Opinion ID: 6936498
Heading Depth: 2
Heading Rank: 1

Heading: FERC’s “Aggrieved Party” Claim

Text: FERC argues that the petitioners are not yet “aggrieved” parties, claiming that PUHCA’s grant of jurisdiction to the SEC to regulate the corporate structure of public utility holding companies makes FERC’s jurisdiction in this case contingent on the SEC’s currently-pending decision reconsidering its approval of the transfer. Because the SEC’s approval of the transfer was remanded, and no subsequent decision has been rendered by that agency, the SEC could still ultimately deny approval of the spin-off, or act in a way so as to “trap costs” that FERC would have no authority to change. We disagree with FERC that the parties are not yet aggrieved. 3 The proposal was initially approved by the SEC and the transfer took place in 1990. Even after this court’s remand for reconsideration of the SEC approval, the SEC’s original order remains in effect. Section 24 of PUHCA grants a reviewing court jurisdiction “to affirm, modify, or set aside” an order, 15 U.S.C. § 79x(a), but declares that the commencement of proceedings under subsection (a) “shall not, unless specifically ordered by the court, operate as a stay of the Commission’s order.” 15 U.S.C. § 79x(b). This court issued no such stay. The challenging parties assert that the transfer will aggrieve them eventually in the form of unreasonable rates, and so was not prudently entered into. If they are correct, as we must assume them to be for purposes of determining their aggrievement, they had a right to a review of FERC’s decision on the prudence of the transaction in terms of its effect on ratepayers. Furthermore, it is difficult to conjecture how any later decision of the SEC could conflict with this FERC decision. In the event that the SEC approves the transfer, FERC’s deferral of a prudence determination on second-decade replacement costs poses no conflict with that decision, and in the event of an SEC rejection, the transfer would be vacated and FERC’s decision mooted. To support their aggrievement argument, FERC relies on the Ohio Power decisions of this circuit and the Supreme Court, which address the relationship between FERC and the SEC, and the applicability of § 318 of the Federal Power Act (“FPA”), 16 U.S.C. § 825q (1988), which regulates conflicts between the agencies’ statutory mandates. 4 The PUHCA/FPA statutory scheme clearly envisions concurrent jurisdiction by FERC and the SEC, rather than the “contingent jurisdiction” FERC claims. We recognized this concurrent jurisdiction in City of Holyoke Gas & Elec. Dep’t v. SEC, 972 F.2d 358 (D.C.Cir.1992), where we noted that the SEC “may not rely upon FERC’s concurrent jurisdiction over an acquisition as a reason to shirk its own statutory mandate.” Id. at 363. We now recognize the converse proposition, that FERC cannot shirk its own duty on these same grounds. In drafting the FPA, Congress foresaw that PUHCA’s requirement that the SEC regulate corporate structure and the FPA’s requirement that FERC regulate utility rates could conflict, and provided for that possibility. When the two agencies’ mandates directly clash, § 318 of the FPA states that the SEC’s determinations will prevail. The Ohio Power decisions explain this court’s interpretation of the relationship between the SEC and FERC, as governed by the statute. In Ohio Power Co. v. FERC, 880 F.2d 1400 (D.C.Cir.1989) (Ohio Power I), rev’d sub nom. Arcadia v. Ohio Power Co., 498 U.S. 73, 111 S.Ct. 415, 112 L.Ed.2d 374 (1990), this court determined that § 318 governed a petition by a power company to vacate a FERC order finding that the company’s cost of coal purchased from an associated company was unreasonable. The power company rested its claim on the grounds that the SEC (which had jurisdiction over the coal transactions under § 13(b) of PUHCA because both companies were associates of a public utility holding company) had ordered that “[t]he price at which ... [the] coal is sold ... will not exceed the cost thereof to the seller.” Id. at 1404. This court agreed with the petitioners that the two agencies had ruled in an inconsistent manner upon the same subject matter, and held that § 318 mandated that the reasonableness of the sales contract for the “captive coal” was to be resolved by the SEC rather than FERC. Id. at 1409. On appeal, the Supreme Court disagreed, holding in Arcadia v. Ohio Power Co., 498 U.S. 73, 111 S.Ct. 415, 112 L.Ed.2d 374 (1990), that § 318 did not govern this dispute. Even if FERC’s order had dealt with a subject matter cognizable under § 318, the Court found that the two agencies had not ruled inconsistently on the same subject matter. Id. at 85, 111 S.Ct. at 422. The Court left the lower court to resolve whether FERC had violated its own regulation and whether FERC had “trapped” costs which the SEC had approved. Id. In this case, similarly, we find no inter-agency conflict cognizable under § 318. The SEC has authority only to approve the sale of the generating facilities; FERC has authority only to judge the reasonableness of the transfer’s effect on power rates. The two agencies’ responsibilities do not overlap. Thus, any reliance by FERC on § 318 is misplaced. Alternately, the Commission argues that our decision in Ohio Power on remand limits FERC’s authority to rule on the merits of CNO and Entergy’s complaints. Ohio Power v. FERC, 954 F.2d 779 (D.C.Cir.) (Ohio Power II), cert. denied sub nom. Arcadia v. Ohio Power Co., — U.S. -, 113 S.Ct. 483, 121 L.Ed.2d 388 (1992). In Ohio Power II, this court held that FERC’s authority to review the reasonableness of rates under the FPA had been constrained by PUHCA’s grant of power to the SEC to approve the price of interassociate sales of goods. See id. at 784. The court held that FERC could not declare unreasonable a price that had been expressly approved by the SEC: “FERC may not set a cost-trapping rate level where that effect is occasioned by a recovery calculation inconsistent with an SEC determination governing an inter-associate transfer subject to § 13(b) of the PUHCA.” Id. at 786. 5 There is no comparable cost-trapping problem here. First, there is no indication in the record that the SEC is even considering approving a sales price for the Entergy electricity. More conclusively, though, FERC’s order deferring a prudence determination, which does not declare any price unreasonable, could not possibly “trap” costs, even if those costs were approved by the SEC.