In re: NTE Connecticut, LLC, 26 F.4th 980

Background

NTE Connecticut developed a new natural‑gas power plant in Killingly and secured a Capacity Supply Obligation (CSO) from ISO‑NE in the 2019 forward capacity auction, with rights to participate in future auctions and a locked‑in CSO option.
NTE’s construction and financing timeline slipped repeatedly (including delays from ISO‑NE/FERC challenges, state court litigation over siting, and COVID‑19 disruptions), putting commercial operation before May 31, 2024, at risk.
ISO‑NE hired a consultant who concluded that timely completion was “aggressive, but achievable” only if NTE issued full notices to proceed by Jan 1, 2022; the consultant doubted notices would issue before financing closed.
On ISO‑NE’s request, FERC terminated NTE’s CSO on Jan 3, 2022, relying on confidential materials and saying it was “persuaded” ISO‑NE’s evidence showed Killingly would not reach commercial operation by June 1, 2024; FERC gave only a limited public explanation.
NTE sought rehearing and emergency relief; FERC denied a stay. NTE petitioned this court for an All Writs Act emergency stay to allow participation in the Feb 7, 2022 ISO‑NE auction.
The D.C. Circuit granted an emergency stay, concluding FERC likely acted arbitrarily and capriciously by failing to provide a reasoned public explanation and that NTE would suffer irreparable harm if excluded from the auction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Authority to issue stay under All Writs Act	All Writs Act supports a stay to preserve this court’s prospective jurisdiction while rehearing pending; statutory remedies inadequate pre‑rehearing	Ordinary FPA review not yet available; relief should await FERC action	Court had inherent All Writs authority and granted stay to preserve jurisdiction and prevent irreparable injury
Whether FERC’s termination was arbitrary and capricious under APA	FERC failed to provide a reasoned public explanation, uncritically adopted ISO‑NE’s analysis, ignored NTE’s central evidence about financing and timing, and did not articulate applicable Tariff standard	FERC relied on ISO‑NE’s consultant and confidential record; explanation that it was “persuaded” was sufficient given record and confidentiality limits	Court found FERC’s public explanation almost certainly inadequate; NTE very likely to succeed on APA arbitrary‑and‑capricious claim
Irreparable harm from exclusion from auction	Losing the Feb 2022 auction would permanently forfeit an invaluable CSO (millions in future revenue) that cannot be remedied later	Economic loss alone is normally reparable and speculative harms to the project do not justify a stay	Court held the harm was irreparable because auction allocations cannot practically be undone and lost capacity rights are unrecoverable
Balance of equities and public interest	Stay preserves status quo, prevents unrecoverable loss, and likely benefits consumers via additional future supply; any short‑term market effects can be remediated by reconfiguration auction	Allowing NTE into the auction could distort market signals and harm incumbents	Court concluded equities and public interest favored stay (harms to incumbents limited and remediable)

Key Cases Cited

Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (arbitrary and capricious standard for agency action)
Nken v. Holder, 556 U.S. 418 (stay factors and All Writs Act authority principles)
FCC v. Fox Television Stations, 556 U.S. 502 (reasoned explanation requirement)
Susquehanna Int’l Grp., LLP v. SEC, 866 F.3d 442 (agency cannot uncritically adopt a self‑interested party’s analysis)
PPL Wallingford Energy LLC v. FERC, 419 F.3d 1194 (agency must meaningfully respond to objections)
Mexichem Specialty Resins, Inc. v. EPA, 787 F.3d 544 (financial injury may be irreparable where later relief is inadequate)
NextEra Energy Res., LLC v. FERC, 898 F.3d 14 (context on forward capacity auctions and CSOs)
Wis. Gas Co. v. FERC, 758 F.2d 669 (economic loss ordinarily not irreparable)