893 F.3d 786
D.C. Cir.2018Background
- FERC issued Order No. 1000 (2011) to promote interregional transmission projects and required neighboring RTOs/ISOs to adopt interregional cost-allocation methods that allocate costs "roughly commensurate with benefits."
- MISO proposed a "cost-avoidance" allocation: MISO’s share equals costs of regional projects the interregional project would avoid, but MISO excluded from that calculation any regional projects already approved by MISO’s board.
- FERC accepted MISO’s methodology in part but rejected the exclusion of approved projects, concluding that omission would undervalue interregional benefits and thus misallocate costs and discourage efficient interregional projects.
- MISO and its transmission-provider members sought rehearing; FERC denied rehearing. Petitioners (MISO members) filed for review in this court; MISO intervened in support of petitioners.
- The petition raised standing, ripeness, exhaustion, and merits challenges: chiefly that FERC’s requirement to count approved projects would (1) displace approved projects harming stakeholders and (2) violate FERC’s obligations under section 206 of the Federal Power Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Petitioners: FERC orders injure transmission providers; MISO also affected | FERC: injuries speculative; no causal link | Court: MISO (intervenor) has standing; thus reviewable |
| Ripeness | Petitioners: present dispute ripe because FERC justified rule based on displacement risk | FERC: unripe—displacement speculative; can seek rehearing if/when occurs | Court: claims ripe; factual development not needed to assess adequacy of FERC's explanation |
| Exhaustion (section 206 claim) | Petitioners: FERC failed to make affirmative section 206 finding; claim inherent in any rate challenge | FERC: petitioners did not raise this argument on rehearing | Held: petitioners failed to exhaust this specific section 206 argument; waived for review |
| Merits (adequacy of FERC’s response re displacement) | Petitioners: FERC ignored harms from displacing approved projects (investor harm, financing uncertainty, unfairness) | FERC: excluding approved projects would undervalue interregional benefits, misallocate costs, and reduce incentives to pursue efficient interregional projects; other regions follow FERC’s approach | Held: FERC adequately considered and rationally rejected petitioners’ concerns; denial not arbitrary or capricious; petition denied |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires concrete injury, causation, redressability)
- Rumsfeld v. Forum for Academic & Institutional Rights, Inc., 547 U.S. 47 (one party with standing suffices for Article III)
- Diamond v. Charles, 476 U.S. 54 (intervenor may maintain appeal if it has standing)
- PPL Wallingford Energy LLC v. FERC, 419 F.3d 1194 (agency must respond meaningfully to objections)
- Aera Energy LLC v. FERC, 789 F.3d 184 (court defers when agency articulates rational connection between facts and choice)
- Transcontinental Gas Pipe Line Corp. v. FERC, 518 F.3d 916 (standard for judicial review of FERC determinations)