TNA Merchant Projects, Inc. v. Federal Energy Regulatory Commission
2017 U.S. App. LEXIS 8789
| D.C. Cir. | 2017Background
- Chehalis (TNA Merchant Projects’ affiliate) began charging Bonneville for reactive power in 2005 by filing a rate schedule; FERC treated the filing as a “changed rate,” suspended it, and ordered refunds (~$2M) for Aug 2005–Sep 2006.
- This court vacated FERC’s initial orders in 2010 and remand led FERC to clarify policy prospectively and conclude Chehalis should recover the previously-ordered refunds with interest.
- Chehalis moved for an order requiring Bonneville to return the refunded amounts (recoupment); FERC agreed recoupment was equitable but held it lacked statutory authority to order Bonneville (an exempt public utility) to repay.
- FERC relied on §§ 201(f) and 205 limits on refund authority for non‑jurisdictional entities; it declined to use § 309 to compel recoupment against Bonneville.
- The D.C. Circuit held FERC erred: § 309 gives broad remedial power to correct agency mistakes and order recoupment distinct from § 205 refunds; FERC retained jurisdiction over the funds and may order Bonneville to return them.
- The court vacated FERC’s ruling that it lacked authority, left the merits finding that recoupment is appropriate as law of the case, and remanded for FERC to reassess equitable apportionment of recoupment (i.e., how much, if any, to recoup).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FERC has authority to order recoupment from an exempt public utility (Bonneville) after FERC reverses a refund order | Chehalis: § 309 empowers FERC to "perform any and all acts…necessary or appropriate" to remedy its errors and order recoupment | FERC: §§ 201(f) and 205 limit refund authority as to exempt entities; § 309 cannot expand § 205’s limits | Held for Chehalis: § 309 grants remedial authority to order recoupment distinct from § 205 refunds; FERC erred to conclude it lacked authority |
| Whether § 201(f)/§205 prohibit any corrective order against a non‑jurisdictional entity for funds improperly received via a § 205 refund | Chehalis: § 201(f)/§205 restrict § 205 refunds but do not bar § 309 recoupment to remedy agency error | FERC: The statutory ban on ordering refunds by exempt utilities prevents any compelled return, so § 309 is no broader than § 205 | Held for Chehalis: § 201(f)/§205 do not reach § 309 recoupment; recoupment is not the same as a § 205 refund |
| Whether recoupment is equitable here (merits) | Chehalis: equitable to make it whole because FERC clarified policy prospectively after ambiguous precedent; it should recover refunds paid | Bonneville: full recoupment would unjustly enrich Chehalis and Bonneville could have faced § 206 review anyway | Court: Agreed that recoupment is appropriate in principle but remanded for FERC to reassess equitable apportionment (amount, interest, any mitigation) |
| Standing to challenge FERC’s rate‑filing rule (requirement to file even if service uncompensated) | Chehalis: challenges FERC’s obligation-to-file rule | FERC/Intervenor: the challenged orders caused no cognizable injury to Chehalis now | Held: Chehalis lacks standing to contest that rule here; claim dismissed |
Key Cases Cited
- TNA Merchant Projects, Inc. v. FERC, 616 F.3d 588 (D.C. Cir.) (prior vacatur and remand of FERC orders establishing background procedural history)
- Xcel Energy Servs., Inc. v. FERC, 815 F.3d 947 (D.C. Cir. 2016) (§ 309 empowers FERC to remedy its errors beyond prospective relief)
- Black Oak Energy, LLC v. FERC, 725 F.3d 230 (D.C. Cir. 2013) (court accepted FERC's authority to order recoupment of previously-ordered refunds)
- Transmission Agency of N. Cal. v. FERC, 495 F.3d 663 (D.C. Cir. 2007) (limits on FERC § 205 refund authority for non-jurisdictional entities; distinguished here)
- Bonneville Power Admin. v. FERC, 422 F.3d 908 (9th Cir. 2005) (refund authority constraints for exempt public utilities; distinguished)
- Niagara Mohawk Power Corp. v. FPC, 379 F.2d 153 (D.C. Cir. 1967) (§ 309 grants broad remedial authority to the Commission)
- United Gas Improvement Co. v. Callery Props., Inc., 382 U.S. 223 (1965) (agencies can undo wrongs created by their orders)
- Nat. Gas Clearinghouse v. FERC, 965 F.2d 1066 (D.C. Cir. 1992) (approval of retroactive recoupment of improperly ordered refunds)
- Pub. Utils. Comm’n of Cal. v. FERC, 988 F.2d 154 (D.C. Cir. 1993) (recognizing corrective power to mitigate injuries from FERC errors)