Court Rulings

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On December 1, 2023, the United States Court of Appeals for the Third Circuit (“Third Circuit”) upheld PJM Interconnection, L.L.C.’s (“PJM”) latest minimum offer price rule (the “Focused MOPR”), denying challenges to both the substance of the rule and FERC’s “constructive” approval of the rule, which went into effect after the Commissioners deadlocked two-to-two and failed to issue a timely order accepting or denying the Focused MOPR. The Third Circuit held that a court’s review of FERC’s “action,” whether actual or constructive, proceeds under the same deferential standards in the Federal Power Act (“FPA”) and the Administrative Procedure Act (“APA”), and encompasses the Commissioners’ mandatory statements setting forth their reasoning for approving or denying the filing. On the merits, the Third Circuit held that FERC’s acceptance of PJM’s Focused MOPR policy was not arbitrary and capricious, pointing to arguments laid out in then-Chairman Glick’s and Commissioner Clements’ Joint Statement supporting the Focused MOPR.Continue Reading Third Circuit Upholds FERC’s Approval of PJM’s Focused MOPR

On September 5, 2023, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), in Solar Energy Industries Association v. FERC, held that the Public Utility Regulatory Policy Act (“PURPA”) gives FERC broad discretion to evaluate which implementation rules are needed to encourage the development of qualifying small-scale renewable generating facilities. While the Ninth Circuit did not vacate FERC’s decision, it remanded the decision back to FERC for failing to conduct the proper National Environmental Policy Act (“NEPA”) review. The decision stems from the Solar Energy Industries Association and several environmental organizations’ (collectively, “Petitioners”) challenge to Order Nos. 872 and 872‑A (collectively, “Order 872”), which were rules adopted by FERC that altered which small-scale renewable facilities qualify for benefits under PURPA and how those facilities are compensated (see July 20, 2020 edition of the WER).Continue Reading Ninth Circuit Finds that PURPA Gives FERC Broad Implementation Discretion, But Remands New Qualifying Facility Rules for Lack of NEPA Review

On September 16, 2022, a panel of three judges on the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued a decision in United Power, Inc. v. FERC affirming FERC’s exclusive jurisdiction over exit fees charged by Tri-State Generation and Transmission Association, Inc. (“Tri-State”), a Colorado generation and transmission cooperative.Continue Reading D.C. Circuit Holds that FERC Has Exclusive Jurisdiction Over Exit Fees Charged by a Colorado Electric Cooperative

On December 5, 2016, the United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) ruled that the United States District Court for the District of Minnesota (“District Court”) did not have federal question jurisdiction over the breach of contract suit filed in Great Lakes Transmission Limited Partnership v. Essar Steel Minnesota., LLC. The Eighth Circuit vacated the lower court’s $32.9 million judgment in favor of the pipeline and remanded for dismissal. 
Continue Reading Eighth Circuit Rules No Federal Question Jurisdiction Over Breach of Contract Claim Involving Pipeline Transportation Agreement

On November 4, 2016, the U.S. Court of Appeals for the D.C. Circuit (the “D.C. Circuit”) rejected Sierra Club’s arguments that FERC’s environmental review under the National Environmental Policy Act of 1969 (“NEPA”) of Cheniere Energy Inc.’s (“Cheniere”) Corpus Christi, Texas liquefied natural gas (“LNG”) export project (the “Corpus Christi Project”) was inadequate. Notably, the D.C. Circuit held that FERC does not have to address the indirect environmental effects of anticipated exports of LNG in its NEPA review because the U.S. Department of Energy (the “DOE”) has sole authority to approve the export of natural gas.
Continue Reading D.C. Circuit Denies Review, Upholds FERC Approval of Corpus Christi LNG Facility

On October 25, 2016, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) ruled that two Notices issued by the FERC Secretary as the result of a deadlock between the then-four sitting FERC Commissioners over whether to approve or set for hearing the rates established by ISO-New England, Inc.’s (“ISO-NE”) eighth Forward-Capacity Auction (“FCA 8”) were unreviewable. Specifically, the court concluded that: (i) the Notices did not constitute reviewable “agency action” as contemplated by the Federal Power Act (“FPA”), because, according to the court, the FPA requires a “majority” vote of the Commissioners in order for FERC to act institutionally; and (ii) the Notices were not reviewable under the Administrative Procedure Act (“APA”) by virtue of an unlawful “failure to act,” because the FPA does not mandatorily obligate FERC to either set disputed rates for hearing, or to affirmatively prevent any unjust and unreasonable rates from going into effect.
Continue Reading D.C. Circuit Holds That FERC Deadlock is Unreviewable Under FPA, APA

On September 8, 2016, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) upheld FERC’s determination that various marketers and generators of electricity (“Petitioners”) violated the California Independent System Operator Corporation (“CAISO”) tariff by scheduling electricity in advance for export and in real-time for import, overscheduling load by submitting exaggerated day-ahead demand schedules to CAISO, and submitting bids at prices that did not reflect marginal costs and/or market prices.
Continue Reading Ninth Circuit Upholds FERC’s Finding of CAISO Tariff Violations During the California Energy Crisis

On July 21, 2016, the U.S. District Court for the District of Massachusetts (“District Court”) determined that review of a FERC-issued penalty for alleged market manipulation must be treated as an “ordinary civil action” requiring de novo review and finding against FERC’s arguments to the contrary. The District Court further ordered in its decision, FERC v. Maxim Power Corp., et al., that in the corresponding civil action—to determine whether to affirm FERC’s prior penalty assessment against the owners and operators of a power plant in Pittsfield, Massachusetts (“Maxim”) and one of their employees (together, “Respondents”)—the Respondents will be entitled to the full discovery of an ordinary civil case, and the proceeding can be decided by a jury, if necessary. 
Continue Reading FERC Ordered to Participate in Full Civil Trial to Affirm Prior Market Manipulation Penalty

On July 1, 2016, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) rendered an opinion affecting the return-on-equity and cost-of-service components of oil pipeline ratemaking. Specifically, the D.C. Circuit ordered FERC to either justify or amend its practice of granting income tax allowances for limited partnership pipelines, questioned FERC’s rationale in deciding what financial data should be used to calculate real rate of return on equity, and upheld FERC’s determination that a pipeline’s cost-of-service rates can already account for changes in costs associated with rate indexes. The D.C. Circuit remanded the case back to FERC on the income tax allowance and real rate of return on equity issues.
Continue Reading D.C. Circuit Issues Opinion Affecting Oil Pipeline Ratemaking

On July 1, 2016, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied a petition to review FERC’s determination that the “Mobile-Sierra” presumption does not preserve “right of first refusal” provisions that are otherwise required to be removed from tariffs and agreements following Order No. 1000.
Continue Reading D.C. Circuit Affirms FERC Order Finding that Mobile-Sierra Does Not Prevent Order No. 1000’s Elimination of Rights of First Refusal