Opinion ID: 402460
Heading Depth: 3
Heading Rank: 2

Heading: FERC's reasoned and adequate consideration

Text: 98 Turning to the second reason for our upholding of the Commission on this issue, it is clear to us that the regulations promulgated by FERC under the statute were a reasoned and adequate response to the charge Congress gave it. To outline the course of our discussion in this section, we find that FERC considered the advantages and disadvantages of fuel use criteria, but concluded that the burdens they would place on cogeneration, the presence of FERC's fuel efficiency criteria, the power of the Department of Energy (DOE) to restrict the fuel use of the largest cogeneration facilities, and the relative pricing of non-petroleum utility power all rendered fuel use criteria unnecessary and undesirable. 99 In this discussion of why the court concludes that the Commission's rules are reasoned and adequate, two general points should be kept in mind. First of course is that the entire discussion takes place against the background of our prior finding of discretion for the Commission, so that the most the Commission need show is that its rule was  'reasonably related to the purposes of the enabling legislation.'  72 Second, not only do we find each of the reasons discussed below to be convincing separately, but these reasons can be weighted cumulatively, which makes their force overwhelming. 100 Petitioners claim that (i)nstead of giving fuel use considerations the 'hard look' required by section 201(18)(B), the Commission gave five reasons for not 'looking' at all. 73 However, it is clear here that petitioners are merely playing a semantic game. 74 If the Commission did give reasons for not looking, that makes its action indistinguishable from a decision not to invoke fuel use criteria when it had looked. 101 More to the point, the Commission actually did give fuel use considerations the hard look that petitioners seek; it simply concluded for a variety of reasons which we will now discuss that fuel use criteria were inappropriate. That there will inevitably be differences of opinion as to the wisdom and effect of various policies creating incentives and disincentives for cogeneration is apparent; but it is equally apparent that this court has neither the technical expertise nor the constitutional authority to question on the merits the decisions made by an executive branch agency properly empowered by Congress. We can do no more than determine whether the law has been followed, and it is clear that the actions of the Commission are within the delegation made to it by Congress. 102 The Commission held hearings in various cities to gather testimony regarding its proposals, including the desirability of fuel use criteria, and the record is replete with voluminous written comments that were received and considered. Many of those commenting at the hearings agreed with the Commission that stringent fuel use criteria should be avoided. 75 There was also testimony to the effect that a fuel savings requirement would discourage cogeneration. 76 The Economic Regulatory Administration (ERA) elsewhere acknowledged the burden of these requirements by proposing an amendment easing the evidentiary requirement for cogenerators in areas of the country where most utilities burn oil to generate electricity. 77 The ERA determined that oil-fired cogeneration would in many cases result in a net savings of oil. Similarly, the Commission argued that a restriction on the use of gas or oil for cogeneration, imposed by the Commission, could discourage cogeneration at the lower heat input levels, while not significantly reducing the use of oil or natural gas. 78 Petitioners object to the use of the unquantified and unexplained 'fudge' words 'could' and 'significantly,'  79 but the problems confronting FERC are of first impression and quite possibly unquantifiable. Moreover, we think it worth noting that the language which petitioner uses in criticizing FERC is similarly unquantified and unexplained. 103 Petitioners themselves concede that a fuel savings requirement might place a burden on oil and gas fired facilities, but argue that the burden need not be substantial. 80 They argue that the Commission could provide for reasonably limited, streamlined procedures. Petitioners' argument continues: The requisite information on the cogenerator's fuel use must be known to it in order for it to determine the economic viability of the project, and the utility's fuel use should be known by the state regulatory authority. 81 But, as is clear from petitioners' own language here, burdens would be placed on prospective cogenerators. That the burdens may seem small goes again to the weight of the factors relied upon by FERC, not their existence. As we stated before, we need not engage in a weighing process in the matter now before us. 104 Moreover, it is by no means clear that-even assuming arguendo that the petitioners are correct in their assertion that the burdens should be perceived as relatively light-that the burdens would be perceived as light. The obstacles to cogeneration are both psychological and economic. 82 The Commission could rationally find that it is of paramount importance to remove the appearance of regulation as well as its reality. A demonstration by the cogenerator of fuel savings, and the requirements that the prospective cogenerator have (t)he requisite information on ... fuel use and that the state regulatory authority be consulted, each entail additional and perhaps substantial psychological barriers to the adoption of cogeneration. FERC could reasonably have concluded that, to avoid the appearance of regulation, a general rule of no fuel use requirements might be preferable to a more complex rule. Encouraging cogeneration by eliminating the appearance of regulation might result in oil and gas savings greater than would be effected were complicated regulations undertaken. 105 The importance of avoiding additional regulations was especially important in light of the fact that the Commission decided that it would promulgate fuel efficiency regulations, to which subject we next turn. 106 We find that the Commission's regulation of fuel efficiency-instead of fuel use-was a reasoned, adequate response to the charge Congress gave it in section 201 of PURPA. Section 201 mentioned fuel efficiency as well as fuel use in the same list of requirements that the Commission might prescribe. 83 The Commission made clear its belief that the establishment of minimum efficiency standards for cogeneration facilities would ensure the efficient use of scarce fuels. 84 The Commission specifically observed that so long as cogeneration facilities provide for more efficient use of scarce fuels the national purpose is served. 85 The efficiency standards adopted by the Commission have much the same effect that the fuel use criteria would have, insofar as these efficiency criteria are strictest for cogeneration facilities using oil or gas. 86 The Commission also proposed efficiency standards (although less stringent ones) for facilities using other fuels that are limited in availability such as biomass. It imposed no efficiency standards on facilities using coal or coal-derived fuel, reasoning that (t)he abundance of this energy resource permits reliance on the market to optimize efficiency. 87 The Commission's proposed efficiency standards are higher for gas and oil in order to ensure that these fuels are put to efficient use. 88 Finally, acknowledging that efficiency standards are not useful for bottoming cycle facilities, the Commission promulgated efficiency standards for such facilities only to the extent they use oil or gas for supplementary firing to generate electricity. 89 107 The Commission also justified its decision not to invoke fuel use criteria by pointing out that the Department of Energy has authority to restrict the fuel use of those cogeneration facilities which have a design capability of consuming fuel at the rate of at least 100 million BTU's per hour. 90 Thus FERC declared in Order No. 70 that the Commission does not believe it necessary or appropriate to require an additional layer of fuel use regulation on technologies which the Commission is charged with encouraging and for which another agency has authority to restrict fuel use. 91 Petitioners argue that this reason has attenuated importance since only some cogenerators meet the 100 million BTU's per hour standard. However, the issue before us remains less the weight of FERC's reasons than their existence. 108 Finally, the Commission reasoned that fuel use criteria were unnecessary since-because the operation of coal-, nuclear-, or hydro-powered generating stations is much less expensive than operating oil- or gas-fired plants-a cogenerator in most places will find it more economical to purchase utility-generated electricity when that power is coal-, nuclear-, or hydro-generated and the cogenerator uses oil or gas. The Commission thus decided that these market forces rather than an additional layer of Federal fuel use regulation should determine the appropriate use of oil and gas. 92 Petitioners question the economic model on which the respondents' argument is based. However, it is not for this court to decide among Chicagoan, Austrian, or Harvardian economic models. Again, the only question properly before us is whether the Commission has based this decision on some plausible evidence. 109 Thus we conclude that the Commission was granted discretion in its decision to invoke or not to invoke fuel use criteria and that its decision not to do so was a reasoned and adequate response to Congress' charge. FERC considered the advantages and disadvantages of such criteria, and concluded that the burdens they would place on cogeneration, the presence of its fuel efficiency criteria, the power of DOE to restrict the fuel use of the larger facilities, and the price of non-petroleum utility power all rendered fuel use criteria unnecessary or undesirable or both.