S.C. Pub. Serv. Auth. v. Fed. Energy Regulatory Comm'n

762 F.3d 41

SOUTH CAROLINA PUBLIC SERVICE AUTHORITY, Petitioner

v. FEDERAL ENERGY REGULATORY COMMISSION, RespondentAlabama Public Service Commission, et al., Intervenors.

Nos. 12–1232, 12–1233, 12–1250, 12–1276, 12–1279, 12–1280, 12–1285, 12–1292, 12–1293, 12–1296, 12–1299, 12–1300, 12–1304, 12–1448, 12–1478.

United States Court of Appeals, District of Columbia Circuit.

Argued March 20, 2014.

Decided Aug. 15, 2014.

Harvey L. Reiter and Andrew W. Tunnell argued the causes for petitioners and supporting intervenors South Carolina Public Service Authority, et al. concerning Threshold Issues. With them on the joint briefs were Ed R. Haden, Scott B. Grover, Jonathan D. Schneider, Jonathan Peter Trotta, Kenneth G. Jaffe, Michael E. Ward, Randall Bruce Palmer, George Scott Morris, Luther Daniel Bentley IV, Sue Deliane Sheridan, Kenneth B. Driver, William H. Weaver, John Lee Shepherd Jr., William Rainey Barksdale, Tamara L. Linde, Jodi L. Moskowitz, Daniel M. Malabonga, Stephen G. Kozey, Matthew R. Dorsett, Wendy N. Reed, Matthew J. Binette, David S. Berman, Clare E. Kindall, Assistant Attorney General, Office of the Attorney General for the State of Connecticut, James Bradford Ramsay, Holly Rachel Smith, Cynthia Brown Miller, Daniel E. Frank, and Jennifer J.K. Herbert. Dennis Lane, Samantha M. Cibula, John A. Garner, and Glen L. Ortman entered appearances.

Randolph Lee Elliott argued the cause for petitioners and supporting intervenors American Public Power Association, et al. concerning Transmission Planning and Public Policy. With him on the joint briefs were John Lee Shepherd Jr., William Rainey Barksdale, Tamara L. Linde, Jodi L. Moskowitz, Cynthia Brown Miller, Andrew W. Tunnell, Ed R. Haden, Scott B. Grover, George Scott Morris, Luther Daniel Bentley, IV, Harvey L. Reiter, Jonathan D. Schneider, Jonathan Peter Trotta, James Bradford Ramsay, Holly Rachel Smith, Cynthia S. Bogorad, and William S. Huang. Delia D. Patterson, Jesse S. Unkenholz, Lyle D. Larson, and Daniel H. Silverman entered appearances.

Luther Daniel Bentley, IV argued the cause for state petitioner and intervenors Alabama Public Service Commission, et al. With him on the joint briefs were George Scott Morris, Clare E. Kindall, Assistant Attorney General, Office of the Attorney General for the State of Connecticut, James Bradford Ramsay, Holly Rachel Smith, and Cynthia Brown Miller.

Jonathan D. Schneider argued the cause for petitioners and supporting intervenors South Carolina Public Service Authority, et al. concerning Cost Allocation. With him on the joint briefs were Harvey L. Reiter, Jonathan Peter Trotta, Andrew W. Tunnell, Ed R. Haden, Scott B. Grover, Sue Deliane Sheridan, Randolph Lee Elliott, Elias G. Farrah, Kenneth G. Jaffe, Michael E. Ward, Randall Bruce Palmer, Howard Haswell Shafferman, Jack Nadim Semrani, George Scott Morris, Luther Daniel Bentley, IV, Holly Rachel Smith, John Lee Shepherd, Jr., William Rainey Barksdale, Tamara L. Linde, and Jodi L. Moskowitz.

John Lee Shepherd, Jr. argued the cause for petitioners and supporting intervenors Public Service Electric and Gas Company, et al. concerning Rights of First Refusal. With him on the joint briefs were William Rainey Barksdale, Tamara L. Linde, Jodi L. Moskowitz, Kenneth G. Jaffe, Michael E. Ward, Randall Bruce Palmer, Andrew W. Tunnell, Ed R. Haden, Scott B. Grover, Kenneth B. Driver, William H. Weaver, John Longstreth, Donald A. Kaplan, William M. Keyser, Stephen M. Spina, John D. McGrane, J. Daniel Skees, Edward Comer, Henri D. Bartholomot, Gary E. Guy, Jeanne Jackson Dworetzky, Barry S. Spector, Matthew J. Binette, N. Beth Emery, Daniel E. Frank, Jennifer J.K. Herbert, Wendy N. Reed, David S. Berman, Daniel M. Malabonga, Stephen G. Kozey, and Matthew R. Dorsett.

Linda G. Stuntz, James W. Moeller, and Andrew M. Jamieson were on the briefs for petitioners International Transmission Company d/b/a ITC Transmission, et al.

Randolph Lee Elliott, Jonathan D. Schneider, Harvey L. Reiter, and Jonathan Peter Trotta were on the joint briefs for petitioners and supporting intervenors concerning Reciprocity Condition. Marie D. Zosa entered an appearance.

Andrew W. Tunnell, Ed R. Haden, Scott B. Grover, Harvey L. Reiter, Jonathan D. Schneider, Jonathan Peter Trotta, Randolph Lee Elliott, Stephen Matthew Spina, John D. McGrane, George Scott Morris, Luther Daniel Bentley, IV, Sue Deliane Sheridan, Kenneth G. Jaffe, Michael E. Ward, Randall Bruce Palmer, Wendy N. Reed, Matthew J. Binette, David S. Berman, Howard Haswell Shafferman, Jack Nadim Semrani, Elias G. Farrah, John Lee Shepherd, Jr., William Rainey Barksdale, Tamara L. Linde, Jodi L. Moskowitz, Kenneth B. Driver, Clare E. Kindall, Assistant Attorney General, Office of the Attorney General for the State of Connecticut, Gary E. Guy, Jeanne Jackson Dworetzky, Barry S. Spector, Cynthia Brown Miller, Daniel M. Malabonga, Stephen G. Kozey, and Matthew R. Dorsett, N. Beth Emery, James Bradford Ramsay, Holly Rachel Smith, Daniel E. Frank, and Jennifer J.K. Herbert were on the joint brief for petitioners and supporting intervenors concerning Statement of the Case, Statement of Facts, and Standards of Review.

Edward H. Comer, Henri D. Bartholomot, John D. McGrane, Stephen M. Spina, and John Daniel Skees were on the briefs for petitioner Edison Electric Institute concerning FPA § 211A.

Beth G. Pacella and Lona T. Perry, Senior Attorneys, and Robert M. Kennedy, Attorney, Federal Energy Regulatory Commission, argued the causes for respondent. With them on the briefs were David L. Morenoff, Acting General Counsel, Robert H. Solomon, Solicitor, and Jennifer S. Amerkhail, Attorney.

Michael R. Engleman argued the cause for intervenors LS Power Transmission, LLC, et al. concerning Rights of First Refusal. With him on the brief were Neil L. Levy and Ashley C. Parrish. David G. Tewksbury entered an appearance.

Dimple Chaudhary, Jill Tauber, Abigail Dillen, and Gene Grace were on the brief for intervenors Conservation Law Foundation, et al. in support of respondents concerning Threshold Issues, Cost Allocation, Transmission Planning and Public Policy, and State Sovereignty. Hannah Chang and Benjamin H. Longstreth entered appearances.

Randall V. Griffin, Gary E. Guy, Jodi Moskowitz, John Longstreth, Donald A. Kaplan, and William M. Keyser were on the brief for intervenors The Dayton Power and Light Company, et al. concerning Scope of Cost Allocation. Megan E. Vetula entered an appearance.

Jonathan D. Schneider, Harvey L. Reiter, Jonathan Peter Trotta, and Randolph Lee Elliott were on the joint brief for intervenors American Public Power Association, et al. concerning FPA § 211A. Delia D. Patterson entered an appearance.

Before: ROGERS, GRIFFITH and PILLARD, Circuit Judges.

PER CURIAM.

This case involves challenges to the most recent reforms of electric transmission planning and cost allocation adopted by the Federal Energy Regulatory Commission pursuant to the Federal Power Act, 16 U.S.C. § 791 a et seq. In Order No. 1000, as reaffirmed and clarified in Order Nos. 1000–A and 1000–B (together, “the Final Rule”), the Commission required each transmission owning and operating public utility to participate in regional transmission planning that satisfies specific planning principles designed to prevent undue discrimination and preference in transmission service, and that produces a regional transmission plan. The local and regional transmission planning processes must consider transmission needs that are driven by public policy requirements. Transmission providers in neighboring planning regions must collectively determine if there are more efficient or cost-effective solutions to their mutual transmission needs. The Final Rule also requires each planning process to have a method for allocating ex ante among beneficiaries the costs of new transmission facilities in the regional transmission plan, and the method must satisfy six regional cost allocation principles. Neighboring transmission planning regions also must have a common interregional cost allocation method for new interregional transmission facilities that satisfies six similar allocation principles. Additionally transmission providers are required to remove from their jurisdictional tariffs and agreements any provisions that establish a federal right of first refusal to develop transmission facilities in a regional transmission plan, subject to individualized compliance review.

Forty-five petitioners and sixteen intervenors (hereinafter “petitioners”) include state regulatory agencies, electric transmission providers, regional transmission organizations, and electric industry trade associations. They challenge the Commission's authority to adopt these reforms, and they contend that the Final Rule is arbitrary and capricious and unsupported by substantial evidence. For the following reasons, we conclude their contentions are unpersuasive. We hold in Part II, that the Commission had authority under Section 206 of the Federal Power Act to require transmission providers to participate in a regional planning process. In Part III, we conclude that there was substantial evidence of a theoretical threat to support adoption of the reforms in the Final Rule. In Part IV, we hold that the Commission had authority under Section 206 to require removal of federal rights of first refusal provisions upon determining they were unjust and unreasonable practices affecting rates, and that determination was supported by substantial evidence and was not arbitrary or capricious; we further hold that the Mobile–Sierra objection to the removal is not ripe. In Part V, we hold that the Commission had authority under Section 206 to require the ex ante allocation of the costs of new transmission facilities among beneficiaries, and that its decision regarding scope was not arbitrary or capricious. In Part VI, we hold that the Commission reasonably determined that regional planning must include consideration of...