Legal Document

535 U.S. 1 NEW YORK et al.v.FEDERAL ENERGY REGULATORY COMMISSION ET AL. No. 00-568. Supreme Court of the United States. Argued October 3, 2001. Decided March 4, 2002.* CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR DISTRICT COLUMBIA CIRCUIT When Federal Power Act (FPA) became law in 1935, most electric utilities operated as separate, local monopolies subject to state or regulation; their sales were "bundled," meaning that consumers paid a single charge for both cost electricity and its delivery; there was little competition among utility companies. Section 201(b) FPA gave Commission (predecessor respondent Energy Regulatory (FERC)) jurisdiction over "the transmission energy interstate commerce sale such at wholesale commerce"; § 205 prohibited, other things, unreasonable rates undue discrimination "with respect any [Commission's] jurisdiction"; 206 power correct unlawful practices. Since number suppliers has increased dramatically technological advances have allowed be delivered three major "grids" continental In all but States, entering grid becomes part vast pool moving commerce. As result, companies can transmit long distances low cost. However, public retain ownership lines competitors must use deliver retail customers thus refuse competitors' on terms conditions less favorable than those they apply own transmissions. Order 888, FERC found practices discriminatory under 205. Invoking authority, (1) ordered "functional unbundling" generation services, which means each separate generation, transmission, ancillary take purchases general tariff applicable equally itself others; (2) imposed similar open access requirement unbundled transmissions commerce; (3) declined extend component bundled sales, concluding unbundling unnecessary would raise difficult jurisdictional issues could more appropriately considered proceedings. After consolidating review petitions, District Columbia Circuit upheld 888. Here, petition New York al. (collectively York) questions FERC's assertion transmissions, Enron Marketing, Inc. (Enron), refusal assert Held: 1. did not exceed by including within scope 888's requirements. insists transactions are only regulation, industry changed since enacted, time universe neatly divided into spheres versus sales. The FPA's plain language readily supports claim. gives "electric commerce," targeted made national grid's nature. No statutory limits market, although statute does limit market. face this clear language, York's arguments supporting contention draws bright line between unpersuasive. Its argument Appeals applied an erroneous standard because it ignored presumption against federal pre-emption focuses wrong legal question. type issue here concerns rule agency may pre-empt when is acting congressionally delegated authority. Because unambiguously "transmission without regard whether sold reseller directly consumer, exercise valid. attempts discredit straightforward analysis reference legislative history unavailing. And will impede sound policy properly addressed Congress. Pp. 16-24. 2. decision regulate statutorily permissible choice. Contrary Enron's argument, chose hold powerless claim jurisdiction. Indeed, explicitly reserved issue, reasons supplied doing so provide valid support decision. Having determined remedy constituted sufficient response problems had identified no obligation order universal unbundling. This also agrees with conclusion regulating raises issues. 25-28. 225 F.3d 667, affirmed. STEVENS, J., opinion Court, Parts II III unanimous, I IV joined REHNQUIST, C. O'CONNOR, SOUTER, GINSBURG, BREYER, JJ. THOMAS, filed concurring dissenting part, SCALIA KENNEDY, JJ., joined, post, p. 28. Lawrence G. Malone argued cause briefs petitioners State 00-568 brief respondents Public Service Commissions 00-809. With him Jonathan D. Feinberg Carl F. Patka. Louis R. Cohen petitioner 00-809 Inc., Joseph E. Killory, Jr., J. Frankel, I. Jay Palansky, Jeffrey Watkiss, Hartsoe. Briefs Court's Rule 12.6 James van Springer Steven L. Miller Electric Supply Association; Sara Schotland Electricity Consumers Resource Council Robert McDiarmid, Cynthia S. Bogorad, Peter Hopkins Transmission Access Policy Study Group; Michael A. Mullett Citizens Action Coalition Indiana, Deputy Solicitor General Kneedler cases. Acting Underwood, Austin Schlick, Marlette, Timm Abendroth. Charles Cole, Alice Loughran, Edward H. Comer, Barbara Hindin Edison Institute, cases.â JUSTICE STEVENS Court. These cases two important concerning (FERC Commission) electricity. First, if "unbundles" — i. e., separates from electrical billing customers, require same applies transmissions? Second, impose continue offer "bundled" sales? 2 issued 1996 stated purpose "Promoting Wholesale Competition Through Open Non-Discriminatory Services Utilities,"1 answered yes first question second. It based answers provisions (FPA), added 213, 49 Stat. 847, amended, 16 U. 824 seq., enacted 1935. Whether 1935 Congress foresaw dramatic changes occurred recent decades, we persuaded, Appeals, construed 3 * law, vertically integrated constructed plants, lines, delivery systems. Although some interconnections utilities, regulation. Their included delivery. prevalent. 4 Prior States possessed broad authority limited our holding negative impact Commerce Clause prohibits regulation burdens commerce.2 confronted attempt Rhode Island charged plant selling Massachusetts company, resold city Attleboro, Massachusetts, invalidated "direct burden upon commerce." Util. Comm'n v. Attleboro Steam & Elec. Co., 273 83, 89 (1927). Creating what become known "Attleboro gap," held transaction either "by vested Congress." Id., 90. 5 1935,3 authorized areas beyond reach power, gap extended coverage previously been regulated, see, e.g., id., 87-88 (explaining, prior enactment, regulations affecting commerce). (FPC), predecessor FERC, "to effective expanding business transmitting Gulf Co. FPC, 411 747, 758 (1973). Specifically, FPA, recognized FPC's commerce" 824(b). Furthermore, Commission," §§ 824d(a)-(b), FPC practices, 824e(a). 6 especially beginning 1970's 1980's, dramatically. Technological possible generate efficiently different ways smaller plants.4 addition, unlike networks past, now networks, "grids," Two these grids "Eastern Interconnect" "Western connected other. Hawaii Alaska "Texas covers distributed entirely State. rest country, enters immediately constantly commerce.5 explained, nature magnitude coordination transactions" enabled operate transferring substantial amounts one area, region region, market fluctuate. 31,641. 7 Despite technology providers "customer Vermont [to] purchase environmentally friendly producer California cogeneration facility Oklahoma," Group 3d 681 (CADC 2000) (case below), used customers. utilities' control facilities them produced E.g., 31,643-31,644.6 8 evolving primary occasions Utility Policies 1978 (PURPA), 92 3117, 2601 promote development new generating conserve fossil fuels. traditional controlled reluctant "nontraditional facilities," PURPA directed promulgate rules requiring "qualifying small production facilities." Mississippi, 456 742, 751 (1982); see 824a-3(a). 9 Over decade later, 1992 (EPAct), 106 2776. individual services unaffiliated generators (i. "wheel" power) case-by-case basis. See 824j-824k. Exercising EPAct, complaining competitor 12 times, 31,646. soon concluded, however, proceedings too costly consuming adequate throughout Ibid. Thus, 1995, initiated rulemaking proceeding led adoption presently review. proposed "require owning and/or controlling file tariffs providing nondiscriminatory openaccess services." Notice Proposed Rulemaking, Stats. Regs., 1988-1999, ¶ 32,514, 33,047, 60 Fed. Reg. 17662 (hereinafter NPRM). encourage lower structuring orderly transition competitive bulk markets." NPRM 33,048. stated: 10 "The key markets opening up services. vital link sellers buyers. To achieve benefits robust, markets, buyers equal grid. Otherwise, efficient trades cannot place ratepayers bear costs. through greatest impediment competition. Unquestionably, still being today, used, discriminatorily block competition."7 33,049. 11 Rather grounding Congress' legislation, cited 205-206 unduly rulemaking. 824d-824e. 1996, after receiving comments NPRM, discriminating "bulk markets," violation inferior third-party wholesalers power. 31,682-31,684. 206, prescribed containing parts relevant. 13 31,654. defined others. 14 envisioned applying requirements rather "would eligibility customers," ultimately concluded "irrelevant Commission's customer service customer." 31,689. "if voluntarily offers access," requires access, affected obtain non-discriminatory Commission." Ibid.8 15 Third, rejected proposal should sales." 31,699. noted ... helpful achieving comparability," "necessary" "difficult issues" "more considered" issues, distinguished explained: 17 "[Our jurisdiction] extends broken products separately (perhaps suppliers: supplier supplier), believe change. situation, clearly retains involves provision `transmission commerce' which, exclusively Commission. Therefore, transactions, resulting falls sphere regulation." 31,781.9 18 1997, numerous petitions rehearing clarification, 888-A, Regs. Preambles, July 1996-Dec. 2001, 31,048, 30,172, 62 12274. various challenges jurisdiction, acknowledged "authority order, sua sponte, utilities," explained required found. 30,202; failure inconsistent repeated explanation transmissions) "was necessary," again serious questions. 30,225. not, 30,225-30,226. Rather, reiterated that, "[o]ur arises [unbundled] occurs result program." 30,226. 19 A 888 consolidated hearing Columbia. considering host objections, order. affirmed rulings present 3d, 681. 20 orders "premised individualized findings specific providers, identification fundamental systemic problem industry." 683. factual determinations reasonable prescribe marketwide problem. Interpreting precedent primarily involving natural gas, Associated Gas Distributors 2d 981 1987) even though "limited," exception "where finds discrimination." 687-688. 21 discussion "Federal Versus Jurisdiction Services," 690-696, endorsed reasoning. complaints regulatory commissions "went far" going "assert[ing] transmissions." 691, 692. 201 broadly,10 supported 824(b)(1). Even ambiguous, given complexities grids, deferred interpretation "as giving 694. 22 next transmission-dependent producers "go far enough." persuaded mandate Noting "clearly contemplates distribution sales," held: 23 "A regulator reasonably construe consumer integral sale. Yet one, while states characterize therefore represents choice defer Chevron [U. Natural Resources Defense Council, 467 837, 842-843 (1984)]." 694-695. 24 importance proceeding, granted questioning 531 1189 (2001). We address separately. At outset, note validity insofar transactions: parties dispute proper Finally, agree interconnected constitute See, Florida Light 404 453, 466-467 (1972); n. 5, supra. 25 exceeded argues overstepped regard, markets. 26 landscape enactment "neatly 691. includes indeed There limiting wholesale. ibid.; cf. Louisiana 406 621, 636 (1972) (interpreting Act, 717(b), mean "applies `transportation' regardless gas transported wholesale"). 27 submission transactions. contends law; second, claims shows congressional intent safeguard pre-existing customers; third, policy. Presumption Pre-emption 28 quite often "presumption pre-emption" controversy concerned Government's displace action, conflicts with, displaced by, existence Government Hillsborough County Automated Medical Laboratories, 471 707, 715 (1985) (citing cases); Medtronic, Lohr, 518 470, 485 (1996); Cipollone Liggett Group, 505 504, (1992). "`start[s] assumption historic police powers superseded unless manifest Congress.'" County, S., (quoting Jones Rath Packing 430 519, 525 (1977)). cases, presented concern conflicting 29 context "pre-emption" "that authority[,] [for] literally act, let alone validly legislation sovereign State, until confers it." Pub. Serv. FCC, 476 355, 374 (1986). sort case confront defining Such involve pre-emption," argues, us certain conferred agency. best way answer exercised area "is examine agency." words, interpret determine act has, do 30 above, text references "transmission" "sale" 1935.11 Subsections (c) (d) explain, respectively, "sale wholesale."12 authorizes activities selling. true specifically confined contains limitation. Legislative History 31 Attempting calls attention statements indicating intended close wholesale, 89. demonstrate intend supplant traditionally state-held points course process evidences preserve facilities. For example, 201(a) provides matters States." 824(a). "over intrastate commerce, consumed wholly transmitter." 32 closed gap" authorizing interstate, precise matter Attleboro. above-quoted States' consistent view gap-closing statute. is, perfectly original good deal 85-86 (noting, aspects More importantly, discussed well catalyzed define outer statute's coverage. 33 portion preservation existing actually never "subject States," development. itself, complete, package. 31,639. neither nor exist.13 34 Moreover, described mere "`policy declaration'" "`cannot nullify grant particular seems broadly expressed purpose.'" Southern Cal. 376 205, 215 (1964) Connecticut 324 515, 527 (1945)); Cal., 345 295, 311 (1953). "a jurisdiction" prefatory undermine 35 point out replete describing sentiment incorporated second sentence codified 824(b), provides: 36 shall energy, except provided subchapter chapter, 37 Yet, arguably affect subjects: facilities, transmitter. discuss improperly invaded distribution," attempted contrary, 31,969, merely set forth seven-factor test identifying purporting them, 31,770-31,771. 38 correctly demonstrates interest retaining But again, carefully avoided assuming noting repeatedly give retail." 31,969. asserted ultimate energy. And, below, leaving 39 Our evaluation extensive reviewed party evidence industry's local, self-sufficient nationwide transmission. Nor possibility foreseen developments responded, objected FPA. Whatever persuasive effect contexts, particularly interim industry. left clearest guidance. That unquestionably (which none before questions), retailers. Sound 40 cites overseeing maintenance siting lines. evaluate force analyzed loss opposed generally, regulated significant unbundled. 31,782, 543 ("Among siting"); 544 ("This Final encroach reliability service; administration resource planning buy-side demand-side decisions, DSM [demand-side management]; portfolios; nonbypassable stranded charges"). members approximately 70% endorse objections persuasiveness, forwarded Congress, Chemehuevi Tribe 420 395, 423 (1975). 41 Objecting opposite direction, electricity, and, discrimination, duty so. making persistently relief seeks.14 incorrect: decided. 31,699 (explaining position "numerous reviews come wheeling program"). Absent flawed assumption, ruling acceptable. 42 refusing "necessary." 31,699; "raises need resolved context. Both 43 determination include remedy, kept mind exactly sought place: findings, recognizes, "`deny competitively priced generation,'" thereby "`deny[ing] prices.'" Brief Petitioner 00-809, pp. 12-13 33,052) (emphasis added). title confirms focus: Services...." 31,632 goal "facilitat[ing] 33,049 44 found, do. Part III, believed steps appropriate alleges, lead well. unbundling.15 45 Of course, suggest exists well, alleges. Were investigate alleged make discrimination. 824e(a) (upon finding just practice, contract fix order"). very desired outcome. argue full array retail-market remedies. 46 issues," 31,699, deciding correct. raised themselves serious. obvious claiming greater implications 824(b) (giving energy," recognizing "any energy" assume, purposes, sale, nevertheless conclude discretion decline complicated Like satisfied focusing "represents choice." 47 Accordingly, judgment 48 ordered. Notes: Together 00-809,Enron al., certiorari court. â Bohdan Pankiw John Levin Pennsylvania amicus curiae urging affirmance. amici Bill Lockyer, Attorney General, Siggins, Chief Rick Frank, Assistant Morris Beatus, Senior Gary M. Cohen, William Julian II; Electrical Engineers Cooper. Jan. 1991-June 31,036, 31,632, 61 21540 (1996). deals recovery "stranded costs" aspect direct drawn mains,Pennsylvania N. Y., 252 (1920); Kan. Landon, 249 236 (1919), rate out-of-state independent distributing resale consumers, Missouri ex rel. Barrett Kansas 265 298, 309 (1924). Title 847. financial large optimum size plants shifted larger, 500 megawatt (with 10-year time) past smaller, 50-to-150 1-year present. produce 3-to-5 cents per kilowatt-hour, older plants' 4-to-15 kilowatt-hour. 31,641 Respondent 4-5. years, 1967, (FPL) attached then regional southeastern transmitted attachment. FPL's commerce: "[S]ince virtually instantaneously needed system speed 186,000 miles FPL generators, turn help meet demands; relationship occurring every generator FPL, Corp, Georgia, systems constitutes to, FPL."In re P. 544, 549 (1967). establish 469 (1972). explain technical terms, "[e]nergy flowing onto network energizes entire grid, draw undifferentiated grid." Amici Curiae amici, activity affects contentions functions water flows pipe blood cells flow vein" "can controlled, traced" substances be, calling metaphors "inaccurate highly misleading." 2, 5. addition policing anticompetitive behavior industry, detail antitrust laws end. inOtter Tail 410 366 (1973), permitted seek remedies company refused sell municipalities transfer 368. preclude applicability laws. 372. Later found: possess power; profit maximizing firms, maintain increase share, deny generation; prices." 33,052 While rates, service" "give deference recommendations" regarding "when recommendations policies." 31,689 "jurisdiction consumer,"id., 31,781, delivering end users.... consumption distinguishable responsibility ensure service. Nothing adopted how assets discerned unbundled, area." 31,782-31,783. distinguishing "Commission-jurisdictional "state-jurisdictional 31,783, seven relevant factors, 31,771, 31,783-31,784. Recognizing maintaining further "in instances program, authorities where facilities...." 31,783-31,785. SeeFPC 453 Jersey Central 319 (1943). twice 201(a), 824(a), full: "It declared interest, relating extent chapter consists ofthe necessary (Emphasis added.) 201(b)(1), 824(b)(1), paragraph deprive commission lawful exportation hydroelectric across line. 201(c) 824(c), explains "[f]or subchapter, outside thereof; takes 201(d), 824(d), "term `sale wholesale' person resale." reaching conclusion: "Rather `new' framework environment transactions.... types prevalent arise viewed `disturbing' regulators theAttleboro case." 30,339-30,340. See,e.g., ("FERC majority problem"); determined, functional sales"); ("FERC's [an tariff] contrary law"); ("[FERC found] retail"). Surprisingly, seemed characterization places brief. 44-45 ("The added)). accurately decided lacked ("[FERC] asserting unbundle ..."); override historical energy"). acknowledgment legitimate costs critical successful tightly cost-of-service industry," 33,052, confine truly "necessary": broader already challenging permitting recover whom KENNEDY join, part. 50 Today that: transmissions; Under associated, concur join opinion. dissent, resolution fails assess justification excluding Tariff (OATT). explanations inadequate warrant deference. 51 foreclose associated defers OATT ground choice, ante, 694-695 2000)), assertions "necessary," 30,225); `raises issues' context." Ante, 30,225-30,226). concludes "provide 26.1 52 disagree. Appeals' "policy choice," itself.2 post-hoc rationalization offered insufficient basis "[A]n agency's action upheld, all, articulated itself." Motor Vehicle Mfrs. Assn. Farm Mut. Automobile Ins. 463 29, (1983) 53 justifications relies on. Neither sufficient. failed why inconclusive 54 reliance "[a]lthough comparability, necessary." Aside conclusory statement, attaches statement. such, determining justified. particular, statement logical inference: connection another. 55 An divisions: distribution. generated fuel coal, oil, uranium hydro spin turbine turns electricity." Engineers). "[G]enerating stations continuously feed web (loosely referred `the grid') high voltages." Fox-Penner, Restructuring: Guide Competitive Era (1997) Fox-Penner). "substations (essentially transformers) reduce voltage spread many successively culminating user." 23.3 56 Unlike components Alaska, Hawaii, Texas inherently interstate.4 configuration cross 13. owned Nation's larger utilities. utility, "`control actual transfers interconnected.'" (1967)). extremely voltages uncontrollable easily path consumer. Fox-Penner 26-27. "[t]ransfer another will, extent, interconnection, transfer." Van Nostrand's Scientific Encyclopedia 1096 (D. Considine ed., 8th ed. 1995). depends load (demand electricity) moment, always following (or paths) least resistance." paths, "change moment moment." 27. "[t]rying predict electrons akin putting drop ink pool, trying diffuse combination outflow pipes eventually contain ink." 57 Nonetheless, negotiate "route[s] nominally specified agreement points." T. Brennan, Shock System 76 (1996) added).5 negotiated transactional arrangements, therefore, resemblance physical impossible isolate distinguish 58 Given identify utility's exclude appears sense. conflict unjust, unreasonable, discriminatory, preferential treatment 824d, 824e.6 recognizes mandate, stating 888-A "our permit adapt changing economic realities so, eliminate protect customers." 30,176.7 certainly discriminate entities bundle transactions.8 fact indicates Without more, "unbundling transmission" lends simply commercial controls 59 sure, prejudge tariff. minimum, "necessary instills confidence complied unambiguous dictates essentially ignores mandatory prescription approving base struggles find generation,' `deny[ing] 12-13). notes focus promoting 26. "`facilitat[ing] markets.'" 33,049; 17662). fail understand Utilities seeking possible, perhaps likely, engage relying makes sense regulates unbundles unbundles. infra, 41-42. "We frequently cogently manner...." Assn., 48. prevents evaluating engaged reasoned decisionmaking B 63 prospect rely statement: 64 "But issues." 65 unsatisfying, account 66 implies based, ambiguous fall grants notes, "[t]here market." 17. consumer." 20. 67 Similarly, distinction. "unbundled" statute.9 intrastate. qualify yet 68 agreed purport resolve ambiguity passage relies. Instead, ambiguity, resolving difficult. (1984), statute, defer. 69 explicit interpretations elsewhere. difficult, presents orders, brief, oral argument. points, affirmatively lacks transmission; noncommittal. heavy misplaced. footnote representations, 25, 14, weight positions. Mead Corp., 533 218, 228 (2001) fair measure administering understood vary circumstances, courts looked degree care, consistency, formality, relative expertness, persuasiveness position..."). inconsistencies alone, convince me aforementioned FERC. 70 regulate. 49. component. 49-50; maintains continues treat manner comparable afforded users. 48.10 71 explanation. disclaiming Tr. Oral Arg. 42-43. hasn't [the sale], it, whatever 72 views noted, asserts later time. belief Explaining "legal determination" exclusive "compelling section face, (by utilities) qualification." 31,781. addressing "its bundled, "we parcel product called retail" "[u]nder 73 By contrast, "retail separately," "believe[s] change." explains: 74 "In 75 Unbundling, occur ways: program Either brings Subsequently, responded requests supplanting earlier quoted above abandoned altogether. point, evades deeming "difficult" resolve, here. From survey positions, singular misguided. 77 mandate. chosen which: (a) State's internal decisions jurisdiction; (b) voluntary determines bundling attempting distinctions shift actions taken itself. qualification. belie text. 78 foregoing demonstrates, disagree 824e mandates minimum consider marketplace warranting application remedy. 79 requests, compel vacate remand appropriate. 80 reasons, respectfully dissent "reasons" 31,698-31,699. 888-A. Seeinfra, 41. light "FERC's underChevron 2000). centers, split send feeder transformers step down secondary contiguous composed grids: Eastern Interconnection, Western Interconnection. Restructuring Industry: Capsule Issues Events, Information Administration (DOE/EIA-X037, "does crosses follows Appendix G, 31,968. "[b]ecause system, results `in commerce.'"Ibid. 824d(b), "No shall, Commission, preference advantage prejudice disadvantage, difference charges, service, respect, localities classes service." whenever conducting hearing, rate, charge, classification, demanded, observed, charged, collected rule, affect[ing] classification preferential, thereafter observed force, order." likewise 31,634, cornerstone monopoly wires comply "must remaining patchwork systems, form others."Id., 31,635. Association preventing using They available capacity capability facilitate committed uses overscheduling loads "valuable" paths; avoid to; accurate disclosure capability, causing "serious difficulties schedule 7-9. "utility reserve superior times closing forcing scramble direct, predictable expensive options." 41-42 pursuant charges combined charge. 4-5 curtailment favored compliance enforce OATT, indirect 48; seeNorthern 176 1090, 1095 (CA8 1999). Eighth Circuit, "FERC concede[d] whatsoever state's utility's] activities," 1096. court's pointed position, explaining observation inherent practical adversarial bias." 1094.

Classification Label: 8