879 F.3d 1192
D.C. Cir.2018Background
- ISO New England administers New England wholesale day-ahead and real-time energy markets and a forward capacity auction; its tariff (filed under FPA §205) sets scarcity pricing ("Scarcity Rates") and a Peak Energy Rent Adjustment (the "Adjustment") that reduces capacity payments when real-time prices exceed a strike price.
- In May 2014 the FERC (Tariff Order) adopted increases to certain Scarcity Rates under an FPA §206 proceeding; some parties sought rehearing, and the increases took effect in December 2014.
- The New England Power Generators Association (the Association) did not seek rehearing of the Tariff Order but later filed a §206 complaint challenging the Adjustment as rendered unjust and unreasonable by the increased Scarcity Rates; FERC denied that complaint (Complaint Order) and denied rehearing.
- The Association petitioned this court to review both the Tariff Order and the Complaint Order; the court dismissed review of the Tariff Order for lack of jurisdiction (failure to satisfy FPA §313 rehearing requirements) and reached the merits of the Complaint Order.
- On the merits, the court upheld FERC’s denial of the Association’s §206 complaint as not arbitrary or capricious, concluding the Association’s evidence (a back-cast and one Adjustment Event) failed to show the Adjustment made rates unjust and unreasonable in the aggregate.
- FERC later granted relief in a separate, later §206 proceeding after the Association produced additional data; the court held that agency reconsideration based on new evidence does not retroactively render the earlier decision arbitrary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction to review Tariff Order (FPA §313(a)) | Association: its Motion for Clarification sufficed; court may review Tariff Order | FERC: Association never filed a rehearing application as required by §313(a) | Dismissed for lack of jurisdiction; rehearing requirement is mandatory |
| Exhaustion and specificity (FPA §313(b)) | Association: objections to Adjustment were "inextricably linked" to Tariff Order; reasonable ground for not raising rehearing | FERC: petitioning entity must itself raise the specific objections on rehearing; no extraordinary grounds here | Dismissed for lack of jurisdiction on §313(b) grounds as well |
| Merits of §206 complaint (was Adjustment unjust and unreasonable?) | Association: increased Scarcity Rates increased Adjustment unfairly; back-cast and Dec. 4, 2014 event show harm | FERC: Association bears burden in §206; evidence fails to show aggregate, recurring harm or account for market responses (day-ahead price changes, price floors) | Denied relief; FERC’s decision not arbitrary or capricious given record and explanation |
| Procedural/evidentiary complaints (burden of proof, evidentiary rules) | Association: FERC shifted burdens and applied unlawful evidentiary standards | FERC: followed statutory burdens; weighting of evidence proper | Rejected; issues either not raised on rehearing or meritless — FERC complied with FPA burdens |
Key Cases Cited
- Blumenthal v. FERC, 552 F.3d 875 (D.C. Cir. 2009) (discussing FERC tariff approval role and just-and-reasonable standard)
- Black Oak Energy, LLC v. FERC, 725 F.3d 230 (D.C. Cir. 2013) (background on day-ahead and real-time market structures)
- Advanced Energy Mgmt. All. v. FERC, 860 F.3d 656 (D.C. Cir. 2017) (allocation of burdens under FPA §§205 and 206)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary-and-capricious review requires explanation of agency action)