Court Rulings

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On March 9, 2015, the United States Supreme Court (the “Court”) issued its ruling in Nikols v. Mortgage Bankers Association, holding that federal agencies do not need to issue notice-and-comment procedures when amending or repealing an “interpretive” rule.  The impact of this ruling means that federal agencies, including FERC, may modify or repeal their interpretative orders and policy statements without providing notice or a public comment period.

On February 20, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) held that FERC had the authority to approve a cost pooling agreement among the carriers of the Trans Alaska Pipeline System (“TAPS”) that allocates certain fixed costs on the basis of each carrier’s share of combined interstate and intrastate utilization of TAPS.  In upholding this determination by FERC, the D.C. Circuit found that FERC could indirectly regulate intrastate oil prices as a result of its regulation of interstate prices.

On October 20, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) approved a request by FERC to delay finalizing its decision that vacated FERC Order No. 745 regarding demand response compensation for consumers.  The D.C. Circuit approved the delay through December 16, 2014.  Additionally, it stated that if it is notified of a petition for writ of certiorari filed during the delay, the court will withhold issuance of the mandate finalizing its decision to vacate, pending the Supreme Court’s final disposition.

On October 7, 2014, the Ohio Supreme Court unanimously affirmed a ruling by the Public Utilities Commission of Ohio (“PUCO”) that permitted Ohio Power to recover $36 million in transmission costs from ratepayers who had “shopped” for alternative generation providers, in addition to those ratepayers who purchased generation service from Ohio Power, during the period of July 2011 through June 2012.

On September 29, 2014, the Large Public Power Council (“LPPC”) filed a petition requesting for en banc review of the United States Court of Appeals for the District of Columbia Circuit’s (“D.C. Circuit”) determination to uphold FERC’s Order No. 1000.  The petition exclusively addresses the D.C. Circuit panel’s decision affirming FERC’s approach to cost allocation for new transmission facilities.

On October 6, 2014, a federal district court in Nebraska dismissed the state of Nebraska’s lawsuit challenging the Environmental Protection Agency’s (“EPA”) proposed rule that would limit emissions of carbon dioxide from newly-built fossil fuel-powered generators.  The court ruled that the state of Nebraska’s challenge “jumped the gun” and would have to wait until there was a final agency action.

On September 8, 2014, the United States Court of Appeals for the Fifth Circuit (“Fifth Circuit”) upheld a rule issued by the Public Utility Commission of Texas (“PUCT”) which restricts Qualifying Facilities (“QFs”) that generate non-firm power from entering into Legally Enforceable Obligations (“LEOs”).  The PUCT had promulgated the rule as part of Texas’ implementation of FERC’s Public Utilities Regulatory Policies Act of 1978 (“PURPA”) regulations. The Fifth Circuit reversed the lower court’s finding that such requirements were inconsistent with PURPA, remanding for a further determination.  The Fifth Circuit also vacated the portion of the lower court’s order related to a specific PUCT order as lacking subject matter jurisdiction.   

On August 26, 2014, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated and remanded a FERC decision that required a generator to pay network upgrade costs related to its interconnection in the PJM Interconnection, L.L.C. (“PJM”).  The D.C. Circuit held that FERC did not justify its reasoning when it departed from its own precedent and required West Deptford Energy, L.L.C. (“West Deptford”) to pay upgrade charges pursuant to cost-allocation provisions of a superseded PJM tariff, rather than pursuant to provisions of the currently-effective tariff.