Happy New Year from LOCE + FERC Appellate Round Up 2021

Aircraft Serv. Int'l, Inc. v. Fed. Energy Regulatory Comm'n, 985 F.3d 1013 (D.C. Cir. January 2021)
Oral Argument
This case arose out of a challenge to FERC’s determination that it lacked jurisdiction over rates for transportation of fuel between Tampa (where it was received from out of state) to Orlando’s airport because the fuel flowed only intrastate. The fundamental question before FERC was whether the pipeline connecting the Tampa and Orlando storage terminals is a link in a continuous interstate movement, or did the storage and other activities in Tampa break the continuity of the interstate claim. Bolstered by detailed findings by the ALJ, FERC concluded that the chain was broken when it was stored at Tampa and dispatched to Orlando only as needed. As such, the gas traveled intrastate and was non-jurisdictional. The court affirmed - following a lively oral argument in which Judge Silberman berated petitioner’s counsel for interrupting him while trying to pose his questions.

Scorecard: FERC Win

Int'l Transmission Co. v. Fed. Energy Regulatory Comm'n, 988 F.3d 471 (D.C. Cir. February 19, 2021)
Oral Argument Recording

Since 2003, FERC has granted return-on-equity "adders" to transmission companies as a reward for investment in transmission infrastructure – so long as they maintain operational independence from other participants in the electrical market. But what happens when a company is awarded an adder based on a finding of independence that is later compromised by an acquisition? That was the fact pattern in ITC v. FERC where a group of transmission customers filed a Section 206 complaint at FERC, charging that ITC’s existing return-on-equity adders were no longer just and reasonable because the companies, post-merger, were no longer independent. FERC agreed and cut the adder, which prompted a challenge by ITC. On review, ITC argued that FERC arbitrarily departed from a particular methodology under which they remained materially independent and further, that FERC exceeded its statutory authority under Section 206 by not expressly finding the existing adders unlawful before setting them at a new level. The majority determined that ITC’s claims were without merit and denied the petition. Judge Sentelle who found that FERC had “altered ITC's rate under § 206 without first finding the existing rate unjust or unreasonable,” and therefore acted outside its statutory authorization.”
Scorecard: FERC Win, 2-1

Swecker v. FERC, Docket 20-1440 (D.C. Cir. February 22, 2021) Just a one paragraph order apparently in a pro se matter, summarily disposing of an appeal of FERC orders issued under PURPA over which the court has no jurisdiction to review under the Federal Power Act. Instead, the appropriate remedy under PURPA would have been for the petitioner to file an enforcement action in federal district court and if relief was denied, to seek appeal of the district court ruling.

Scorecard: FERC Win.

Pub. Serv. Elec. & Gas Co. v. Fed. Energy Regulatory Comm'n, 989 F.3d 10 (D.C. Cir. March 2, 2021)
Oral Argument Recording
Another ridiculously complicated cost-allocation case involving a reversal by FERC on rehearing. In 2016, FERC approved PJM’s cost allocation methodology for a project to improve reliability of three New Jersey nuclear plants, which Delaware and Maryland alleged would impose undue burden with little benefit on ratepayers in Delmarva’s transmission zone. On rehearing, FERC reversed and concluded that upon reexamination of the evidence, application of PJM's cost–allocation method to the project did indeed violate cost–causation principles and was therefore unjust and unreasonable in violation of section 206 of the Federal Power Act, 16 U.S.C. § 824e. The Petitioners, PJM transmission owners sought review, arguing that FERC departed from precedent without adequate explanation, made findings that are unsupported by substantial evidence, and failed to respond meaningfully to objections raised during the proceedings. The court rejected the claims, concluding that FERC reasonably decided to adopt a different cost-allocation method and offered adequate explanation for departing from the earlier methodology.

Scorecard: FERC Win

N.Y. State Dep't of Envtl. Conservation v. Fed. Energy Regulatory Comm'n, 991 F.3d 439 (2d Cir. March 23, 2021)
Under the Clean Water Act, states have a year to act on a water quality certificate for a FERC regulated pipeline or hydro project, or the requirement is deemed waived - meaning that FERC can essentially disregard the state’s input. But one year means one year, ruled the Second Circuit in New York State Department v. FERC and therefore found that New York’s attempt to circumvent the one-year deadline by agreeing with a pipeline applicant to post-date its application (and thus starting the clock later) resulted in waiver because the state neither denied nor refused to act on the application within the one-year time frame. The court noted that this type of concerted action between the state and applicant similarly led to a finding of waiver by the DC Circuit in Hoopa Valley v. FERC. The court contrasted that scenario with another FERC ruling in Village of Morrisville (conflict alert: I’m counsel on the appeal) which determined no waiver when the applicant withdrew and re-submitted its application on its own without the state’s participation.

Scorecard: FERC Win

Shafer & Freeman Lakes Envtl. Conservation Corp. v. Fed. Energy Regulatory Comm'n, 992 F.3d 1071, 1078 (D.C. Cir. March 26, 2021)
Oral Argument Recording

This case features a marathon oral argument - over two hours - and somewhat oblique facts. But after reading some supplementary material, here’s what I could discern. Petitioners, two organizations with members who either own lakefront property or use the Shafer and Freeman Lakes challenged a FERC decision changing operation of a dam to protect an endangered mussels species which had the effect of lowering lake levels. FERC based the change on a Fish and Wildlife Service biological opinion. The court concluded that many of the challenges to the Biological Opinion had not been preserved, but that FERC and FWS failed to adequately explain why the new dam procedures do not violate a regulation prohibiting the Fish and Wildlife Service from requiring more than "minor" changes to the Commission's proposal for dam operations. The court declined to vacate the FERC order as it would “subject the dam operator to contradictory legal obligations imposed by separate agencies,” and remanded to FERC for further proceedings consistent with this opinion.
Scorecard: FERC and Petitioner.

Envtl. Defense Fund v. Fed. Energy Regulatory Comm'n, 2 F.4th 953 (D.C. Cir. June 22, 2021)
Oral Argument Recording
File this case under what are the odds…for several reasons. Of course, there’s the decision itself which vacated an already operating pipeline, and we’ll get to that in a minute. But the other thing that I’ll always remember about this case is that it dropped on the second day of a trial where I was in court in the Eastern District of Missouri litigating just compensation for property that had been taken by Spire for a pipeline that had just been invalidated. The court’s ruling, unfortunately, didn’t put my case on hold and spawned dozens of filings thereafter, culminating in a recent schedule. But talk about timing!

In any event, I’ll dispense with the war stories and proceed to the merits. EDF, an environmental group on behalf of impacted members, challenged FERC’s order granting a certificate for the 65-mile Spire Pipeline which would transport gas through Missouri and Illinois. Spire Missouri (the local utility) had already had access to gas supply and no expectation of new demand, but nevertheless, when Spire STL decided to build a pipeline, Spire Missouri contracted for over 80 percent of the pipeline’s capacity and was the pipeline’s sole customer. EDF argued before FERC that Spire had engaged in self-dealing and manufactured need for the pipeline by entering into a contract with its affiliate for corporate gain, and that there was no other evidence of need to justify the line. A divided FERC, (then-Commissioners Glick and LaFleur dissented) ruled that Spire’s decision to enter into the agreement was a non-reviewable “business decision” and that the agreements were sufficient evidence of need to justify grant of a certificate.

On appeal, the DC Circuit reversed in a scathing decision. The court found that the evidence was undisputed that there was no demand for gas in the area for the foreseeable future and that FERC fell down on the job by failing to investigate bonafide claims of self-dealing or to balance the marginal benefits of the pipeline against the massive harm. The court also emphasized why rigorous review is important: because a certificate endows private pipeline companies with the right of eminent domain. Ultimately, the court vacated the certificate, expressing that it lacked any confidence that FERC could rehabilitate the ruling on remand.

The case returns to FERC in an interesting posture. Because it took FERC so long to act on rehearing, the composition of FERC has now changed, with once dissenting Commissioner Glick now the head honcho. Typically, on remand, the agency drills down to defend its original order but that’s unlikely here because Glick initially voted against approval of Spire. At the same time, the passage of time also means that circumstances have changed. Once its pipeline was built and put in service, Spire cut ties to alternative supply sources meaning that this once unnecessary pipeline may be needed in the short-term at least until Spire can replace the gas now transported by its pipeline. The passage of time also means that numerous tracts of property along the pipeline were taken under a certificate that’s now been declared invalid, and it is unclear whether owners who negotiated easements can now ask for their property back. In short, Spire is a big win for those who believe that pipeline projects that will encumber private property in perpetuity should undergo rigorous review, but it’s also a big mess, big time.

Scorecard: Petitioner Win.

Penneast Pipeline Co. v. New Jersey, 141 S. Ct. 2244 (June 29, 2021)
Oral Argument Recording

          Though FERC wasn’t a name party in PennEast v. FERC, the case merits inclusion in our round-up. The case resolves the important constitutional question of whether the Eleventh Amendment sovereign immunity clause bars a private pipeline from delegating the power of eminent domain under the Natural Gas Act from initiating a condemnation proceeding in federal court to take state-owned property. The Supreme Court says no, in a 5-4 ruling.

            Penn East was a 116 mile, 36-inch natural gas pipeline that would transport Marcellus gas from Northeast Pennsylvania to New Jersey. Though the project itself was the subject of vigorous opposition and the sovereign immunity issue raised in Penn East did not arise until after a divided FERC granted the certificate, paving the way for the company to bring an eminent domain action in federal court to take property needed for the project. New Jersey, which owned property subject to condemnation opposed, arguing that it was immune from suits by a private company under the Eleventh Amendment. The Third Circuit agreed with New Jersey, but the Supreme Court reversed. Writing for the majority, Chief Justice Roberts concluded that the Natural Gas Act expressly authorizes private pipeline companies to institute condemnation proceedings against states. Roberts acknowledged that although the Eleventh Amendment bars federal suits against states absent consent, here, “the States consented in the plan of the Convention to the exercise of federal eminent domain power, including condemnation proceedings brought by private delegatees.”

Justice Barrett, joined by Thomas, Kagan and Gorsuch dissented, asserting that Congress may not abrogate state sovereign immunity under the Eleventh Amendment and authorize private suits against nonconsenting states and therefore, Penn East was barred from instituting a condemnation action against New Jersey.

Though the decision resolves the Eleventh Amendment issue for future pipelines, it could not help the troubled PennEast project which was canceled, with the FERC certificate vacated in December 2021.

Scorecard: Pipeline win.

N.C. Dep't of Envtl. Quality v. Fed. Energy Regulatory Comm'n, 3 F.4th 655 (4th Cir. July 2, 2021)
Oral Argument Recording

NC Dep’t. of Environmental Quality is a twofer, involving (1) the original hydro project owner’s challenge to FERC’s finding of jurisdiction over the project and grant of a license to another company and (2) North Carolina’s objection to FERC’s waiver of the state’s water quality certification requirement. On the license issue, PK Ventures had argued that because its project was not located on navigable waters, FERC had no jurisdiction over the project under Section 23(b) of the Federal Power Act (16 USC 817) and no jurisdiction to issue a license to another company. But under Section 23(b), FERC is also required to issue a license for projects located on Commerce Clause waters and with some post-1935 construction. The Fourth Circuit found that the PK Ventures Dam had been constructed in 1940 and was located on Commerce Clause waters. Therefore, a license was required and because PK Ventures declined to apply for a license, FERC was justified in granting a license to another company.

On the second issue, the court held that FERC erred in waiving the water quality certificate. Though skeptical of FERC’s interpretation that collusion between an applicant and the state could trigger waiver, the court declined to reach that issue. Instead, the court found thatFERC’s claim of concerted activity between the state and the applicant to delay the certification process beyond one year was unsupported by substantial evidence where the applicant had withdrawn its application of its own volition. Finding that the delays resulted solely from the applicant’s withdrawal without any involvement of the state, the court vacated FERC’s finding of waiver.

Scorecard - Petitioner win on WQC waiver, FERC win on jurisdiction over license

Del. Div. of Pub. Advocate v. Fed. Energy Regulatory Comm'n, 3 F.4th 461 (D.C. Cir. July 9, 2021)
Oral Argument Recording

Petitioner Delaware Division of Public Advocate challenged a FERC decision approving PJM’s choice of a greenfield gas-fired combustion turbine as a reference resource to set demand curves for future PJM interconnection capacity market auctions as well as use of a 10 percent adder to account for generator’s uncertainty in submitting cost bids. The court found that FERC’s use of a combustion turbine was reasonable in part because revenue estimates for combined cycle turbines are more difficult to estimate and that FERC never intended for its prior order in ISO-NE to dictate factors for assessing reference resources. However, the court agreed with the petitioner on the 10 percent adder, finding that FERC had failed to respond to evidence suggesting that combustion turbines would not use the 10 percent adder, and therefore, FERC’s conclusion that the adder would improve accuracy of PJM’s revenue estimates was unsupported. This was so notwithstanding that FERC had previously determined that an adder was just and reasonable but had done so under different circumstances and market rules, and thus, could not rely on its past approval without further explanation.

Entergy Services v. FERC, Docket 17-1251, (D.C. Cir. July 13, 2021)
Oral Argument Recording
And yet another Entergy Systems agreement comes before the court, this time with Entergy Services as petitioner. Here, FERC ordered Entergy Arkansas to pay damages for the misallocation of energy sales made under a now-defunct contract known as the Entergy System Agreement. In this consolidated case, Petitioners Entergy Services, Inc. ("Entergy"), the Louisiana Public Service Commission ("Louisiana"), and the Arkansas Public Service Commission ("Arkansas") seek review of the orders. Entergy argues that FERC erred by misinterpreting the contract and ordering damages. Louisiana and Arkansas argue that FERC's methods for calculating and allocating damages were arbitrary and capricious. In a per curiam decision, the court found all of FERC’s explanations for its decisions to be reasonable and denied the petition.

Scorecard: FERC Win.

National Parks Conservation Assoc. v. Federal Energy Regulatory Comm'n, 6 F.4th 1044 (July 28, 9th Cir. 2021)
Oral Argument Video Recording

A failure to timely intervene in a FERC case can have long-tail consequences. That’s the lesson of National Parks where a party that failed to intervene in a hydroelectric license proceeding was likewise shut out of the post-licensing proceeding as well. In National Parks, FERC awarded a license for a pumped storage project to a developer which sought one two year extension of time to commence construction, and then another which the petitioner, an environmental group opposed. Trouble was, the group hadn’t intervened in the original license proceeding, and FERC does not permit interventions in post-license proceedings unless they involve a material change to the project which according to FERC, an extension request does not. The group also contended it was entitled to notice of the post-licensing changes which FERC had not provided. Although the group was not an intervenor, the Ninth Circuit found it had jurisdiction over the appeal because “a non-party petitioner is considered a party for the limited purpose of reviewing the agency’s basis for denying party status.” The court went on to find that FERC’s denial of intervention was reasonable because an extension request was not a material change to the project and was not the type of action that required public notice.

In my view, post-license actions should trigger a whole new proceeding and re-open intervention options, particularly in a case like this one where the second extension request was made several years after the initial license proceeding and impacted parties who may not have lived in the area at the time the project was proposed. But the law is the law, so parties and practitioners in hydro and pipeline proceedings should take heed and intervene early and often.

Scorecard: Petitioner Win.

Vecinos Para El Bienestar De La Comunidad Costera v. Fed. Energy Regulatory Comm'n, 6 F.4th 1321 (D.C. Cir. August 3, 2021)
Oral Argument Recording

Ever since the D.C. Circuit’s decision in Sierra Club v. Fed. Energy Regulatory Comm'n, 867 F.3d 1357 (D.C. Cir. 2017) which never solved the question of social cost of carbon (because FERC’s order on remand was never appealed), parties have pursued a ruling from the D.C. Circuit that FERC must use the “social cost of carbon” to analyze the significance of a project’s greenhouse gas emissions? Nearly four years later, that ruling has finally been achieved in Vecinos v. FERC, where petitioners challenged several LNG facilities on several grounds including FERC’s failure to use the social cost of carbon to assess impacts.   The court agreed and concluded that FERC was “required to address Petitioners’ argument concerning the significance of 40 C.F.R. § 1502.21(c), and that its failure to do so rendered its analyses of the projects’ greenhouse gas emissions deficient.” Petitioners also prevailed on their challenge to FERC’s environmental justice analysis which the court deemed arbitrary and capricious since it limited consideration of the projects’ impacts on environmental justice communities to census blocks within two miles of the project sites although FERC had acknowledged elsewhere in its review that the project’s impacts extended beyond two miles. Finally, the court concluded that because FERC’s analysis of the project’s impacts on climate change and environmental justice were deficient, FERC must revisit its determinations of public interest and convenience under Sections 3 and 7 of the NGA.
Rather than criticize the court for overturning its orders, FERC Chairman Glick issued a statement welcoming the rulings which vindicated his earlier dissents.
Scorecard: Petitioner Win

Pub. Citizen v. Fed. Energy Regulatory Comm'n, 7 F.4th 1177 (D.C. Cir. August 6, 2021)
Oral Argument Recording
In April 2015, an auction for electrical capacity in Illinois produced a striking result. Capacity in neighboring regions (from Louisiana up to Minnesota) uniformly sold for less than $3.50 per megawatt-day. But in a region covering much of Illinois, the auction resulted in capacity prices of $150 per megawatt-day—more than 40 times the price in those neighboring regions. These anomalies prompted FERC to identify numerous problems with existing market rules and to undertake an investigation. Ultimately, FERC concluded that neither the flaws it had identified nor allegations of market manipulation called into question the 2015 auction or the $150 price it produced. With facts like these, not surprisingly, the court found FERC’s analysis of the 2015 Auction arbitrary and capricious. The court found that FERC failed to adequately explain why the problems it identified in the existing auction rules affecting pricing—problems it ordered fixed going forward—did not also affect the fairness of the 2015 Auction itself. Said the court “That omission is particularly glaring in light of the starkly anomalous rates that the Auction produced.” Ultimately, based on the unwonted (thanks, Judge Millett for this great adjective!) record before FERC and the multi-year FERC investigation into market manipulation that record prompted, the agency's conclusory and unreasoned decision to sustain the 2015 Auction rates does not hold up, the court concluded and remanded the case to FERC for further explanation.
Scorecard: Petitioner Win.

La. Pub. Serv. Comm'n v. Fed. Energy Regulatory Comm'n, 10 F.4th 839 (D.C. Cir. August 21, 2021)
Oral Argument Recording
Oy - it wouldn’t be a FERC appellate round-up without some challenge or another under the Entergy Systems Operating Agreement - and this year is no different. Here, the Louisiana Commission challenged FERC’s finding that a 2009 amendment to the governing tariff required Entergy to exclude amortized purchased power costs from the bandwidth calculation. The court found the amendment’s exclusionary language was “unambiguous” and that the filed rate doctrine prohibited FERC from interpreting the tariff in a way to allow the costs. The court therefore found Louisiana’s arguments unpersuasive and denied the petition.

Scorecard: FERC Win.

Okla. Gas & Elec. Co. v. Fed. Energy Regulatory Comm'n, 20-1062 (D.C. Cir. Aug. 27, 2021)
Oral Argument Recording.

So many rate cases that are seemingly complicated (not to mention ponderously dull) on the surface often boil down to the filed rate doctrine, a relatively simple principle that prohibits FERC from messing with a rate already on file - even when the outcome seems inequitable. Oklahoma Gas & Electric is one such case. There, Oklahoma Gas, a member of the Southwest Power Pool (SPP) sought reimbursement for costs it had fronted for transmission upgrades that benefited other SPP members. Under the tariff on file, SPP was required to recover those costs from members through monthly invoices and make any adjustments within a year. The reimbursement calculation proved complicated, and it took SPP eight years to implement it during which time it did not invoice for the charges. FERC initially waived the one-year rule for adjustments but then reversed, determining that it lacked authority to waive the provision retroactively. SPP and Oklahoma Gas appealed. The court denied the petition, agreeing with FERC that once a tariff is filed, FERC has no statutory authority to waive the on-year rule even to remedy the arguable windfall for other transmission users or even if the approved rate violates cost causation principles.

Scorecard: FERC Win.

Deborah Evans v. FERC, Docket 20-1161(November 1, 2021)
Oral Argument Recording
This case challenged FERC’s approval of the Jordan Cove Project, a liquified natural gas facility sponsored by Pembina Gas that would have been located on the Oregon coast, and the associated pipeline that would traverse most of the state carrying Canadian gas for export. Call Jordan Cove the proverbial guest that wouldn’t leave; even after the project was previously rejected by FERC, it returned for another round notwithstanding that Pembina’s only customer for Jordan Cove was Pembina.

The petition for review in Deborah Evans v. FERC was intended to bring all of the project challenges to a head, with a cornucopia of arguments ranging from lack of project need and an unconstitutional taking of property for an export project to FERC’s failure to consider the project’s adverse environmental impacts including downstream greenhouse gas emissions. But after a marathon oral argument that ran three and a half hours, the case went out not with a bang but a whimper. At oral argument, it emerged that the project developer had voluntarily put development of the project on hold - although the certificate remained valid, thus raising the possibility that the developer could initiate eminent domain proceedings against the landowners at any moment. In light of learning about the developer’s voluntary hold, the court, just days after oral argument, sent the case back to FERC to consider whether a stay of the certificate (which would also stay eminent domain) was appropriate. Thereafter, Pembina told FERC that it was canceling the project, bringing the 15-year battle quietly to a close.

Scorecard: Remand before ruling

La. Pub. Serv. Comm'n v. Fed. Energy Regulatory Comm'n, 20-1104 (D.C. Cir. Dec. 7, 2021)
Oral Argument Recording

You might call the Entergy System Agreement – which governed planning, operation and cost sharing of and between Entergy’s six utility affiliate systems from 1986-2016 – the gift that keeps giving. As the court noted, the System Agreement "has been a feature of many cases before this Court," and it’s back again for a second time in a matter of months. This time, it's the Louisiana Commission again objecting that FERC was arbitrary and capricious in excluding costs from calculation of a remedy and denying a complaint alleging violations of the System Agreement. Finding no basis for the arguments, the court denied the petitions for review.

Scorecard: FERC Win.

Cal. Pub. Utils. Comm'n v. Fed. Energy Regulatory Comm'n, 20-1388 (D.C. Cir. Dec. 17, 2021)
Oral Argument Recording

Here’s the second case of the year (the first being Delaware Div. Public Advocate v. FERC, supra) where a petitioner - this time, the California Public Utilities Commission prevailed on a component of an RTO capacity procurement program. Here, the Commission approved a 20 percent adder on soft-cap offers, finding the adder justified by its approval in an earlier case. But relying on Delaware Div. Public Advocate, the court found that the earlier case bore little factual resemblance and reminded FERC that “application of precedent is warranted only if "the factual composition of the case to which the principle is being applied bear[s] something more than a modicum of similarity to the case from which the principle derives." Without precedent to justify the 20 percent adder, the court found no other evidence in the record to support FERC’s approval and vacated the decision.

No doubt, these RTO market cases are crazy complicated and difficult to challenge because of the degree of deference traditionally accorded FERC. But what Delaware Div. Public Advocate and CPUC cases bear out that the D.C. Circuit is not inclined to allow FERC to simply rubber stamp tariffs submitted by ISOs and RTOs but instead, will require FERC to at least analyze and show that what it is approving is either justified by past actions involving similar facts or is independently supported by substantial evidence. It’s also noteworthy that these cases were brought by state rate offices; will we see more of these challenges if intervenor funding is approved as part of the Office of Public Participation? Stay tuned….

Scorecard Petitioner Win.

Niskanen Ctr. v. Fed. Energy Regulatory Comm'n, 20-5028 (D.C. Cir. Dec. 17, 2021)
Oral Argument Recording

And now, a break from our scheduled arbitrary and capricious standard programming for a FOIA issue….The Niskanen Institute, a group that champions landowner rights in pipeline cases, filed a FOIA request at FERC seeking disclosure of the names and addresses of landowners along the now-canceled Atlantic Coast Pipeline. Niskanen explained that the information was necessary to determine whether FERC had complied with its statutory obligation to notify impacted landowners about the projects. FERC refused, citing FOIA Exemption 6 which shields disclosure if it would result in an unwarranted invasion of privacy. Niskanen sued in federal district court and FERC offered to provide property owner initials and street addresses. Niskanen rejected FERC’s proposal as insufficient and lost at the federal district court which found the limited disclosure appropriate. On appeal, the D.C. Circuit acknowledged the “weighty public interest” in ascertaining FERC’s compliance with its notice obligations, but ruled that Niskanen had not articulated a reason that it would need the full names and addresses of the landowners and affirmed the district court ruling. to the D.C. Circuit.

The majority’s opinion is not unexpected, but Judge Randolph’s concurrence irked me. Randolph suggested that if full names were disclosed, public interest groups like Niskanen would tout their victory in defeating the Atlantic Coast Pipeline and hit them up for donations with mailed solicitations. Not only is Randolph’s perspective sorely outdated (after all, most organizations solicit via social media and email lists rather than snail mail or personal visits) but it’s also myopically one-sided since landowners are already subject to a battery of pro-pipeline propaganda from developers during the certificate process. Hopefully, the impact of Randolph’s gratuitous concurrence will be blunted by FERC’s Office of Public Policy which will help ensure that landowners receive assistance to protect their property.

Scorecard: FERC Win.

Newman v. Fed. Energy Regulatory Comm'n, 20-1324 (D.C. Cir. Dec. 28, 2021)
Oral Argument Recording

This is a rather extraordinary decision in that the petitioners, Keryn Newman and Alison Haverty represented themselves pro se, did a bang up job and WON! (disclosure: I advised on court proceedings and briefings, and ran a moot court for them).

The case involved an attempt by the Potomac Appalachian Transmission Highline (PATH) to pass on to ratepayers more than $6 million that PATH spent for public relations and advocacy activities for its transmission project that was ultimately canceled. Initially, both an ALJ and FERC found that the expenses were intended to influence public officials and should have been booked in an account for “expenditures for civic, political and related activities” which would exclude them from recovery under the formula rate. But PATH sought rehearing, and by that time, the composition of the FERC had changed, as did its ruling. On rehearing, the reconstituted Commission found that the disputed expenses were for only for indirect rather than direct influence and thus, could be booked and recovered in another account. The court shot down FERC’s ruling, finding that FERC improperly read the word “direct” into its regulations and that in any event, FERC improperly focused on whether the expenses were direct, rather than on their purpose, i.e., to influence public officials. Accordingly, the court vacated the FERC decision and remanded the case for further proceedings consistent with the court order.

Scorecard: Petitioners win!

TransCanada Power Marketing v. FERC, Docket 20-1289 (D.C. Cir. December 28, 2021)
Oral Argument Recording

This case wound its way back up to the court following a 2015 remand to FERC to explain why the rates associated with a temporary program designed to ensure that the New England power system could reliably meet consumer demand for electricity during the winter of 2013-2014 were “just and reasonable” within the meaning of the Federal Power Act. TransCanada challenged the FERC remand order arguing that FERC erred in (1) using a market-based paradigm to evaluate auction results and (2) relying on a cost-based supply curve with a 25% upward adjustment. The court disposed of the arguments in a per curiam order. The court found first, the disputed program employed a bid auction, which is a market mechanism. Therefore, the Commission reasonably chose to analyze the rates associated with the temporary program under a market-based paradigm. Second, the supply curve and 25% adder reflected reasonable estimates of participant costs and reasonably accounted for indeterminate factors such as participants’ lack of information and the unique nature of the program. Finally, the court noted that TransCanada forfeited its remaining arguments by failing to adequately raise them before the Commission.

Scorecard: FERC Win

Happy New Year from LOCE + FERC Appellate Round Up 2021

Happy 2022!

A Wild Year for FERC Appeals

2021 FERC Appellate RoundUp

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