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United States Court of Appeals for the District of Columbia Circuit
March 20, 2014, Argued; August 15, 2014, Decided
No. 12-1232 Consolidated with 12-1233, 12-1250, 12-1276, 12-1279, 12-1280, 12-1285, 12-1292, 12-1293, 12-1296, 12-1299, 12-1300, 12-1304, 12-1448, 12-1478
[**48] [*48] Per Curiam: This case involves challenges to the most recent reforms of electric transmission planning and cost allocation adopted by the Federal Energy Regulatory Commission pursuant to the Federal Power Act, 16 U.S.C. § 791a et seq. In Order No. 1000, 136 F.E.R.C. P61,051, as reaffirmed and clarified in Order Nos. 1000-A and 1000-B (together, "the Final Rule"), the Commission required each transmission owning and operating public utility to participate in regional transmission planning that satisfies specific planning principles designed to prevent undue discrimination and preference in transmission service, and that produces a regional transmission plan. The local and regional transmission planning processes must consider transmission needs that are driven by public policy requirements. Transmission providers in neighboring [***7] planning regions must collectively determine if there are more efficient or cost-effective solutions to their mutual transmission needs. The Final Rule also requires each planning process to have a method for allocating ex ante among beneficiaries the costs of new transmission facilities in the regional transmission plan, and the method must satisfy six regional cost allocation principles. Neighboring transmission planning regions also must have a common interregional cost allocation method for new interregional transmission facilities that satisfies six similar allocation principles. Additionally transmission providers are required to remove from their jurisdictional tariffs and agreements any provisions that establish a federal right of first refusal to develop transmission facilities in a regional transmission plan, subject to individualized compliance review.
Forty-five petitioners and sixteen intervenors (hereinafter "petitioners") include state regulatory agencies, electric transmission providers, regional transmission organizations, and electric industry trade associations. They challenge the Commission's authority to adopt these reforms, and they contend that the Final Rule [***8] is arbitrary and capricious and unsupported by substantial evidence. For the following reasons, we conclude their contentions are unpersuasive. We hold in Part II, that the Commission had authority under Section 206 of the Federal Power Act to require transmission providers to participate in a regional planning process. In Part III, we conclude that there was substantial evidence of a theoretical threat to support adoption of the reforms in the Final Rule. In Part IV, we hold that the Commission had authority under Section 206 to require removal of federal rights of first refusal provisions upon determining they were unjust and unreasonable practices affecting [**49] [*49] rates, and that determination was supported by substantial evidence and was not arbitrary or capricious; we further hold that the Mobile-Sierra objection to the removal is not ripe. In Part V, we hold that the Commission had authority under Section 206 to require the ex ante allocation of the costs of new transmission facilities among beneficiaries, and that its decision regarding scope was not arbitrary or capricious. In Part VI, we hold that the Commission reasonably determined that regional planning must include consideration [***9] of transmission needs driven by public policy requirements. In Part VII, we hold that the Commission reasonably relied upon the reciprocity condition to encourage non-public utility transmission providers to participate in a regional planning process. Accordingly, we deny the petitions for review of the Final Rule.1
A brief overview of the Federal Power Act ("FPA") and subsequent changes to the electric industry sets the background for petitioners' challenges to the Final Rule. Upon enacting the FPA, Congress determined that federal regulation of interstate electric energy transmission and its sale at wholesale is "necessary in the public interest," FPA § 201(a), 16 U.S.C. § 824(a), and vested the Commission with "jurisdiction over all facilities for such transmission or sale," id. § 201(b)(1), 16 U.S.C. § 824(b)(1). The States would retain authority over "any other sale of electric energy" and facilities used for "generation of electric energy," "local distribution," or "transmission of electric energy in intrastate commerce." Id. The Commission was directed [***10] "to divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission, and sale of electric energy," and assigned the "duty" to "promote and encourage such interconnection and coordination." FPA § 202(a), 16 U.S.C. § 824a(a). Such public utilities, in turn, were required to file new rates for Commission approval, and Congress directed that "[a]ll rates and charges made, demanded, or received by any public utility for or in connection with the [jurisdictional] transmission or sale of electric energy . . . shall be just and reasonable," and that "[n]o public utility shall, with respect to any [jurisdictional] transmission or sale . . . subject any person to any undue prejudice or disadvantage" or "maintain any unreasonable difference in rates, charges, service, facilities, or in any other respect, either as between localities or as between classes of service." FPA § 205(a)-(b), 16 U.S.C. § 824d(a)-(b). Additionally, Congress empowered the Commission to take action on its own motion in order to ensure that such rates, charges, and classifications, as well as "any rule, regulation, practice, or contract affecting [***11] such rate, charge, or classification," are not "unjust, unreasonable, unduly discriminatory or preferential." FPA § 206(a), 16 U.S.C. § 824e(a).
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
762 F.3d 41 *; 412 U.S. App. D.C. 41 **; 2014 U.S. App. LEXIS 15674 ***; 44 ELR 20197; 2014 WL 3973116
SOUTH CAROLINA PUBLIC SERVICE AUTHORITY, PETITIONER v. FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT, ALABAMA PUBLIC SERVICE COMMISSION, ET AL., INTERVENORS
Subsequent History: Rehearing, en banc, denied by S.C. Pub. Serv. Auth. v. FERC, 2014 U.S. App. LEXIS 19968 (D.C. Cir., Oct. 17, 2014)
Prior History: [***1] On Petitions for Review of Orders of the Federal Energy Regulatory Commission.
S.C. Pub. Serv. Auth. v. Ferc, 2012 U.S. App. LEXIS 22831 (D.C. Cir., Nov. 6, 2012)18 CFR Part 35, 141 F.E.R.C. P61044, 2012 FERC LEXIS 1834 (F.E.R.C., 2012)18 CFR Part 35 Transmission Planning & Cost Allocation, 139 F.E.R.C. P61132, 2012 FERC LEXIS 918 (F.E.R.C., 2012)18 CFR Part 35 Transmission Planning & Cost Allocation, 136 F.E.R.C. P61051, 2011 FERC LEXIS 1387 (F.E.R.C., 2011)
transmission, planning, regional, transmission facilities, costs, rates, providers, coordination, electric, reforms, non-public, Final Rule, right of first refusal, planning process, public utility, petitioners', reliability, facilities, entities, reciprocity, incumbents, practices, allocated, regulation, grid, non-incumbents, orders, public policy, interregional, generation
Administrative Law, Judicial Review, Standards of Review, Deference to Agency Statutory Interpretation, Energy & Utilities Law, US Federal Energy Regulatory Commission, Hearings & Orders, Judicial Review, Electric Power Industry, Federal Power Act, Agency Rulemaking, Rule Application & Interpretation, Validity, Business & Corporate Compliance, Federal Rate Regulation, Governments, Legislation, Interpretation, Regulators, Authorities & Powers, General Overview, Electricity Distribution & Transmission, Reviewability, Ripeness, Notice & Comment Requirements