South Carolina Public Service Authority v. Federal Energy Regulatory Commission
762 F.3d 41
D.C. Cir.2014Background
- Final Rule Order No. 1000 (and rehearings No. 1000-A, No. 1000-B) required regional transmission planning, interregional coordination, ex ante cost allocation, removal of incumbent rights of first refusal, and a reciprocity framework; aimed to align planning with public policy and reduce rate discrimination.
- Petitioners—state regulators, transmission providers, RTOs/ISOs, and trade groups—challenged FERC’s authority under the Federal Power Act (FPA) and the rule’s reasoned basis.
- Court applies Chevron deference to FERC’s statutory interpretations and reviews for arbitraries under 5 U.S.C. § 706(2).
- Court recognizes FPA Section 206 authority to remedy practices affecting rates and Section 202(a)’s coordination/ interconnection language, and reviews the rule for substantial evidence and rational basis.
- Court holds that the Final Rule is within FERC’s authority, supported by substantial evidence, and not arbitrary or capricious; Mobile-Sierra issues are not ripe and state sovereignty concerns are addressed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section 206 authorizes regional planning and ex ante cost allocation | Petitioners argue 206 cannot mandate planning | FERC reasonably interpreted 206 to require process reform | Yes; 206 authorizes the planning/cost allocation mandate |
| Whether Section 202(a) precludes planning | Coordination refers to interconnection, not planning | Coordination includes planning; planning is within 206 scope | No; Section 202(a) permits, planning falls within 206 scope |
| Whether Section 201(a) precludes federal planning authority | States retain planning authority; federal rule cannot intrude | Planning of interstate transmission falls under Section 201(b) broadly; no preemption | No; planning mandate fits within 201(b) without undermining state authority |
| Whether removal of federal rights of first refusal is justified by substantial evidence | Removal is an unlawful constraint on incumbents | Removal addresses anti-competitive planning and rate effects; supported by substantial evidence | Yes; removal of ROFR within regional plan context is supported by substantial evidence |
| Whether cost allocation reforms are lawful under Section 206 | 206 cannot require costs be allocated beyond pre-existing relationships | Beneficiary-based ex ante allocation is a permissible 206 remedy | Yes; 206 authorizes beneficiary-based cost allocation as a practice affecting rates |
Key Cases Cited
- Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984) (two-step framework for agency statutory interpretation)
- City of Arlington v. FCC, 133 S. Ct. 1863 (2013) (deference to agency statutory interpretation; reasonable bounds)
- MCI Telecommunications Corp. v. AT&T Co., 512 U.S. 218 (1994) (limits of agency reinterpretation of statutes)
- CAISO v. FERC, 372 F.3d 395 (D.C. Cir. 2004) (broadly limited notion of 'practices' beyond direct rate effects)
- TAPS v. FERC, 225 F.3d 667 (D.C. Cir. 2000) (upheld open access remedy as 206 authority to address undue discrimination)
- New York v. FERC, 535 U.S. 1 (2002) (broad interpretation of FPA 201(b) and Section 201(a) balance with state authority)
- Associated Gas Distributors v. FERC, 824 F.2d 145 (D.C. Cir. 1987) (agency permissibly uses generic rules to address rate-impacting practices)
- Wisconsin Gas Co. v. FERC, 770 F.2d 1144 (D.C. Cir. 1985) (substantial evidence standard and deference in rate matters)