D.C. Circuit Review – Reviewed: FERC and Farewell
We are now solidly within the slow period for the D.C. Circuit, as the few outstanding opinions from last term trickle out. Only two opinions this week, and only one is admin-related.
In the first, Lin v. District of Columbia, a divided panel reversed in part a grant of summary judgment to the District of Columbia in a § 1983 claim related to an arrest of a bus ticketing agent. Judge Millet, joined by Judge Rao, concluded that there were material disputed facts over whether the police had probable cause to arrest the ticketing agent. Judge Walker viewed the record as indisputable and would have affirmed the grant of summary judgment to the district.
The second case this week is United Power, Inc. v. FERC, which deals with a utility’s challenge to FERC’s jurisdiction over a power cooperative. As FERC aficionados are no doubt aware, the Federal Power Act gives FERC regulatory authority over “the transmission of electric energy” and “the sale of electric energy at wholesale,” 16 U.S.C. § 824(b)(1), and requires that rates and charges “for or in connection with the transmission or [jurisdictional] sale of electric energy” be “just and reasonable” Id. § 824d(a). If FERC determines that a rate is unjust or unreasonable, then it must determine the appropriate rate and fix it by order. Id. § 824e(a). FERC does not have authority over every entity that sells electric energy at wholesale or in interstate commerce, however. There are exclusions for states, political subdivisions, certain electric cooperatives, and corporations that are wholly owned by those entities. 16 U.S.C. § 824(f).
This case involves Tri-State Generation and Transmission Association, which is a cooperative that was formerly made up only of excluded entities and therefore was not subject to FERC’s authority. In 2019, however, Tri-State admitted a new member that is not excluded from FERC’s jurisdiction. United Power objected to that entity’s admission, sought to exit the cooperative, and filed a complaint with the state public utilities commission seeking to compel Tri-State to set reasonable exit charges for it. Tri-State petitioned FERC for an order stating that Tri-State was now subject to FERC’s exclusive jurisdiction, including to set the exit charge levied. United Power argued that FERC should not make any such determination because there were outstanding state-law questions regarding the validity of the new member’s admission to the cooperative. FERC nevertheless decided the petition and concluded that it had exclusive jurisdiction over the exit charge. United petitioned the court for review.
In an opinion written by Judge Ginsburg and joined by Judges Tatel and Rao, the D.C. Circuit dismissed the petition in part and denied the petition in part. The dismissal was due to the panel’s conclusion that United had not exhausted certain arguments it now sought to raise—namely, that FERC had exceeded its statutory authority by asserting jurisdiction over Tri-State before it was established that the new member could lawfully be considered a member of the cooperative under state law. The panel concluded that United had argued that it would be “premature” and “inefficient” for FERC to reach the issue prior to the state-law determination, but not that it would be beyond the agency’s authority to do so.
United also raised an arbitrary-and-capricious challenge to FERC’s decision, which the panel found properly preserved through that same “premature” and “inefficient” language. On the merits, however, the panel rejected United’s arguments, and found that FERC had “broad discretion” to decide the issue now rather than awaiting the resolution of the state-law issue. The panel also rejected United’s claim that setting the exit charge was not within FERC’s exclusive jurisdiction. The FPA gives FERC exclusive jurisdiction over rates and charges made “in connection with the . . . sale of electric energy,” and the panel agreed that the charge fell within those parameters as it “protects members of a cooperative against rate increases caused by the exit of a member, while also increasing membership commitment and stability.”
And with that, I must say a fond farewell to the D.C. Circuit Review, as I leave the private sector to return to government work. I am confident that my co-authors will continue to enlighten as they summarize the opinions from the D.C. Circuit each week, and I will rejoin the ranks as a loyal reader. It’s been a pleasure!