Notice & Comment

D.C. Circuit Review – Reviewed: The Glory of the Mundane

Life on the D.C. Circuit is a mixture of the grand and the mundane. As Haley Proctor wrote in the last entry to this blog, the decisions from the Court two weeks ago included a blockbuster case: a clash between President Biden and former President Trump over presidential records at the heart of a congressional investigation into a mob’s attack on the Capitol intended to thwart the constitutional order of presidential succession. Likely headed for the Supreme Court, Trump v. Thompson is the stuff of headlines, punditry, books, and films. This week? Not so much. I’m reminded of my interview with White House Counsel when President George W. Bush was thinking of  nominating me to fill a vacancy on the D.C. Circuit. One of the White House lawyers (who shall remain nameless) asked me with genuine incredulity, “Tom, are you sure that you want this? How can you stand the thought of spending the rest of your life doing administrative law?” It turns out that some of us marvel at that prospect. This week’s offerings from the D.C. Circuit are glorious people like us.

The Aviation and Transportation Security Act requires airlines to collect “security” fees from passengers which are then remitted to the Transportation Security Administration (TSA). The Act provides that the agency “may refund any fee paid by mistake or any amount paid in excess of that required.” 49 U.S.C. § 44940(g). In United Airlines, Inc. v. TSA, the airline challenged TSA’s denial of two requests for such refunds. In an opinion by Judge Henderson, joined by Judge Walker and Senior Judge Edward, the Court found for United on one of its claims, but not the other. On the successful claim, United sought a refund for fees it remitted to TSA for passengers who bought tickets from other airlines and were involuntarily transferred to United flights, arguing that the airline that sold the initial flight should collect and remit the fees to the agency. The Court held that the TSA did not provide a reasoned explanation for its denial and remanded the refund request to the TSA for reconsideration. On the losing claim, United argued that fluctuations in the foreign exchange rate caused fees collected in a foreign currency to differ from the amount required by the Act. The Court held that the TSA’s denial to refund these fees was reasonably based on a variety of factors that the TSAadequately explained.

In Niskanen Center v. FERC, the Court affirmed the district court’s grant of summary judgment to Federal Energy Regulatory Commission (FERC) in a Freedom of Information Act (FOIA) suit brought by the Niskanen Center.  To build a pipeline, a gas company must notify all affected landowners and provide FERC a list of those notified. The Niskanen Center filed a FOIA request with FERC for the names and addresses of landowners that the gas company had provided to FERC during the now-abandoned Atlantic Coast Pipeline project. Relying upon Exemption 6, FERC offered to provide only the initials of the landowners and the names of the streets where they lived. The district court granted the agency summary judgment. On appeal, the Court affirmed the district court in an opinion written by Judge Tatel and joined by Judge Rogers and Senior Judge Randolph. The Court held that under FOIA’s Exemption 6, “the substantial privacy interest” in protecting the landowners’ identity outweighed “the public interest” in disclosure—especially in light of Niskanen’s admission before the district court that it could determine in almost all instances whether the gas company had notified landowners of the proposed pipeline having only the landowners’ initials and street names.

Finally, in California Public Utilities Commission v. FERC, the Court vacated and remanded a FERC order that established a bidding rate for California energy compensation because the order improperly relied on FERC precedent and lacked evidentiary support.  In 2020, FERC reviewed two options for the compensation structure of a voluntary bidding program that would ensure that “resources—such as nuclear power plants, solar farms and natural-gas-fired power plants—are in place” to meet California’s electricity demands. Option A would allow an energy resource that wants to recover fixed costs to submit a bid based on its demonstrated fixed costs “plus a 20% adder.” Option B provided the same cost-justified bid as Option A, minus the adder. Without addressing Option B’s merits, FERC found Option A “just and reasonable” because the 20% adder allowed participating resources “the opportunity for sufficient recovery of fixed costs plus a return on capital to facilitate incremental upgrades and improvement by the resources.” FERC further concluded that this option was “consistent” with a prior FERC order that also included a 20% adder. The California Public Utilities Commission (CPUC) challenged FERC’s decision, arguing that FERC failed to explain why the 20% adder was just and reasonable and that FERC’s reliance on its precedent was “misplaced.” Judge Henderson, joined by Judge Katsas and Senior Judge Ginsburg, agreed with CPUC. FERC’s “misplaced reliance” on its precedent did “not evince the type of reasoned decision-making necessary to withstand scrutiny” because FERC “failed to grapple” with the “material differences” between Option A and its prior order. The Court relied in part on its recent opinion in Delaware Division of Public Advocate v. FERC, 3 F.4th 461 (D.C. Cir. 2021), where FERC’s “mere citation to its earlier order—absent further explanation or analysis—was arbitrary and capricious.” Next, the panel held that the record contained no evidence or findings to support FERC’s decision. The Court stated that FERC’s assurance that the 20% adder would grant “the opportunity for sufficient recovery” was a conclusory or “talismanic phrase that does not advance reasoned decision making.” The D.C. Circuit pointed out the “lack of analysis as to why” Option B would provide “insufficient cost recovery for incremental upgrades and improvements,” and FERC failed to explain the relationship between the 20% adder and specific upgrades and improvements.

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