Opinion ID: 185132
Heading Depth: 2
Heading Rank: 3

Heading: Abuse of Remedial Discretion

Text: 29 Because we conclude that the Commission has discretion with respect to remedying Claremont's violation of S 3(17)(C)(ii), Connecticut Valley is remitted to challenging the Commission's exercise of that discretion, which we review only for abuse. See Louisiana Public Serv. Comm'n v. FERC, 174 F.3d 218, 225 (D.C. Cir. 1999). An agency abuses its remedial discretion if its decision conflicts with the 'core purpose[]'  of the statute itadministers, Towns of Concord, 955 F.2d at 74 (quoting Maislin Indus., Inc. v. Primary Steel, Inc., 497 U.S. 116, 133 (1990)), or if it is not otherwise reasonable, that is, based upon a reasonable accommodation of all the relevant considerations and not inequitable under the circumstances. Towns of Concord, 955 F.2d at 75-76; see also Koch Gateway Pipeline Co. v. FERC, 136 F.3d 810 (D.C. Cir. 1998); Laclede Gas Co. v. FERC, 997 F.2d 936 (D.C. Cir. 1993). Insofar as the Commission's remedial decision is based upon factual determinations, they must be supported by substantial evidence in the record. See 16 U.S.C. S 825l(b); Louisiana Public Serv. Comm'n, 174 F.3d at 225. 30 Connecticut Valley argues that the Commission's decision not to revoke Claremont's QF status or to provide any alternative relief is an abuse of discretion for a number of reasons. First, Connecticut Valley claims the decision directly conflicts with all three statutory purposes expressed in S 101 of the PURPA, to wit, conservation of energy, optimization of [electric utility] efficiency, and equitable rates to electric consumers. 16 U.S.C. § 2611. 31 As the Commission properly notes, however, S 101 applies only to Title I of the PURPA, whereas QF status is a creature of Title II. And the Supreme Court has said that the core purpose of Title II is to encourage the development of cogeneration and small power production facilities by addressing problems imped[ing] the development of nontraditional generating facilities. FERC v. Mississippi, 456 U.S. at 750. In other words, Title II reflects, predominantly, solicitude for certain types of producers rather than for the consumers who must pay their rates. Accordingly, the Commission deemed it material in the orders under review that many QFs ... have entered into contracts which require[ ] or permit[ ] the ... sale of gross output. 82 FERC at 61,419. Revoking the QF status of those facilities, or altering their obligations and responsibilities under[ ] such executed PURPA sales contracts, id. at 61,420, would undercut the purpose of the Congress in Title II to encourage the development of these nontraditional generating facilities. We see no conflict, therefore, between the Commission's exercise of remedial discretion and the relevant statutory purpose. 32 Nor can we accept Connecticut Valley's second argument, which is that the Commission's failure even to consider harm to consumers was an abuse of discretion. According to Connecticut Valley, § 210(b) of the PURPA expressly requires the Commission to balance the interests of consumers against those of producers, thus: 33 The rules prescribed under subsection (a) of this section shall insure that, in requiring any electric utility to offer to purchase electric energy from any [QF], the rates for such purchase ... shall be just and reasonable to the electric consumers of the electric utility and in the public interest.... 34 16 U.S.C. S 824a-3(b). This requirement is directed, however, at the Commission's exercise of rulemaking authority over the rates utilities must pay QFs for power. The Supreme Court has already held that the full avoided cost rule satisfies the requirements of S 210(b). See American Paper Inst., 461 U.S. at 415-17. Therefore the Commission did not abuse its discretion when it omitted explicitly to consider anew the interests of consumers. 35 Third, Connecticut Valley claims the Commission failed adequately to consider whether Occidental Geothermal, Inc., 17 FERC p 61,231 (1981), and Power Developers, Inc., 32 FERC p 61,101 (1985), put Claremont on notice, before the contract was executed (or at least before Claremont filed its application for certification as a QF), that a QF may not sell its gross output. The Commission did not fail fully to consider those cases. On the contrary, the Commission expressly read both casesas having resolved issues related to but not the same as that resolved in Turners Falls: In Occidental Geothermal the Commission held that net output is the appropriate measure of the 80-MW limitation upon SPPs; and in Power Developers it concluded that a QF may not sell more than net output at avoided cost rates. Connecticut Valley, 82 FERC at 61,417-18. Although both cases were, of course, relevant to the Commission's understanding of this case, the Commission reasonably concluded that it was not until Turners Falls that it removed any remaining ambiguity about whether the 'simultaneous buy-sell' rule permitted a sale in excess of net output [and] clearly stated that a sale in excess of net output would deprive a facility of its QF status.Id. at 61,417; see also 83 FERC p 61,136, at 61,610. There was no abuse of discretion here. 36 Fourth, Connecticut Valley argues the Commission failed to consider whether Claremont intentionally or negligently misled the Commission by stating its gross rather than its net output in its application for certification. The Commission did not have to address this claim in the orders under review, however; it was rendered moot when the Commission held that it was reasonable for a facility applying for QF certification prior to the Turners Falls decision to have believed that the Commission's simultaneous buy-sell rule allowed the QF to sell its gross output. See 82 FERC at 61,418. The Commission noted that many applicants--and indeed several state PUCs--had thought gross sales were permitted under the Commission's regulations, and that although this point had been clarified to a significant degree in 1985 in Power Developers, it was not until Turners Falls in 1991 that the Commission removed any remaining ambiguity. Id. The Commission could hardly say, therefore, that prior to that decision a QF was either intentionally deceptive or even merely negligent if it listed its gross rather than its net output in applying for QF certification. 37 Finally, Connecticut Valley claims the Commission failed to support with substantial evidence a key factual determination, namely, that Claremont had a settled expectation it could lawfully sell its gross output when it entered into the contract. As Connecticut Valley conceives the issue, the Commission must show that, in developing and financing the SPP facility, Claremont actually relied upon being able to sell its gross output. 38 The Commission never made a factual finding about Claremont's actual reliance, however. Rather, the Commission reiterated its general policy against invalidating contracts for which a PURPA-based challenge was not timely raised-that is, before the contracts were executed, so as not to upset the settled expectations of parties to, and to invalidate any of their obligations and responsibilities under, such executed PURPA sales contracts. Id. at 61,419-20; see also 83 FERC p 61,136, at 61,611. The Commission reasonably infers the parties' settled expectations from the terms of their executed contract; either party may avoid such an inference by including a specific reservation in its contract or by challenging the validity of a contract provision at the time it executes the contract. 39 Because the Commission did not make a factual finding relative to settled expectations, but rather drew a reasonable inference in accord with its established policy, it need not support this aspect of its decision with substantial evidence. Nor does Connecticut Valley claim that the Commission is legally required to determine settled expectations by making a case-specific factual inquiry rather than relying upon a rule of general applicability. The only question remaining, therefore, is whether the Commission's application of its general rule in this case was arbitrary and capricious. See Southeastern Michigan Gas Co. v. FERC, 133 F.3d 34, 38 (D.C. Cir. 1998). Connecticut Valley included no reservation clause in the contract suggesting disagreement about or uncertainty over the purchase and sale of Claremont's gross output; nor was Connecticut Valley challenginggross sales in court or before the Commission at the time it entered into the contract. We therefore conclude that the Commission's application in this case of its general rule inferring the settled expectations of the parties to a contract from the terms of their agreement was not arbitrary or capricious.