892 F.3d 321
D.C. Cir.2018Background
- West Deptford submitted a PJM interconnection request in 2006; PJM studies assigned West Deptford potential liability for a $13 million network upgrade (Network Upgrade 28) under the then-active PJM Tariff § 37.7.
- While West Deptford’s request was pending, PJM filed tariff amendments (2008 Tariff) including § 219, which changed the rule for assigning cost responsibility for prior upgrades; PJM requested an August 1, 2008 effective date for the revisions.
- PJM and the Commission disagreed about whether the new § 219 applied to interconnection agreements filed after the effective date or only to projects entering the queue after that date; PJM’s transmittal and answers were ambiguous on prospectivity.
- PJM ultimately sought to impose the pre‑2008 cost allocation on West Deptford; FERC initially ruled the old § 37.7 governed because West Deptford entered the queue before the amendment, and denied rehearing.
- This court vacated and remanded, finding FERC had not adequately explained how its decision aligned with statute, precedent, and the filed-rate doctrine; on remand FERC reversed, applying § 219 and interpreting its five‑year window to run from execution of the interconnection agreement.
- Marcus Hook petitioned for review of the remand decision, arguing FERC’s selection of § 219 and its interpretation (execution date as the relevant trigger) were arbitrary, conflicted with precedent and evidence, and undermined the filed-rate doctrine.
Issues
| Issue | Plaintiff's Argument (Marcus Hook) | Defendant's Argument (FERC/PJM) | Held |
|---|---|---|---|
| Which tariff governs cost allocation for an interconnection agreement executed after a tariff amendment but entered in the queue before the amendment? | Old § 37.7 governs because West Deptford entered the queue before the amendment and had notice of costs. | New § 219 governs for interconnection agreements filed/executed after the amendment’s effective date absent explicit grandfathering. | FERC’s determination that § 219 governs was reasonable and upheld. |
| What is the operative date for § 219’s five‑year look‑back period? | The look‑back should be queue entry or the study date when upgrade necessity was identified. | The five‑year period reasonably runs from execution of the interconnection service agreement. | Court defers to FERC and upholds execution‑date interpretation as reasonable. |
| Did FERC adequately justify changing its prior position on remand? | FERC failed to address extrinsic evidence and prior practice; change was arbitrary. | FERC relied on this Court’s prior finding that PJM’s transmittal and answers were ambiguous and explained reasons on remand. | FERC provided a reasoned explanation; the change was lawful and not arbitrary. |
| Did FERC ignore relevant evidence or arguments on remand (e.g., related proceedings or facilities studies)? | Evidence in related proceedings and facilities studies show § 219 should not apply to West Deptford. | Court’s prior opinion rejected those materials as dispositive; facilities studies are non‑binding estimates; objections were addressed or waived. | Court finds FERC permissibly relied on the record and this Court’s earlier analysis; claims of ignored evidence are rejected. |
Key Cases Cited
- W. Deptford Energy, LLC v. FERC, 766 F.3d 10 (D.C. Cir. 2014) (prior opinion finding FERC’s initial reasoning inadequate and remanding)
- FPL Energy Marcus Hook, L.P. v. FERC, 430 F.3d 441 (D.C. Cir. 2005) (prior Court decision upholding FERC on related network upgrade cost allocation dispute)
- Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116 (1990) (filed‑rate doctrine and requirement that utilities file rates openly)
- Old Dominion Elec. Co‑Op., Inc. v. FERC, 518 F.3d 43 (D.C. Cir. 2008) (deference standard for Commission interpretation of tariffs)