Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-03-01023/USCOURTS-caDC-03-01023-0/pdf.json

Parties Involved:
Alabama Public Service Commission
Intervenor for Petitioner
Federal Energy Regulatory Commission
Respondent
Georgia Public Service Commission
Amicus Curiae for Petitioner
Southern Company Services, Inc.
Petitioner
Tenaska, Inc.
Intervenor

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 10, 2004 Decided December 10, 2004

No. 02-1199

ENTERGY SERVICES, INC.,

PETITIONER

V.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

SOUTHERN COMPANY SERVICES, INC., ET AL.,

INTERVENORS

Consolidated with

02-1336, 02-1375, 03-1023

On Petitions for Review of an Order of the

Federal Energy Regulatory Commission

J. Wayne Anderson argued the cause for petitioners.

With him on the briefs were Floyd L. Norton, IV., Heath K.

Knakmuhs, S. Chris Still, Kevin A. McNamee, and Gerard A.

Clark. Andrew W. Tunnell and Matthew W. Estes entered

appearances.

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Thomas D. Samford, IV, was on the brief for Alabama

Public Service Commission in support of petitioner and reversal

of orders.

Marlene K. Stern was on the brief of amicus curiae

Florida Public Service Commission in support of petitioner and

urging reversal. With her on the brief was David E. Smith.

Harold A. McLean entered an appearance.

Thurbert E. Baker, Attorney General, Attorney General's

Office of the State of Georgia, and Daniel S. Walsh, Assistant

Attorney General, were on the brief for amicus curiae Georgia

Public Service Commission in support of petitioner.

Dennis Lane, Solicitor, Federal Energy Regulatory

Commission, argued the cause for respondent. With him on the

brief were Cynthia A. Marlette, General Counsel, and Laura J.

Vallance, Attorney.

Ashley C. Parrish argued the cause for intervenor

Tenaska, Inc. With him on the brief was Neil L. Levy.

Before: SENTELLE, TATEL and ROBERTS, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Concurring opinion filed by Circuit Judge TATEL.

SENTELLE, Circuit Judge: Electricity utility companies

Entergy Services, Inc., Southern Company Services, Inc., and

Nevada Power Company, Inc., petition for review of various

orders of the Federal Energy Regulatory Commission in which

the Commission held that certain costs incurred by customers

connecting generators to petitioners’ networks must be “spread”

across all customers and not “directly assigned” to the respective

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generator companies. Specifically, the Commission found that

because the connection facilities in each case were located “at

or beyond” the point of connection to the network, they

constituted “network upgrades” not directly assignable to

individual generators.

Petitioners contend (1) that the Commission’s orders

should be reversed because they are unsupported by substantial

evidence, and (2) that the Commission’s orders should be

reversed because the “At or Beyond” rule constitutes an

arbitrary departure from Commission precedent. Because we

agree with Intervenor Tenaska, Inc. that Entergy and Southern

lack standing to pursue their claims, we limit our review to the

objections advanced by Nevada Power. However, because we

hold that the order from which Nevada Power petitions has not

adequately explained the Commission’s apparent departure from

prior practice, we vacate and remand that order for further

proceedings. 

I. Background

A. Regulatory Background

Petitioners in this case–Entergy Services, Inc.

(“Entergy”), Southern Company Services, Inc. (“Southern”), and

Nevada Power Co. (“Nevada Power”)–are electricity utility

companies that own transmission systems providing electricity

to large geographic regions. In order to foster a more

competitive, efficient market for electricity, federal regulation

requires that such “transmission providers” open their networks

to transmission customers–other sellers of electricity seeking to

supply power to their own customers. See Promoting Wholesale

Competition Through Open Access Nondiscriminatory

Transmission Services by Public Utilities; Recovery of Stranded

Costs by Public Utilities and Transmitting Utilities, Order No.

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888, FERC Stats. & Regs. ¶ 31,036 (1996), 61 Fed. Reg. 21,540

(“Order No. 888”), on reh’g, Order No. 888-A, FERC Stats. &

Regs. ¶ 31,048, 62 Fed. Reg.12,274 (1997), on reh’g, Order No.

888-B, 81 F.E.R.C. ¶ 61,248 (1997), on reh’g, Order No. 888-C,

82 F.E.R.C. ¶ 61,046 (1998), aff’d, 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).

In implementation of Order No. 888, the Commission

promulgated a pro forma Open Access Transmission Tariff

(“OATT”) that sets forth the minimum terms and conditions

under which transmission providers may offer their services to

would-be customers. See Order No. 888-A at 30,503-43

(including the final OATT); 18 C.F.R. § 35.28(c)(1) (requiring

public utilities owning, controlling, or operating facilities

transmitting electricity in interstate commerce to “have on file

with the Commission a tariff of general applicability for

transmission services” or a tariff approved by the Commission

consistent with Order No. 888).

Under this tariff regime, some costs incurred by an

interconnecting customer are borne by the respective customer,

while other costs are spread across all customers on the network.

In general, when a Generator of electricity connects to a

Transmission Provider’s network consistent with Order No. 888,

the Transmission Provider cannot require the Generator to bear

costs incurred for the development of equipment that benefits all

users of the network. Duke Energy Co., 95 F.E.R.C. ¶ 61,279 at

61,980 (2001). Such costs, spread across all customers, are

known as “network upgrades.” The Generator must initially

finance the costs, but upon completion of the interconnection

project the Transmission Provider spreads the cost among all

customers and rebates to the Generator its initial investment by

providing it with transmission credits against its tariff expenses.

By contrast, when a new Generator incurs cost developing

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equipment of no benefit to the existing customers, the costs are

assigned to the Generator alone. This is known as “direct

assignment,” and the equipment is known as “direct assignment

facilities.”

The specific tariff and other interconnection details are

finalized in an Interconnection Agreement (“IA”) between the

Transmission Provider and the Generator. IAs are drafted by the

parties and are submitted to the Commission for approval.

B. Factual Overview

The consolidated cases before this court arise from the

Commission’s disapproval of four IAs submitted for its

approval.

Entergy submitted an unexecuted IA to the Commission

on November 14, 2001. Amelia Energy Center, LP (“Amelia”)

was the other party to the agreement. At issue were two

connection facilities: (1) a new Switching Station section to

accommodate two new 230 kV radial power lines from the

Generators; and (2) the re-routing of three existing power lines.

The Commission held that the IA could not directly assign costs

for the facilities at issue to Amelia, because the facilities were

located “at or beyond” the point of interconnection with the grid,

and as such provided benefit to all users. See Entergy Gulf

States, Inc., 98 F.E.R.C. ¶ 61,014 (2002), reh’g denied, 99

F.E.R.C. ¶ 61,095 (2002). On June 14, 2002, the Commission

accepted Entergy’s proposed termination of the IA; prior to

termination, the IA was of indefinite duration.

Southern submitted two IAs for Commission approval.

It submitted its first IA, between its Alabama Power

transmission system and Blount County Energy, LLC

(“Blount”), on November 30, 2001. At issue was a replacement

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breaker at the Miller Steam Plant substation. The Commission

held that the cost of the breaker could not be directly assigned

to the Generator, in light of the “At or Beyond” rule. Southern

Company Services, Inc., Letter Order, Docket No. ER02-430-

000 (Jan. 25, 2002),reh’g denied, 100 F.E.R.C. ¶ 61,246 (2002).

On January 24, 2003, the Commission accepted Southern’s

request to terminate the Blount IA; prior to termination, the IA

was of a forty-year term, subject to prior termination by mutual

assent.

Southern submitted its second IA, between its Georgia

Power transmission system and Athens Development, LLC

(“Athens”), on June 5, 2002. At issue were three 115 kV

breakers at two Georgia Power substations. The Commission

held that the cost of the breakers could not be directly assigned

to Athens, in light of the “At or Beyond” rule. Southern

Company Services, Inc., Letter Order, Docket No. ER02-2015-

000 (July 30, 2002),reh’g denied, 101 F.E.R.C. ¶ 61,309 (2002).

On August 9, 2002, Southern filed a “Notice of Cancellation”

regarding the Athens IA. See Southern Company Services, 103

F.E.R.C. ¶ 61,279 (2003). The IA was cancelled effective

January 6, 2003, when the parties submitted a revised IA. Prior

to cancellation, the original IA was of a term of no less than ten

years, subject to exceptions.

Nevada Power submitted an unexecuted IA to the

Commission on May 29, 2002. GenWest, LLC (“GenWest”)

was the other party to the agreement. At issue was a “one line

terminal” to be added to Nevada Power’s Harry Allen 500 kV

Switchyard. The Commission held that the cost of the one line

terminal could not be directly assigned to GenWest, in light of

the “At or Beyond” rule. Nevada Power Co., 100 F.E.R.C. ¶

61,077 at 61,302 (2002) (“Nevada Power I”), reh’g denied, 101

F.E.R.C. ¶ 61,036 (2002) (“Nevada Power II”). Neither party

has cancelled the agreement. It is for a term of at least ten years,

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subject to exceptions.

Following these administrative proceedings, Entergy,

Southern, and Nevada Power filed these petitions for review.

II. Analysis

A. Jurisdiction

Three of the four IAs at issue in these consolidated cases

have been cancelled by the parties, with the consent of the

Commission. Therefore, the cases arising under those three

contracts are now moot, and we lack jurisdiction to hear these

petitions. Moreover, because petitioners fail to show injury in

fact resulting from the Commission’s “At or Beyond” rule per

se, they lack standing to challenge generally the Commission’s

policies that underlie those orders.

A challenge to a specific Commission order regarding an

interconnection agreement is moot when the contract is

terminated. Northwest Pipeline Corp. v. FERC, 863 F.2d 73,

76-77 (D.C. Cir. 1988) (“Obviously, the challenged rate terms

disappeared into the regulatory netherworld when the

certificates themselves entered the archives. . . . Thus, to the

extent it seeks [review of Orders affecting the certificates,

Petitioner’s] claim is, beyond reasonable dispute, moot.”). The

Entergy and Southern IAs have joined their predecessors in the

regulatory netherworld; Entergy and Southern bring no live

controversy to this court. Arguably, at least, the flaw in

jurisdiction over two of the IAs should be viewed entirely in

terms of standing rather than mootness, as Entergy and Southern

(with reference to its second petition) had already terminated

their IAs before seeking the assistance of an Article III court.

By way of comparison, in Advanced Management Technology,

Inc. v. FAA, 211 F.3d 633 (D.C. Cir. 2000), we had to decide

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whether standing or mootness doctrine applied in a situation

where the petitioner filed its challenge to the agency’s

termination of a contract after the agency had re-awarded the

contract to petitioner. “The claim may sound like one of

mootness–a justiciable controversy existed but no longer

remains–but the timing makes [Petitioner’s] problem one of

standing . . . . Standing is assessed ‘at the time the action

commences,’ i.e., in this case, at the time [Petitioner] sought

relief from an Article III court.” Id. at 636 (quoting Friends of

the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 191

(2000)) (internal citation omitted). In any event, we lack Article

III jurisdiction to consider their specific complaints.

Petitioners treat the justiciability analysis as a question

of mootness. Under the mootness analysis, Petitioners argue

that a challenge to agency action is not moot “where there is a

reasonable chance of the dispute arising again between the

government and the same [petitioner].” Legal Assistance for

Vietnamese Asylum Seekers v. Dep’t of State, 74 F.3d 1308,

1311 (D.C. Cir. 1996) (“LAVAS”), vacated on other grounds,

519 U.S. 1 (1997). Granted, we so held in LAVAS, but that is

not a parallel for the present case. In LAVAS, we noted that the

precedents upon which we relied therein stood “for the

proposition that the government cannot escape the pitfalls of

litigation by simply giving in to a plaintiff’s individual claim

without renouncing the challenged policy . . . .” Id. That is not

what happened in the petition before us today. The government

did not give in; Petitioners abandoned the petition. While it may

be true that the government cannot by selective surrender

establish mootness to prevent challenge to its policies, this does

not prevent mootness from occurring where the would-be

challengers have abandoned the case or controversy that they

would have us decide. The Entergy and Southern petitions fall

into the latter category, not the former. There is no ongoing case

or controversy. These challenges are moot.

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These Petitioners cannot take refuge under the broader

doctrine of “capable of repetition yet evading review.” See, e.g.,

Weinstein v. Bradford, 423 U.S. 147, 148-49 (1975). The very

contracts at issue establish operative terms of at least ten years.

Some were of indefinite duration. Such contracts provide ample

time for both administrative and judicial review. Indeed, the

present petition did not evade review; Petitioners themselves

chose to abandon the undertakings that gave rise to the

controversy. If further proof is needed that such contracts do not

fall within that exception to the mootness rule, the petition of

Nevada Power, which remains an active controversy before us,

clearly establishes that an IA need not evade review.

Southern and Entergy claim that they are nonetheless

before the court with a justiciable controversy because they are

asserting facial challenges to the ongoing policy as well as

seeking review of their underlying contracts. This argument

also fails to keep them in court. While it is true that a petitioner

with a mooted individual controversy may at times have

standing to challenge an ongoing policy, such a petitioner must

demonstrate standing to obtain each type of relief sought. See

City of Houston v. HUD, 24 F.3d 1421, 1429 (D.C. Cir. 1994).

Even if we assume that Entergy and Southern have properly

raised a challenge to Commission policies beyond the specific

orders for which they have sought review, they have not

demonstrated that they have standing to challenge such ongoing

policies.

To meet “the irreducible constitutional minimum for

standing,” petitioners must show, inter alia, that they suffer an

actual injury in fact which is caused by the Commission’s

policy. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61

(1992). The Commission’s “At or Beyond” rule challenged by

Petitioners does not affect Entergy or Southern until they are

confronted with it in a matter before the Commission regarding

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1

In reaching this conclusion, we do not ignore Capitol

Technical Servs, Inc. v. FAA, 791 F.2d 964, 967 (D.C. Cir. 1986),

cited by the separate opinion of our colleague. Rather, we simply do

not read that case, or any other, as suggesting that standing need not

be established for a general challenge when such general challenge is

all that is left in the case. True, we did not in Capitol Technical

Services address the question of standing, but it seems that standing to

challenge the general policy in that case was clear enough. As the

Capitol Technical Services panel explained in analyzing ripeness, “the

hardship to Capitol is concrete and easily perceived; noncompliant

foreign aircraft cannot reasonably expect to contract with Capitol for

major maintenance at locations they cannot reach.” Id. at 969. 

a “live” interconnection agreement. Until then, they are in a

position identical to that of any other utility company whose

hypothetical future interconnection agreements may be

evaluated according to the rule. To open the courthouse doors

to Entergy and Southern for the purposes of their policy

challenge disembodied from the original Commission orders

would open the door to every other utility company’s challenges

to Commission policies. Federal courts do not have the

jurisdiction to render advisory opinions on such matters, with

respect to FERC or any other administrative agency.

Entergy and Southern lack standing to proceed before

this Court. This Court therefore lacks jurisdiction over the

Entergy and Southern petitions.1 Their cases are dismissed.

B. Limitation of Issues

The elimination of the Entergy and Southern cases limits

the matters remaining for this Court’s consideration. This

Court’s power to review FERC petitions is tightly

circumscribed: “No 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

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rehearing unless there is reasonable ground for failure so to do.”

16 U.S.C. § 825l(b) (2004). “Parties seeking review of FERC

orders must petition for rehearing of those orders and must

themselves raise in that petition all of the objections urged on

appeal.” Platte River Whooping Crane Critical Habitat Maint.

Trust v. FERC, 876 F.2d 109, 113 (D.C. Cir. 1989) (emphasis in

original).

We construe § 825l narrowly. In Kelley ex rel. Mich.

Dep’t of Nat’l Resources v. FERC, we held that objections not

explicitly presented in proceedings below, but arguably

“implicit” in other objections, were not properly preserved:

“Suffice to say that an argument ‘implicit’ in prior requests

before the Commission’s staff does not satisfy the strict standard

of § 313(b) [of the Federal Power Act, codified at 16 U.S.C. §

825l].” 96 F.3d 1482, 1488 (D.C. Cir. 1996).

While § 825l offers petitioners an exception–i.e., a

“reasonable ground for failure” to urge the objection

below–Nevada Power offers no such reasonable ground for its

failure to raise several objections in its petition for FERC

rehearing. Therefore, any objections raised by Petitioners’

consolidated briefs but not raised by Nevada Power in its

administrative proceedings are not properly before this Court.

The only issues raised by Nevada Power in its petition

for rehearing and preserved in Petitioners’ consolidated briefs

are whether: (1) the Commission’s determination that the

facilities at issue benefit the entire network was not supported by

substantial evidence, and (2) the Commission’s “At or Beyond”

rule represents an unjustified departure from past precedent.

Request for Rehearing at 6-12, Nevada Power Co., Docket No.

ER02-1913-001 (Aug. 16, 2002). A different version of these

arguments advanced by Entergy or Southern that was not

advanced by Nevada Power–e.g., that the Commission ignored

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evidence that the facilities in question actually decrease network

stability–is not properly before this Court in our consideration

of Nevada Power’s case. Such an argument was not even

implicit–let alone explicit–in Nevada Power’s objections before

the Commission. Indeed, the evidence allegedly ignored by the

Commission–a sworn affidavit–was introduced in Southern’s

proceedings, not Nevada Power’s.

C. Substantial Evidence

Nevada Power argues that the Commission’s finding that

facilities located “at or beyond” the point of interconnection to

the network benefit the entire network was not supported by

substantial evidence. See 5 U.S.C. § 706(2)(E) (2004) (“The

reviewing court shall . . . hold unlawful and set aside agency

action, findings, and conclusions found to be . . . unsupported by

substantial evidence . . . .”). It argues that GenWest was the sole

beneficiary of the facilities at issue, and that geographic location

of the additions to the Harry Allen Switchyard is not itself

sufficient justification for a finding to the contrary.

But Nevada Power’s view of “benefit” is too narrow.

Like the petitioners in another recent challenge to the

Commission’s policy, this Petitioner suffers from a “cramped

view of what constitutes a ‘benefit.’” Entergy Services, Inc. v.

FERC, 319 F.3d 536, 543 (D.C. Cir. 2003) (“Entergy I”).

Nevada Power focuses on the benefit of “reliability” (or

“stability”), which we recognized in Entergy I, id. at 544. See

Brief for Petitioners at 30. So does Nevada Power’s expert.

Answer of Nevada Power Co. at Ex. A (Whalen Aff. at 2),

Nevada Power Co., Docket No. ER02-1913-000 (July 3, 2002).

But “stability” is not the only “benefit” recognized by the

Commission: the Commission cites the new facilities’

contribution to the Switchyard’s “expanded energy flow.” Brief

for Respondent at 48. Indeed, the Whalen affidavit recognizes

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that, but for the added facilities, GenWest could not contribute

its energy flow to the network. Id. This Court has recognized

that system expansion is a “benefit” sufficient to support the

Commission’s pricing policy, Entergy I, 319 F.3d at 544, and we

repeat that recognition here today.

The justifications that this Court accepted for the

Commission’s application of the pre-existing cost allocation

policy to those specific facilities also warrant this Court’s

approval of the policies’ application to the facilities here. As we

noted, “[o]ur conclusion that the Commission has adequately set

forth its rationale rests . . . on its explanation in the Consumers

Energy decisions that the Commission relied upon in the order

to review.” Id. at 543.

The Consumers Energy explanation was the

Commission’s justification of “a standard policy that requires

credits for customer-funded network upgrades,” Consumers

Energy Co., 96 F.E.R.C. ¶ 61,132 at 61,560 (2001) (“Consumers

Energy II”) (emphasis added), quoted in Entergy I, 319 F.3d at

543, not just for certain types of customer-funded network

upgrades. Petitioner contends that the facilities before us are not

network upgrades. However, Consumers Energy resolves the

question by its reference to the Commission’s May 17, 2001

order. The Commission defined “network upgrades” by the

point of connection of facilities, without a case-specific analysis

of marginal benefit to other users:

The Commission’s policy

regarding credits for network

upgrades associated with the

interconnection of a generating

facility has been, and continues

to be, that all network upgrade

costs (the cost of all facilities

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from the point where the

generator connects to the grid),

including those necessary to

remedy short-circuit and stability

problems, should be credited

back to the customer that funded

the upgrades once delivery

service begins.

Consumers Energy Co., 95 F.E.R.C. ¶ 61,233 at 61,804 (2001)

(“Consumers Energy I”) (emphasis added). In short, the

Commission’s definition of “network upgrade,” accepted by

Entergy I, includes any changes to facilities located on the grid.

The Consumers Energy I justification, quoted above and in

Entergy I, set forth an overarching defense of at least a “From”

test: “all facilities from the point where the generator connects

to the grid.” Id. (emphasis added). 

Petitioners urge us to read Entergy I narrowly, restricting

it to the facilities at issue in that case: short-circuit and stability

network upgrades. 319 F.3d at 544. But to adopt such a narrow

reading would be to adopt a “cramped” view of Entergy I’s “less

cramped view.” Id. at 543. Entergy I does not endorse the

Commission’s policy merely with respect to short circuit and

stability network upgrades. As this Court said in that case, such

a limited holding was a mere “consequen[ce]” of the much

larger holding: that the Commission had reasonably explained

its crediting pricing policy generally. Id. That pricing policy,

spelled out in Consumers Energy, makes no mention of specific

reference to short circuit and stability network upgrades. It

referred to “all facilities from the point” of interconnection.

Consumers Energy I, 95 F.E.R.C. at 61,804 (emphasis added).

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D. Departure from Precedent

The only difficulty–and though it is a small one, it is one

upon which potentially millions of dollars of cost allocation

rest–is whether “from” as a test of allocation justified by the

Commission in Consumers Energy I equates to “at or beyond”

as the Commission urges in the present controversy, or merely

to “beyond.” Either is a natural reading of “from.” For

example, when a bridal couple declares their fealty “from this

day forward,” we would not likely interpret this as a declaration

of faithfulness to begin the next day. The Commission’s “at or

beyond” test is consistent with such an immediate beginning

inclusive of everything from the point of commencement

including that point. On the other hand, if a travel guide tells us

that it is “one hundred miles from City A to City B,” we would

not necessarily assume that any distance within the city of

commencement is included within that one hundred miles.

Neither construction would be unreasonable. Normally, we

would defer to the Commission’s interpretation of its own prior

ruling. Cassell v. FCC, 154 F.3d 478, 483 (D.C. Cir. 1998).

However, such deference would presuppose that the

Commission had justified the subsequent usage in the prior

declaration it purports to interpret. Such justification is not

present on the record before us.

As we noted above, FERC’s explanation of its policy

application to the present contract depends upon its adoption of

its rationale from the Consumers Energy decisions. As we

further discussed above, justification by adoption of a prior

ruling is perfectly appropriate and adequate. The difficulty is

that the Commission’s explanation in Consumers Energy, at

least on its face, is not consistent with the Commission’s

application of the test to the facts before us. Nevada Power’s

petition does not depend on any inherent flaw in the “from” test

as applied to improvements beyond the point of interconnection,

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but only as to those precisely “at” the interconnection. It

appears from the face of Consumers Energy II that the

Commission’s application of its test to the facts before it in that

case may have been consistent with Nevada Power’s

interpretation rather than the one FERC advances now. The

total interconnection cost at issue in Consumers Energy was

$13.2 million. Of that total, the Commission permitted (albeit

almost sub silentio) direct assignment of the “$3 million . . .

attributable to the physical interconnection of the generating

facility with consumers’ transmission grid,” and approved credit

for the “remaining $10.2 million in network upgrade costs . . .

.” Consumers Energy I, 95 F.E.R.C. at 61,082. If the

Commission had intended “from” to mean “at or beyond” rather

than simply “beyond,” then it is not at all clear what accounts

for the $3 million in direct assignment, as the interconnection

presumably is “at” the determinative point. We therefore must

vacate the order under review and remand the controversy to the

Commission for further proceedings.

The progression of Commission pronouncements of its

network upgrade policy demonstrates that the “At or Beyond”

test is the product of regulatory evolution – marked by change,

not consistency–beginning with Consumers Energy. The

Commission issued Consumers Energy I on May 17, 2001.

There it described “all network costs” as “the cost of all

facilities from the point where the generator connects to the

grid.” 95 F.E.R.C. at 61,804 (emphasis added). As we noted,

supra, in that analysis the Commission did not consider “the

physical interconnection of the generating facility with . . . the

grid” to be a “network upgrade.” Consumers Energy I itself was

a clarification, see Entergy I, 319 F.3d at 541, of a prior order in

which the Commission excluded from “system upgrades” “the

cost of minimum facilities needed to establish the

interconnection.” Amer. Elec. Power Service Corp., 91 F.E.R.C.

¶ 61,308, at 62,051 (2000) (“AEP”), quoted in Consumers

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Energy II, 96 F.E.R.C. at 61,559.

Less than one month after the issuance of Consumers

Energy I, Commissioner Wood called for a change in policy.

He proposed that “costs of transmission beyond the power plant

busbar which are needed to accommodate the output of the new

generation facility should be borne by the transmission service

provider . . . .” Detroit Edison Co., 95 F.E.R.C. ¶ 61,415 at

62,540 (2001). Commissioner Wood credited his “recent

experience” on Texas’s regulatory body with demonstrating the

need for interconnection cost-allocation policies that foster fair,

efficient competition between old and new generators. Id.

While this may appear to be a restatement, not change, of policy

in light of Consumers Energy I, the concurrence’s further

explanation reveals a difference. Looking back to

Commissioner Wood’s experience, we see that the policies of

the Public Utility Commission of Texas reflected an “At or

Beyond” test rather than a “From” test. In at least one case the

Texas Commission, in a decision authored by thenCommissioner Wood, included as “transmission costs” “the

transmission switching facilities, necessary to provide the

interconnection between [Generator] and [Transmission Service

Provider].” Petition of Pasadena Cogeneration, L.P. for

Declaratory Order, Docket No. 20,760, Public Util. Comm. of

Texas, at ¶¶ I.15-18, III.1-2, 1999 Tex. PUC LEXIS 32 (Aug. 2,

1999). Commissioner Wood’s discussion of the role of efficient

cost-allocation in generator competition in Detroit Edison

mirrors his discussion in Pasadena Cogeneration. Given the

facts in Pasadena Cogeneration, he clearly endorsed an “At or

Beyond” test in 1999. He appears to have called for a similar

test in his 2001 Detroit Edison concurrence.

One month after Commissioner Wood’s statement in

Detroit Edison, the Commission denied a rehearing in

Consumers Energy, and it made no reference to either a “From”

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test or an “At or Beyond” test, but it referred only to network

“upgrade” costs. Consumers Energy II, 96 F.E.R.C. at 61,561.

The day after Consumers Energy II, however, the

Commission stated its policy in a manner resembling an “At or

Beyond Test” more than a “From” test of the sort suggested in

Consumers Energy I, as it described the difference between a

direct-assignment “interconnection facility” and a “network

upgrade.” As the Commission noted: “Interconnection facility

costs are those costs associated with facilities on the generator’s

side of the interconnection with the grid, which traditionally

have been directly assigned to the generator. Network upgrade

costs are any upgrades necessary to grid facilities to allow the

generator to inject its power at the interconnection.” Removing

Obstacles to Increased Electric Generation And Natural Gas

Supply In The Western United States, 96 F.E.R.C. ¶ 61,155, at

61,674 (2001) (emphasis added). Removing Obstacles cited

Consumers Energy I as a proper statement of its network

upgrade cost-allocation policies, id. at 61,674 n.37, but did not

explain why Consumers Energy I did not consider “the physical

interconnection of the generating facility with . . . the grid” to be

a “network upgrade,” 95 F.E.R.C. at 61,802. Nor did it explain

why Consumers Energy II did not consider AEP’s “minimum

facilities needed to establish the interconnection” to be “system

upgrades.”

In the three years following Removing Obstacles and

Consumers Energy, the Commission has reiterated that its “At

or Beyond” test was born not in Removing Obstacles but in

Consumers Energy I and II. In the administrative proceedings

regarding Entergy’s petition now before this Court, the

Commission equated Consumers Energy’s “from the point [of

interconnection]” language with an “At or Beyond” rule. Order

Denying Rehearing, Entergy Gulf States, Inc., 99 F.E.R.C. ¶

61,095, at 61,399 (2002) (“Entergy makes much of the fact that

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19

we referred to network facilities as all those ‘from’ the point

where the customer connects to the grid in Consumers, while

referring to them, for the first time, as facilities ‘at or beyond’

that point in Entergy. . . . [W]e fail to see a meaningful

distinction between these phrases . . . .”). The Commission has

continued to maintain this position in its hearings on Southern’s

more recent IAs. Southern Co. Servs., 108 F.E.R.C. ¶ 61,220 at

62,226 (2004); Southern Co. Servs., 108 F.E.R.C. ¶ 61,229 at

62,249 (2004). In Tampa Electric Co., the Commission traced

the lineage of the “At or Beyond” test at as far back as

Consumers Energy, and perhaps as far back as 1992’s Pub.

Service Co. of Colorado. 99 F.E.R.C. ¶ 61,192 at 61,795 (2002)

(citing 59 F.E.R.C. ¶ 61,311 at 62,149 (1992)). The

Commission repeated this genealogical claim in its denial of

rehearing in Nevada Power. 101 F.E.R.C. ¶ 61,036 at 61,145

(2002). But in none of these cases did the Commission take

account of Consumers Energy I and II’s discussion of facilities

at the point of “interconnection.”

Reading these cases, recounting the Commission’s

development of a “From” test, tracing its transformation into an

“At or Beyond” test, and keeping in mind the Commission’s

subsequent assertions that the two tests are one and the same, we

are left with the conclusion that the “At or Beyond” test

represents an apparent departure from Consumers Energy’s

“From” test. That departure may be slight, but it is a departure

nonetheless.

We do not suggest that the Commission may not directly

assign the costs at issue–as is apparent from our discussion in

Part C, the same substantial evidence appears to support either

test. But if the Commission does so, it must provide further

explanation. The Commission may change its practices, but it

must do so with “reasoned analysis indicating that prior policies

and standards are being deliberately changed, not casually

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20

ignored.” Entergy I, 319 F.3d at 541. Departures from

precedent must not violate the Administrative Procedure Act’s

prohibition on arbitrary and capricious decisionmaking. 5

U.S.C. § 706(2)(A); TransCanada Pipelines Ltd. v. FERC, 24

F.3d 305, 308 (D.C. Cir. 1994).

Although an agency’s interpretation of its own precedent

is entitled to deference, Cassell v. FCC, 154 F.3d 478, 483 (D.C.

Cir. 1998), this Court cannot accept the Commission’s assertion

that “it has not now nor has it ever directly assigned the costs of

the network at its borders.” Brief for Respondent at 44. We will

therefore allow the petition of Nevada Power and remand this

case to the Commission for further explanation. That

explanation may take the form of a clarification of Consumers

Energy I that in some way establishes that we have misread the

Commission’s apparent direct assignment of costs occurring

precisely at the point of interconnection or an explanation of

why it has departed from that policy. It must do one or the other

if we are to sustain the result reached in the order on review.

Conclusion

For the reasons set forth above, we conclude that the

petitions of Southern and Entergy must be dismissed. However,

as to the order from which Nevada Power petitions for review,

we order that it be vacated and the case remanded to the

Commission for further proceedings consistent with this

opinion.

So ordered.

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TATEL, Circuit Judge, concurring in part and concurring

in the judgment: I agree with the court on the merits and join

Parts I and II.B-D of its opinion. I also agree that we lack

jurisdiction over the Entergy and Southern petitions, but I cannot

join Part II.A because, in my view, the court’s approach

“incorrectly conflate[s] our case law on initial standing to bring

suit with our case law on postcommencement mootness,”

Friends of the Earth,Inc. v.LaidlawEnvtl. Servs., Inc., 528 U.S.

167, 174 (2000) (citations omitted).

Two of the three petitions fail—unarguably, in my

view—on standing grounds alone. Entergy filed its petition for

review on June 24, 2002, ten days after FERC accepted the

company’s proposed termination of its Interconnection

Agreement (“IA”) with Amelia Energy Center. Southern filed

its second petition for review on February 13, 2003, more than

a month after the effective cancellation of its IA with Athens

Development. Since neither IA remained in effect at the time

the companies sought judicial review, precedent requires that we

address jurisdiction as a question of standing, not mootness.

InAdvanced Management Technology, Inc. v. FAA, 211

F.3d 633 (D.C. Cir. 2000), we had to decide whether standing or

mootness doctrine applied in a situation where the petitioner

filed its challenge to the agency’s termination of a contract after

the agency had re-awarded the contract to petitioner. “The

claim may sound like one of mootness—a justiciable

controversy existed but no longer remains—but the timing

makes [petitioner’s] problem one of standing. . . . Standing is

assessed ‘at the time the action commences,’ i.e., in this case, at

the time [petitioner] sought relief from an Article III court.” Id.

at 636 (quoting Laidlaw Envtl. Servs., 528 U.S. at 191) (internal

citation omitted); see also WorldCom, Inc. v. FCC, 308 F.3d 1,

10 (D.C. Cir. 2002) (where petitioner lacked standing at the

onset of its suit because the issue had lost “practical

significance,” it could not argue that its situation was “capable

of repetition yet evading review” since “that familiar exception

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2

to mootness cannot confer standing on a claim when injury in

fact was missing at the outset”) (internal quotation marks

omitted);City of Orrville v. FERC, 147 F.3d 979, 985 n.5 (D.C.

Cir. 1998) (“Because [petitioner’s] preliminary permit expired

before it petitioned for review, . . . its claims are properly

disposed of on standing, rather than mootness, grounds.”). The

court cites Northwest Pipeline Corp. v. FERC, 863 F.2d 73, 76

(D.C. Cir. 1988), but in that case we applied a mootness analysis

because petitioner filed for review in 1987 (as the docket

number makes clear) well before “the challenged rate terms

disappeared into the regulatory netherworld” in June 1988. See

id.

Given this case law, I believe this court had no reason to

consider whether mootness exceptions apply to the Entergy and

second Southern petitions, as the two companies lacked standing

in the first place. Once their IAs had terminated, neither

qualified as a party “aggrieved by an order issued by the

Commission” within the meaning of section 313(b) of the

Federal Power Act, 16 U.S.C. § 825l(b). “The requirement of

aggrievement serves to distinguish a person with a direct stake

in the outcome of a litigation from a person with a mere interest

in the problem.” City of Orrville, 147 F.3d at 985 (quoting

North Carolina Utils. Comm’n v. FERC, 653 F.2d 655, 662

(D.C. Cir. 1981)). After their IAs terminated, Entergy and

Southern had only a “mere interest.” They thus lack standing to

petition for review in this court.

Southern’s first petition for review presents a different,

more complex situation. Southern filed that petition on

November 1, 2002, almost three months before FERC accepted

the termination of the company’s IA with Blount County

Energy. “[A]t the time the action commence[d],” Laidlaw Envtl.

Servs., 528 U.S. at 191, Southern therefore had standing to

challenge FERC’s modification of the company’s IA, as well as

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3

the policies on which that order rested. With the cancellation of

the IA, Southern’s specific challenge became moot, and (as the

court notes) neither the “voluntary cessation” nor the “capable

of repetition yet evading review” exception applies. 

We thus need to determine whether a justiciable

controversy remains due to Southern’s broader reason for

objecting to the challenged order—namely, the company’s claim

that the policies underlying that order require it to revise other

IAs, revisions that will cost it some $22 million. This court

faced a similar issue in Capitol Technical Services, Inc. v. FAA,

791 F.2d 964, 967 (D.C. Cir. 1986), where petitioner,

maintenance provider for foreign aircraft, sought an exemption

from an FAA noise-control regulation so that it could fly two

DC-8s to the United States for servicing. By the time we heard

the petition, however, the time for servicing the two airplanes

had passed. Id. at 965-66. We held that although petitioner’s

challenge to the FAA’s denial of an exemption for the specific

planes had become moot, the “challenge to th[e] general policy

is not moot” because “[c]learly Capitol sought not only a

particular exemption, but also a decision favorable to the

continued viability of its business.” Id. at 968; see also City of

Houston v. Dep’t of Hous. & Urban Dev., 24 F.3d 1421, 1428-

1430 (D.C. Cir. 1994); Better Gov’t Ass’n v. Dep’t of State, 780

F.2d 86, 90-92 (D.C. Cir. 1986). Significantly, we did not

reevaluate whether Capitol had standing to petition for review

on policy grounds. Had we done so under the court’s logic

today, we would have concluded that Capitol lacked standing to

pursue its policy challenge, since Capitol was in a “position

identical to that of any other [maintenance provider] whose

hypothetical future [requests for foreign aircraft exemptions]

may be evaluated according to the rule,” see majority slip op. at

9-10. Instead, we applied mootness doctrine to evaluate the

justiciability of Capitol’s policy challenge and found “plainly

meritless” the agency’s argument that “[i]f Capitol wishes to

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4

obtain exemptions for future flights by noncompliant foreign

operators to its maintenance facilities . . . it should reapply for

exemptions and, if unsatisfied, seek review of those decisions.”

791 F.2d at 989. Concluding that Capitol’s policy concerns

remained alive, we went on to find its challenge ripe because the

FAA’s policy was fit for review and Capitol would suffer

hardship without immediate review. 791 F.2d at 969 & n.26

(applying the ripeness test developed in Abbot Laboratories v.

Gardner, 387 U.S. 136 (1967)). As to fitness, we observed that

the issues were “purely legal . . . [and] there can be no question

that the agency action has taken final form; indeed, the agency

has not even suggested that any further policy evolution could

be expected.” Id. 

Disregarding Capitol Technical Services, the court today

holds that once a petitioner’s specific challenge has become

moot, we must go back and reevaluate the petitioner’s standing.

In support, the court relies on City of Houston, 24 F.3d at 1429-

30 & n.6, which stands for the proposition, established since at

least City of Los Angeles v. Lyons, 461 U.S. 95 (1983), that

plaintiffs in civil suits must establish standing separately for

each type of relief they seek—declaratory relief, injunctive

relief, damages, etc. By contrast, like the petitioner in Capitol

Technical Services, Southern has filed a petition for review of an

agency action and seeks the same relief on both specific and

policy grounds: vacatur of FERC’s order based on a finding that

the order was arbitrary and capricious. At the time Southern

petitioned for review, it plainly had standing to seek this relief,

and under Capitol Technical Services our jurisdiction over

Southern’s policy challenge should turn on whether that

challenge has also become moot or, alternatively, whether it is

unripe for review.

As to mootness, we have typically applied the policychallenge exception to mootness in situations where the specific

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5

requests became moot due to circumstances beyond petitioners’

control. See Capitol Technical Servs., Inc., 791 F.2d at 967-68;

City of Houston, 24 F.3d at 1424, 1428-29; Better Gov’t Ass’n,

780 F.2d at 88, 90-92. But Southern’s specific request became

moot due to its voluntary decision to seek cancellation of its IA.

I am thus unsure whether Southern’s policy challenge remains

alive. In any event, I am convinced the challenge is unripe. 

To begin with, this case differs from Capitol Technical

Services in a significant respect. There, the FAA “ha[d] not

even suggested that any further policy evolution could be

expected.” 791 F.2d at 969. At the time of Southern’s

challenge, by contrast, FERC’s policy had not yet become final.

Indeed, in later rulemaking orders, FERC revisited its “At or

Beyond Test” (and particularly its explanations for the test). See

Standardization of GeneratorInterconnection Agreements and

Procedures, Order No. 2003, [Regs. Preambles] FERC Stats. &

Regs. ¶ 31,146, 68 Fed. Reg. 49,846 (2003); on reh’g, Order No.

2003-A, [Regs. Preambles] FERC Stats. & Regs. ¶ 31,160, 69

Fed. Reg. 15,932 (2004). Absent a specific need for relief, it

seems unfair to require FERC to defend its earlier, less complete

explanation of its policy. Moreover, the “only hardship”

Southern “will endure as a result of delaying consideration of

this issue is the burden of having to file another suit.” See Webb

v. Dep’t of Health & Human Servs., 696 F.2d 101, 107 (D.C.

Cir. 1982). Because this relatively minimal hardship does not

outweigh the relatively strong interest in postponing judicial

review, I would find Southern’s policy challenge unripe. 

Over a quarter century ago, Justice Brennan warned that

“Art. III jurisprudence . . . in such areas as mootness and

standing is creating an obstacle course of confusing standardless

rules to be fathomed by courts and litigants.” Kremens v.

Bartley, 431 U.S. 119, 140 (1977) (Brennan, J., dissenting). The

opinion in this case may add still more obstacles to the already

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6

littered course. Until today, where a petitioner sought review

after the challenged order had ceased to aggrieve it, as with two

of the petitions in this case, we evaluated the case under

standing doctrine alone. Yet the court today addresses mootness

even though “if a plaintiff lacks standing at the time the action

commences, the fact that the dispute is capable of repetition yet

evading review will not entitle the complainant to a federal

judicial forum.” See Laidlaw Envtl. Servs., 528 U.S. at 191.

Moreover, we have no reason to reevaluate a petitioner’s

standing during the course of a proceeding, as we retain

authority to weed out those cases that cease to present justiciable

controversies by using the doctrines designed for that

purpose—mootness and ripeness. The court’s midstream

assessment of standing muddies this sensible framework. True,

standing and mootness are closely related, but they are cousins,

not twins.

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