20 F.4th 1
D.C. Cir.2021Background:
- Six Entergy utilities operated under a System Agreement requiring coordinated planning and roughly equalized production costs; Section 30.03 governed allocation to native load, Section 30.04 governed opportunity (off-system) sales, and Section 4.05 governed Joint Account Sales.
- In 2009 Louisiana PSC sued, alleging Entergy Arkansas made off-system sales of low-cost energy to third parties while improperly treating them as native load under Section 30.03.
- Phase 1: FERC found Entergy Arkansas could make opportunity sales but had violated the System Agreement by accounting some third-party sales as native load; FERC ordered refunds to other system utilities and set a methodology for damages to be worked out in later phases.
- During Phase 3 Entergy Arkansas identified a subset (the Grand Gulf Sales, Jan–Sept 2000) that it said were accounted for as Joint Account Sales under Section 4.05 and thus should be excluded from the damage calculation; the ALJ rejected exclusion but FERC reversed and excluded the Grand Gulf Sales as outside the Section 30.03 remedy.
- FERC held that whether the Grand Gulf Sales were properly accounted for under Section 4.05 was beyond the scope of the Phase 3 proceeding and that Louisiana could file a separate complaint.
- Louisiana filed a 2019 complaint challenging the Grand Gulf accounting; FERC dismissed it as barred by a 2015 Settlement Agreement in which settling parties waived claims arising from the System Agreement that were not filed and served before the settlement. Louisiana petitioned for review; the D.C. Circuit denied the petitions.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether excluding the Grand Gulf Sales was an arbitrary change in FERC position | FERC previously grouped disputed sales ("Opportunity Sales") to include Grand Gulf, so excluding them is a reversal requiring reasoned explanation | FERC never previously decided that Grand Gulf were violations; the defined term only identified the set of disputed sales, not a finding on each sale | No arbitrary change: FERC had not taken a prior position on Grand Gulf and provided a rational explanation for exclusion |
| Whether FERC’s factual finding that Grand Gulf Sales were accounted as Joint Account Sales is supported by substantial evidence | Louisiana: FERC cited no evidence that Entergy always classified Grand Gulf as Joint Account Sales | FERC: record includes Louisiana’s own witness conceding Grand Gulf were treated as Joint Account Sales; substantial evidence standard is low | Held supported: record evidence met the substantial-evidence standard |
| Whether FERC should have remedied Grand Gulf Sales in the same Phase 3 proceeding | Louisiana: Grand Gulf caused similar harm and should have been remedied here | FERC: Phase 3 targeted Section 30.03 violations; Grand Gulf implicated Section 4.05 and a separate accounting dispute outside the remedy scope | Held: FERC reasonably exercised discretion to treat the issues separately |
| Whether the 2019 Complaint was barred by the 2015 Settlement Agreement (waiver, estoppel, mutual mistake) | Louisiana: 2019 claims were preserved by the 2009 complaint and by Section G(2)’s savings clause; alternatively, estoppel or mutual mistake prevents barring the claim | Entergy/FERC: 2019 complaint alleges different legal theory (accounting under Section 4.05); G(1) waiver bars unfiled claims, G(2) is limited to bandwidth/cost-allocation disputes; estoppel/mutual mistake not shown | Held: FERC reasonably interpreted and enforced the Settlement Agreement; 2019 Complaint barred; estoppel and mutual mistake claims fail |
Key Cases Cited
- Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency action must be reasoned and not arbitrary)
- Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 519 (1978) (agencies have procedural discretion in agency rulemaking and adjudication)
- Mobil Oil Expl. & Producing Se. Inc. v. United Distrib. Cos., 498 U.S. 211 (1991) (agency discretion to handle related but discrete issues)
- Consolidated Edison Co. v. NLRB, 305 U.S. 197 (1938) (definition of substantial evidence)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel standard)
- ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104 (D.C. Cir. 1988) (elements of equitable estoppel)
- Harbor Ins. Co. v. Stokes, 45 F.3d 499 (D.C. Cir. 1995) (mutual mistake rescission standard)
- Bituminous Coal Operators' Ass'n v. Connors, 867 F.2d 625 (D.C. Cir. 1989) (mutual mistake doctrine)
- FPL Energy Main Hydro LLC v. FERC, 287 F.3d 1151 (D.C. Cir. 2002) (standard for substantial evidence review in FERC cases)
- Louisiana Pub. Serv. Comm'n v. FERC, 522 F.3d 378 (D.C. Cir. 2008) (background on System Agreement and remedies)
- Louisiana Pub. Serv. Comm'n v. FERC, 482 F.3d 510 (D.C. Cir. 2007) (standard of review for FERC orders)
- Louisiana Pub. Serv. Comm'n v. FERC, 866 F.3d 426 (D.C. Cir. 2017) (interpretation of System Agreement cost-equalization remedies)