Opinion ID: 19840
Heading Depth: 2
Heading Rank: 1

Heading: FERC's Section 202(b) Authority

Text: 8 Section 202(b) of the Federal Power Act provides: 9 Whenever the Commission, upon application . . . of any person engaged in the transmission or sale of electric energy, . . . , finds such action necessary or appropriate in the public interest it may by order direct a public utility (if the Commission finds that no undue burden will be placed upon such public utility thereby) to establish physical connection of its transmission facilities with the facilities of one or more other persons engaged in the transmission or sale of electric energy, to sell energy to or exchange energy with such persons: Provided, That the Commission shall have no authority to compel the enlargement of generating facilities for such purposes, nor to compel such public utility to sell or exchange energy when to do so would impair its ability to render adequate service to its customers. 10 16 U.S.C. 824a(b) (emphasis in original). EPE argues that FERC exceeded its authority under the statute because the City is not engaged in the transmission or sale of electric energy and because the Act does not grant to FERC the same public interest authority to order sales of electricity as it does to order interconnection of electric facilities. We disagree. 11 To decide whether or not FERC had the statutory authority to issue the Order, we must review the agency's interpretations under the Chevron doctrine. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), Texas Office of Public Util. Counsel v. Federal Communications Comm'n, 183 F.3d 393, 409 (5th Cir. 1999). Key to this inquiry is determining whether or not thestatute is ambiguously worded. If Congress has directly spoken to the precise question at issue, we must give effect to the unambiguously expressed intent of Congress. Chevron, 467 U.S. at 842-43. We may reverse an agency's interpretation of an unambiguous statute only if it does not conform to the plain meaning of the statute. See Public Util. Counsel, 183 F.3d at 409. If, however, the statute is ambiguous or silent, the question for the court is whether the agency's answer is based on a permissible construction of the statute. Chevron, 467 U.S. at 843. Thus, we may reverse an agency's construction of an ambiguous or silent statute only if we find it to be arbitrary, capricious, or manifestly contrary to the statute. Id. at 844. 12 EPE reasons that because the City is not currently providing power to the inhabitants of Las Cruces, the City is not engaged in the transmission or sale of electric energy as required by the Act. To this end, EPE relies heavily upon Niagara Mohawk Power Corp. & Town of Massena, New York, 56 F.P.C. 666 (1976), in which FERC's predecessor, the Federal Power Commission, ruled that Section 202(b) requires that a prospective purchaser of power under the Section be currently engaged in the transmission or sale of electric energy. See id. at 667 (emphasis added). From this interpretation EPE extrapolates that a party seeking an order under Section 202(b) must be currently engaged in the transmission or sale of electric energy within the precise geographic area that it seeks to serve under the order. We do not read the statute to impose such a geographic limitation, nor has FERC previously interpreted the statute to impose such a limitation. Accordingly, FERC's refusal to read such a requirement into Section 202(b) is consistent with the unambiguous wording of the statute and passes Chevron scrutiny. 13 The plain language of the statute indicates that any person engaged in the transmission or sale of electric energy may seek an order under its provisions. See City of Paris, Kentucky v. Federal Power Comm'n, 399 F.2d 983, 984 (D.C. Cir. 1968) (It is clear that under [Section 202(b)] the Commission can order a public utility to sell its energy to, or exchange its energy with, any person engaged in transmission or sale of electric energy.). The City is currently transmitting and selling power to industrial customers outside of Las Cruces. Accordingly, the City is eligible to seek a sale order under section 202(b). 14 EPE next argues that FERC's authority to act in the public interest in issuing orders under section 202(b) is limited strictly to orders mandating interconnection of facilities and does not apply to orders requiring sales of electricity. Again, looking to the plain language of the statute we see no such limitation upon FERC's authority. The language in question permits FERC to act in the public interest to establish physical connection of its transmission facilities with the facilities of one or more other persons engaged in the transmission or sale of electric energy, to sell energy to or exchange energy with such persons. 16 U.S.C. 824a(b). As the First Circuit indicated in New England Power Co. v. Federal Power Comm'n, 349 F.2d 258 (1st Cir. 1965): 15 The plain language of [Section 202(b)] is in the disjunctive, and we think it must be read as empowering the Commission to direct a public utility to establish a physical connection of its transmission facilities with the facilities of another entity engaged in the transmission or sale of electric energy, or to order the utility to sell energy to or exchange energy with such other entity, or to do both, as the public interest requires. 16 Id. at 263. EPE's involved recitation of the Act's legislative history does nothing to alter the disjunctive wording of Congress' final version of the section. The unambiguous wording of section 202(b) permitsFERC to order interconnection and/or the sale or exchange of energy between qualified entities as long as to do so is in the public interest and does not run afoul of any of the other prohibitions enumerated in the section. Accordingly, FERC's ruling to this effect passes Chevron scrutiny. 17 As both of FERC's statutory interpretations addressed above pass Chevron muster, we AFFIRM both contested orders to the extent that they are consistent with this holding.