MISO Transmission Owners v. Federal Energy Regulatory Commission
860 F.3d 837
| 6th Cir. | 2017Background
- MISO is a regional transmission organization that approves transmission expansion projects and allocates costs to member utilities under a filed Tariff.
- American Transmission Systems (ATSI) and Duke Energy’s Ohio/Kentucky utilities notified MISO of withdrawal (2009–2010) and had earliest possible exit dates at the end of the year following notice.
- MISO created a new, higher-cost project category—Multi-Value Projects (MVPs)—and approved a portfolio of MVPs in December 2011 shortly before Duke’s scheduled departure.
- MISO added Schedule 39 and Attachment MM, which the FERC approved prospectively, to charge ex-members for MVP costs using an MVP Usage Charge based on annual energy withdrawals.
- FERC later held Schedule 39 could not be applied retroactively to charge Duke and ATSI for MVPs approved before their departures; other MISO Transmission Owners appealed that FERC interpretation to the Sixth Circuit.
Issues
| Issue | Petitioners' Argument | Respondent's Argument | Held |
|---|---|---|---|
| Venue: Is Sixth Circuit an appropriate forum | Petitioners filed in Sixth Circuit (ties to Ohio/KY utilities) — venue proper | FERC questioned venue but did not move to transfer | Venue not objected to; Sixth Circuit retains case; no transfer warranted |
| Standard of review for FERC tariff interpretation | Petitioners urged less deference to FERC | FERC argued deference where based on technical expertise | Court reviews legal questions afresh but would affirm under either fresh or deferential review |
| Whether pre-Schedule 39 Tariff made withdrawing members liable for MVP costs approved before exit | Petitioners: costs allocated at approval; withdrawing members (present at approval) incurred obligations | FERC/Intervenors: MVPs allocate "annual revenue requirements" by usage; no up-front liability before construction/usage | Held: Tariff allocates MVP costs year-to-year via Usage Charge; withdrawing utilities did not incur pre-departure obligations and are not retroactively liable |
| Whether FERC departed from prior orders or failed to reason adequately | Petitioners: FERC departed from earlier reasoning and lacked adequate explanation | FERC: prior orders did not decide timing of MVP allocation; its reasoning is supported by Tariff text | Held: No unexplained departure; FERC’s explanation was sufficient and not arbitrary or capricious |
Key Cases Cited
- Ill. Commerce Comm’n v. FERC, 721 F.3d 764 (7th Cir. 2013) (describing MISO and its region)
- Pub. Serv. Comm’n of Wis. v. FERC, 545 F.3d 1058 (D.C. Cir. 2008) (background on FERC approval of MISO Tariff changes)
- Ark. La. Gas Co. v. Hall, 453 U.S. 571 (1981) (filed-rate doctrine and prohibition on retroactive ratemaking)
- Panhandle E. Pipe Line Co. v. Fed. Power Comm’n, 324 U.S. 635 (1945) (venue rules under federal utility statutes)
- FERC v. Elec. Power Supply Ass’n, 136 S. Ct. 760 (2016) (standard for reviewing FERC orders)
- Cincinnati Gas & Elec. Co. v. FERC, 724 F.2d 550 (6th Cir. 1984) (Sixth Circuit’s approach to deference on tariff interpretation)
- Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016) (agency explanation must allow the court to discern its path)