Northwest Requirements Utilities v. Federal Energy Regulatory CommissionNorthwest Requirements Utilities v. Federal Energy Regulatory Commission
OPINION
These are consolidated petitions for review of orders by the Federal Energy Regulatory Commission (“FERC”) that require the Bonneville Power Administration — a federal agency that both markets electricity and operates a large portion of the transmission grid in the Pacific Northwest — to provide transmission services on terms “not unduly discriminatory or preferential.” Bonneville has complied with the orders, and is not a party to this proceeding. The petitioners, instead, are wholesale electricity customers of Bonneville who challenge the orders on substantive and procedural grounds. We conclude that they lack statutory standing to pursue their claims.
I
A
Bonneville markets electric power generated at federal hydroelectric dams in the Columbia River Basin. Its power customers are primarily public and private utilities that purchase wholesale electricity. See Nw. Envt’l Def. Ctr. v. Bonneville Power Admin.,
Bonneville is self-funded and must recover its costs through rates charged to customers. See 16 U.S.C. §§ 838g, 839e(a)(l); see also id. § 839(4). Its rates are “based upon [its] total system costs.” Id. § 839e(a)(2)(B). Bonneville is also subject to a potentially conflicting mandate to market power “with a view to encouraging the widest possible diversified use of electric power at the lowest possible rates to consumers consistent with sound business principles.” Id. § 838g; see also Ass’n of Pub. Agency Customers,
Bonneville must also comply with various environmental protection requirements. The amount of water that can be stored behind Bonneville’s dams is limited. See, e.g., Bonneville Power Admin., BPA’s Interim Environmental Redispatch and Negative Pricing Policies, Administrator’s Final Record of Decision 11 (May 2011) (“2011 ROD”), http://tinyurl.com/pcgt3pj. But so is the amount of water that can pass over a dam’s spillway. See Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries Serv.,
Bonneville is further constrained by the realities of operating hydroelectric dams on an electrical grid. Water that cannot be spilled over Bonneville’s dams must pass through the turbines, generating electricity. This electricity must be consumed to maintain transmission stability. Reliability standards therefore require Bonneville to maintain the balance between supply and demand on its electrical grid. 2011 ROD 7.
B
The demand for electricity is finite. When spill must be limited, Bonneville can dispose of excess electricity by marketing it to other generators at low prices or giving it away, thereby displacing electricity those sources would ordinarily generate. Fossil fuel and nuclear generators gladly accept such inexpensive hydropower because it allows them to save on fuel costs by reducing their more costly output or shutting down entirely. Wind generators, in contrast, do not have fuel costs, and are federally subsidized based on the amount of energy they generate. The availability of free hydropower therefore does not generally cause them to reduce production.
In response to a substantial increase in wind generation on Bonneville’s transmission system and anticipated high water levels in the Columbia River Basin, Bonneville promulgated an Environmental Redispatch Policy (“ER Policy”) in May 2011, to remain in effect until the end of March 2012. Id. at 8, 14-17. The ER Policy allowed Bonneville to curtail the customers’ electricity generation unilaterally through “Dispatch Orders.” Id. at 8, 16-17. Dispatch Orders were to be issued only as a last resort during “overgeneration events” when spill limits were reached, water levels required Bonneville to generate electricity that outpaced demand, and excess hydropower could not be disposed of at low or zero prices or by curtailing non-wind generation. Id. at 14-16.
Under the ER Policy, Bonneville redispatched wind generation for over two hundred hours between May 18 and June 18, 2011, curtailing 5.4% of the wind generation on Bonneville’s transmission system during that period. Bonneville initially estimated that this caused wind generators to lose approximately $50 million in federal credits, although the estimate was later reduced.
C
On June 17, 2012, a group of wind generators filed a FERC complaint against Bonneville, seeking an order that Bonneville “immediately revise its [ER Policy] to comport with the undue discrimination standards of [Federal Power Act] Section 211 A.” Several wholesale energy customers of Bonneville and trade organizations intervened, contending that “[i]f the Commission were to order [Bonneville] to pay the requested compensation to the Complainants, [Bonneville] could pass on those costs to its customers ... in future rate proceedings.” On December 7, 2011, FERC concluded that the ER Policy “results in noncomparable transmission service that unfairly treats non-Federal [i.e., wind] generating resources connected to Bonneville’s transmission system,” and ordered Bonneville,
pursuant to section 211A of the FPA, ... to file ... tariff revisions to address the comparability concerns raised in this proceeding in a manner that provide[s] for transmission service on terms andconditions that are comparable to those under which Bonneville provides transmission services to itself and that are not unduly discriminatory or preferential.
FERC emphasized that its order was prospective and that it was “making no determinations as to whether actions taken by Bonneville in the past, whether pursuant to the Environmental Redispatch Policy or otherwise, were prohibited.”
D
In order to comply with the December 2011 FERC order, on March 6, 2012, Bonneville submitted for FERC approval a temporary Oversupply Management Protocol (“OMP I”). The OMP I, to be effective until March 2013, permitted Bonneville to unilaterally redispatch wind generation during oversupply conditions, but called for “compensation to renewable generators for the costs they incur from being displaced,” at a rate of 50% of the costs they incurred. On December 20, 2012, FERC conditionally approved the OMP I “as a balanced interim measure that addressed Bonneville’s oversupply problems,” but found that the cost-sharing arrangement was not equitable and ordered Bonneville to propose a different scheme.
Bonneville filed a new compliance protocol on March 1, 2013 (“OMP II”), but was granted leave to defer revising the cost-allocation component of the protocol pending the filing of a rate-setting proceeding pursuant to the Northwest Power Act. See Order on Compliance & Revised Oversupply Management Protocol Proposal, 149 F.E.R.C. ¶ 61,044, ¶¶ 10-12 (2014).
On October 16, 2014, FERC found this methodology compliant with its nondiscrimination mandate. Order on Compliance
E
’ In January 2012, shortly before Bonneville promulgated the OMP I, various parties, including Bonneville and Bonneville power customers and trade organizations that had intervened in the FERC proceedings, filed petitions for rehearing of FERC’s December 2011 order. FERC denied these petitions on December 20, 2012. In January 2013, the power customers requested rehearing of the December 20 order, raising the question of whether FERC in its previous orders had “requirted] Bonneville to act in a manner that violates its other governing statutes.” FERC denied the motion on June 26, 2013.
F
Before us are various consolidated petitions for review of the FERC orders. The petitioners, intervenor-respondents in the proceedings below, are either “preference customers” of Bonneville-entities with statutory preferences to buy wholesale electricity, see 16 U.S.C. § 832c(a), (d) — or trade organizations representing the interests of Bonneville’s preference customers. Bonneville does not challenge the FERC orders.
The petitioners raise two claims. First, they argue FERC exceeded its statutory authority in issuing the nondiscrimination mandate because § 211A only permits regulation of “transmission services,” 16 U.S.C. § 824j-l(b), and redispatch involves generation, not transmission. Second, they argue FERC failed to provide reasoning for its decision to issue the nondiscrimination mandate and to consider relevant evidence.
Our jurisdiction to review the petitions is governed by § 313(b) of the FPA, 16 U.S.C. § 8251(b), and § 10 of the Administrative Procedure Act, 5 U.S.C. § 702.
II
To satisfy Article III standing requirements, the petitioners must establish injury in fact, causation, and redressa
A
An injury in fact is “an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” Lujan,
The petitioners claim they suffered increased energy prices as a result of the nondiscrimination mandate. Because financial harm in the form of increased prices is concrete and particularized, see Aluminum Co. of Am. v. Bonneville Power Admin.,
It plainly was. The December 2011 order found “that Bonneville’s [ER Policy] results in noncomparable transmission service” and “direct[ed] Bonneville to file ... tariff revisions that address the comparability concerns raised in this proceeding.” Bonneville responded by revising the re-dispatch policy to provide compensation to redispatched generators. Because Bonneville is statutorily required to operate on a cost-plus basis, the logical “side-effect” of an increase in costs is “an increase in the rates paid by ... customers.” Pac. Nw. Generating Coop. v. Dep’t of Energy,
B
To satisfy the causation requirement, the petitioners “must show that the injury is. causally linked or ‘fairly traceable’ ” to the FERC orders, and not the result of independent choices by a party not before the Court. Wash. Envt’l Council v. Bellon,
Although electricity rate increases to the petitioners were the result of actions by Bonneville, that non-party’s choices were not “unfettered” in a way that breaks causation. Id. Because it is undisputed that unilateral redispatch of wind generation is sometimes required for Bonneville to comply with various statutory requirements during “oversupply events,” Bonneville’s only realistic response to the nondiscrimination mandate was to compensate wind generators for redispatching them. This compensation might have taken a variety of forms, see, e.g., Order Confirming & Approving Rate on a Final Basis, 149 F.E.R.C. ¶ 61,043, ¶ 11 (noting various cost-allocation possibilities), but any compensation would increase Bonneville’s costs — which, given Bonneville’s cost — plus business model, would in turn increase prices for the petitioners. The FERC orders thus had a determinative effect on the petitioners regardless of what course of action Bonneville ultimately undertook, and the causation requirement is satisfied. See Bennett v. Spear,
C
Whereas “causality examines the connection between the alleged misconduct and injury, ... redressability analyzes the connection between the alleged injury and requested judicial relief.” Wash. Envt’l,
Redress for the petitioners in the form of lower electricity rates depends on whether Bonneville would revert to a compensation-free redispatch policy if the FERC orders were invalidated. To be
Ill
The petitioners must demonstrate not only Article III standing, but also statutory standing.
A
Under § 211A, FERC
may, by rule or order, require an unregulated transmitting utility to provide transmission services—
(1) at rates that are comparable to those that the unregulated transmitting utility charges itself; and
(2) on terms and conditions (not relating to rates) that are comparable to those under which the unregulated transmitting utility provides transmission services to itself and that are not unduly discriminatory or preferential.
16 U.S.C. § 824j — 1(b). This provision was enacted as part of the Energy Policy Act of 2005 (“EP Act”), Pub.L. No. 10958, 119 Stat. 594, a comprehensive statute that, among other things, expanded FERC’s authority to regulate energy markets. See, e.g., Hunter v. FERC,
Section 211A was designed to foster an open and competitive energy market by promoting access to transmission services on equal terms. This is evident from the language of the provision, which prevents anticompetitive behavior by utilities that seek to stifle competitors’ generation through control over transmission. See New York v. FERC,
B
The interests of Bonneville’s wholesale energy customers and their organizational allies do not align with these goals. Ultimate consumers of energy plainly stand to benefit from open access and increased competition in energy markets. See Order No. 890, Preventing Undue Discrimination & Preference in Transmission Serv., F.E.R.C. Stats. & Regs. ¶ 31,241, ¶60, 72 Fed.Reg. 12,266, 12,276 (2007) (noting that impeded access to transmission “can have significant cost impacts on consumers”). But the interests of Bonneville’s wholesale energy customers are different. They seek to reduce Bonneville’s costs, which are passed on to them by statutory mandate. This goal is, at best, “orthogonal” to the purposes of a statutory provision intended to increase access to transmission markets.
IV
The petitions for review are therefore DENIED.
Notes
. The motion for judicial notice of this decision and the decision in Order Confirming & Approving Rate on a Final Basis, 149 F.E.R.C. ¶ 61,043 (2014), is granted.
. We grant the petitioners’ motion to take judicial notice of this document. See Transmission Agency of N. Cal. v. Sierra Pac. Power Co.,
. Because the rate component of the OMP II was proposed in a rate-setting proceeding, approval was also required under the Northwest Power Act; FERC granted that approval by separate order on the same day. See Order Confirming & Approving Rate on a Final Basis, 149 F.E.R.C. ¶ 61,043, ¶¶ 1, 22.
. Bonneville initially filed two petitions for review of the FERC orders, but voluntarily dismissed them before the opening briefs in the consolidated cases were filed.
.The substantive challenge arises under the FPA; we have treated procedural challenges to FERC actions as arising under both the FPA and the APA — both of which provide for review on "arbitrary and capricious” grounds. See Cal. Trout v. FERC,
. Petitioners American Public Power Association, National Rural Electric Cooperative Association, Northwest Requirements Utilities, and Public Power Council are trade organizations representing the interests of Bonneville’s "preference customers.” Their standing as organizations depends on whether their "members would otherwise have standing to sue in their own right, the interests at stake are germane to the organization[s'] purpose, and neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.” Friends of the Earth, Inc. v. Laidlaw Envt’l Servs. (TOC), Inc.,
. Although the nondiscrimination mandate was prospective only, oversupply conditions in 2012 had already caused Bonneville to accrue $2.7 million in expenses (which were indeed ultimately included in subsequent rate increases). See Order Confirming & Approving Rate on a Final Basis, 149 F.E.R.C. ¶ 61,-043, ¶ 10.
.The petitioners’ challenge on the merits is part substantive and part procedural, and outright invalidation is therefore only one possible outcome. But this has no bearing on the Article III standing inquiry because, under the "procedural rights” doctrine, uncertainty regarding whether an agency will stay its course after following proper procedures on remand does not undermine redressability. See Mendoza v. Perez,
. Unlike Article III standing, however, "statutory standing” does not implicate our subject-matter jurisdiction. Lexmark Int’l, Inc. v. Static Control Components, Inc., — U.S. -,
. Procedural aggrievement is cognizable under APA § 10 and FPA § 313(b), see Cal. Trout,
. Such entities were, with some exceptions, previously excluded from FERC's jurisdiction and therefore generally not subject to other statutory nondiscrimination mandates enforced by FERC. See 16 U.S.C. §§ 824d(b), 824e(a) (permitting FERC to regulate discrimination in electricity transmission by investor-owned utilities).
. Bonneville’s electricity prices are, moreover, heavily regulated by an intricate array of other statutory provisions, and "to hold [the petitioners have statutory] standing would be to create a considerable potential for judicial intervention that would distort the regulatory process.” Cement Kiln Recycling Coal. v. ERA,