ORAL ARGUMENT HAS NOT BEEN SCHEDULED Nos. 11-1486, et al.

IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

ELECTRIC POWER SUPPLY ASSOCIATION, et al .,

Petitioners,

v. FEDERAL ENERGY REGULATORY COMMISSION, et al.,

Respondents. On Petition for Review from the Federal Energy Regu latory Commission

CORRECTED BRIEF OF AMICI CURIAE ENVIRONMENTAL DEFENSE FUND, CITIZENS UTILITY BOARD, AND NATURAL RESOURCES DEFENSE COUNCIL IN SUPPORT OF RESPONDENT FEDERAL ENERGY

REGULATORY COMMISSION

Vickie L. Patton General Counsel ENVIRONMENTAL DEFENSE FUND 2060 Broadway Boulder, CO 80302 Tel. (303) 447-7215 Email: vpatton@edf.org Katherine Mayer Mangan MAYER MANGAN, PLC 10755 Scripps Poway Parkway, Ste. 367 San Diego, CA 92131 Tel. 858-397-6234 Email: kate@mayermangan.com Counsel for Amicus Curiae Environmental Defense Fun d* DATED: September 14, 2012 *Additional counsel lis ted on inside coverii Counsel for Amicus Curiae Environmental Defense Fun d Orijit Ghoshal CITIZENS UTILITY BOARD 309 West Washington, Suite 800 Chicago, Illinois 60606 Tel. (312) 263-4282 ext. 124 Email: oghoshal@citizensutilityboard.org Counsel for Amicus Curiae Citizens Utility Board John N. Moore Senior Attorney-The Sustainable FERC Project NATURAL RESOURCES DEFENSE COUNCIL 2 North Riverside Plaza, Ste. 2250 Chicago, IL 60606 Tel. (312) 651-7927 Email: jmoore@nrdc.org Counsel for Amicus Curiae Natural Resources Defense Council Elizabeth B. Stein Attorney ENVIRONMENTAL DEFENSE FUND 257 Park Avenue South New York, NY 10010 Tel. (212) 616-1327 Email: estein@edf.org John Finnigan Senior Regulatory Attorney ENVIRONMENTAL DEFENSE FUND 128 Winding Brook Lane Terrace Park, Ohio 45174 Tel. (513) 509-3339 Email: jfinnigan@edf.orgiii CORPORATE DISCLOSURE STATEMENT Pursuant to Fed. R. App. P. 26.1 and Circuit Rule 2 6.1, Amici make the following disclosures:

Environmental Defense Fund. Environmental Defense Fund is a not-for-profit organization dedicated to protecting public health and the environment. It does not have any outstanding shares or debt securities in t he hands of the public nor any parent, subsidiary, or affiliates that have iss ued shares or debt securities to the public. Citizens Utility Board. The Citizens Utility Board (CUB) is a statutorily created non-profit entity organized as a 501(c)(4) for Inte rnal Revenue Service purposes. CUB’s mission is to represent the interests of resi dential and small commercial utility customers in state and federal regulatory a nd judicial proceedings. CUB is a membership-funded organization with approx imately 100,000 members across Illinois. CUB does not have any parent compa nies, and no publicly-held company has a 10 percent or greater ownership inter est in CUB. CUB does not

issue stock.

Natural Resources Defense Council. Natural Resources Defense Council (NRDC) has no parent companies, and there are no publicly held companies that have a 10% or greater ownership interest in NRDC. NRDC is a national non-profitiv

organization committed to the preservation and prot ection of the environment, public health, and natural resources.v

CERTIFICATE AS TO PARTIES, RULINGS, RELATED CASES, AND

COORDINATION WITH OTHER AMICI CURIAE Pursuant to Circuit Rules 28 and 29, amici curiae submit this certificate: Parties, Intervernors, and Amici

. Other than amici curiae listed on this brief, all parties, intervenor, and amici appearing before this Court are listed in the Opening Brief of Petitioners Electric Power Supply Association, et al. Agency Action _Under Review. The orders under review are Federal Energy Regulatory Commission Orders 745, 134 FERC ¶ 61,187 (Mar. 15, 2011), and Order 745-A, 137 FERC ¶ 61,215 (Dec. 15, 2011).

Related Cases. Electric Power Supply Ass’n v. FERC , No. 12-1306 (D.C. Cir., filed July 16, 2012) has been held in abeyanc e pending the outcome of this

case. Coordination with Other Amici

. Pursuant to Circuit Rule 29(d), Amici hereby state that they are not aware of any other amicus curiae parties supporting

FERC. Respectfully submitted, Katherine Mayer Mangan MAYER MANGAN, PLC 10755 Scripps Poway Parkway, Ste. 367 San Diego, CA 92131 Tel. 858-397-6234 Email: kate@mayermangan.com /s/ Vickie L. Patton Vickie L. Patton General Counsel ENVIRONMENTAL DEFENSE FUND 2060 Broadway Boulder, CO 80302 Tel. (303) 447-7215 Email: vpatton@edf.orgvi

Elizabeth B. Stein Attorney ENVIRONMENTAL DEFENSE FUND 257 Park Avenue South New York, NY 10010 Tel. (212) 616-1327 Email: estein@edf.org John Finnigan Senior Regulatory Attorney ENVIRONMENTAL DEFENSE FUND 128 Winding Brook Lane Terrace Park, Ohio 45174 (513) 509-3339 email: jfinnigan@edf.org Counsel for Amicus Curiae Environmental Defense Fun d Orijit Ghoshal CITIZENS UTILITY BOARD 309 West Washington, Suite 800 Chicago, Illinois 60606 Tel. (312) 263-4282 ext. 124 Email: oghoshal@citizensutilityboard.org Counsel for Amicus Curiae Citizens Utility Board John N. Moore Senior Attorney-The Sustainable FERC Project NATURAL RESOURCES DEFENSE COUNCIL 2 North Riverside Plaza, Ste. 2250 Chicago, IL 60606 Tel. (312) 651-7927 Email: jmoore@nrdc.org Counsel for Amicus Curiae Natural Resources Defense CouncilTABLE OF CONTENTS

I. Interest of Amici Curiae

.................................................. ..................................... 1 II. Background.....................................

................................................... .................. 3 A. How Wholesale and Retail Electricity Markets Wor k ..................................... 3 B. Demand Response in the Wholesale Markets ....... ........................................... 6

C. Orders 745 and 745-A ...........................

................................................... ........ 8 III. Summary of Argument ..........................

................................................... .......... 9 IV. Argument ......................................

................................................... .................12 A. FERC Has Jurisdiction Because the Orders Regulat e Transactions in the Wholesale Markets, Not Retail Sales or Other Retail “Services” Reserved to the States ............................................

................................................... ......................12 B. Demand Response Should Be Compensated at LMP Because Demand Response Affects Wholesale Rates and Encouraging Demand Response Provides Energy, Public Health, and Enviro nmental Benefits ............17 1. Compensating Demand Response at LMP Will Encoura ge Its Development ..................................

................................................... .....18 2. The Value of Demand Response Is At Least as High , If Not Higher, Than Supply Because It Reduces Externalities and Social Costs ................

................................................... 20

V. Conclusion .....................................

................................................... .................28ii TABLE OF AUTHORITIES

Cases B & J Oil and Gas v. FERC , 353 F.3d 71, 75 (D.C. Cir. 2004) ................ ..............17 Chevron U.S.A., Inc. v. Natural Resources Defense C ouncil , 467 U.S. 837, 843 (1984) .........................

................................................... .........13 Electricity Consumers Resource Council v. FERC , 407 F.3d 1232, 1236 (D.C. Cir. 2005) ............. ............................................. 17, 1 9 Elizabethtown Gas Co. v. FERC , 10 F.3d 866, 872 (D.C. Cir. 1993) ............... ......20 FPC v. Conway Corp., 426 U.S. 271, 276-277 (1999) ...................... ......................13 Mississippi Power & Light Co. v. Mississippi ex rel

. Moore, 487 U.S. 354, 357 (1988) .........................

................................................... .........15

* New York v. FERC , 535 U.S. 1 , 19 (2002) ......................................... ....... 13, 15, 16

Statutes 5 U.S.C. § 706 ....................................

................................................... ...................17

* 16 U.S.C. § 824 (Federal Power Act § 201) ......... ..................... 4, 6, 7, 9, 12, 13, 16

* 16 U.S.C. § 824d (Federal Power Act § 205) ........ ........................................ 4, 9, 13

* 16 U.S.C. § 824e (Federal Power Act § 206) ....... .................................... 4, 7, 9, 13

Other Authorities Ade Dosunmu, Up in Smoke: Seven Gigawatts of Coal Retrenches fro m PJM , Energy Pulse (August 5, 2011) .....................

................................................... .....24 DeWayne Todd, Summary Remarks, Panel Discussion—Demand Response i n Organized Markets—Barriers to Comparable Treatment and Solutions to Eliminate Potential Barriers (May 21, 2008) ................................... ...................25

* Authorities upon which we chiefly rely are marked w ith asterisks.iii

U.S. Dep't of Energy, Energy Info. Adm., Annual Energy Outlook 2008: With Projections to 2030 (2008) ............................................ .......................................27 ENERNOC, Demand Response: A Multi-Purpose Resource For Utili ties and Grid Operators (2009) ..........................................

................................................... ...... 7 ERCOT, New Report Reinforces Future Electric Resource Adeq uacy Concerns (May 22, 2012) ....................................

................................................... ..............22 FERC, A Guide to the FERC Electric Transmission Facilitie s Permit Process (updated Sept. 2010) ..............................

................................................... ............26 FERC, National Assessment of DR Potential (June 2009) ...................................... 22 Michael Milligan and Brendan Kirby , Utilizing Load Response for Wind and Solar Integration and Power System Reliability ,” Presented at WindPower 2010 Dallas, Texas, May 23–26, 2010 ....................

................................................... ...26 MIT, Future of the Electric Grid (2011) ............................................ .......... 4, 21, 25 National Academies of Sciences Committee on Health, Environmental, and Other External Costs and Benefits of Energy Production an d Consumption; National Research Council, et al., The Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use

.................................................. ...........................23 Oak Ridge National Laboratory, Climate Change and Energy Supply Use: Technical Report to the U.S. Department of Energy i n Support of The National Climate Assessment (2012) ............................................ ......................................27 Richard J. Pierce, Jr., A Primer On Demand Response and a Critique of FERC Order 745 , Journal of Energy & Environmental Law, Winter 201 2 ..................... 6 Shelley Welton, MIT Study Demonstrates Demand Response’s Role in Ba lancing Renewables, Columbia Law School Climate Law Blog (December 15, 2011) ...24 The Brattle Group, ERCOT Investment Incentives and Resource Adequacy (June 1, 2012) .............................................

................................................... .....................22 The Electric Energy Market Competition Task Force, Report to Congress on Competition in Wholesale and Retail Markets for Ele ctric Energy ....................... 6 U.S. Dep’t of Energy, Benefits of Demand Response in Electricity Markets and Recommendations for Achieving Them (February 2006) .................................. ...21iv

U.S. Dep’t of Energy, National Transmission Grid Study (May 2002) ..................20

Regulations 18 C.F.R. § 35.28 .................................

................................................... ................... 7 Administative Cases

* Demand Response Compensation in Organized Wholesale Energy Markets, Order No. 745, Final Rule, FERC Stats. & Regs. ¶ 31 ,322 (2011), on reh’g and clarification, Order No. 745-A, 137 FERC ¶ 61,215 (2011 ).......................................... 1, 3, 5, 7-9, 12, 13-14, 16, 19, 20, 25, 27 In re PJM Interconnection, L.L.C ., 139 FERC ¶ 61,031 at 2-3 (2012). ............... ...22v GLOSSARY OF ABBREVIATED TERMS FERC Federal Energy Regulatory Commission

FPA Federal Power Act Generators Petitioners Electric Power Supply Associ ation, American

Public Power Association, National Rural Electric Cooperative Association, Old Dominion Electric Cooperative and Edison Electric Institute ISO Independent System Operator LMP Locational Marginal Price: the market clearing price, as

calculated by a System Operator at a particular nod e within the System Operator’s market footprint Order 745 Demand Response Compensation in Organized Wholesale

Energy Markets , Order No. 745, Final Rule, FERC Stats. & Regs. ¶ 31,322 (Mar. 15, 2011)

Order 745-A Demand Response Compensation in Organized Wholesale

Energy Markets , Order No. 745-A, Order on Rehearing and Clarification, 137 FERC ¶ 61,215 (Dec. 15, 2011)

RTO Regional Transmission Organization1

Amici curiae Environmental Defense Fund (EDF), Citizens Utility Board (CUB), and Natural Resources Defense Council (NRDC) respectfully submit this brief in support of respondent Federal Energy Regul atory Commission’s (FERC’s)

Orders 745 and 745-A. 2

I. INTEREST OF AMICI CURIAE 3

EDF. EDF is a national non-profit, non-governmental, n on-partisan organization, representing more than 300,000 member s and supporters. Since 1967, EDF has linked science, economics, law, and i nnovative private sector partnerships to create breakthrough solutions to th e most serious environmental problems. To that end, EDF advocates ways to deplo y smart grid technologies to hasten our nation’s transition to a cost-effective, clean energy future. EDF is actively working to foster policies that open elect ricity markets to entrepreneurs and that encourage the innovation and deployment of cost-effective clean energy resources, including flexible demand. Orders 745 a nd 745-A create incentives to reduce peak demand, which will increase the reliabi lity and security of the

2 Demand Response Compensation in Organized Wholesale Energy Markets , Order No. 745, 76 Fed. Reg. 16,658 (Mar. 24, 2011), FERC Stats. & Regs. ¶31,322 (2011), reh’g denied , Order No. 745-A, 137 FERC ¶61,215 (Dec. 15, 2011)

.

3 Pursuant to F.R.A.P. 29(c)(5), amici certify that no counsel for any party authored this brief in whole or in part and that no counsel or party made a monetary contribution intended to fund the preparation or su bmission of this brief. No amici were compensated for their participation in this br ief. No person, other than the amici , their members, and their counsel, contributed mon ey intended to fund preparation or submission of this brief.2

electricity grid while reducing emissions of numero us health-harming air pollutants. EDF, therefore, has an interest in the outcome of the case. It participated in the underlying FERC rulemaking, 4 and it supports FERC's Orders.

CUB. CUB advocates for just and reasonable rates on be half of residential and small business electricity consumers in Illinoi s. CUB is interested in the proper compensation for demand response because it reduces the overall price of electricity, increases competitiveness in generatio n resource ownership, and improves system reliability.

NRDC. Natural Resources Defense Council (NRDC) is a nat ional nonprofit membership organization with more than 350,0 00 members. NRDC is committed to the preservation and protection of the environment, public health, and natural resources. Addressing the climate chan ge crisis is one of NRDC’s top institutional priorities. As part of its work in t his arena and to curb air pollution, NRDC has been actively involved in advocacy related to regulation of greenhouse gas emissions, energy efficiency, and renewable ene rgy. Since the mid-1990s, NRDC has housed the Sustainable FERC Project, a coa lition of public interest groups focused on regional transmission and wholesa le markets with the goal of

4 EDF filed comments dated October 13, 2010, and join ed in joint comments of Public Interest Organizations dated May 13, 2010, i n FERC docket RM10-17.3

integrating renewable and demand-side resources int o the transmission grid and leveling the playing field for all interconnecting resources. NRDC has for many years advocated before FERC, as w ell as regional transmission planning entities and state siting and regulatory authorities. Acting through the Sustainable FERC Project, NRDC submitte d comments to FERC on the proposed rule that became Order 745. NRDC and its Sustainable FERC Project also have participated in RTO proceedings i nvolving implementation of

Order 745.

Amici Curiae file this brief pursuant to a pending Motion for Le ave to File

an Amici Curiae Brief in Support of Respondents, filed herewith.

II. BACKGROUND

A. How Wholesale and Retail Electricity Markets Work To understand why demand response is integral to th e reliable and costefficient operation of the electrical system, it is helpful to have a basic understanding of both the physical characteristics of electricity and the electricity markets that exist in many areas of the country. O ne of the most significant challenges, and one that affects the need for deman d response, is that electricity is difficult and costly to store in large amounts. 5 This means that the electric grid

5 See generally MIT, Future of the Electric Grid app. B, p. 254 (2011), available at http://web.mit.edu/mitei/research/studies/the-elect ric-grid-2011.shtml.4

operators must continuously balance the supply of e lectricity with consumer

demand on a second-to-second basis. Id. Generally speaking, in many parts of the country, w holesale markets balance supply and demand as follows. Sellers in t he wholesale markets are generators of electricity and buyers are utilities or other load-serving entities that will re-sell electricity to consumers. Id. at 259. The wholesale markets usually are administered by independent system operators (ISOs) or regional transmission organizations (RTOs) and are regulated by FERC. See Federal Power Act (FPA) § 201(b), 16 U.S.C. § 824(b) (granting FERC jurisdi ction over wholesale sales of energy); FPA §§ 205, 206, 16 U.S.C. §§ 824d, 824e ( granting jurisdiction over wholesale rates and charges, as well as over rules, regulations, practices and contracts affecting wholesale rates). The process of selling wholesale electricity in a r egional day-ahead and realtime energy market begins when generators bid into the wholesale markets, stating the prices at which they are willing to sell electr icity during specific periods of

time. 6 The ISO/RTO accepts the offers ( i.e. , tells suppliers to generate electricity) from lowest to highest price until the demand has b een met, that is, until the “market clears.” FERC Order 745 ¶ 51. In the day- ahead markets, the clearing price for a given hour-long period is set at the pr ice of the lowest marginal cost

6 See, e.g., MIT, The Future of the Electric Grid app. B at 258.5

resource necessary to meet the hour’s total energy demand (load). The entire dayahead market is cleared hourly, and all generators are paid the market clearing price regardless of their actual cost to run. The hourly clearing prices are called locational marginal prices (LMPs). See, e.g., Demand Response Supporters Aug. 30, 2010 Reply Comments (Kahn Affidavit at 2). The following day, in the real-time market, the RTO dispatches sufficient energy each hour (and at small increments within ea ch hour) to meet customer demand, moving up the dispatch stack starting with the least costly power needed to meet demand. Each RTO has procedures in place t o ensure sufficient energy is dispatched to meet real-time, security-constrained operating conditions. This process achieves real-time balance of supply and de mand: the RTO/ISO dispatches just the amount of supply needed to matc h the expected demand at a given moment. Order 745 P 49. Because supply bids are organized in ascending orde r—from lowest to highest—the higher the demand, the higher the price that will clear the market. When demand is extremely high, usually on hot summe r days, the wholesale price can skyrocket. In one extreme example, wholesale p rices in California, which usually were about $27 per megawatt hour, spiked to $450 per megawatt hour. 7

7 See generally, The Electric Energy Market Competition Task Force, Report to Congress on Competition in Wholesale and Retail Mar kets for Electric Energy , at 28 available at http://www.ferc.gov/legal/fed-sta/ene-pol-act/epact -final-rpt.pdf

.6

Utilities that purchased electricity on the wholesa le market re-sell that electricity in retail transactions to the consumers they serve. States regulate these retail energy sales. See FPA § 201(b), 16 U.S.C. § 824(b). Retail energy pr ices are more stable than the volatile wholesale prices because retail prices are generally based on the average annual cost of servi ng the consumer. 8 Thus, while the wholesale price may rise dramatically during ti mes of peak demand, the retail price may remain lower, meaning that end-users do n ot necessarily pay a higher price even when demand peaks and the cost of servin g the retail consumer at that moment exceeds the retail price. This discrepancy between how prices are set in

the wholesale and retail markets affects consumers’ incentive (or lack thereof) to

conserve. See generally, Richard J. Pierce, Jr., A Primer On Demand Response and a Critique of FERC Order 745 , Journal of Energy & Environmental Law, Winter 2012, at pp. 102, 103.

B. Demand Response in the Wholesale Markets Demand response programs provide a more open energy market that allows participation by cost-effective conservation of ele ctricity when meeting demand is particularly expensive. These programs can reduce consumers’ electric

8 See generally, The Electric Energy Market Competition Task Force, Report to Congress on Competition in Wholesale and Retail Mar kets for Electric Energy , at 45 available at http://www.ferc.gov/legal/fed-sta/ene-pol-act/epact -final-rpt.pdf (explaining that retail electricity rates are based on annual (or multi-year) average costs).7

consumption during periods of peak demand or high p rices by providing payment or other incentives to reduce consumption of electr icity. See, e.g., 18 C.F.R. § 35.28(b)(4). Demand response programs can exist in either the retail or the wholesale markets, but Orders 745 and 745-A address only demand response in the wholesale markets because FERC’s jurisdiction exten ds only to wholesale markets.

See FPA §§ 201, 206, 16 U.S.C. §§ 824, 824e; Order 745 P 114; Order 745-A P

32. In the wholesale markets, providers of demand respo nse often are large industrial or commercial customers or companies tha t act as third party “aggregators” of smaller commercial and residential customers. 9 These wholesale providers of demand response are the entities that will be compensated under

Order 745 and 745-A. Regardless of who provides demand response or the n ature of the demand response program, all consumers purchase their elec tricity on the retail market. Even large industrial consumers that act as demand response resources in the wholesale market purchase electricity on the retail market. Thus, a large industrial consumer may act in two capacities. In one capacit y, it is a consumer who purchases electricity on the retail market; in a di fferent capacity, it is a demand

9 ENERNOC, Demand Response:A Multi-Purpose Resource For Utilit ies and Grid Operators 2 (2009), available at http://www.enernoc.com/images/whitepapers/pdfs/drmu ltipurpose.pdf.8

response provider in the wholesale market that has the right to bid into the dayahead and real-time energy markets.

C. Orders 745 and 745-A Due to several major barriers, demand response reso urces have not been fully deployed in the wholesale markets and do not play a significant role in setting LMP. Order 745 P 57; see also Demand Response Supporters, Reply Comments at 9 n.29 (Aug. 30, 2010) (citing a U.S. Department of Energy calculation that, in 2008, demand side management programs comprised onl y 2% of the market).

FERC identified some of the most critical barriers as being lack of a direct connection between wholesale and retail prices, lac k of real-time information sharing and lack of market incentives to invest in enabling technologies that allow consumers and aggregators of retail consumers to se e and respond to changes in marginal costs of providing electric services as th ose costs change. Order 745 P 57; see also, Order 745 P 47; Order 745-A PP 72-75. With Orders 745 and 745-A, FERC seeks to reduce the barriers to demand response in the wholesale markets. Order 745 at PP 113, 115. The Orders require ISO/RTOs to pay demand response resources (that is, the larger industrial and commercial consumers who can participate directly i n the wholesale markets and aggregators of smaller electricity consumers) for t he demand response services they provide. The Orders require payment of LMP, t he same price paid to9

suppliers, because demand response and supply provi de a comparable service to the market: both help balance supply and demand. P ayment is required only when the demand response resource has the capability to balance supply and demand and when dispatch of that demand response resource is c ost-effective under the net benefits test. Order 745 Summary, PP 48, 50.

III. SUMMARY OF ARGUMENT 1. FERC permissibly construed the Federal Power A ct as granting it jurisdiction over demand response compensation in w holesale markets. Order 745 PP 112-113 (citing FPA §§ 201, 205 206); Order 745- A PP 20-35. The FPA unambiguously grants FERC authority over practices affecting wholesale rates. FPA §§ 201, 206, 16 U.S.C. §§ 824, 824e (granting F ERC authority over “any rule, regulation, practice or contract affecting su ch [wholesale] rate”). Wholesale demand response is such a practice, and no party co ntends otherwise. The petitioning Generators, 10 however, argue that the FPA reserved to the States authority over retail sales of electricity, and that precludes FERC from exercising its jurisdiction over demand response ev en though demand response affects wholesale energy rates. Paying compensatio n to demand response providers in the wholesale markets is not a retail sale of electricity. The

10 “Generators” refers to Petitioners Electric Power S upply Association, American Public Power Association, National Rural Electric C ooperative Association, Old Dominion Electric Cooperative, and Edison Electric Institute

.10

transaction FERC seeks to regulate is the payment b y wholesale market administrators for a service provided on the wholesale market, which helps balance

wholesale supply and demand and which reduces wholesale rates. Payment for demand response services in the wholesa le markets is not somehow transformed into a “retail service” simply because retail consumers are involved. An entity may be a retail consumer in o ne capacity, when it purchases electricity from a utility, and also be a wholesale demand response resource (or part of a third party aggregator) in another capaci ty when it makes a demand response bid into a wholesale energy market. Retai l sales, the transaction the FPA clearly reserves to the States, are not regulated b y Orders 745 and 745-A. The regulated transaction is a wholesale transaction: wholesale market administrators compensate demand response resources for the servic e they provide to wholesale markets. The regulated transaction is not a retail sale. 2. FERC’s decision to require compensation at the L MP should be sustained. FERC appropriately considered real-worl d markets, the full value of demand response, and reasonably relied upon a subst antial body of expert economic opinion in finding that LMP is the appropr iate compensation. The Court

should defer to FERC’s decision. Compensating demand response at LMP, and not at a l ower level, is a policy decision, necessary because of the economic, social and environmental benefits of11

demand response. Demand response resources can low er peak wholesale prices that affect all consumers. Indeed, FERC’s net bene fits test provides that demand response resources will receive full LMP only if th e wholesale peak price reductions exceed the amount paid to the demand res ponse providers. Demand response resources also can reduce the social and e nvironmental costs of meeting peak demand. These “externality” costs are not ref lected in wholesale prices of power generators but impose real costs on affected communities. The plants used to meet peak demand are often the least efficient, most expensive, and highest emitting plants, so avoiding their use produces tre mendous societal benefit. Demand response resources can also facilitate the i ntegration of lower-cost renewable resources into the electricity grid, ther eby reducing the clearing price of clean electricity generation resources. In short, to fully value demand response resources and to encourage their development, LMP—n ot LMP minus the retail price—is the appropriate compensation. Indeed, not deducting the retail price is entirely reasonable because full LMP treats supply and demand resources comparably for providing comparable services to the wholesale markets.12

IV. ARGUMENT

A. FERC Has Jurisdiction Because the Orders Regulate Transactions in the Wholesale Markets, Not Retail S ales or Other Retail “Services” Reserved to the States

There is no challenge to FERC’s position that the F PA grants it authority over practices that affect wholesale rates, Gen. Br . 30, nor is there a challenge to FERC’s factual finding that wholesale demand respon se directly affects wholesale prices. Order 745 PP 112-115; Order 745-A PP 22-24

. Instead of challenging FERC’s position that wholesa le demand response programs are practices affecting wholesale rates, G enerators try another approach. They argue that the FPA prohibits FERC from regulat ing “retail services”—a

manufactured term not found in the law—and other tr ansactions subject to regulation by the States. See generally Gen. Br. 28. Generators’ argument is

flawed. Contrary to Generators’ claims, Congress did not as sign the States jurisdiction over “retail services.” Instead, Cong ress focused on sales. It assigned FERC jurisdiction over wholesale sales of electrici ty and interstate transmission, along with ensuring that wholesale rates and practi ces are reasonable. FPA §§ 201, 205, 206, 16 U.S.C. §§ 824, 824d, 824e. It exclude d from FERC’s jurisdiction “any other [i.e., non-wholesale] sale of electric energy.” FPA § 201(b)(1), 1613

U.S.C. § 824(b)(1) (emphasis added). 11 Neither the FPA nor any case that Generators cite excludes “retail services,” whateve r those may be, or “retail customers” from FERC’s jurisdiction. Gen. Br. 31 ( citing FPC v. Conway Corp., 426 U.S. 271, 276-277 (1999); Gen. Br. 28 (citing New York v. FERC , 535 U.S. 1 , 19 (2002)). FERC carefully tailored its action to address whole sale demand response. The question is whether FERC’s construction of the FPA as granting it jurisdiction over this wholesale demand response is permissible. See, e.g., Chevron U.S.A., Inc. v. Natural Resources Defense Council , 467 U.S. 837, 843 (1984). It is. The unchallenged factual findings of FERC establish that the regulated

transaction is a wholesale transaction that affects wholesale generation rates. The relevant transaction is the payment of LMP to a who lesale demand response provider (assuming the net benefits test is met) fo r the service it provides to the energy market. See Order 745, Summary. The payer is the administrator of the wholesale market, over which FERC has jurisdiction. Order 745-A P 28

. The

11 Though not at issue here, the FPA also excludes fro m FERC’s jurisdiction “facilities used for the generation of electricity or over facilities used in local distribution or only for the transmission of electr ic energy in intrastate commerce, or over facilities for the transmission of electric energy consumed wholly by the transmitter.” States, conversely, have ample autho rity to require the use of specific types of electricity generation and demand-side sou rces for their retail customers but not to directly regulate wholesale rates.14

payee is a participant in the wholesale market. Or der 745-A P 31. The effect is on the wholesale markets: reducing demand for wholesa le electricity, thereby affecting wholesale rates by reducing the wholesale price. Order 745-A P 23 & n.51 (describing findings that wholesale demand res ponse benefits wholesale markets); Order 745 P 47. Nor do the Orders directly regulate retail demand r esponse. Cf. Order 745-A P 71 (finding that the Final Rule does not directly affect retail-level demand response programs); Order 745 P 108 (the disconnect between wholesale a nd retail prices prevents the effect of wholesale demand resp onse—reducing wholesale pricing—from automatically passing directly through to the retail price). As a factual matter, the regulated transaction is a whol esale transaction, and the Orders establish the rules governing that transaction.

Generators would have the Court believe that becaus e retail customers choose to become involved in wholesale demand respo nse (whether directly or indirectly) and reduce their retail consumption, th e transaction is somehow transformed into something akin to a retail sale. Generators are wrong for many

reasons. First, Generators’ premise that Order 745 requires payments to “retail customers,” Gen. Br. 28, is incorrect. In fact, ma ny wholesale demand response resources are not retail customers at all. They ar e third-party aggregators of retail15

customers. It is they, and not the retail customer s, who would be compensated directly under Order 745. And when a third-party a ggregator pays a consumer, the Orders are not regulating that transaction. Moreov er, even if a wholesale demand response provider is also a retail customer—say, a large industrial company—it is not acting in its capacity as a retail customer whe n it provides demand response into the wholesale market. That an entity particip ates in the retail markets for one purpose—buying electricity—does not mean that every other transaction in which the entity participates becomes a retail transactio n. The same entity can be subject to FERC’s jurisdicti on for some transactions

and not for others. See, e.g., Mississippi Power & Light Co. v. Mississ ippi ex rel. Moore, 487 U.S. 354, 357 (1988) (noting that the sa me companies were engaged in both wholesale and retail sale of electricity, that the wholesale transactions were governed by agreements filed with FERC, while the r etail sales were governed by local agencies); New York v. FERC, 535 U.S. 1, 11, 23-24 (2002) (holding that, FERC had jurisdiction over retail transmission, eve n though the transaction involved retail customers). Here, though customers ’ retail purchases are subject to State jurisdiction, compensation for the demand res ponse they bid into the wholesale markets is subject to FERC jurisdiction. Second, retail sales—the kind of transactions clear ly outside FERC’s jurisdiction—occur in the retail markets regardless of whether demand response is16

dispatched. Customers, even if they are end-users permitted to participate in the wholesale market as a demand response resource, mus t buy their electricity on the retail market. Those retail sales of electricity c ontinue to be regulated by the States, and Orders 745 and 745-A do not regulate th e price or operation of those retail sales. The retail sale and demand response transactions are separate, even if the same entity is a party to both transactions. Generators gain no more traction from the prefatory language in Section 201. The language is declaratory, stating simply t hat FERC’s jurisdiction shall “extend only to those matters which are not subject to regulation by the States.” FPA § 201(a), 16 U.S.C. § 824(a). The “state power s” language in Section 201(a) is a “mere policy declaration that cannot nullify a clear grant of jurisdiction, even if that particular grant seems inconsistent with the b roadly expressed purpose.” New York, 535 U.S. at 22. “Because the FPA contains a clear a nd specific grant of authority to FERC over [practices affecting wholesa le rates], the prefatory language . . . does not undermine FERC’s jurisdicti on.” Id

. FERC has carefully avoided intruding on retail dema nd response programs run in retail markets. Order 745 P 114 (the Commis sion “is not regulating retail rates or usurping impending state regulatory effort s concerning demand response.”); Order 745-A P 71. The transactions th e Orders do regulate are17

wholesale transactions affecting wholesale rates, n ot retail transactions, and FERC reasonably concluded that they fall within the Comm ission’s jurisdiction.

B. Demand Response Should Be Compensated at LMP Becaus e Demand Response Affects Wholesale Rates and Encoura ging Demand Response Provides Energy, Public Health, and Environmental Benefits

FERC’s decision to require compensation of wholesal e demand response

resources at LMP must be sustained unless it is “ar bitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(2)(A); see also B & J Oil and Gas v. FERC , 353 F.3d 71, 75 (D.C. Cir. 2004) (applying arbitrary and capricious standard of review to chal lenge to FERC order). Judicial review of “issues of rate design are fairly technic al and, insofar as they are not technical, involve policy judgments that lie at the core of [FERC’s] regulatory

mission.” Electricity Consumers Resource Council v. FERC , 407 F.3d 1232, 1236 (D.C. Cir. 2005). FERC’s decision to compensate at full LMP is exactly the kind of technical and policy decision that deserves defe rence. LMP is appropriate because demand response affects wholesale generatio n rates and because it will encourage the development of demand response, which is an important policy decision. Encouraging demand response will lead to a host of health and

environmental benefits. FERC’s Orders should be su stained.18 1. Compensating Demand Response at LMP Will Encourage Its Development

All parties and amici seem to agree on the “critical importance of effici ent price signals in competitive markets.” Br. of Robe rt L. Borlick, Joseph Browning,

et al. as Amici Curiae in Support of Petitioners, filed June 13, 2012, at 3 (Doc. No. 1378605). In a world of textbook economics, with e fficient price signals, the wholesale price (LMP) would more closely approach t he retail price (G). In such a world, where LMP equaled G, retail consumers would cut their electricity use if and only if doing so would benefit them, and by sav ing electricity and not paying for that electricity they would save an amount equa l to LMP, which would be the same as the retail rate (G).

But we do not live in a world of textbook economics . In the real world, wholesale and retail prices are disconnected and fa r from equivalent. Order 745-A PP 58, 59. “Paying LMP to demand resources will he lp address the lack of direct connection between wholesale and retail prices and the lack of dynamic retail prices by providing those customers that can respon d to price signals with accurate market price signal for such response.” Order 745- A P 61. Part of removing those barriers requires compensation greater than LMP-G. In addition, compensation at LMP does not improperl y subsidize demand response resources because the Orders do not permit compensation unless the net19

benefits test is satisfied. See Order 745 P 47. Under that test, demand response resources will be paid LMP only when “the nature of the supply curve is such that small decreases in generation being called to serve the load will result in price decreases sufficient to offset” the cost of acquiri ng the demand response resources. Order 745 P 80. The test helps ensure that demand response is, in fact, comparable to supply when it is compensated. Compensating demand response resources at LMP “will encourage more demand-side participation.” Order 745-A P 61; see also id. P 62 (“Paying the full marginal value of energy to demand response will pr ovide the proper level of investment resources available for capital improvem ents.”). Encouraging demand response is an important policy decision within FER C’s administrative expertise, as we explain below. FERC appropriately considered real world markets, the policy value of demand response, and resolved diffe ring views between economic experts, finding that LMP is the appropriate compen sation. See, e.g., Electricity

Consumers Resource Council , 407 F.3d at 1236 (judicial review of “issues of r ate design are fairly technical and, insofar as they ar e not technical, involve policy judgments that lie at the core of [FERC’s] regulato ry mission,” and this Court defers to FERC’s resolution of disputes between exp erts). The Court should defer

to FERC’s decision.20 2. The Value of Demand Response Is At Least as High, I f Not Higher, Than Supply Because It Reduces Externalitie s and Social Costs

FERC premised its decision to require wholesale dem and response resources to be compensated at LMP, the same rate as supplier s, on the well-supported determination that both supply and demand resources provide a comparable service to RTOs and ISOs for purposes of balancing supply a nd demand and maintaining a reliable electricity grid. Order 745 P 47; Order 7 45-A PP 58, 60, 73. Comparable treatment is the right standard, particularly becau se wholesale demand response actually provides a number of public interest benef its that make it even more valuable than supply. FERC is entitled to consider these benefits to the public

interest. Elizabethtown Gas Co. v. FERC , 10 F.3d 866, 872 (D.C. Cir. 1993) (FERC “has wide discretion to balance competing equ ities against the backdrop of the public interest”). To fully appreciate the value of wholesale demand r esponse, one must recognize that it usually becomes competitive in th e energy market during peak hours of demand. When demand peaks, wholesale mark ets must dramatically increase supply in order to keep up with the demand —unless demand response is deployed. Meeting peak demand with supply alone ca uses a number of serious challenges and adverse impacts that that demand res ponse can help avoid or

minimize.21

At peak times in a particular location, it may be literally impossible to add marginal units of energy due to congestion on the t ransmission grid. 12 At such times, marginal units of demand response may be uni quely able to balance marginal units of demand. Even though electricity cannot at present be store d efficiently, the grid must reliably supply electricity at all times, even duri ng periods of peak demand. The grid meets high demand largely with “peaking units, ” power plants that operate only when demand is close to its peak. 13 Peaking units may run only for a relatively small number of hours each year, 14 but the system still needs to build them to provide power during those peak times. Bui lding and maintaining peaking units requires extensive economic investments in ge neration and transmission

infrastructure.

12 See, e.g., U.S. Dep’t of Energy, National Transmission Grid Study (May 2002) at p. 41, available at http://energy.gov/oe/information-center/library/rep ortsdocuments#demand (discussing bottlenecks in transmission lines that demonstrate physical limits of system, and explaining how deman d response can relieve such bottlenecks); U.S. Dep’t of Energy, Benefits of Demand Response in Electricity Markets and Recommendations for Achieving Them (February 2006) at ix-xi, available at http://eetd.lbl.gov/ea/ems/reports/con gress-1252d.pdf (explaining that demand response programs are established so that th e load can be reduced when the grid becomes unreliable).

13 MIT, The Future of the Electric Grid app. B at 259 (2011).

14 Id.22

Demand response can reduce the need for these peaki ng plants by lowering total peak demand. Indeed, FERC’s assessment of de mand response potential indicates that the highest level of demand response could level demand between 2009 and 2019, the last year of FERC’s analysis hor izon. 15 The 2019 peak load could be reduced by as much as 150 gigawatts (GW), compared to the business-asusual scenario. Id. The current FERC-approved cost estimate for a pea king plant is $112,868 per MW-year. Using this estimate, the projected 2019 peak load reduction of 150 GW would result in approximately $ 17 billion in cost savings in

2019. 16 In addition to saving money, avoiding the construc tion of these peaking plants provides important societal benefits. Peaki ng plants are frequently built

15 FERC, National Assessment of DR Potential (June 2009) , available at http://www.ferc.gov/legal/staff-reports/06-09-deman d-response.pdf.

16 I n re PJM Interconnection, L.L.C ., 139 FERC ¶ 61,031 at pp. 2-3 (2012). Another example further demonstrates how demand res ponse can reduce the need to build plants. In Texas, if demand response participation reached the estimated achievable participation, it would more than cover the reserve margin needed to meet contingencies such as extreme weather—without the need to build new plants. See ERCOT, New Report Reinforces Future Electric Resource Adeq uacy Concerns (May 22, 2012), available at http://www.ercot.com/news/press_releases/show/518 ( target planning reserve margin is 13.75%); The Brattle Group, ERCOT Investment Incentives and Resource Adequacy (June 1, 2012) at 90, available at http://www.ercot.com/content/news/presentations/201 2/Brattle%20ERCOT%20Re source%20Adequacy%20Review%20-%202012-06-01.pdf (potential for achievable participation in demand response is 15% of capacity, greater than reserve margin).23

near major populations, where the air pollutants th ey discharge do disproportionate harm to public health. The National Academy of Sci ences estimates the health costs of peaking plants at $3 million per plant per year. 17 Using demand response to avoid nearly 2,000 new peaking plants could avoi d health costs in the range of $4 or more billion annually. 18 Demand response also can reduce the need to dispatc h energy from existing peaking plants, which have disproportionate public health and environmental harm. Generation sources used for marginal supply at time s of peak demand are among the oldest, most polluting, and most inefficient in the fleet. Avoiding the use of the 10% most polluting peaking plants avoids 100-200 mi llion metric tons of greenhouse gases annually, plus nitrogen oxides, an d sulfur dioxide, gases that contribute to serious health problems and environme ntal problems. 19 Demand response can also reduce the marginal cost o f electricity, which saves consumers money and provides a cleaner, lower polluting alternative to meet

17 National Academies of Sciences Committee on Health, Environmental, and Other External Costs and Benefits of Energy Product ion and Consumption; National Research Council, et al., The Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use , available at http://www.nap.edu/catalog.php?record_id=12794.

18 National Research Council, The Hidden Costs of Energy, available at http://www.nap.edu/catalog.php?record_id=12794.

19 National Research Council, et al, The Hidden Costs of Energy , available at http://www.nap.edu/catalog.php?record_id=12794.24

electricity demand. In fact, FERC’s net benefits t est provides that demand response providers will receive full LMP only if de ploying demand response lowers the wholesale prices by an amount greater th an the payments to the demand response providers. With sufficient wholesale dema nd response, the market will clear at lower prices than the high polluting, more costly generators’ bids. 20 When demand response meets peak demand, it can lead to s ignificant human health and

environmental benefits. 21 Wholesale demand response also can foster the integ ration of renewable energy sources into the grid. Renewable resources, like wind and solar, vary in

20 See generally Ade Dosunmu, Up in Smoke: Seven Gigawatts of Coal Retrenches from PJM , Energy Pulse (August 5, 2011), available at http://www.energypulse.net/centers/article/article_ display.cfm?a_id=2451 (explaining that, at a recent auction for electrici ty capacity in PJM, an RTO, almost seven gigawatts of coal generation, enough capacity to power over 2.2 million homes, failed to clear the market because demand re sponse contributed to the market clearing at a lower price than the coal gene rators’ bids).

21 Not producing the seven gigawatts of coal-fired ele ctricity generation that failed to clear the auction cited at fn. 19 above could el iminate approximately the same amount of carbon dioxide emissions equivalent as re moving seven million passenger vehicles and could avoid approximately 22 8,000 tons of sulfur dioxide and 59,000 tons of nitrogen oxides. Id. The environmental and public health benefits of demand response are optimized where the demand response consists of changes in electricity consumption, rather than the use of uncontrolled on-site generators that may actually increase emissions and pollutants over what traditional supply resources would emit.25

their production of energy with the time of day and the weather. 22 Backup power is necessary to meet high demand that occurs when c onditions prevent renewable energy from meeting it. By shaving the peak load, demand response lowers the amount of reserves needed to support renewable ener gy sources. 23 In addition, demand response can serve as a supply-following res ource that tracks the variable supply of renewable energy. That is, as the supply varies, demand response

enables demand to follow suit. 24 Demand response also can serve as a substitute for more costly and higher emitting fossil spinning reserves and other ancilla ry services. These ancillary services are needed to maintain the precise balance of grid supply and demand during both normal and abnormal operation (for example, when a large fossilfueled plant trips off line). Wholesale demand res ponse is a fast-acting ancillary service, which permits it to respond to short-term variation in electrical demand

22 Shelley Welton, MIT Study Demonstrates Demand Response’s Role in Balancing Renewables, Columbia Law School Climate Law Blog (December 15, 2011), available at http://blogs.law.columbia.edu/climatechange/2011/12 /15/mitstudy-demonstrates-demand-response%E2%80%99s-role-i n-balancingrenewables

/ (citing The Future of the Electric Grid, MIT Energy Initiative, http://web.mit.edu/mitei/research/studies/the-elect ric-grid-2011.shtml).

23 MIT, The Future of the Electric Grid

.

24 See, e.g., MIT, Future of the Electric Grid , at p. 67 available at http://web.mit.edu/mitei/research/studies/the-elect ric-grid-2011.shtml.26

from both normal and abnormal operations. See Order 745 P 10 n.20 (providing an example of how demand response can quickly re-balan ce a system). 25 Utilizing wholesale demand response can help maximi ze the use of existing generation and transmission facilities and infrastr ucture. By reducing demand during peak times, it can shift that demand to peri ods when facilities would otherwise be underutilized. This includes shifting demand to resources such as wind, which would otherwise have to be curtailed wi thout sufficient demand. Existing ancillary services and reserves specifical ly designed to respond to large, infrequent ramps, which are slower than conventiona l contingencies, are important. 26 Deploying demand response in the wholesale market c an help avoid the full suite of costs associated with new peak electricity generation facilities and the accompanying transmission infrastructure. As with generation, transmission infrastructure involves costly economic investments and can have adverse environmental impacts. Depending on the scope of a transmission project and its

25 See also, DeWayne Todd, Summary Remarks, Panel Discussion—Demand Response in Organized Markets—Barriers to Comparabl e Treatment and Solutions to Eliminate Potential Barriers (May 21, 2008), available at http://www.ferc.gov/eventcalendar/Files/20080521082 049-Todd,%20Alcoa.pdf.

26 Michael Milligan and Brendan Kirby , Utilizing Load Response for Wind and Solar Integration and Power System Reliability ,” Presented at WindPower 2010 Dallas, Texas, May 23–26, 2010, available at http://www.nrel.gov/docs/fy10osti/48247.pdf.27

siting, environmental concerns include potential im pacts on endangered species, wetlands, water resources, wildlife, vegetation, an d lands. 27 Expansive utilization of demand response in the wholesale market can help prevent these impacts. As temperatures increase, the grid is experiencing more peak events, which last longer. 28 For example, the hot weather in the summer of 200 8 caused peak summer electricity demand in the U.S. to increase b y 4.4 percent. 29 This trend will only make demand response more valuable in helping to reduce peak demand.

FERC made a reasonable decision to set the level of compensation at LMP. Demand response is a sound economic decision and is essential to national environmental and energy policy, making it eminentl y reasonable to set the level of compensation such that demand response resource wil l more fully develop and participate in the wholesale markets. As FERC expl ained, compensation below LMP will not sufficiently encourage investment and development of resources to

27 See FERC, A Guide to the FERC Electric Transmission Facilitie s Permit Process 13 (updated Sept. 2010), available athttp://www.ferc.gov/forcitizens/citizen-guides/electric/guide-transmission .pdf.

28 See Oak Ridge National Laboratory, Climate Change and Energy Supply Use: Technical Report to the U.S. Department of Energy i n Support of The National Climate Assessment 7, 10–11, 18, 46 (2012), available at http://www.esd.ornl.gov/eess/EnergySupplyUse.pdf.

29 U.S. Dep’t of Energy, Energy Info. Adm., Annual Energy Outlook 2008: With Projections to 2030 46 (2008), available at http://www.eia.gov/oiaf/aeo/pdf/0383(2008).pdf.28

realize the significant social, environmental, and economic benefits that demand response can provide. Order 745-A PP 59-62.

V. CONCLUSION The Court should dismiss the petition for review. Dated: September 14, 2012 Respectfully submitted , /s/Vickie L. Patton Katherine Mayer Mangan MAYER MANGAN, PLC 10755 Scripps Poway Parkway, Ste. 367 San Diego, CA 92131 Tel. 858-397-6234 Email: kate@mayermangan.com Vickie L. Patton General Counsel ENVIRONMENTAL DEFENSE FUND 2060 Broadway Boulder, CO 80302 Tel. (303) 447-7215 Email: vpatton@edf.org

Elizabeth B. Stein Attorney ENVIRONMENTAL DEFENSE FUND 257 Park Avenue South New York, NY 10010 Tel. (212) 616-1327 Email: estein@edf.org John Finnigan Senior Regulatory Attorney ENVIRONMENTAL DEFENSE FUND 128 Winding Brook Lane Terrace Park, Ohio 45174 (513) 509-3339 Email: jfinnigan@edf.org Counsel for Amicus Curiae Environmental Defense Fun d Orijit Ghoshal CITIZENS UTILITY BOARD 309 West Washington, Suite 800 Chicago, Illinois 60606 Tel. (312) 263-4282 ext. 124 Email: oghoshal@citizensutilityboard.org Counsel for Amicus Curiae Citizens Utility Board John N. Moore Senior Attorney-The Sustainable FERC Project NATURAL RESOURCES DEFENSE COUNCIL 2 North Riverside Plaza, Ste. 2250 Chicago, IL 60606 Tel. (312) 651-7927 Email: jmoore@nrdc.org29 Counsel for Amicus Curiae Natural Resources Defense Council30 CERTIFICATE OF COMPLIANCE In accordance with Federal Rule of Appellate Proced ure 32(a)(7)(C) and D.C. Circuit Rule 32, I certify that the accompanyi ng brief has been prepared using 14-point Times New Roman typeface. I further certi fy that the accompanying brief complies with the type-volume limitations of Rule 3 2(a)(7)(B). The brief is proportionately spaced, and contains 6,086 words, e xclusive of the table of contents, table of authorities, signature lines, an d certificates of service and compliance.

Dated: September 14, 2012 Respectfully submitted , / s/Vickie L. Patton Vickie L. Patton31 CERTIFICATE OF SERVICE

I hereby certify that I electronically filed the f oregoing with the Clerk of the Court for the United States Court of Appeals for th e District of Columbia Circuit by using the appellate CM/ECF system on September 1 4, 2012. I certify that the following parties in the case a re registered CM/ECF users and that service on those parties will be accomplis hed by the appellate CM/ECF system.

/ s/Vickie L. Patton Vickie L. Patton