Court Opinion

ID: 185384
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:21+00
Date Added: 2024-06-11T17:26:15.482485
License: Public Domain

245 F.3d 839 (D.C. Cir. 2001)
The Power Company of America, L.P., Petitionerv.Federal Energy Regulatory Commission, Respondent
No. 99-1263 & 99-1333
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 16, 2001Decided April 17, 2001

PG&E Energy Trading-Power, L.P., et al., Intervenors Consolidated with No. 99-1333[Copyrighted Material Omitted]
On Petitions for Review of Orders of the Federal Energy Regulatory Commission
Daniel Joseph argued the cause for petitioner.  With him  on the briefs were Merrill L. Kramer and Beth L. Hirschfelder.
David H. Coffman, Attorney, Federal Energy Regulatory  Commission, argued the cause for respondent.  With him on  the brief was Dennis Lane, Solicitor.  Susan J. Court, Special Counsel, entered an appearance.
Earle H. O'Donnell argued the cause for intervenor PG&E  Energy Trading-Power, L.P., et al.  With him on the brief  were Donna M. Attanasio, Bruce A. Grabow, David P.  Sharo, Jacob Dweck, Daniel E. Frank, Paul B. Turner, Terry  D. Kernell and David I. Bloom.  Joseph R. Hartsoe and  Jeffery D. Watkiss entered appearances.
Before:  Edwards, Chief Judge, Ginsburg and Randolph,  Circuit Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Randolph, Circuit Judge:

1
These are petitions for judicial  review of a Federal Energy Regulatory Commission ruling  that a 60-day notice-of-termination rule does not apply to  power sales contracts terminated by 21 of the counterparties  of the Power Company of America (PCA).

2
PCA is a power marketer.  As such, it buys and sells  wholesale electricity at market-based rates but does not own  generation or transmission facilities.  It purchases electricity  from other power marketers and from traditional utilities.  In  contrast to power marketers, traditional utilities not only buy  or sell electricity, they also own generation or transmission  facilities.  Power marketers and traditional utilities receive  different regulatory treatment, especially in regard to the  transaction documents they are required to file with the  Commission.

3
During the summer of 1998, several entities terminated  their contracts to sell power to PCA, purportedly because of  PCA's weak financial condition.  PCA's creditors then forced  it into involuntary bankruptcy.

4
The present dispute is about the notice PCA's counterparties had to give before unilaterally terminating their contracts.  Those contracts apparently do not address the matter  of notice, but PCA claims a Commission regulation does.  The regulation requires 60 days notice to the Commission to  terminate "a rate schedule or part thereof required to be on  file with the Commission."  18 C.F.R. § 35.15(a).1  The issue,  then, is whether the terminated contracts were "required to  be on file with the Commission."  The canceling parties filed  notices with the Commission as a precautionary measure, but  not sufficiently far in advance to satisfy PCA.  The Commission dismissed the notices as not required:  all of the canceled  transactions were "short-term power sales made from time to  time at the discretion of the parties," and, as such, did not  have to be on file under 18 C.F.R. § 35.15(a).  See Southern  Co. Energy Marketing, L.P., 84 F.E.R.C. p 61,199, at 61,98687 & n.3 (1998).

I. Jurisdictional Issues
A. Standing

5
PCA concedes that the contracts at issue have been "irrevocably cancelled."  Final Brief of Petitioner at 34.  The  Commission did not cancel the contracts;  private parties did,  many of whom are not party to this suit.  It is not obvious  that PCA can show an "injury in fact" that is "fairly traceable" to the Commission's actions and that will likely be  "redressed by a favorable decision," as Article III requires. Bennett v. Spear, 520 U.S. 154, 162 (1997);  see also Lujan v.  Defenders of Wildlife, 504 U.S. 555, 560-61 (1992);  Animal  Legal Defense Fund, Inc. v. Glickman, 154 F.3d 426, 431  (D.C. Cir. 1998) (en banc).

6
PCA's ultimate injury is the termination of its contracts. Although the Commission did not terminate them, it ac quiesced in their termination by others.  If, as PCA claims,  the Commission had a duty to prevent those terminations by  requiring more notice than was given, then PCA's injury is  two-fold--the terminations by others, and the Commission's  failure to prevent this.  In these circumstances, the latter  injury is cognizable.  The "loss of a valuable contractual  interest in a licensee is an injury sufficient to invoke our  jurisdiction."  Telephone and Data Sys., Inc. v. FCC, 19 F.3d 42, 46 (D.C. Cir. 1994).  The injury is directly traceable to the  Commission's alleged nonfeasance.  See id. at 47;  see also  Animal Legal Defense Fund, 154 F.3d at 440-42.

7
Redressability is another matter.  PCA is not asking for  damages or injunctive relief in this court, although it is  seeking such relief elsewhere.  PCA stated that the Commission "has the power to fashion any number of remedies, and  PCA would ask FERC to use that power if this Court holds  that violations of the FPA and FERC regulations have occurred."  Final Reply Brief of Petitioner at 4.  The Commission does not dispute that it has remedies for unlawful  contract terminations.  In holding that the terminated agreements were not subject to the notice-of-termination rule,  however, the Commission effectively held that the contracts  were legally terminated.  As such, no contract remedies will  be forthcoming if the Commission's determination stands.  In  these circumstances, a declaratory ruling that the terminations at issue are subject to the notice requirement is a  " 'necessary first step on a path that could ultimately lead to  relief fully redressing the injury'."  Telephone and Data Sys., 19 F.3d at 47;  see also Hazardous Waste Treatment Council  v. U.S. EPA, 861 F.2d 270, 273 (D.C. Cir. 1988).  PCA is in  the same position as the litigants who had standing in Telephone and Data Systems--they will not necessarily prevail if  we overturn the Commission, but they "cannot prevail unless  we do so." 19 F.3d at 47.2

8
B. Failure to Properly Intervene and Obtain Party Status

9
The Commission treated each contract termination as a  separate proceeding and assigned each its own docket number, though it disposed of them on a consolidated basis.  PCA  sought to become a party to each proceeding by intervention. The Commission permitted PCA to intervene in most proceedings but denied intervention in the six proceedings involving Idaho Power Co.;  PG&E Energy Trading-Power,  L.P.;  South Jersey Energy Co.;  Vitol Gas & Electric LLC; El Paso Energy Marketing Co.3;  and Cook Inlet Energy  Supply, L.P.  See New York State Elec. & Gas Corp., 85  F.E.R.C. p 61,196 (1998) (denying PCA's motions to intervene  in the Vitol and Cook Inlet proceedings);  Southern Co.  Energy Mktg. L.P., 86 F.E.R.C. p 61,131 (1999) (denying  intervention in the Idaho Power and South Jersey Energy  Co. proceedings);  PG&E Energy Trading-Power, L.P., 86  F.E.R.C. p 61,303 (1999) (denying intervention in the PG&E  Energy and El Paso proceedings).  As a consequence, PCA  was not party to these six proceedings.

10
We have no jurisdiction over proceedings in which PCA is  not a party because only "part[ies] to a proceeding" may seek  judicial review under the Federal Power Act.  See 16 U.S.C.  § 825l(b).  The Commission concluded that PCA did not  properly intervene and therefore did not become a party to  these six proceedings.  PCA did not file timely motions to  intervene, and the Commission was not obligated to accept  untimely ones.

11
PCA claims that "FERC had no grounds on which to deny  intervention."  Final Brief of Petitioner at 35.  Under the Commission's rules, however, the burden is on the untimely  movant to show good cause to intervene.  See 18 C.F.R.  § 385.214(b)(3).  PCA has not demonstrated good cause, certainly not to a degree sufficient to warrant our upsetting the  Commission's application of its own procedural rule.  PCA  also asserts that the Commission arbitrarily considered only  good cause, to the exclusion of four other factors identified in  the rule.  Final Brief of Petitioner at 36-38.  Failure to  establish good cause is, however, a sufficient condition to  deny intervention, so the Commission was not obligated to  consider any other factor.  See 18 C.F.R. § 385.214(b)(3).4

II. The Merits

12
PCA has four arguments:  (1) the Commission erroneously  viewed 17 of the 21 terminations as involving short-term  discretionary sales;  (2) the Commission's interpretation of 18  C.F.R. § 35.15(a) violates the Federal Power Act;  (3) the  Commission's interpretation violates the regulation itself;  and  (4) the Commission should have applied its new interpretation  (assuming its validity) prospectively only.

13
A. The Nature of the Terminated Transactions

14
PCA asserts that the Commission misconceived the nature  of the terminated transactions, that 17 of them were umbrella agreements or their functional equivalents.  See Final Brief  of Petitioner at 19-24.  We have jurisdiction to consider only  PCA's argument regarding 12 of the transactions because  PCA was not a party to the proceedings involving the other  five.5 See supra section I.B.

15
One of the 12, Washington Water Power Company  (WWPC), clearly did not terminate an umbrella agreement  with PCA.  WWPC's notices of termination stated that it was  terminating transactions under the Western Systems Power  Pool Agreement.  See Joint Appendix at 358 & 657.  While  the Pool Agreement may constitute an umbrella agreement  "required to be on file," WWPC could not have terminated it  merely by terminating individual transactions under it.  The  Pool Agreement has numerous parties in addition to WWPC  and PCA, and as such is not subject to termination by a  single party.  As the Commission put it in Western Systems  Power Pool, 55 F.E.R.C. p 61,495, at 62,716 (1991), the  "WSPP is an umbrella arrangement that will continue for at  least ten years while members come and go over time.  When  one member leaves, the arrangement does not terminate." See generally Western Systems Power Pool, 55 F.E.R.C.  p 61,099 (1991).

16
We will assume arguendo that the remaining 11 cancellations were of umbrella agreements.  PCA still must establish  that these umbrella agreements were "required to be on file  with the Commission."  18 C.F.R. § 35.15(a).  If they were  not required to be on file, they are not subject to the  Commission's 60-day notice-of-termination requirement. PCA makes no attempt to prove this essential predicate.

17
As it turns out, the canceled agreements were not required  to be on file, whether they were umbrella agreements or not. This is so because these 11 terminating counterparties were  power marketers like PCA rather than traditional utilities.6 The Commission, in its original order holding that notice of  termination was not necessary, explained that for transactions  "involving power sales by power marketers, there are no  umbrella service agreements on file and likewise the particular transaction terms were not on file."  84 F.E.R.C. p 61,199,  at 61,986 & n.3.  The Commission further explained in its  order on rehearing that "the filings by power marketers  involved specific market-based power sales transactions that  were neither on file with the Commission nor subject to any  filed umbrella agreements, but were made pursuant to an  umbrella tariff on file."  86 F.E.R.C. p 61,131, at 61,455.

18
Power marketers are not required to file umbrella agreements, so the notice-of-termination regulation in 18 C.F.R.  § 35.15(a) does not apply to umbrella agreements they terminate.  Power marketers instead file umbrella tariffs and  quarterly reports summarizing past transactions.  See 86  F.E.R.C. p 61,131, at 61,459 & n.36;  see also Heartland  Energy Servs., Inc., 68 F.E.R.C. p 61,223, at 62,065-66 (1994)  ("the requirement that [power] marketers file quarterly reports detailing the purchase and sale transactions undertaken  in the prior quarter is necessary to ensure that contracts  relating to rates and services are on file, as required by  section 205(c) of the FPA");  supra note 6.  Traditional  utilities, by contrast, are required to file umbrella agreements.  See Southern Co. Servs., Inc., 75 F.E.R.C. p 61,130,  at 61,439, 61,444-45 (1996) (revising filing requirements for  "short-term market-based rate transactions by non-power  marketer public utilities" and requiring filing of umbrella  agreements and quarterly reports).  Because PCA never  established that the contracts at issue are "required to be on  file," it is irrelevant that PCA's power marketer counterparties might have canceled umbrella agreements or their functional equivalent.

19
We decline to address PCA's argument in its reply brief  that the umbrella agreements were required to be on file  because they were contained in quarterly reports that are  required to be on file.  See Final Reply Brief of Petitioner at  7-8.  This argument was not raised in PCA's opening brief  and is therefore waived.  See Rollins Environmental Servs.  (NJ) Inc. v. U.S. EPA, 937 F.2d 649, 652 n.2 (D.C. Cir. 1991). The Commission's motion to strike the portions of PCA's  reply brief that raise this argument is granted.  Contrary to  PCA's contention in its opposition to the Commission's motion  to strike, the Commission's orders adequately apprised PCA  of the need to raise in its opening brief the argument that the  canceled transactions, whatever their nature, were required  to be on file.  See 84 F.E.R.C. p 61,199, at 61,986 (Commission order stating that traditional utilities file umbrella agreements but power marketers do not);  86 F.E.R.C. p 61,131, at  61,455 (rehearing order making the same distinction);  id. at  61,459 (rehearing order stating that quarterly reports satisfy  Federal Power Act filing requirement but are not rate schedules required to be on file under 18 C.F.R. § 35.15(a)).

B. The Federal Power Act

20
PCA asserts that even if the Commission correctly treated  the canceled transactions as short-term discretionary power  sales, its refusal to apply the 60-day notice-of-termination  requirement nonetheless violates the Federal Power Act. PCA first claims that the Commission's interpretation of its  regulation contravenes the Commission's regulatory obligations.  PCA has not identified with any specificity what  regulatory obligations the Commission has shirked.  It is not  the court's role to fill in the blanks in counsel's argument.

21
PCA also seems to argue (the argument is not developed)  that the Act's jurisdictional provision implies that the filing  requirements cover the canceled transactions.  The premises  are obscure, but the reasoning apparently is that the Act  covers "sales," and the term "sales" contemplates actual  transactions with agreed-upon prices and quantities, not umbrella agreements.  See Final Brief of Petitioner at 25.  Cancellation of individual transactions rather than of umbrella  agreements presumably is, under this theory, the critical  event because it implicates the Act's jurisdictional provision.

22
This syllogism ignores the determinative part of the Act-the part setting forth the filing requirements.  Section 205(c)  of the Act governs filing and states:

23
Under such rules and regulations as the Commission may prescribe, every public utility shall file with the Commission, within such time and in such form as the Commission may designate, and shall keep open in convenient form and place for public inspection schedules showing all rates and charges for any transmission or sale subject to the jurisdiction of the Commission, and the classifications, practices, and regulations affecting such rates and charges, together with all contracts which in any manner affect or relate to such rates, charges, classifications, and services.

24
16 U.S.C. § 824d(c).  The Commission has held that traditional utilities and power marketers who engage in marketbased rate transactions are required to file quarterly reports  summarizing transactions, and that these reports satisfy the  filing requirements of § 205(c).  See 86 F.E.R.C. p 61,131, at  61,459.  PCA has not even questioned the Commission's  judgment in this regard so neither will we.

25
C. The Commission's Interpretation of its Regulation

26
The Commission interpreted 18 C.F.R. § 35.15(a) as not  applying to the canceled transactions because the agreements  were not required to be on file, which is the predicate for the  60-day notice-of-termination requirement.  See 84 F.E.R.C.  p 61,199, at 61,986-87;  86 F.E.R.C. p 61,131, at 61,457.  On rehearing, PCA pointed out that the Commission had previously applied the notice-of-termination rule to transactions  like the ones at issue.  See Portland Gen. Elec. Co., 75  F.E.R.C. p 61,310, at 62,002 (1996) (refusing to waive 60-day  notice requirement in section 35.15 for terminating individual  transactions);  Portland Gen. Elec. Co., 77 F.E.R.C. p 61,171,  at 61,639 (1996) ("we believe that the ability to unilaterally  terminate a power sales contract without prior notice should  be limited:  (1) to contracts executed on and after July 9,  1996;  and (2) to termination at the end of the contract").  In  its Order on Rehearing, the Commission conceded that it  "applied Section 35.15 to short-term power sale transactions  in Portland General" but proceeded to "reverse any contrary  language in Portland General indicating that Section 35.15  might apply to short-term discretionary power sales that are  not themselves on file."  86 F.E.R.C. p 61,131, at 61,457.

27
PCA claims that the regulation cannot sustain this reinterpretation.  In PCA's view, the overruling of Portland  General wrote the "part thereof" language out of § 35.15(a)  without notice-and-comment rulemaking.  In actuality, the  Commission simply altered its view of what is "required to be  on file," holding that the discretionary power transactions at  issue were not in that class.  18 C.F.R. § 35.15(a);  86  F.E.R.C. p 61,131, at 61,457.  In doing so, the Commission  merely narrowed the category of "rate schedule[s] or part[s]  thereof" that are "required to be on file" (18 C.F.R.  § 35.15(a));  it left the "part thereof" language undisturbed. The regulation does not forbid such narrowing.

D. Retroactivity

28
In overruling Portland General, the Commission faced the  choice of applying the new rule of law prospectively or  retrospectively.  It chose the latter course, a choice PCA  attacks as arbitrary and capricious.

29
Administrative agencies have relatively more freedom to  apply retroactively "new applications of law, clarifications,  and additions" than "substitution[s] of new law for old law  that was reasonably clear" because retroactive application of a wholly new rule may disrupt settled expectations and  implicate fairness concerns.  Williams Natural Gas Co. v.  FERC, 3 F.3d 1544, 1554 (D.C. Cir. 1993).  Viewing its  retreat from Portland General as substituting new law for  old, the Commission acknowledged that "the August 28 Order  represented a change in interpretation of Section 35.15."  86  F.E.R.C. p 61,131, at 61,457.  The Commission proceeded to  analyze PCA's claim for prospective-only application of the  new rule under a three-factor test:

30
(1) whether the rule is actually a departure from clear prior policy or instead a new policy for a new situation (or a clarification of a prior policy);  (2) whether retroactive application will be more likely to hinder than to further the operation of the new rule;  and (3) whether retroactive application would produce substantial inequitable results, with particular reference to whether parties relied on the old standard.

31
86 F.E.R.C. p 61,131, at 61,457-58.  It concluded that all  three factors favored retroactive application, noting that participants in this market require flexibility to manage the  terms and conditions of their transactions, that there is no  purpose in the Commission's reviewing the termination of  transactions whose terms and conditions were never required  to be reviewed in the first place, and that PCA suffered no  substantial inequity because "PCA knew that these individual  power sales were not on file with the Commission, but rather  were made pursuant to umbrella tariffs and/or umbrella  service agreements on file."  86 F.E.R.C. p 61,131, at 61,45859.

32
The Commission's three-factor test differs slightly from the  way we would go about deciding whether agency adjudications may be given retroactive effect.7The Commission's approach (and ours) also differs from Supreme Court retroactivity principles with respect to judicial rulings, under which  court judgments must be applied retroactively with few exceptions.  See, e.g., Harper v. Virginia Dep't of Taxation, 509 U.S. 86, 97 (1993);  Reynoldsville Casket Co. v. Hyde, 514 U.S. 749 (1995).  We have not decided whether this line of cases  applies to agency adjudications, and we will not make the  decision here.  See District Lodge 64, Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO v. NLRB, 949 F.2d 441,  447 (D.C. Cir. 1991);  United Food & Commercial Workers  Int'l Union, AFL-CIO, Local No. 150-A v. NLRB, 1 F.3d 24,  35 (D.C. Cir. 1993);  National Fuel Gas Supply Corp. v.  FERC, 59 F.3d 1281, 1289 (D.C. Cir. 1995);  see also Laborers'  Int'l Union of North America, AFL-CIO v. Foster Wheeler  Corp., 26 F.3d 375, 386 n.8 (3d Cir. 1994).  No matter which  line of authority one follows, the Commission's conclusion that  the equities favor retroactive application cannot be faulted. The 60-day notice provision would have created a serious  obstacle to competition in view of the fact that parties are  entering into discretionary sales agreements that may last for  only days or hours.  The short duration of many sales in this  market also vitiates PCA's reliance interest on a lengthy  notice-of-termination period.  To the extent PCA wished to  rely on certain termination provisions, it could have put them  in its contracts.

33
Petitions denied.

Notes:

1
 The relevant provision states in its entirety:
"When a rate  schedule or part thereof required to be on file with the Commission  is proposed to be cancelled or is to terminate by its own terms and  no new rate schedule or part thereof is to be filed in its place, each  party required to file the schedule shall notify the Commission of  the proposed cancellation or termination on the form indicated in  § 131.53 of this chapter at least sixty days but not more than one  hundred-twenty days prior to the date such cancellation or termination is proposed to take effect."  18 C.F.R. § 35.15(a).

2
 We disagree with the Commission that New York State Elec. &  Gas Corp. v. FERC [NYSEG], 117 F.3d 1473 (D.C. Cir. 1997),  defeats standing.  NYSEG did not even deal with standing. The  jurisdictional defect there was the suit's incompatibility with Congress' distribution of functions between the district courts and the  courts of appeal.  Entertaining that appeal would have deprived the  district court of its enforcement function under the Public Utility  Regulatory Policies Act.  See NYSEG, 117 F.3d at 1476-77.  Entertaining the present appeal, by contrast, would not frustrate the  enforcement scheme of any statute.  See 16 U.S.C. § 825l(b).

3
 El Paso Power Services Co. is the successor-in-interest to El  Paso Energy Marketing Co.  See PG&E Energy Trading-Power,  L.P., 86 F.E.R.C. p 61,303, at 62,055 n.1 (1999).

4
 The intervenors in this appeal argue that PCA did not properly  intervene in the Enron proceeding.  See Joint Brief for Intervenors  at 21 n.8.  The Commission to this point has treated PCA as a party  to that proceeding and so will we.

5
 The 12 transactions involve the following counterparties:  ConAgra Energy Services, Inc.;  Entergy Power Marketing Corp.;  Griffin Energy Marketing, L.L.C.;  Midcon Power Services Corp.; North American Energy Conservation, Inc.;  British Columbia Power Exchange Corp.;  Coral Power, L.L.C.;  Enron Power Marketing,  Inc.;  New Energy Ventures, L.L.C.;  New York State Electric &  Gas Corp./NGE Generation Inc.;  Southern Company Energy Marketing, L.P.;  and Washington Water Power Company.  See Final  Brief of Petitioner at 20-23.  The five transactions that we have no  jurisdiction to review involve Cook Inlet Energy Supply, L.P.;  El  Paso Energy Marketing Co.;  South Jersey Energy Co.;  PG&E  Energy Trading-Power, L.P.;  and Vitol Gas & Electric LLC.

6
 The Commission granted each of these 11 power marketers  authority to sell power at market-based rates and required only the  filing of quarterly reports.  See Griffin Energy Mktg., L.L.C., 81  F.E.R.C. p 61,133 (1997);  Southern Co. Energy Mktg., L.P., 81  F.E.R.C. p 61,009 (1997);  British Columbia Power Exch. Corp., 80  F.E.R.C. p 61,343 (1997);  New York State Elec. & Gas Corp., 79  F.E.R.C. p 61,303 (1997);  New Energy Ventures, Inc., 76 F.E.R.C.  p 61,239 (1996);  Entergy Power Mktg. Corp., 74 F.E.R.C. p 61,137  (1996);  In re Coral Power, L.L.C., Letter Order, Docket No.  ER96-25-000 (Dec. 6, 1995);  In re ConAgra Energy Servs., Letter  Order, Docket No. ER95-1751-000 (Oct. 23, 1995);  In re MidCon  Power Servs. Corp., Letter Order, Docket No. ER94-1329-000  (Aug. 11, 1994);  In re North American Energy Conservation, Inc.,  Letter Order, Docket Nos. ER94-152-000 & ER94-9-000 (Feb. 10,  1994);  Enron Power Mktg., Inc., 65 F.E.R.C. p 61,305 (1993).

7
 We have framed the inquiry as follows:  "(1) whether the  particular case is one of first impression, (2) whether the new rule  represents an abrupt departure from well established practice or  merely attempts to fill a void in an unsettled area of the law, (3) the  extent to which the party against whom the new rule is applied  relied on the former rule, (4) the degree of the burden which a  retroactive order imposes on a party, and (5) the statutory interest  in applying a new rule despite the reliance of a party on the old  standard."  Williams, 3 F.3d at 1553-54;  see also Cassell v. FCC,  154 F.3d 478, 486 n.6 (D.C. Cir. 1998).