Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-04-01020/USCOURTS-caDC-04-01020-0/pdf.json

Parties Involved:
DTE Energy Company
Petitioner
Dearborn Industrial Generation, LLC
Terminated Party
Federal Energy Regulatory Commission
Respondent
International Transmission Company
Intervenor for Petitioner
The Detroit Edison Company
Petitioner

Document Text:

Notice: This opinion is subject to formalrevision before publication in the

FederalReporterorU.S.App.D.C. Reports. Users are requested to notify the

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bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 6, 2004 Decided January 14, 2005

No. 04-1020

DTEENERGY COMPANY AND

DETROIT EDISON COMPANY,

PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

DEARBORN INDUSTRIAL GENERATION, LLC AND

INTERNATIONAL TRANSMISSION COMPANY,

INTERVENORS

On Petition for Review of Orders of the

Federal Energy Regulatory Commission

Michael C. Griffen argued the cause for petitioners. With

him on the briefs was John D. McGrane.

Beth G. Pacella, Attorney, Federal Energy Regulatory

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 1 of 17
2

1

 See Promoting Wholesale Competition Through Open

Access Non-Discriminatory Transmission Services by Public Utilities;

Recovery of Stranded Costs by Public Utilities and Transmitting

Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), FERC

Stats. & Regs. ¶ 31,036 at 31,783-84 (1996), order on reh'g, Order

No. 888-A, 62 Fed. Reg. 12,274 (March 14, 1997), FERC Stats. &

Regs. ¶ 31,048 at 30,336 (1997), order on reh'g, Order No. 888- B, 81

F.E.R.C. ¶ 61,248 (1997), order on reh'g, Order No. 888-C, 82

F.E.R.C. ¶ 61,046 (1998), aff'd in relevant part sub nom. Transmission

Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000),

aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002) (“Order No.

Commission, argued the cause for respondent. On the brief

were Cynthia A. Marlette, General Counsel, Dennis Lane,

Solicitor, and Lona T. Perry, Attorney.

Before: GINSBURG, Chief Judge, and ROGERS and ROBERTS,

Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: The DTE Energy Company and the

Detroit Edison Company (“Detroit Edison”) petition for review

of three orders of the Federal Energy Regulatory Commission

ruling that certain distribution and interconnection facilities are

transmission facilities subject to the Commission’s exclusive

jurisdiction. DTE’s petition is not properly before the court

because it failed to seek rehearing or petition for review of its

aggrieving order. See 16 U.S.C. § 825l(b). Detroit Edison’s

petition for review of two orders is properly before the court,

and it contends the Commission acted arbitrarily and

capriciously because the facilities at issue are “dual-use” local

distribution/transmission facilities and should therefore be

subject to the shared jurisdiction of the Commission and the

State of Michigan. Ordinarily, this would occasion our review

of the Commission’s application of its seven-factor

jurisdictional test adopted in Order No. 888,1 which the

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 2 of 17
3

888").

2

 The seven factors, which the Commission stated it “will

evaluate in determining whether particular facilities are transmission

or local distribution in the case of vertically integrated transmission

Commission asserts it applied here. However, because Detroit

Edison failed to argue in its petition for rehearing that the

Commission misapplied the seven-factor test, the court lacks

jurisdiction to consider it now. Instead, Detroit Edison raised on

rehearing, as it does on appeal, a substantial evidence challenge

to the Commission’s factual findings and a collateral attack on

the Commission’s single-jurisdictional approach. Accordingly,

we deny the petition because the Commission’s findings in

support of its jurisdictional conclusion are supported by

substantial evidence in the record and its collateral attack is

precluded. 

I.

A.

Section 201 of the Federal Power Act (“FPA”), 16 U.S.C.

§ 824(b)(1), empowers the Commission to regulate both

wholesale sales of electric energy in interstate commerce and

interstate electric energy transmissions, by vesting it with

“jurisdiction over all facilities for such transmission or sale of

electric energy.” It also reserves regulatory authority to the

states over bundled retail transactions, including the intrastate

sale and distribution of electricity through local distribution

facilities. Id. In Transmission Access Policy Study Group v.

FERC, 225 F.3d 667 (D.C. Cir. 2000) (“TAPS”), the court

affirmed Order No. 888 in relevant part, deferring to the

Commission’s interpretation of Section 201 of the FPA to

accommodate new industry practices and conditions. Id. at 694-

95. In Order No. 888, the Commission adopted a seven-factor

jurisdictional test to identify unbundled retail-wheeling facilities

primarily engaged in local distribution; the Commission claimed

exclusive jurisdiction over all other facilities.2 Id. at 691.

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 3 of 17
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and distribution facilities,” are:

(1) Local distribution facilities are normally in close

proximity to retail customers.

(2) Local distribution facilities are primarily radial in

character.

(3) Power flows into local distribution systems; it rarely, if

even, flows out.

(4) When power enters a local distribution system, it is not

reconsigned or transported on to some other market.

(5) Power entering a local distribution system is consumed in

a comparatively restricted geographical area.

(6) Meters are based at the transmission/local distribution

interface to measure flows in the local distribution system.

(7) Local distribution systems will be of reduced voltage.

Order No. 888 at 31,981. 

3

 E.g., Am. Serv. Co., 106 F.E.R.C. ¶ 63,001 (2004); Puget

Sound Energy, Inc., 104 F.E.R.C. ¶ 61,272, 61,909 (2003); Akin,

Gump, Strauss, Hauer & Feld, LLP, 95 F.E.R.C. ¶ 61,375, 62,403

(2001); Mansfield Mun. Elec. Dep’t and N. Attleborough Elec. Dep’t,

94 F.E.R.C. ¶ 63,023 (2001). 

Thereafter, in New York v. FERC, 535 U.S. 1 (2002), the

Supreme Court affirmed. By rejecting New York’s contention

that the dividing line between regulatory authority of the states

and the Commission falls between wholesale and retail markets,

id. at 17, the Court implicitly approved the Commission’s

single-jurisdictional approach over multi-use unbundled retailwheeling facilities, see id. at 22-23. 

Accordingly, the Commission has applied Order No. 888's

seven-factor test to determine jurisdictional authority over

utilities providing unbundled retail services.3 See TAPS, 225

F.3d at 691. When the Commission recently ignored the sevenfactor test to resolve such jurisdictional questions, the court

rejected, as contrary to the statute and precedent, the

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Commission’s attempt to expand its jurisdiction to set rates for

all services occurring over facilities used for both retail and

wholesale distribution, expressing concern that “the orders under

review totally ignore Order No. 888's carefully formulated

seven-factor test for distinguishing between local distribution

facilities and ‘FERC-jurisdictional facilities.’” Detroit Edison

Co. v. FERC, 334 F.3d 48, 54 (D.C. Cir. 2003) (“Detroit

Edison”).

 

B.

The instant appeal arises in the context of the Commission’s

efforts to establish a regional transmission organization (“RTO”)

to integrate the Midwest wholesale electricity market. In

response to rising energy costs in the Midwest, the Commission

facilitated the development of a Midwest RTO and the

integration of for-profit transmission companies to operate under

the RTO umbrella. See generally Pub. Util. Dist. No. 1 v.

FERC, 272 F.3d 607 (D.C. Cir. 2001). After evaluating

competing proposals, the Commission determined that Midwest

Independent Transmission System Operator, Inc. (“Midwest

ISO”) should serve as the foundation for the Midwest RTO. 

Detroit Edison and International Transmission (“IT”) were

both wholly owned subsidiaries of DTE Energy. Detroit Edison

operates as DTE Energy’s public utility, engaged in the

generation, transmission, and distribution of energy in Michigan.

DTE Energy Co., 91 F.E.R.C. ¶ 61,317, 62,909 (2000). DTE

Energy created IT with the purpose of acquiring ownership of

Detroit Edison’s transmission assets as a first effort to divest its

transmission business to an entity qualified to join the Midwest

RTO. See id. Thus, on May 4, 2000, DTE, Detroit Edison, and

IT sought and received the Commission’s authorization to

transfer Detroit Edison’s transmission facilities with voltage

ratings of 120 kV and above to IT. Id. Following the January

1, 2001 transfer, IT’s transmission facilities, interconnected with

those of Michigan Electric Transmission Company, together

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comprised substantially all of the Michigan Transmission grid.

Int’l Transmission Co., 97 F.E.R.C. ¶ 61,328, 62,534 (2001).

Pursuant to the Commission’s approval of Midwest ISO as

the regional RTO, IT applied for and received by Order of

December 20, 2001, the Commission’s authorization to transfer

to Midwest ISO functional control over IT’s jurisdictional

transmission facilities. When IT thereafter submitted an updated

list of jurisdictional facilities to be transferred to Midwest ISO,

CMS Marketing, Services and Trading Company (“CMS”)

protested, arguing that the list should include Detroit Edison’s

facilities interconnecting Dearborn Industrial Generation, LLC

(“DIG”) with IT—specifically, the 230 kV Navarre-DIG line

(“Navarre line”), the 230 kV Baxter-DIG line (“Baxter line”),

and the Baxter substation (collectively, “DIG

facilities”)—because these are the facilities by which DIG sells

electric energy to wholesale purchasers, and therefore are

Commission jurisdictional transmission facilities. Int’l

Transmission Co., 99 F.E.R.C. ¶ 61,211, 61,888 (“May22, 2002

Order”). 

By Order of May 22, 2002, the Commission found that the

Navarre and Baxter lines appear to perform a jurisdictional

transmission function because they are part of the

interconnection facility connecting DIG to the transmission grid,

and sought additional information from IT to inform the

Commission’s jurisdictional decision. Id. at 61,889. The

Commission found the Baxter substation should be included in

an updated list of IT’s transmission facilities as it had already

been included in the FERC Docket No. EC00-86 list of facilities

that Detroit Edison was transferring to IT, incorporated into the

December 20, 2001 Order. Id.

Detroit Edison moved to intervene and responded on July

16, 2002, conceding that the DIG facilities are, in part,

interconnection facilities used in wholesale sales from the DIG

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 6 of 17
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Plant, but contending they nevertheless were part of Detroit

Edison’s local distribution system. Noting that the Baxter and

Navarre lines had been developed and historically used to

provide retail distribution service to electric loads located in or

near the Rouge Industrial Complex in Dearborn pursuant to

retail tariffs and contracts, Detroit Edison maintained the

facilities were “dual-use” and should be subject to the shared

jurisdiction of Michigan and the Commission. Concerned that

classifying the facilities as transmission rather than local

distribution facilities would cause it to incur stranded costs,

Detroit Edison offered alternatively to transfer limited

operational control over the DIG facilities to Midwest ISO to the

extent necessary to effectuate wholesale sales. CMS again

protested, arguing the Navarre line serves as the primary point

of interconnection between DIG and IT from DIG’s inception,

and the Baxter line had been reconfigured to serve as a

secondary point of interconnection with IT; it appended an

analysis of power flows on the two lines. 

Then, on October 4, 2002, Detroit Edison submitted an

executed Agency Agreement between it and Midwest ISO that

sought to transfer limited functional control over the DIG

facilities to enable Midwest ISO to ensure the DIG generator

receives non-discriminatory service when using the facilities for

wholesale sales. In responding to a deficiency letter from

Commission staff, Detroit Edison explained that retail-load

customers must obtain retail-delivery service over the Detroit

Edison facilities under the state Retail Access Service Tariff

(“RAST”), and that ceding complete operational control to

Midwest ISO would render Detroit Edison unable to recover its

costs under the RAST, including the costs of the Baxter line.

DIG and CMS protested, arguing that the DIG facilities are an

integral part of the IT system and that points of interconnection

from the DIG facilities form a 230 kV loop rather than being

radial as is most common for local facilities; hence, the DIG

facilities should be subject to the Commission’s exclusive

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jurisdiction, and the Commission should reject the Agency

Agreement.

By Order of March 13, 2003, the Commission found that

the DIG facilities perform a transmission, not a statejurisdictional local distribution function. Detroit Edison Co.,

102 F.E.R.C. ¶ 61,282 (2003) (“March 13, 2003 Order”).

Specifically, the Commission found that the facilities are highvoltage facilities that together with the DIG ring bus, form a 230

kV loop through which power flows into and out of IT’s

interstate transmission facilities. Id. at 61,906. Noting further

that Michigan has implemented retail access for all customers of

Michigan’s investor-owned utilities, the Commission found that

retail customers are entitled to receive unbundled retail access

pursuant to a Commission-approved tariff. Id. Additionally, the

Commission found that DIG, interconnected by the DIG

facilities to IT, is selling all its output at wholesale. Id. Based

on these factual findings, the Commission concluded that the

DIG facilities primarily function as transmission facilities, and

full operational control should be transferred to Midwest ISO.

Id. It noted, however, that Detroit Edison should be able to

collect its RAST through state-approved charges, and that

although “in most cases there will be identifiable local

distribution facilities subject to state jurisdiction, we also believe

that even when there are no identifiable local distribution

facilities, states nevertheless have jurisdiction in all

circumstances over the service of delivering energy to end

users.” Id. In its April 11, 2003 Order, International

Transmission Co., 103 F.E.R.C. ¶ 61,041 (2003) (“April 11,

2003 Order”), the Commission accepted DTE and IT’s

compliance filing with modifications to reflect transfer of the

DIG facilities to Midwest ISO; it also affirmed its findings in its

March 13, 2003 Order. 

Finally, by Order of November 17, 2003, the Commission

denied, in relevant part, DTE’s and Detroit Edison’s petitions

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for rehearing of the March 13, 2003 and April 11, 2003 Orders,

stating that both parties had presented the same arguments as

before without offering any new evidence. Detroit Edison Co.,

105 F.E.R.C. ¶ 61,209, 62,084 (2003) (“November 17, 2003

Rehearing Order”). In seeking rehearing, Detroit Edison

conceded that the DIG facilities are high-voltage facilities that

together with DIG’s ring bus form a 230 kV loop configuration,

and that power can flow into and out of the facilities, but it

argued that the DIG facilities also perform a retail distribution

function, which should be subject to state jurisdiction. Detroit

Edison also moved to reopen the record to include a recent

Michigan Public Service Commission order, which it contended

supports its view that the facilities perform a retail distribution

function. The Commission explained that while local

distribution lines may exist, the record demonstrated the DIG

facilities were not local distribution facilities. This finding, the

Commission observed, “is consistent with the seven-factor test

outlined in Order No. 888 for classifying facilities as

transmission or local distribution.” Id. at 62,084-85. The

Commission denied Detroit Edison’s motion to reopen the

record for failure to show an extraordinary change in

circumstances outweighing the need for finality and going to the

heart of the case. Id. at 62,086. The Commission also noted

that deference to a state commission’s classification was

inappropriate here because the Michigan Public Service

Commission order did not discuss or apply the seven-factor test

or reclassify the DIG facilities. Id.

II.

On appeal, DTE and Detroit Edison challenge the

Commission’s May 22, 2002 and March 13, 2003 Orders and

the November 17, 2003 Rehearing Order. We first address two

jurisdictional issues.

A.

Section 313(a) of the FPA provides that “[a]ny person . . .

aggrieved by an order issued by the Commission . . . may apply

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for a rehearing . . . ,” but “[n]o proceeding to review any orders

of the Commission shall be brought by any person unless such

a person shall have made application to the Commission for a

rehearing thereon.” 16 U.S.C. § 825l(a). A party may only

obtain judicial review of an aggrieving order, in accordance with

section 313(b), “within sixty days after the order of the

Commission upon the application for rehearing.” Id. § 825l(b).

Neither the court nor the Commission has the discretion to

ignore this “‘express statutory limitation on the jurisdiction of

the court.’” Calif. Dep’t of Water Res. v. FERC, 306 F.3d 1121,

1125 (D.C. Cir. 2002) (quoting Tenn. Gas Pipeline Co. v. FERC,

871 F.2d 1099, 1107 (D.C. Cir. 1989)); Granholm ex rel. Mich.

Dep’t of Natural Res. v.FERC, 180 F.3d 278, 280-82 (D.C. Cir.

1999). 

DTE Energy petitions for review of the Commission’s May

22, 2002 Order, for which it did not seek rehearing before the

Commission, but fails to challenge the April 11, 2003 Order, by

which it is aggrieved. Hence, DTE Energy is not a proper party

to these proceedings. In the May 22 Order, the Commission

conditionally accepted the compliance filing by DTE Energy

and IT submitted pursuant to the Commission’s December 20,

2001 Order, but directed DTE Energy to submit further

information in response to CMS’s protest regarding the

exclusion of the Navarre and Baxter lines as transmission

facilities in the filing. It was not until the April 11 Order, in

which Detroit Edison intervened, that the Commission accepted

DTE Energy’s compliance filing with modifications directing

DTE Energy, IT, and Detroit Edison to revise their filings to

include the DIG facilities as jurisdictional transmission facilities

to be transferred to Midwest ISO for operational control. April

11, 2003 Order, 103 F.E.R.C. at 61,666-67. 

DTE’s failure to seek rehearing of the May 22, 2002 Order

is fatal to its challenge of that Order in its petition for review.

16 U.S.C. § 825l(a); Cal. Dep’t of Water Res., 306 F.3d at 1125.

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 10 of 17
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The mandatory requirement of filing a petition for rehearing is

designed to afford the Commission an opportunity to invoke its

expertise or to correct any errors prior to judicial review, and the

court cannot consider DTE’s challenge to the May 22 Order

anew. See Granholm, 180 F.3d at 281. It is unsurprising,

however, that DTE Energy did not petition for rehearing of the

May 22 Order because it is the April 11 Order, instead, by which

it is aggrieved. As the court has explained, “[a] party is

aggrieved within the meaning of § 313(b) if it can establish both

the constitutional and prudential requirements for standing.”

Pub. Util. Dist. No. 1, 272 F.3d at 613 (citations omitted). DTE

Energy can show no injury-in-fact, see id. (citing Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560 (1992)), as a result of

the May 22 Order, because it was conditional, subject to a

further compliance filing, and thus was without binding effect

onDTE Energy. Cf. Cal. Dep’t of Water Res., 306 F.3d at 1126.

It was not until the Order of April 11, 2003, when the

Commission accepted the compliance filing, that DTE Energy

could demonstrate actual injury. See La. Energy & Power Auth.

v. FERC, 141 F.3d 364, 367 (D.C. Cir. 1998). But while DTE

Energy sought rehearing of the April 11 Order, its petition for

review by the court challenges only the November 17, 2003

Rehearing Order. Because DTE Energy failed to identify the

aggrieving order in its petition for review, the court cannot

consider DTE’s challenge to the Commission’s November 17,

2003 Rehearing Order. City of Oncoto Falls v. FERC, 204 F.3d

1154, 1159-60 (D.C. Cir. 2000). Consequently, only Detroit

Edison’s petition for review of the March 13, 2003 Order and

November 17, 2003 Rehearing Order are properly before the

court.

B.

Section 313(b) of the FPA provides that “[n]o objection to

the order of the Commission shall be considered by the court

unless such objection shall have been urged before the

Commission in the application for rehearing unless there is

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 11 of 17
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reasonable ground for failure to do so.” 16 U.S.C. § 825l(b).

This well-settled principle is “an unusually strict requirement

that will not be ignored by the courts,” even absent an objection

by the Commission. Wabash Valley Power Ass’n, Inc. v. FERC,

268 F.3d 1105, 1114 (D.C. Cir. 2001); see also High Country

Res. v. FERC, 255 F.3d 741, 745-46 (9th Cir. 2001). 

While Detroit Edison sought rehearing of the March 13,

2003 Order, by which it is aggrieved, it did not argue in its

petition for rehearing before the Commission that the

Commission misapplied the seven-factor test. Instead, it raises

the argument for the first time in its reply brief to the court.

Detroit Edison fails to offer any grounds, let alone reasonable

grounds, under section 313(b) of the FPA to excuse its failure to

raise this argument before the Commission on rehearing. See

OMYA, Inc. v. FERC, 111 F.3d 179, 181 (D.C. Cir. 1997).

However, while the Commission argues in its brief on appeal

that it applied the seven-factor test in the analysis of the March

13, 2003 Order, it did not expressly reference the test until the

Rehearing Order. Even then the Commission did not state it was

applying the seven-factor test, commenting only that its factual

conclusions are “consistent with the seven-factor test.”

November 17, 2003 Rehearing Order, 105 F.E.R.C. at 62,084.

This language is hardly consistent with the Commission’s

statement in Order No. 888 that it “will apply” its jurisdictional

test. Order No. 888 at 31,980. Nevertheless, Detroit Edison

acknowledged the applicability of the seven-test in footnote 42

of its petition for rehearing and could have challenged the

Orders on that ground, citing Detroit Edison as support; instead

it argued that, contrary to the Commission’s findings, the

evidence showed the DIG facilities were “dual-use” facilities

and not subject to the Commission’s exclusive jurisdiction.

Detroit Edison’s failure to challenge the seven-factor analysis

earlier is understandable, in part, because, as counsel for the

Commission stated during oral argument, Detroit Edison is not

seeking to have the Commission apply the seven-factor test but

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to have the Commission classify the facilities as “dual-use”

subject to shared jurisdictional control. But the Commission’s

single-jurisdictional approach, identifying the primary function

of a facility, has been judicially approved as a reasonable means

of resolving regulatory ambiguity under section 201 of the FPA,

see New York v. FERC, 535 U.S. 1; TAPS, 225 F.3d 667, and

Detroit Edison’s attempted collateral attack fails to argue why

TAPS (and other precedents endorsing the jurisdictional test of

Order No. 888) is not controlling. Whatever the reason for the

omission, Detroit Edison has waived any argument that the

Commission failed properly to apply its seven-factor test. See

High Country Res., 255 F.3d at 746-47; OMYA, 111 F.3d at 181.

Accordingly, the only issue within the court’s jurisdiction

is Detroit Edison’s contention that the Commission’s findings in

support of its exclusive jurisdictional determination are

unsupported by the record evidence and that the Commission

therefore acted arbitrarily and capriciously in asserting exclusive

jurisdiction over the facilities.

III.

The court will uphold the Commission’s orders unless they

are arbitrary and capricious, an abuse of discretion, or otherwise

not in accordance with the law. 5 U.S.C. § 706(2)(A); see also

Sithe/IndependencePowerPartners v.FERC,165 F.3d 944,948

(D.C. Cir. 1999); Transcontinental Gas Pipe Line Corp. v.

FERC, 54 F.3d 893, 898 (D.C. Cir. 1995). The Commission’s

findings of fact will be upheld if they are supported by

substantial evidence in the record and the connection between

the factual findings and conclusion drawn is apparent. Jifry v.

FAA, 370 F.3d 1174, 1181 (D.C. Cir. 2004) (citing Burlington

Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962));

Trans Alaska Pipeline Sys., 80 F.E.R.C. ¶ 63,015, 65,232-33

(1997). Substantial evidence includes such relevant evidence as

a reasonable person may accept as proof of a conclusion. Id.

(citing Universal Camera Corp. v. NLRB, 340 U.S. 474, 477

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 13 of 17
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(1981) (quotingConsol. Edison Co. v. NLRB, 305 U.S. 197, 229

(1938))). 

In the March 13, 2003 Order, the Commission found that

“the [f]acilities perform a transmission function and not a statejurisdictional local distribution function because: (1) the

[f]acilities are at a high-voltage level; (2) the Navarre-DIG line

and the Baxter-DIG line are both 230 kV lines, and along with

the DIG ring bus, form a 230 kV loop configuration; and (3)

power flows into and out of the loop configuration.” 102

F.E.R.C. at 61,906. The Commission found that the DIG, which

is interconnected by the facilities to IT, is selling all its output

at wholesale. It affirmed these findings on rehearing, explaining

that:

Although local distribution lines may exist within the

Rouge Industrial Complex where Detroit Edison states

that it serves retail customers, the record demonstrates

that the [f]acilities are not local distribution facilities.

. . . Power flows into and out of the [f]acilities, making

them looped transmission facilities, i.e., not radial in

character like those of local distribution facilities.

With the DIG facility interconnected to the grid and

given the network configuration, the [f]acilities have

the capacity to transmit energy to other markets outside

the geographical area.

November 17, 2003 Rehearing Order, 105 F.E.R.C. at 62,084.

The Commission noted that Detroit Edison had previously

characterized the Baxter 230 kV switch as transmission and that

the Navarre line connects to the IT systems and thus to the

transmission grid, such that it also operates as a looped 230 kV

transmission line. Id. at 62,085. 

As on appeal, Detroit Edison argued in its petition for

rehearing that the Commission’s jurisdictional conclusion was

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wrong in two respects: First, the facilities perform dual

functions, i.e., transmission and retail distribution, and second,

because of this record showing, the facilities should be subject,

at least in part, to shared jurisdiction by Michigan. Pointing to

the “substantial evidence” provided in its pleadings, Detroit

Edison argued that the facilities were constructed at the request

of the DIG and Rouge complex customers to provide them with

local-distribution service and that Detroit Edison continues to

use the DIG facilities to provide retail-access service to end-use

customers. It did not, however, dispute the Commission’s

factual findings that the facilities are high voltage and together

with DIG’s ring bus facilities (and facilities owned by Ford and

Rouge at their plant sites at the Rouge complex) form a 230 kV

loop configuration, such that power can flow into and out of the

facilities. But, as on appeal, Detroit Edison instead argued that

the Commission failed to address the evidence of the facilities’

“dual-use” and that no record evidence contradicts Detroit

Edison’s showing. 

In fact, on rehearing the Commission acknowledged that

“local distribution lines may exist within the Rouge Industrial

Complex where Detroit Edison states that it serves retail

customers.” Id. at 62,084. Critical to the Commission was that

“the record,” described in its March 13, 2003 Order, which was

affirmed on rehearing, “demonstrates that the [f]acilities are not

local distribution facilities.” Id. Moreover, “neither Detroit

Edison nor DTE has proffered any additional evidence on

rehearing that shows otherwise,” id.; nor did Detroit Edison

dispute the factual findings on which the Commission relied for

its jurisdictional conclusion. For these reasons, the Commission

explained it disagreed with Detroit Edison’s view that the

facilities are “dual-use,” rather than transmission facilities.

On appeal, Detroit Edison’s reliance on the historical

distribution function performed by the facilities is misplaced

because the historical purpose or alleged intended use of the

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facilities does not speak to the issue at hand, which is their

present primary function. Detroit Edison’s further contention

that the looped nature of the facilities arises only because of the

configuration of third-party facilities is forfeited because it

failed to raise this argument before the Commission. See supra

Part II B. Although Detroit Edison cites its rehearing request of

the March 13, 2003 Order, its request never argued that the

Commission should have found the DIG facility lines radial

because the facilities were owned by others; rather, its argument

was that if the Commission found the DIG facilities to be

jurisdictional, the Commission should also find the Ford and

Rouge facilities completing the loop jurisdictional as well to

avoid discriminatory impact on Detroit Edison. In any event,

whether Detroit Edison owns all the facilities in the loop is

beside the point as the determinative question is whether the

facilities it does own, as presently configured, perform a

transmission function. Nothing in Detroit Edison, 334 F.3d 48,

on which Detroit Edison now relies in claiming the

Commission’s findings are contrary to its holding, is to the

contrary. That case is factually distinguishable, because the

Commission, without reference to the seven-factor jurisdictional

test of Order No. 888, had asserted jurisdiction over all facilities

except those used exclusively in local distribution. See id. at 54.

Finally, there is no merit to Detroit Edison’s contention that

the Commission erred by failing to reopen the proceedings to

consider the order of the Michigan Public Service Commission.

In accordance with Order No. 888, the Commission defers to a

state commission classification of facilities when such entities

“‘specifically evaluate the seven factor indicators and any other

facts,’” in making their determination. November 17, 2003

Rehearing Order, 105 F.E.R.C. at 62,086 (citing Order No. 888

at 31,784 & n.4). Detroit Edison acknowledges that order did

not purport to apply the seven-factor test of Order No. 888 or to

reclassify the facilities. Hence, the Commission had no

obligation to consider it.

USCA Case #04-1020 Document #870898 Filed: 01/14/2005 Page 16 of 17
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Accordingly, we deny the petition for review.

So ordered.

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