Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-01144/USCOURTS-caDC-06-01144-0/pdf.json

Parties Involved:
Braintree Electric Light Department
Petitioner
Federal Energy Regulatory Commission
Respondent
Reading Municipal Light Department
Petitioner
Taunton Municipal Lighting Plant
Petitioner

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 21, 2008 Decided December 16, 2008 

No. 04-1335 

BRAINTREE ELECTRIC LIGHT DEPARTMENT, ET AL.,

PETITIONERS

v. 

FEDERAL ENERGY REGULATORY COMMISSION, 

RESPONDENT

ISO NEW ENGLAND INC., ET AL., 

INTERVENORS

Consolidated with 05-1210, 05-1212, 06-1144 

On Petition for Review of Orders 

of the Federal Energy Regulatory Commission 

John P. Coyle argued the cause and filed the briefs for 

petitioners. 

Colleen Mary McConnell, Assistant Attorney General, 

Attorney General’s Office for the Commonwealth of 

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Massachusetts, and Bruce C. Johnson, Attorney, Office of 

Consumer Counsel, were on the brief for intervenors in 

support of petitioners. Joseph W. Rogers, Assistant Attorney 

General, Attorney General’s Office for the Commonwealth of 

Massachusetts, entered an appearance. 

Beth G. Pacella, Attorney, Federal Energy Regulatory 

Commission, argued the cause for respondent. With her on 

the brief were Cynthia A. Marlette, General Counsel, and 

Robert H. Solomon, Solicitor. John P. Coyle, Attorney, 

entered an appearance. 

Howard H. Shafferman and Daniel R. Simon were on the 

brief for intervenor ISO New England Inc. 

Before: GRIFFITH, Circuit Judge, and EDWARDS and

WILLIAMS, Senior Circuit Judges. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: This appeal presents 

the issue of whether the Federal Energy Regulatory 

Commission may approve rates filed by a Regional 

Transmission Organization (“RTO”) to cover the cost of 

activity that for some purposes may be classified as lobbying. 

Rejecting petitioners’ contentions that approval of the rates 

was arbitrary and capricious and violated their First 

Amendment rights, we affirm FERC’s orders. 

* * * 

 Since 1996, in an effort to facilitate the development of 

competitive wholesale power markets, FERC has required 

power utilities to provide non-discriminatory open access 

transmission services. To this end it has encouraged creation 

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of RTOs—entities consolidating control of all transmission 

services in a particular region. Promoting Wholesale 

Competition Through Open Access Non-Discriminatory 

Transmission Services by Public Utilities, 61 Fed. Reg. 

21,540, 21,667 (1996) (“Order No. 888”) (“We continue to 

support the development of [RTOs]”). But the Commission 

found that the requirement of non-discriminatory access did 

not fully accomplish its efficiency goals. See Regional 

Transmission Organizations, 65 Fed. Reg. 810, 817 (2000) 

(“Order No. 2000”) (detailing inefficiencies that remained 

after Order No. 888). Hence, in Order No. 2000, the 

Commission stepped up the pressure, requiring transmissionowning utilities either to participate in an RTO or to explain 

their failure to do so. See 18 C.F.R. § 35.34(a), (c), (g), (h); 

Regional Transmission Organizations, 65 Fed. Reg. at 812. 

Order No. 2000 required all RTOs to meet a minimum 

independence requirement, but allowed RTOs to assume 

“different organizational forms” in order to satisfy the 

independence characteristic. Regional Transmission 

Organizations, 65 Fed. Reg. at 811 (“the Commission is not 

proposing a ‘cookie cutter’ organizational format”). Among 

the forms explicitly approved in Order No. 2000, see id. at 

836, was one that FERC had noted in Order No. 888, an 

independent system operator or “ISO.” This would “separate 

operation of the transmission grid and access to it from 

economic interests in generation” and provide what the 

Commission called “operational unbundling.” Order No. 888, 

61 Fed. Reg. at 21,551–52 n.115 & 21,594 n.41 (internal 

quotations omitted). 

The RTO involved in the present case is operated under 

just such an arrangement. It originated in 1971 with the 

formation of the New England Power Pool (“NEPOOL”), 

which in 1997 obtained FERC approval for the creation of 

ISO New England Inc. (“ISO-NE”), a “private, non-profit 

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entity to administer New England energy markets and operate 

the region’s bulk power transmission system.” NSTAR 

Electric & Gas Corp. v. FERC, 481 F.3d 794, 796 (D.C. Cir. 

2007). Ultimately ISO-NE requested approval to establish 

itself as an RTO under Order No. 2000. FERC gave its 

approval in 2004, relying, in part, on the fact that as a “notfor-profit entity governed by an independent, non-stakeholder 

board,” ISO-NE met Order No. 2000’s independence 

requirement. ISO-NE, 106 FERC ¶ 61,280 at P 51, order on 

reh’g, 109 FERC ¶ 61,147 (2004), aff’d sub nom. Maine Pub. 

Utilities Comm’n v. FERC, 454 F.3d 278 (D.C. Cir. 2006). 

As a FERC-authorized RTO, ISO-NE is required to 

submit its tariff to FERC for approval under § 205 of the 

Federal Power Act, 16 U.S.C. § 824(d). The tariff is meant to 

establish rates that will provide customers with “open access 

to the regional transmission system to all electricity generators 

. . . in a non-discriminatory manner.” Midwest ISO 

Transmission Owners v. FERC, 373 F.3d 1361, 1364 (D.C. 

Cir. 2004). Section 205 requires that the rates be “just and 

reasonable.” 

 At issue in the current proceeding are the tariff sheets 

ISO-NE submitted for FERC approval covering its 2005 and 

2006 revenue requirements. In each tariff ISO-NE sought 

over two million dollars in funding for accounts associated 

with “Government Affairs,” “Public Information,” and 

“Regulatory Affairs” (collectively, “external affairs”). See 

ISO-NE, 109 FERC ¶ 61,383 at P 18 (2004); ISO-NE, 113 

FERC ¶ 61,341 at P 10 (2005). These accounts were elements 

of total administrative budgets exceeding $100,000,000 a 

year. See ISO-NE, 109 FERC ¶ 61,383 at P 3; ISO-NE, 113 

FERC ¶ 61,341 at P2. 

In response to both tariffs, petitioners Braintree Electric 

Light Department, Reading Municipal Light Department, and 

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Taunton Municipal Lighting Plant (collectively, “BRT”)—all 

ISO-NE customers—intervened and argued that further 

information was required to determine if the costs ISO-NE 

sought to recover for external affairs were just and reasonable 

within the meaning of § 205. In particular, it pointed to 

reports that lobbyists engaged by ISO-NE had filed with the 

U.S. Congress under § 5 of the Lobbying Disclosure Act of 

1995 (2 U.S.C. §§ 1601–1612 at § 1604), as well as 

comparable reports filed under state law. BRT argued that 

these filings showed that ISO-NE’s proposed charges included 

lobbying costs, which BRT said were not permitted under 

FERC’s own precedent and regulations, and that FERC 

approval in effect compelled subsidization of speech in 

contravention of the First Amendment. 

In response to BRT’s complaints, FERC sua sponte

ordered a “paper hearing” in which it directed ISO-NE to 

“clarify the nature of each activity listed in the ‘lobbying 

reports’ filed by protestors and explain how each of the 

activities cited by protestors is an educational, informational, 

or monitoring activity on the one hand, or a lobbying activity 

on the other.” ISO-NE, 115 FERC ¶ 61,332 at P 11 n.8 

(2006). ISO-NE submitted an almost 800-page filing, 

comprised of a brief, nine affidavits, and numerous exhibits, 

arguing that all of its communications with government 

officials were “designed to address matters of direct operating 

concern,” i.e., “to ensure a reliable bulk-power system and 

competitive energy markets.” Brief of ISO-NE on Issues Set 

for Paper Hearing 5, Joint Appendix (“J.A.”) 993. 

The Commission rejected BRT’s substantive objections, 

but in a move to enhance transparency ordered ISO-NE to 

“prepare and post on its website a monthly report concerning 

‘external affairs’ and ‘corporate communications.’” ISO-NE, 

117 FERC ¶ 61,070 at P 52 (2006). On rehearing it made 

clear that the monthly posting did not have to include certain 

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ISO-NE communications, such as “inquiries to or from 

executive branch officials” and the provision of “information 

to state and federal, executive and legislative officials 

regarding the status of New England’s bulk-power system.” 

ISO-NE, 118 FERC ¶ 61,105 at P 39. 

On appeal BRT challenges FERC’s decision to uphold 

both the 2005 tariff (Docket No. 05-1210) and the 2006 tariff 

(Docket No. 06-1144). Before proceeding to the merits, a 

brief bit of procedural housekeeping is in order. FERC argues 

that BRT waived its challenge to the 2005 tariff because it 

failed to advance arguments specific to the 2005 tariff in its 

opening brief. BRT responds that its arguments against the 

2006 orders were equally applicable, and clearly intended to 

apply with equal force, to the 2005 orders. Since we reject 

BRT’s attacks on FERC’s orders covering the 2006 tariff, we 

need not reach the question of waiver. As to Docket No. 04-

1335, BRT admits in its opening brief that it was not briefing 

the sole issue that it would have raised in that appeal, see Petr. 

Br. 1 n.2, and accordingly, that petition for review is 

dismissed with prejudice. See World Wide Minerals, Ltd v. 

Republic of Kazakhstan, 296 F.3d 1154, 1160 (D.C. Cir. 

2002). Similarly, as the Massachusetts Municipal Wholesale 

Electric Company elected not to brief the matters in Docket 

No. 05-1212, see Notice of Petitioner Massachusetts 

Municipal Wholesale Electric Company Regarding Briefing 1 

(Mar. 31, 2008), we dismiss the petition in that docket. 

* * * 

Apart from the First Amendment challenge, we review 

FERC’s orders under the familiar arbitrary and capricious 

standard. Midwest ISO Transmission Owners, 373 F.3d at 

1368 (citing 5 U.S.C. § 706(2)(A)). This requires that we be 

persuaded that the Commission has made a reasoned decision 

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based upon substantial evidence and that the path of its 

reasoning is clear. NSTAR Electric, 481 F.3d at 802. 

In approving ISO-NE’s rates FERC articulated a line 

between what we may loosely call informational lobbying 

(recoverable) and more political variants (not recoverable). 

On the non-recoverable side of the line it identified “activities 

such as participation in Political Action Committees, 

candidate fundraising, entertainment expenses (e.g., meals, 

sporting events, junkets) [as] clearly not recoverable lobbying 

activities.” ISO-NE, 117 FERC ¶ 61,070 at P 41. In contrast, 

it said that “informational and educational activities as well as 

monitoring and communicating on issues of direct operating 

concern to the RTO, such as those described by ISO-NE in the 

present proceeding, are much harder cases,” id., which in fact 

it approved. 

BRT asserts two primary reasons to convince us that 

FERC’s approval of the rates as just and reasonable was not 

based on reasoned decisionmaking: (1) FERC’s alleged 

violation of its own precedent; and (2) its alleged blindness to 

the possibility that an ISO might pursue goals different from 

those sought by members, in particular goals not shared by all

members. 

BRT claims that FERC’s precedent broadly disallowed 

recovery for lobbying expenditures, even if informational and 

related to ISO-NE’s core purposes and objectives. FERC 

acknowledged that its prior statements on the subject had “not 

always been clear.” Id. at P 47. This appears quite true. On 

the one hand is a case cited by BRT, Delmarva Power & Light 

Co., 58 FERC ¶ 61,169 (1992), order on reh’g, 58 FERC ¶ 

61,282 (1992), further order on reh’g, 59 FERC ¶ 61,169 

(1992), in which FERC asserted that a utility’s lobbying 

expenses, made in the form of contributions to lobbying 

activity by Edison Electric Institute, “may not, under any 

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circumstances, be included in the utility’s cost of service.” 

Delmarva, 58 FERC ¶ 61,169 at 61,509. On the other hand, 

not long after Delmarva FERC approved the decision of an 

administrative law judge that allowed for lobbying 

expenditures where a utility demonstrated that “lobbying 

related to proposed legislation . . . could benefit . . . 

ratepayers.” Williams Natural Gas Company, 73 FERC 

¶ 63,015, at 65,072–73 (1995), order on initial decision, 77 

FERC ¶ 61,277 (1996), order on reh’g, 80 FERC ¶ 61,158 

(1997). 

Moreover, FERC’s accounting rules have quite clearly 

left these issues somewhat up in the air. FERC (or more 

precisely, its predecessor, the Federal Power Commission) 

had recognized that “political expenditures of utilities fall into 

a peculiar category” and that it would possibly be “unfair” if 

such expenditures were presumed recoverable in all instances. 

Alabama Power Co., 24 FPC 278, 286 (1960), reh’g denied, 

Alabama Power Co., 24 FPC 860 (1960), aff’d, Southwestern 

Elec. Power Co. v. Fed. Power Commission, 304 F.2d 29 (5th 

Cir. 1962). As a result, the FPC had required that certain 

utility expenditures, such as advertising to promote legislation 

or influence public opinion, be isolated in a special account 

and thus identified for agency review. In defending this 

procedure, the FPC had explained that location in that account 

was definitely not the same as preclusion from recovery. 

“Thus this accounting classification, while isolating and 

identifying these controversial expenditures, appropriately 

avoids any implication that the companies are entitled without 

a further showing to charge against the rate payer the cost of 

political programs favored by the companies but possibly 

opposed by those who must pay the costs of supporting these 

enterprises.” Id. at 286–87 (emphases added). The presentday version of the account is No. 426.4. See Expenditures for 

Political Purposes—Amendment of Account 426, Other 

Income Deductions, Uniform System of Accounts, and Report 

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Forms Prescribed for Electric Utilities and Licensees and 

Natural Gas Companies—FPC Forms Nos. 1 and 2, 30 FPC 

1539, 1541 (1963) (“We note also that such classification 

does not constitute a determination that such expenditures 

should be excluded from a utility’s cost of service in rate 

proceedings.”), order on reh’g, 31 FPC 411 (1964). 

 Given the Commission’s having expressly left open the 

consequences of placing an expense in Account No. 426.4, it 

was quite logical, and no diversion from any clear prior 

pattern, that the Commission here “did not attempt to identify 

which expenditures should have been classified as lobbying in 

Account 426.4 because little purpose would be served, in light 

of our determination that all of the expenses were properly 

recoverable.” ISO-NE, 118 FERC ¶ 61,105 at P 17 (emphasis 

in original). The same is true, of course, of expenditure 

reports that ISO-NE’s consultants were required to file with 

Congress under the Lobbying Disclosure Act of 1995, and 

similar state provisions. 

BRT’s second attack on FERC’s reasoning points to 

FERC’s statement that “ISO-NE has no interest in obtaining a 

profit from its operations and seeks only to provide reliable 

service at the lowest reasonable cost.” ISO-NE, 118 FERC 

¶ 61,105 at P 21. BRT finds this a Pollyannaish view, and 

observes that there may well be other factors, such as the 

desire for institutional prestige or ideological biases, “or even 

a good faith but mistaken belief in the merits of a particular 

program,” Petr. Br. 30, that might lead ISO-NE to sacrifice 

the interests of its constituents. Moreover, it notes the 

obvious fact that the interests of those constituents may 

conflict. 

If FERC’s ruling below were based entirely on an 

assumption that ISO-NE must invariably operate in the best 

interests of its stakeholders solely because it is a non-profit 

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entity, then we would be inclined to agree with BRT’s 

criticism. Rent-seeking and shirking are surely not confined 

to for-profit firms. But FERC was hardly as naive as BRT 

depicts. 

First, FERC candidly acknowledged that because ISO-NE 

was charged with providing system reliability and competitive 

markets for “all market participants,” this “necessarily has 

(and will) result in ISO-NE advocating positions that may be 

contrary to [those of] some of its individual members.” ISONE, 118 FERC ¶ 61,105 at P 18 (emphasis added). FERC 

observed that the disputed communications involved in the 

present case “involved controversial issues on which 

consensus among market participants in New England, each 

with their own financial interests, was not possible to 

achieve.” Id. It concluded, however, that this lack of 

consensus “should not preclude ISO-NE from providing its 

position on issues affecting the New England electricity 

markets to various officials, including legislators and those in 

the executive branches of government, who need, and often 

seek out, ISO-NE as an independent informational resource.” 

Id. Given the potential impingement of government action on 

all stakeholders, we can see nothing arbitrary in FERC’s 

facilitating ISO-NE’s efforts to express its perceptions even in 

the absence of stakeholder unanimity, and even on “highly 

controversial subject matters.” ISO-NE, 117 FERC ¶ 61,070 

at P 49. 

Nor do we see anything unreasonable in FERC’s 

classification of communications for which recovery was 

proper. ISO-NE plays a critical role in the administration of 

New England’s power markets and it seems eminently 

reasonable to encourage legislature access to such an 

informational resource. Similarly, FERC’s conclusion 

allowing recovery of ISO-NE’s costs in monitoring legislative 

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activity, so that it may consider how such activity might affect 

its operations, appears quite reasonable. 

In attacking FERC’s remark about ISO-NE’s absence of 

profit motive, and the suggestion that it “seeks only to provide 

reliable service at the lowest reasonable cost,” BRT points to 

NSTAR Electric & Gas Corp., where we said that FERC had 

failed to identify “incentives driving ISO-NE to bargain for 

low prices.” 481 F.3d at 803. But there FERC appeared to 

have abdicated its role of verifying the reasonableness of 

prices paid by an ISO. Here FERC did investigate the 

expenditures in question (there is no claim that they were 

extravagant), reviewing mounds of material from ISO-NE, 

and found that “no party has provided any evidence that ISONE has acted imprudently or contrary to its core purpose and 

objectives.” ISO-NE, 118 FERC ¶ 61,105 at P 21. BRT’s 

allegation that FERC could act in neglect of its members’ 

aggregated interests appears irrelevant in light of this finding. 

BRT’s remaining non-constitutional claim is that FERC 

lacked substantial evidence for its conclusion that ISO-NE’s 

expenditures really did fit on the recoverable side of the line 

FERC drew. Specifically, BRT argues that FERC’s 

conclusion is undermined by its reliance on what BRT calls 

ISO-NE’s “characterizations” of its communications with 

governmental bodies, and its decision to proceed by paper 

hearing. 

In fact ISO-NE submitted a detailed mass of its actual

communications, in the form of speeches, correspondence, 

PowerPoint presentations and hand-outs. These 

communications add up to nearly 600 pages, J.A. 1077–1661, 

and are introduced with a 35-page affidavit by ISO-NE’s 

Director of External Affairs, Carolyn O’Connor, J.A. 1041–

75. Far from being characterizations, these are ISO-NE’s 

communications. BRT gives us no reason to think there have 

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been any material omissions, with the possible exception of 

ISO-NE’s relations with FERC itself. 

As to those relations, FERC noted that ISO-NE was 

entitled, like any other utility, to meet with the Commission 

and other regulators to pursue its legitimate interests. It said, 

“ISO-NE’s contacts with the Commission are strictly 

regulatory in nature; it is appropriate for ISO-NE as a public 

utility to recover costs of regulatory contacts.” ISO-NE, 118 

FERC ¶ 61,105 at P 30. FERC’s own guidelines entitle ISONE “to meet with the Commission . . . to pursue its legitimate 

interests and to recover the expenses associated with such 

activities.” Id. (citing 18 C.F.R. Part 101, Account No. 928 

(2006)). And Account 426.4 also explicitly excludes

“expenditures which are directly related to appearances before 

regulatory . . . bodies in connection with the reporting utility’s 

existing or proposed operations.” See Expenditures for 

Political Purposes-Amendment of Account 426, 30 FPC 1539, 

1540 (1963) (internal quotations omitted). Thus, unlike other 

government communications expenditures, FERC’s guidelines 

already provided that dealings with FERC generally need not 

be subject to increased scrutiny. The mere possibility that 

ISO-NE could have inappropriately dealt with FERC, which 

would be inconsistent with the evidence on its dealings with 

other governmental bodies, neither undermines FERC’s 

conclusions nor calls for additional procedures beyond the 

“paper hearing.” See Central Maine Power Co. v. FERC, 252 

F.3d 34, 46–47 (D.C. Cir. 2001) (gathering cases where courts 

have approved “hearings by affidavit and nothing more” so 

long as any “genuine issues of material fact can be adequately 

resolved on the written record” (internal quotations omitted)). 

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* * * 

BRT argues next that even if FERC’s holding was 

reasonable in light of its precedent and the evidence, FERC’s 

decision that BRT and ISO-NE’s other customers must pay 

for ISO-NE’s external affairs expenditures contravenes the 

First Amendment’s prohibition of compelled speech. 

In rejecting BRT’s claim, the Commission held both that 

there was no state action, the essential predicate for 

application of the compelled speech doctrine, ISO-NE, 114 

FERC ¶ 61,315 at P 26, and also that, even if there were state 

action, ISO-NE’s disputed communications were “germane” 

to the goals for which it had been created, so that the 

Commission could lawfully approve the charges without 

providing dissenters an opt-out right or other remedy, id. at P 

39. 

We pass on the state action issue. On that, FERC relied 

on the Supreme Court’s decision in Jackson v. Metropolitan 

Edison Co., 419 U.S. 345 (1974), in which the Court found no 

state action in state courts’ enforcement of a tariff filed by a 

heavily regulated utility enjoying a state-sanctioned monopoly 

over the provision of electricity. Id. at 351–52; ISO-NE, 114 

FERC ¶ 61,315 at P 26. On the other hand, the Court held 

soon after, in Abood v. Detroit Board of Education, 431 U.S. 

209 (1977), that where a state conditioned state employment 

on membership in a union, it could not, consistently with the 

First Amendment, allow the union to coerce dues payments to 

fund the expression of political or ideological views “not 

germane to [the union’s] duties as collective-bargaining 

representative.” Id. at 235–36. Jackson was not a First 

Amendment case, though we are uncertain whether the 

concept of state action varies with the specific right at stake. 

In any event, under Abood and kindred cases, a government 

may adopt rules making it very costly for a person to avoid 

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membership in a group, and yet allow the group to charge 

members (including dissenters) for the costs of expressing 

views “germane” to the group’s mission. See, e.g., Keller v. 

State Bar of Cal., 496 U.S. 1, 13 (1990). Given the possibility 

that customers of a government-sanctioned monopoly might 

be regarded as analogous, we will assume state action

arguendo and move directly to germaneness. 

Expenditures are “germane” to an organization’s purpose 

where they “are necessarily or reasonably incurred for the 

purpose” of the organization. Id. at 14 (quoting Ellis v. 

Railway Clerks, 466 U.S. 435, 448 (1984)). BRT’s argument 

here largely replicates its earlier contentions about FERC’s 

understanding of ISO-NE’s incentives. It argues that the 

finding of germaneness rests on the “untenable fiction that 

ISO-NE’s interests do not diverge from those of its customers 

because it does not have a profit motive.” Petr. Br. 45. Again 

it notes our observation in NSTAR, 481 F.3d at 803, that 

FERC had not identified incentives inducing ISO-NE to 

bargain for low prices. 

The argument fails for the same reason that it did in the 

prior context: FERC did not merely assume that any and all 

expenditures would be germane to ISO-NE’s mission, but 

reviewed and analyzed the actual content of ISO-NE’s 

communications. BRT harps on ISO-NE’s having adopted 

some highly contentious positions, but fails to show why they 

must be perceived as outside its mission. For example, it 

points to ISO-NE’s position on locational installed capacity 

and proposed mergers of grid operators as issues that “became 

controversial largely because ISO-NE is notoriously cost 

indifferent.” See Petr. Br. 29. But FERC directed ISO-NE to 

develop a locational capacity proposal, see Devon Power 

LLC, 103 FERC ¶ 61,082 at P 37 (2003), order on reh’g, 104 

FERC ¶ 61,123 (2003), and at one point directed ISO-NE to 

attempt to merge with other system operators in the Northeast, 

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see Regional Transmission Organizations, 96 FERC ¶ 61,065 

at P 61, 282 (2001) (“the Commission concludes that it is 

necessary that the three independent system operators in the 

Northeastern United States combine to form one Regional 

Transmission Organization”), though it later vacated that 

order because of subsequent events, RTO Informational 

Filings, 104 FERC ¶ 61,296 at PP 5–7 (2003). No matter 

what BRT thinks of the positions ISO-NE ultimately adopted 

on these measures, the fact that FERC at one point thought 

them necessary to the efficient administration of New 

England’s power markets is strong evidence that they are 

germane to ISO-NE’s mission. Above all, FERC analyzed the 

content of ISO-NE’s communications on various issues, 

including locational installed capacity, before concluding that 

“in providing information on these subjects, ISO-NE was 

attempting to benefit its market participants.” ISO-NE, 117 

FERC ¶ 61,070 at P 49 & n.70. 

Thus it is simply not the case that FERC rested its 

germaneness finding on an assumption that ISO-NE, as a nonprofit entity, necessarily worked in the aggregate interests of 

its customers. Rather, the conclusion was based on its 

appraisal of the communications in the light of ISO-NE’s role 

in the administration of New England’s power supply. We 

agree with FERC that the approval of ISO-NE’s rates did not 

violate the First Amendment. 

* * * 

Finally, we turn to BRT’s argument that FERC abused its 

discretion in making clear that its requirement of monthly 

website disclosures did not encompass “briefings, responses 

to inquiries, and similar activities” by ISO-NE. ISO-NE, 118 

FERC ¶ 61,105 at P 39. Perhaps because of the multiplicity 

of potentially relevant factors and the broad range of choices, 

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we approach agencies’ decisions on remedies with exceptional 

deference. See, e.g., Louisiana Public Service Commission v. 

FERC, 522 F.3d 378, 393 (D.C. Cir. 2008); Niagara Mohawk 

Power Corp. v. FPC, 379 F.2d 153, 159 (D.C. Cir. 1967). 

FERC’s theory in excluding such communications was 

that they were “an integral part of ISO-NE’s regulatory or 

public informational responsibilities and therefore, should not 

be fettered by additional reporting requirements.” ISO-NE, 

118 FERC ¶ 61,105 at P 39. BRT argues on appeal that 

because FERC has admitted that the dividing line between 

educational and informational expenditures on the one hand 

and lobbying expenditures on the other is not clear, FERC’s 

reporting mandate should be broader, so as to provide the 

transparency necessary to protect ISO-NE’s customers from 

excess charges. 

In light of the substantial deference afforded FERC in this 

matter, we find that FERC’s proposed remedy is reasonable. 

In its clarification order FERC recognized that the distinction 

between types of external communications was not easy to 

draw, and hence refused to allow ISO-NE’s own 

categorization of expenses as either “external affairs” or 

“corporate communications” to determine what was included 

in the monthly reporting requirements. Id. at P 41. 

Furthermore, the communications FERC excluded from the 

reporting requirement included such activities as “questions 

from Commission staff about uncontested ISO filings” and 

“providing information to state and federal, executive and 

legislative officials regarding the status of New England’s 

bulk-power system.” Id. at P 39. Such exclusions would 

presumably still require reporting of any meetings ISO-NE is 

involved in that could promote specific legislation or policy 

initiatives, which are the primary types of communication 

BRT seems to find objectionable. Finally, FERC explained 

that the purpose of its initial order was not to provide 

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exhaustive lists of information, but rather “to provide 

stakeholders information regarding the nature of activities 

undertaken by ISO-NE and, therefore, the opportunity to seek 

further information from ISO-NE.” Id. at P 42. FERC thus 

imposed on ISO-NE the expectation that, “if requested, ISONE will provide copies of any documents that it prepared for 

or distributed at meetings with public officials.” Id. 

As clarified, FERC’s posting directive appears to be a 

reasonable balance of competing interests. ISO-NE has to 

disclose the most objectionable forms of communications, but 

will not be unduly bogged down with requirements likely to 

prove pointless. And of course, if the remedy proves 

inadequate or ISO-NE fails to comply, BRT is free to pursue 

additional remedies with FERC. 

* * * 

The appeals in Nos. 04-1335 and 05-1212 are dismissed 

(see supra at 6), and FERC’s orders approving ISO-NE’s 

tariffs for 2005 and 2006 are 

Affirmed. 

USCA Case #06-1144 Document #1154244 Filed: 12/16/2008 Page 17 of 17