deptford differently than other generators that were subjected to tariff provisions in effect at the time an agreement was filed or executed.  (Id. at 19-20).  In this regard, the Court noted that in a prior case involving the PJM tariff cost allocation provisions and the very same network upgrade, FERC held that the applicable tariff was the one in effect at the time the interconnection agreement was executed.  (Id. at 21) (discussing FPL Energy Marcus Hook, L.P. v. PJM Interconnection, L.L.C., 118 FERC ¶ 61,169 (2008)).  The Court held that FERC’s failure to explain why it treated West Deptford differently constituted unreasoned and arbitrary decision making.  (Id. at 22).

Finally, the Court addressed FERC’s assertion that because West Deptford had been on notice that it could be allocated the upgrade costs at issue, the filed rate doctrine did not apply.  (Id. at 22).  The Court noted that the “notice exception” had been for the most part confined to scenarios involving formula rates or where judicial invalidation of Commission decisions resulted in retroactive rate adjustments.  (Id. at 22-23).  FERC argued that West Deptford had been on notice because PJM had clarified the applicability of the effective date in the tariff change proceeding, but the Court noted that the “clarification” itself was ambiguous; moreover, West Deptford had not been a party to the tariff change proceeding.  (Id. at 24-25).

The Court also determined that FERC improperly failed to address the impact of ARRs that had already been exercised on West Deptford’s costs.  The Court accepted FERC’s assertion that, with respect to ARRs that had not been exercised by the two other generators, West Deptford’s claim would not become ripe until it executed the interconnection agreement.  (Id. at 27).  However, the Court found that FERC had failed to explain why West Deptford’s costs should not be offset by costs the two other generators already had recovered through exercising their ARRs, and thus the Court remanded the issue for further explanation.  (Id. at 27-28).

Southwestern Power Administration v. FERC, No. 13-1033 (D.C. Cir. Aug. 22, 2014)

In this decision, the United States Court of Appeals for the District of Columbia vacated and remanded the Federal Energy Regulatory Commission’s (“Commission” or “FERC”) decision affirming the North American Electric Reliability Corporation’s (“NERC”) assessment of a monetary fine against the Southwestern Power Administration (“Southwestern”), a federal government entity.  The Court found that the relevant sections of the Federal Power Act (“FPA”) lacked the unequivocal waiver of sovereign immunity necessary to sustain the fine.  Southwestern did not contest the fact it could be subject to non-monetary sanctions under the FPA, and this issue was not before the Court.

The Court noted that FPA section 215, added to the FPA by Congress in 2005, directs FERC to certify an Electric Reliability Organization (“ERO”) to develop and enforce reliability standards for the bulk-power system, and that NERC is that ERO.  (Slip op. at 4-5).  Section 215(b)(1) provides FERC with jurisdiction over “all users, owners and operators of the bulk-power system, including but not limited to the entities described in section 824(f) of this title, for purposes of approving reliability standards established under this section and enforcing compliance with this section.”  The entities referred to in section 824(f) (FPA section 201(f)) include “the United States, a State or any political subdivision of a State” that are generally exempt from FERC regulation under the FPA.  Section 215(e) authorizes the ERO to impose “a penalty on a user or owner or operator of the bulk-power system for a violation of a reliability standard approved by the Commission . . . after notice and an opportunity for a hearing.”  FPA section 316A allows FERC to assess a fine of up to $1,000,000 per day on “any person.”  As the Court noted, the FPA defines a person in a manner that excludes the United States, i.e., as an individual or a corporation. (Slip op. at 6).  

FERC, in the proceeding below, upheld NERC’s assessment of a monetary penalty of $19,500 against Southwestern for violating various reliability standards.  (Slip op. 6-7). In overturning FERC’s decision and addressing sovereign immunity, the Court stated that it is a “settled understanding that waiver of sovereign immunity” must unequivocally be stated in the applicable statute and cannot be implied – any ambiguity in the statute must be construed in favor of finding that there has been no such waiver.  (Slip op. at 7-8).  The Court held that section 215 does not provide an unequivocal waiver of such immunity, and stated that section 215(e) makes no references to federal government at all, and thus did not unequivocally authorize the imposition of monetary penalties on the federal government.  (Slip op. at 8-9).  The Court rejected FERC’s claims that section 215(b)(1), including the statement that the reliability standards applied to the entities listed in section 824(f), constituted a waiver of sovereign immunity against monetary fines.  (Slip. op. at 9).  While acknowledging there was a certain logic to FERC’s position, and that section 215(b)(1) gives FERC authority to enforce reliability standards against the federal government, the Court found that there were sufficient ambiguities such that section 215(b)(1) could not be deemed a waiver of sovereign immunity against monetary fines.  (Slip op. at 9-11).  The Court again stated that the fact the penalty provisions in section 215(e) do not include the reference to the entities in section 824(f), further creates ambiguity as to whether the general grant of jurisdiction in section 215(b)(1) applies to the federal government under section 215(e).  (Slip op. at 13-14).  The Court also held that FERC’s penalty authority under section 316A is limited to penalties assessed against a person – defined as an individual or corporation – and undisputedly does not authorize monetary penalties against the United States. (Slip op. at 15). 

Finally, the Court declined to address FERC’s challenges to the standing of certain parties who intervened in support of Southwestern, stating it was unnecessary to resolve this issue as doing so would not affect the case’s outcome. (Slip op. at 16).

South Carolina Pub. Serv. Authority v. FERC, No. 12-1232, et al. (D.C. Cir. Aug. 15, 2014)

The Federal Energy Regulatory Commission’s (FERC or Commission) landmark rulemaking on electric transmission planning and cost allocation was upheld by the United States Court of Appeals for the District of Columbia (D.C. Circuit or Court).  FERC’s Order No. 1000, as reaffirmed and clarified in Order Nos. 1000-A and 1000-B (collectively the Final Rule), implemented a series of significant reforms related to the regional and interregional planning and development of electric transmission facilities. 

Forty-five petitioners and sixteen intervenors challenged the ruling arguing that FERC acted beyond the scope of its authority under the Federal Power Act (FPA), that the Final Rule was arbitrary and capricious, and that the Final Rule was unsupported by substantial evidence. (Slip op. at 6).  The seven-part, per curiam opinion of the D.C. Circuit panel rejected all challenges

In Part I, the Court applied Chevron deference to FERC’s decisions. (Slip op. at 16).  The Court noted that “in rate-related matters, the court’s review of the Commission’s determinations is particularly deferential because such matters are either fairly technical or ‘involve policy judgments that lie at the core of the regulatory mission’ and that “[t]he court owes the Commission ‘great deference’ in this realm because ‘the statutory requirement that rates be just and reasonable is obviously incapable of precise judicial definition.’” (Slip op. at 17)(internal citation omitted).

In Part II, the Court held that FPA Section 206 authorizes FERC to require transmission providers to participate in a regional planning process.  FERC reasonably concluded that transmission planning is a “practice” that affects transmission rates within the meaning of FPA Section 206.  Further, FPA Section 202 does not restrict FERC from promoting and encouraging voluntary transmission interconnection and coordination because FPA Section 202 covers operational coordination, not planning prior to operation. (Slip op. 25-31).  The Court also found that the Final Rule did not infringe upon the States’ traditional regulation of transmission planning, siting, and construction in violation of FPA Section 201(a). (Slip op. at 31-34).

In Part III, the Court held that there was substantial evidence of a theoretical threat of unjust and unreasonable rates for transmission service in the absence of Order No. 1000’s regional planning reforms to support adoption of the Final Rule.  FERC’s determination of the necessity of transmission planning reform was not based on guesswork, but was supported by prior Commission proceedings (including Order No. 890) and comments from the Department of Energy, industry consultants, and FERC technical conferences. (Slip op. at 37-38).  FERC is permitted to “rely on ‘generic’ or ‘general’ findings of systemic problem to support imposition of an industry-wide solution.” (Slip op. at 41)(internal citation omitted).

In Part IV, the Court held that FERC had the authority under FPA Section 206 to require removal of rights of first refusal (ROFRs) from FERC-jurisdictional tariffs and agreements.  FERC reasonably concluded that ROFRs posed a competitive barrier to entry that made the transmission market inefficient and amplified costs for transmission customers. (Slip op. at 59).  The Court also declined to evaluate whether and how the Mobile-Sierra doctrine (i.e. the presumption that freely-negotiated contracts are just and reasonable unless found to seriously harm the public interest) will ultimately apply to particular contracts.  The Court found the issue not ripe because FERC has deferred its analysis of contract-specific ROFRs to future proceedings regarding Order No. 1000 compliance filings. (Slip. Op at 66-67).

In Part V, the Court held that FERC acted within its authority under FPA Section 206 to require allocation of costs of new transmission facilities among beneficiaries. The Court rejected Petitioners’ argument that FPA Section 206 forecloses FERC from mandating the allocation of costs absent a pre-existing commercial relationship, finding “[n]o such limitation exists in the statutory text.” (Slip op. at 73) The Court rejected Petitioners’ argument that mandatory regional cost allocation constitutes an impermissible joint rate on the grounds that the Final Rule does “not require any rate, joint or otherwise, to be paid.” (Slip op. at 77-78).

In Part VI, the Court held that FERC reasonably determined that regional planning must include consideration of transmission needs driven by public policy requirements.  FERC’s public policy mandate is not impermissibly vague because the mandate merely requires regions to establish processes for identifying and evaluating public policies that might affect transmission needs. (Slip op. at 86).

In Part VII, the Court upheld the reciprocity condition, requiring that “non-public utilities must participate in transmission planning and cost allocation in exchange for open access.” (Slip op. at 88).  The Court found the reciprocity condition in Order No. 1000 to be fundamentally the same as that in Order Nos. 888 and 890, except broadened from transmission service to also include transmission planning and cost allocation. (Slip op. at 89-90).  FERC provided a reasoned and adequate basis for this expansion and was not arbitrary or capricious in deciding to stop at a conditional rather than a categorical requirement for non-public utilities. (Slip op. at 89).  Finally, FPA Section 211A does not require FERC to mandate non-public utility participation in planning and cost allocation, and FERC reasonably declined its Section 211A authority to adopt such a mandate in favor of Order No. 1000’s incremental and incentive-based approach. (Slip op. at 94-97).

Illinois Commerce Commission v. FERC, Nos. 13-1674, et al. (7th Cir. June 25, 2014)

The United States Court of Appeals for the Seventh Circuit (Seventh Circuit or Court) vacated and remanded to the Federal Energy Regulatory Commission (FERC or Commission) for the second time FERC’s finding that the PJM Interconnection, LLC’s (PJM) postage stamp cost allocation is just and reasonable for transmission facilities operated at 500 kV and above.  The Court found that FERC once again failed to provide “evidence that postage-stamp pricing is an acceptable, or the only possible, alternative.”  (Slip op. at 17).   

In a 2007 order, FERC found that allocating the cost of 500 kV facilities and above using a postage-stamp methodology produces a just and reasonable rate.  PJM Interconnection, L.L.C., Opinion No. 494, 119 FERC ¶ 61,013 (2007), order on reh’g, Opinion No. 494-A, 122 FERC ¶ 61,082 (2008) (Opinion 494).  A postage-stamp cost allocation broadly socializes the cost of transmission facilities among all members of a Regional Transmission Operator (RTO) or Independent System Operator (ISO).  In this case, the cost of facilities constructed in eastern PJM for reliability purposes were allocated “in proportion to each utility’s electricity sales, a pricing method analogous to a uniform sales tax.”  (Slip op. at 5).  In 2009, the Seventh Circuit vacated FERC’s Opinion No. 494, finding that FERC had not identified an “articulable and plausible reason to believe that the benefits” to utilities in western PJM “are at least roughly commensurate with” the costs allocated to those same western PJM utilities.  (Slip op. at 5, citing Illinois Commerce Commission v. FERC, 576 F.3d 470 (7th Cir. 2009)).  On remand, FERC again found that allocating the costs of 500 kV and above facilities using a postage-stamp methodology is just and reasonable, explaining that the reliability of such facilities will be shared by all in the PJM region, including the western part of PJM.  PJM Interconnection, L.L.C., 138 FERC ¶ 61,230 (2012), order on reh’g 142 FERC ¶ 61,216 (2013) (Order on Remand).  Petitioners, largely consisting of the western members of PJM, filed a timely petition for review of the Order on Remand to the Seventh Circuit. 

Writing for the majority, Judge Posner found that FERC’s failure to quantify the benefits of the 500 kV facilities to entities in western PJM was impermissible absent a demonstration “that even a rough estimate of the benefits to be conferred by the new eastern transmission facilities is impossible.”  (Slip op. at 10).  The Court did not deem postage-stamp cost allocation impermissible per se, instead finding fault in the “absence from the Commission’s orders of even an attempt at empirical justification.  The Commission assumes – it does not demonstrate – that the benefits of the eastern 500-kV lines are proportionate to the total electric-power output of each utility…. It is a method guaranteed to overcharge the western utilities …” (Slip op. at 11) (emphasis in original).  The Order on Remand was, once again, remanded to FERC.     

In a dissenting opinion, Judge Cudahy wrote that “the majority is under the impression that somehow there is a mathematical solution to this problem, and I think that this is a complete illusion.”  (Slip op. at 19).  Judge Cudahy found indistinguishable an earlier Seventh Circuit decision by the same name, Illinois Commerce Comm’n v. FERC, 721 F.3d 764 (7th Cir. 2013), wherein Judge Posner, again writing for the majority, had upheld postage-stamp cost allocation for certain high voltage facilities in the Midcontinent Independent System Operator, Inc. (MISO) region.  Judge Cudahy’s dissent suggests that the “uniformity of benefit as provided by the postage stamp approach [should] be the starting point in both cases[.]”  (Slip op. at 21)

Utility Air Regulatory Group v. Environmental Protection Agency, No. 12-1146 (S.Ct., June 23, 2014)

On June 23, 2014, a divided U.S. Supreme Court, in a decision authored by Justice Scalia, affirmed in part and reversed in part a decision by the U.S. Court of Appeals for the D.C. Circuit that had upheld regulations by the Environmental Protection Agency (EPA) that were intended to implement the Supreme Court’s ruling in Massachusetts v. EPA, 549 U. S. 497 (2007).  Coalition for Responsible Regulation, Inc. v. EPA, 684 F. 3d 102 (D.C. Cir. 2012).  In short:

  • The court rejected regulations that would have potentially expanded EPA’s regulation to sources not already regulated under EPA’s air pollutant regulations.  Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented to this part of the decision.
  • The court affirmed EPA regulations that applied to emission sources already regulated under the EPA’s pollutant regulations (referred to in the decision as “anyway” sources).  Justice Alito, joined by Justice Thomas, dissented to this part of the decision.

Following the Supreme Court’s ruling in Massachusetts v. EPA, the EPA issued regulations to regulate the emissions of greenhouse-gas emissions by stationary sources under Titles I and V of the Clean Air Act (CAA).  The EPA determined that a mix of six greenhouse-gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perflourocarbons, and sulfur hexafluoride – comprised a single air pollutant for purposes of its greenhouse gas regulations.  The EPA regulations at issue would have required a permit to be obtained to modify or construct a major emitting facility in any area in which the EPA’s “Prevention of Significant [Air] Deterioration” or “PSD” program applied.  Although the EPA had “tailored” its regulations to reduce the impact on the large number of new sources that would have been affected by the regulations, the court nonetheless rejected the EPA’s regulations, concluding that:

The fact that EPA’s greenhouse-gas-inclusive interpretation of the PSD and Title V triggers would place plainly excessive demands on limited governmental resources is alone a good reason for rejecting it; but that is not the only reason. EPA’s interpretation is also unreasonable because it would bring about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization. When an agency claims to discover in a long-extant statute an unheralded power to regulate “a significant portion of the American economy,” Brown & Williamson, 529 U. S. [120] at 159, we typically greet its announcement with a measure of skepticism.

Slip op. at 19.  The court further explained that “Massachusetts does not strip EPA of authority to exclude greenhouse gases from the class of regulable air pollutants under other parts of the Act where their inclusion would be inconsistent with the statutory scheme.”  Id. at 14.

After finding that the EPA regulations applicable to new sources were not “compelled” by the CAA, the court then asked if the regulations could be upheld as a “permissible” interpretation under a Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), analysis.  The court concluded that requiring permits solely based on the level of greenhouse gas emissions was “‘incompatible’ with ‘the substance of Congress’ [CAA] regulatory scheme’” and that deference in these circumstances was not required.  Slip op. at 18. The court further found that the EPA’s effort to mitigate the impact of its rules by adjusting the emissions threshold that would trigger the permitting requirement was itself an impermissible departure from the unambiguous statutory requirements that had specified those thresholds.

Having determined that the EPA overstepped its statutory authority by requiring permits for emissions of greenhouse gases from any source that had the potential to emit greenhouse gases, the court then turned to the question of whether the result should be the same for sources already subject to emissions limitations (referred to as “anyway” sources) of other pollutants using “best available control technology” or “BACT.”  Here the court reached a different result, again using a Chevron analysis, and concluded that requiring such sources to extend existing requirements to use BACT to also limit greenhouse-gas emissions was a permissible interpretation by the EPA of the CAAThe court went on, however, to confine this part of its decision, explaining that:

We acknowledge the potential for greenhouse-gas BACT to lead to an unreasonable and unanticipated degree of regulation, and our decision should not be taken as an endorsement of all aspects of EPA’s current approach, nor as a free rein for any future regulatory application of BACT in this distinct context.  Our narrow holding is that nothing in the statute categorically prohibits EPA from interpreting the BACT provision to apply to greenhouse gases emitted by “anyway” sources.

 However, EPA may require an “anyway” source to comply with greenhouse-gas BACT only if the source emits more than a de minimis amount of greenhouse gases. 

Slip op. at 28.

Delaware Riverkeeper Network v. FERC, No. 13-1486, et al (D.C. Cir. June 6, 2014)

The United States Court of Appeals for the District of Columbia (D.C. Circuit or Court) remanded to the Federal Energy Regulatory Commission (FERC or Commission) for further consideration FERC’s Environmental Assessment (EA) of a natural gas pipeline upgrade project.  The Court held that the Commission (i) impermissibly segmented the environmental review of the project from other connected, closely related, and interdependent projects in violation of the National Environmental Policy Act (NEPA); and (ii) failed to include any meaningful analysis of the cumulative impacts of these related upgrade projects in its EA. (Slip op. at 6). 

Section 7 of the Natural Gas Act (NGA) requires any person seeking to construct or operate a facility for the transportation of natural gas in interstate commerce to first obtain a certificate of convenience and necessity (Section 7 Certificate) from the Commission.  (Slip op. at 7).  Before issuing a Section 7 Certificate, the Commission must first conduct an environmental review under NEPA.  NEPA review requires the preparation of an EA, in which the agency decides whether to prepare an environmental impact statement or issue a finding of no significant impact.  (Slip op. at 7)  An agency’s EA must consider the impacts of connected actions, cumulative actions, and similar actions.  (Slip op. at 16 (citing to 40 C.F.R. § 1508.25(a))).  An agency is not permitted to “segment” NEPA review by dividing “connected, cumulative, or similar federal actions into separate projects” in a manner that “fails to address the true scope and impact of the activities that should be under consideration.”  (Slip op. at 15).  

In 2010, Tennessee Gas Pipeline Company, LLC (“Tennessee Gas”) commenced a series of upgrades to the Eastern Leg of the 300 Line, which delivers gas from Western Pennsylvania to New Jersey.  (Slip op. at 4).  Tennessee Gas submitted four separate applications to FERC for Section 7 Certificates.  The upgrades were reviewed by FERC, approved, and then constructed “in rapid succession between 2010 and 2013.”  (Slip op. at 4).  FERC completed its EA for the third of the four upgrades – the Northeast Project – in November 2011, recommending a Finding of No Significant Impact and issued a Section 7 Certificate to Tennessee Gas to construct the Northeast Project in May 2012. 

Petitioners sought timely review to the D.C. Circuit, arguing that FERC violated NEPA by failing to adequately consider the cumulative impacts of all four Eastern Leg upgrades in conducting its EA, and by impermissibly segmenting consideration of the Northeast Project from the related Eastern Leg upgrades.  (Slip op. at 5).  The Court agreed with Petitioners that the four Eastern Leg Projects were “similar” and “connected” under  40 C.F.R. § 1508.25(a) and therefore impermissibly segmented under NEPA.  The Court noted in particular that during FERC’s review of the Northeast Project’s Section 7 Certificate application, “the other three upgrade projects were either under construction … or were also pending before FERC for environmental review and approval … The end result is a single pipeline running from the beginning to the end of the Eastern Leg.  The Northeast Project is, thus, indisputably related and significantly ‘connected’ to the other three pipeline upgrade projects.”  (Slip op. at 18).  The Court also held that “[m]any of the same points” that support Petitioners’ segmentation claim “also sustain its contention that FERC’s EA is deficient in its failure to include any meaningful analysis of the cumulative impacts of Tennessee Gas’s projects.”  (Slip op. at 27)  

The Court rejected FERC’s argument for separate NEPA review of the four Eastern Leg upgrades under the four-factor analysis in Taxpayers Watchdog v. Stanley, where the Court had previously held that segmented analysis is appropriate for a project that “(1) has a logical termini; (2) has substantial independent utility; (3) does not foreclose the opportunity to consider alternatives; and (4) does not irretrievably commit federal funds for closely related projects.”  (Slip op. at 19 (citing to Taxpayers Watchdog v. Stanley, 819 F.2d 294 at 298 (D.C. Cir. 1987)).  The Court reminded FERC that an agency’s consideration of the scope of its NEPA review should be guided by the governing regulations – in this case, 40 C.F.R. § 1508.25(a) – and not only by the Taxpayer Watchdog factors.  (Slip op. at 18).  The Court found that even under Taxpayers Watchdog,  FERC failed to demonstrate the first two factors (the only factors deemed relevant in this case) because (i) the Eastern Leg “is linear and physically interdependent, and it contains no physical offshoots;” (Slip op. at 21); and (ii) none of the upgrade projects have any independent utility without the other upgrades since they are “inextricably intertwined” with the others, notwithstanding FERC’s argument that each of the four upgrades to the Eastern Leg were supported by separate shipping contracts.  (Slip op. at 24).  

Judge Brown filed a concurring opinion noting she would have granted the petition for FERC’s failure to adequately address the cumulative impacts of the four upgrade projects.  Judge Brown would have, however, “declined to delve into the murky waters of backwards-looking segmentation review.”

Judge Silberman filed a concurring opinion joining the opinion of the Court regarding improper segmentation because of the timing of upgrade projects while expressing his view that the cumulative impact issue was the stronger ground for the decision.  Judge Silberman also issued a strongly-worded warning that briefs may be rejected if they fail to comply with D.C. Circuit’s admonitions to avoid uncommon acronyms.

Electric Power Supply Ass’n v. FERC, Nos. 11-1486, et al (D.C. Cir. May 23, 2014)
 
The United States Court of Appeals for the District of Columbia (D.C. Circuit or Court) vacated a Federal Energy Regulatory Commission (FERC or Commission) rule concerning incentivizing demand response. (Slip op. at 16). FERC Order 745 required demand response providers who participate in the day-ahead and real time energy markets to be compensated at the same locational marginal price as generators clearing in those markets. (Slip op. at 4). Electric Power Supply Association and four other energy associations (Petitioners) petitioned the D. C. Circuit for review of the rule arguing that the rule exceeded the authority of the agency and encroached upon the exclusive jurisdiction of the states. (Slip op. at 3). In response, FERC argued that it has Congressional authority to promulgate the rule found in Order 745 and that §§ 205 and 206 of the Federal Power Act (FPA) provide it with the authority to issue the rule “[b]ecause incentive-driven demand response affects the wholesale market.” (Slip op. at 7 and 8). Additionally, FERC argued that step two of the Chevron doctrine provided it with the authority because if “the statute is silent or ambiguous on the specific issue, [the court] must defer to the agency’s reasonable construction of the statute” and its interpretation is permissible. (Slip op. at 6) (citing to City of Arlington, Tex. v. FCC, 133 S. Ct. 1863, 1868 (2013)). Finally, FERC argued that the Energy Policy Act of 2005 provided it with the authority to issue the rule. (Slip op. at 11).
 
When reviewing Order 745, the D.C. Circuit relied upon the Administrative Procedure Act, which requires a reviewing court to “hold unlawful and set aside agency action…in excess of statutory jurisdiction, authority, or limitations.” (Slip op. at 5) (citing to 5 U.S.C. § 702(2)(C)). The D.C. Circuit disagreed with FERC’s argument regarding the scope of its authority. The Court found that FERC’s argument with respect to §§ 205 and 206 of the FPA would create limitless jurisdiction of the agency. (Slip op. at 8). The Court instead looked to the statutory construction to determine the limits of the FPA and found that § 201(b)(1) provided that FERC may only regulate those matters not reserved to the states and that the states “retain exclusive authority to regulate the retail market.” (Slip op. at 8-9). The Court held that “[d]emand response – simply put – is part of the retail market.” (Slip op. at 11). As such the Court held under step one of the Chervon doctrine that FERC’s rule in Order 745 exceeded its statutory authority and therefore must be vacated. (Slip op. at 16).
 
With respect to FERC’s argument regarding the Energy Policy Act of 2005, the Court found that reliance on this policy does not provide the agency with necessary statutory power and that, in fact, such Act “clarifies FERC’s authority over demand response is limited: its role is to assist and advise state and regional programs.” (Slip op. 12 and 13). Finally, the Court found that even if FERC did have the necessary authority to issue the rule that the rule still fails “because it was arbitrary and capacious.” (Slip op. at 14). The Court held that “FERC failed to properly consider – and engage – Commissioner Moeller’s reasonable (and persuasive) arguments, reiterating the concerns of Petitioners and other parties, that Order 745 will result in unjust and unreasonable rates.” (Slip op. at 15).
 
The Honorable Harry T. Edwards issued a dissenting opinion in this case because he believed that the FPA “is ambiguous regarding FERC’s authority to require [Independent System Operators] and [Regional Transmission Organizations] to pay demand response resources,” requiring the Court “to defer under Chervon to the Commission’s permissible construction of ‘a statutory ambiguity that concerns the scope of the agency’s statutory authority (that is, its jurisdiction).’” (Slip op. dissent at p. 4) (citing to City of Arlington, Tex. v. FCC, 133 S. Ct. 1863, 1868, 1874-75 (2013)). Justice Edwards stated that § 201 of the FPA was ambiguous because said section speaks to sales of electricity and foregone consumption via demand response is not a sale of electricity. (Slip op. dissent at p. 16).