Court Opinion

ID: 9431415
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:32:15.24258+00
Date Added: 2024-06-11T17:23:28.390987
License: Public Domain

Justice Scalia,
concurring in the judgment.
I concur in the judgment of the Court, but write separately to discuss more fully what is to me the critical issue in this case: whether FERC had jurisdiction to determine whether MP&L’s agreement to participate in the construction of Grand Gulf 1 and to purchase power from that facility was prudent.
It is common ground that if FERC has jurisdiction over a subject, the States cannot have jurisdiction over the same subject. See Nantahala Power & Light Co. v. Thornburg, 476 U. S. 953, 962-967 (1986). FERC has determined that when two or more utilities form a joint venture or pool to share electrical generating capacity, including construction of *378a new facility, the resulting transfers of power are wholesales of electricity subject to FERC’s jurisdiction under the Federal Power Act, 16 U. S. C. § 791a et seq. It is not disputed that in reviewing the wholesale rates charged to the participants in such a venture, FERC has jurisdiction to determine whether the venture was prudent as a whole. Nor is it seriously contested that in general FERC has jurisdiction to determine a fair allocation of the cost of the facility among the utilities in the pool. Cf. Nantahala, supra, at 966. The central controverted issue in the present case is whether FERC has jurisdiction to determine the prudence of a particular utility’s participation in the pool.
FERC has asserted that it has such jurisdiction in the context of a pool of affiliated companies. In AEP Generating Co., 36 FERC ¶61,226 (1986), FERC was asked to consider the prudence, “in light of the availability of alternative power supplies,” of Kentucky Power Company’s agreement to purchase 15% of the capacity of a generating facility as part of a pooling agreement with other, affiliated, utilities. Id., at 61,549. FERC agreed to do so, concluding that fair allocation of costs among the utilities was inseparable from some inquiry into the prudence of Kentucky Power’s entering into the pooling arrangement in light of available alternative power supplies. Id., at 61,550-61,551. FERC explained that “the transaction involves affiliated, jurisdictional utilities, which are members of an integrated, interstate holding company arrangement” and that “[ujnder these circumstances, more complex, interrelated questions arise and, whether one characterizes the questions as related to prudence, interpretation [of the basic system agreements], or cost allocation, they are clearly matters most appropriately resolved by the Commission as part of its overriding authority to evaluate and implement all applicable wholesale rate schedules.” Id., at 61,550.
AEP Generating Co. makes plain that for the type of arrangement at issue in this case, see ante, at 357, and n. 1 — a *379joint venture or pooling agreement among affiliated companies — FERC asserts jurisdiction to inquire into the prudence of a particular utility’s entering the arrangement. Nothing the Commission said or did in the present case is inconsistent with that assertion of jurisdiction. Its statement that allocation of the costs of Grand Gulf was not to be based on the “needs” of particular utilities, Middle South Energy, Inc., 32 FERC ¶61,425, p. 61,958 (1985), merely rejects allocating costs according to the current needs of the utilities, which would be incompatible with the utilities’ agreement to approach power planning on a systemwide basis. That has nothing to do with whether the prudence of a utility’s joining the system in the first place can be examined. It is true, of course, that FERC did not conduct such an examination in the present case; but, as the Court discusses, see ante, at 375, neither did any party ask it to do so. That failure to ask does not take the issue out of FERC’s jurisdiction and recommit it to the States.*
*380What the case comes down to, then, is whether FERC’s asserted jurisdiction to examine the prudence of a particular utility’s joining a pooling arrangement with affiliated companies is supported by the provisions of the Federal Power Act. If so, there is no regulatory gap for the States to fill, and they are pre-empted from examining that question of prudence in calculating the rates chargeable to retail customers. In considering the Federal Power Act question we will defer, of course, to FERC’s construction if it does not violate plain meaning and is a reasonable interpretation of silence or ambiguity. See, e. g., K mart Corp. v. Cartier, Inc., 486 U. S. 281, 291-292 (1988); Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842-844 (1984).
Contrary to the dissent, post, at 386-387, we have held that this rule of deference applies to an agency’s interpretation of a statute designed to confine its authority. See, e. g., Japan Whaling Assn. v. American Cetacean Society, 478 U. S. 221, 226, 233 (1986); Chemical Manufacturers Assn. v. *381Natural Resources Defense Council, Inc., 470 U. S. 116, 123, 125, 126 (1985). In particular, it is settled law that the rule of deference applies even to an agency’s interpretation of its own statutory authority or jurisdiction. See Commodity Futures Trading Comm’n v. Schor, 478 U. S. 833, 844-845, (1986); NLRB v. City Disposal Systems, Inc., 465 U. S. 822, 830, n. 7 (1984) (“We have never. . . held that such an exception [for issues of statutory jurisdiction] exists to the normal standard of review . . . ; indeed, we have not hesitated to defer . . .”); see also, e. g., City of New York v. FCC, 486 U. S. 57, 64 (1988); Capital Cities Cable, Inc. v. Crisp, 467 U. S. 691, 700 (1984); CBS, Inc. v. FCC, 453 U. S. 367, 382 (1981); Red Lion Broadcasting Co. v. FCC, 395 U. S. 367, 379-381 (1969); FTC v. Bunte Brothers, Inc., 312 U. S. 349, 352 (1941) (dictum). In fact, the arguments relied on by the dissent, post, at 386-387, haye been expressly rejected by this Court — namely, that agencies can claim no special expertise in interpreting their authorizing statutes if an issue can be characterized as jurisdictional, see Schor, supra, at 845, and that the usual reliance on the agency to resolve conflicting policies is inappropriate if the resolution involves defining the limits of the agency’s authority, see, e. g., City of New York v. FCC, supra, at 64, rather than (what is really no different) defining the limits of application of authority it plainly has. Rather, it is plain that giving deference to an administrative interpretation of its statutory jurisdiction or authority is both necessary and appropriate. It is necessary because there is no discernible line between an agency’s exceeding its authority and an agency’s exceeding authorized application of its authority. To exceed authorized application is to exceed authority. Virtually any administrative action can be characterized as either the one or the other, depending upon how generally one wishes to describe the “authority.” Cf. NLRB v. City Disposal Systems, Inc., supra, at 830, n. 7. And deference is appropriate because it is consistent with the general rationale for deference: Congress would naturally ex*382pect that the agency would be responsible, within broad limits, for resolving ambiguities in its statutory authority or jurisdiction. Cf. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., supra, at 843-844. Congress-would neither anticipate nor desire that every ambiguity in statutory authority would be addressed, de novo, by the courts. To be sure, in defining agency jurisdiction Congress sometimes speaks in plain terms, in which case the agency has no discretion. But the dissent concedes that in this case, “[i]f agency deference applied, . . . these prudency issues are sufficiently intertwined that we should defer to FERC’s conclusion.” Post, at 386.
FERC’s interpretation in the present case satisfies the conditions for deference. Under 16 U. S. C. §824e(a), FERC is responsible for assuring that the rates charged to purchasers of electric energy at wholesale, and the contracts affecting such rates, are not “unjust, unreasonable, unduly discriminatory or preferential.” Perhaps (we need not decide the point today) it cannot be considered “unjust, unreasonable, unduly discriminatory or preferential” ■ to hold the participant in a joint venture to that fair proportion of the costs which it contracted in arm’s-length negotiations to bear, even though its entry into the contract may have been imprudent. But I think it assuredly can be considered “unjust, unreasonable, unduly discriminatory or preferential” (for purposes of the ends served by the Federal Power Act) to make a participant bear such costs under an imprudent contract it was essentially assigned, through a process in which the overall interests of the affiliated group rather than the particular interest of the individual affiliate was paramount. It is entirely reasonable to think that the fairness of rates and contracts relating to joint ventures among affiliated companies cannot be separated from an inquiry into the prudence of each affiliate’s participation.
Appellees rely upon the language in § 824(b)(1) which states that FERC “shall not have jurisdiction, except as spe*383cifically provided in this subchapter [the Federal Power Act] . . . , over facilities used for the generation of electric energy.” But this does not plainly contradict FERC’s assertion of jurisdiction. First, it is reasonable to regard FERC’s § 824e(a) authority to set wholesale rates as precisely an example of jurisdiction “specifically provided.” And second, it is reasonable to say that FERC is not exercising jurisdiction over the electrical generating facility but merely over the sale of the power created by that facility.
After today, the battle will no longer be over who has jurisdiction, FERC or the States, to evaluate the prudence of a particular utility’s entering pooling arrangements with affiliated companies for the sharing of electrical generating capacity or the creation and wholesaling of electrical energy. FERC has asserted that jurisdiction and has been vindicated. What goes along with the jurisdiction is the responsibility, where the issue is appropriately raised, to protect against allocations that have the effect of making the ratepayers of one State subsidize those of another.

The dissent’s assertion that “[i]n conducting this litigation, FERC originally took the position that it had no jurisdiction over the prudence of a pool member’s purchase decision,” post, at 388, is contradicted by the passage cited by the dissent from the Administrative Law Judge (ALJ) hearings. To be sure, appellees asserted before the ALJ that FERC had no jurisdiction over this prudency issue, see App. to Motion to Dismiss 52-53, 54,. 56, 60, 61, 62, hut the ALJ gave clear indications that he would address such an issue if a party pressed it:
“MR. EASTLAND [for MPSC]: . . . [W]hat we say we can do is that you set a wholesale charge, . . . but it is not necessarily proper or prudent for that utility, for purposes of utilizing that power in retail sales, to buy that power.
“That’s what we’re saying that we have the jurisdiction to make decisions with respect to.
“PRESIDING JUDGE: ... I would not get into a prudency argument unless one of the Intervenors raises a prudency question.
“I mean we have prudency questions in the gas cases now all over the place, with customers screaming that the purchasing practices of the pipelines were imprudent, and those prudency issues have been set for hearing in-rate eases as an initial determination as to the justness and reasonable*380ness of the rates and rate design, and what you should do if there is imprudence. So it comes into the justness and reasonableness.
“But if you are not going to argue that — If the Intervenors themselves are not going to argue imprudence on behalf of the company, MSE or the operating companies, I’m not going to get into that issue.
“MR. VINCE [for Council of the City of New Orleans (not a party here)]: Would your Honor be examining the issue of prudency in the subject of allocation?
“PRESIDING JUDGE: Not unless you raise it.
“MR. VINCE: Your Honor, New Orleans . . . would perhaps propose to take this one step further and say that the allocation, first of all with reference to AP&L, was imprudent and secondly, with reference to the individual operating companies was imprudent, and the methodology for the allocation was imprudent.
“PRESIDING JUDGE: Okay. If you raise that question then I will have to decide the prudency issue in the context of deciding whether or not such alleged imprudeney would justify a finding of unjust unreasonableness in the allocation of discrimination with respect to the allocation.
“So you are raising the prudency issue?
“MR. VINCE: With respect to allocation, yes.
“PRESIDING JUDGE: Okay. So it’s in.” Id., at 60-62.