Court Opinion

ID: 3029956
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:43:38.59005+00
Date Added: 2024-06-11T09:33:02.558262
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 01-3876
                                   ___________

The Mid-Continent Area Power Pool,      *
                                        *
            Petitioner,                 *
                                        * Petition for Review of
      v.                                * an Order of the Federal Energy
                                        * Regulatory Commission.
Federal Energy Regulatory               *
Commission,                             *
                                        *
            Respondent.                 *
                                   ___________

                             Submitted: June 11, 2002

                                 Filed: October 1, 2002
                                  ___________

Before RILEY, BEAM, and MELLOY, Circuit Judges.
                           ___________

RILEY, Circuit Judge.

       The Mid-Continent Area Power Pool (MAPP) petitions for review of an order
issued by the Federal Energy Regulatory Commission (the Commission). The
Commission determined MAPP was late in filing certain types of transmission service
agreements (TSAs) and ordered MAPP to refund the time value of revenues collected
under these TSAs. MAPP argues it was arbitrary and capricious for the Commission
to assess the refund, because the Commission's previous orders did not require these
TSAs to be filed. Although we affirm the Commission's interpretation of its previous
orders, we remand the case for further proceedings involving the refund.
I.    BACKGROUND
      MAPP is a voluntary association of electric utilities with its main office in St.
Paul, Minnesota. The members of MAPP provide electrical power in seven
midwestern states and portions of Canada. These members "pool" their power
through three types of transmission service: (1) long-term firm point-to-point service,
(2) short-term firm point-to-point service, and (3) non-firm point-to-point service.1

     MAPP provides power both to its members and to non-member utilities. When
MAPP provides power to a non-member utility, it must file a TSA with the
Commission. Before 1996, however, the Commission did not require MAPP to file
TSAs for service MAPP provided to its own members.

       In 1996, the Commission sought to address a perception that power pools were
unjustly discriminating against non-members. To accomplish this goal, the
Commission promulgated Order No. 888. Appendix D to Order No. 888 is a Pro
Forma Open Access Transmission Tariff (the Pro Forma Tariff). Section 13.4 of the
Pro Forma Tariff requires power pools to offer their customers a standard form TSA
for short-term firm and some long-term firm service, as well as to file the TSAs with
the Commission. Section 14.4 of the Pro Forma Tariff requires power pools to offer
their customers a standard form TSA for non-firm service, as well as to file the TSAs
with the Commission. These provisions are essentially the same for short-term firm,
long-term firm, and non-firm service, and they do not contain an exemption for
service provided within a power pool. See Promoting Wholesale Competition
Through Open Access, Non-Discriminatory Transmission Service by Public Utilities;
Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No.

      1
       Short-term firm service involves the reservation or scheduling of service for
a term of less than one year. Long-term firm service involves service for a term of
one year or more. Non-firm service is provided on an "as available" basis.

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888, FERC Stats. & Regs. ¶ 31,036, 61 Fed. Reg. 21540 (1996), codified as revised
at 18 C.F.R. Pts. 35 & 385 (1999).2

       Pursuant to Order No. 888, MAPP filed an open access transmission tariff
(OATT) on December 24, 1996. The OATT submitted by MAPP did not include
provisions on filing TSAs, as required under sections 13.4 and 14.4 of the Pro Forma
Tariff in Order No. 888. The Commission accepted the OATT for filing purposes and
allowed the OATT to become effective on March 1, 1997, subject to refund and to
issuance of further orders. Mid-Continent Area Power Pool, 78 FERC ¶ 61,203
(1997).

      On April 15, 1999, the Commission issued an order on the acceptability of the
OATT filed by MAPP (the April 15, 1999 Order). In less than clear language, the
April 15, 1999 Order addressed MAPP's proposals for filing TSAs:

             We note that MAPP eliminated the pro forma tariff provisions in
      Sections 13.4 and 14.4 (Service Agreements) dealing with service
      agreements. This apparently reflects MAPP's position that service
      agreements are not required when all customers are already signatories
      to the MAPP Agreement. Consistent with our directive that MAPP
      eliminate the membership restriction for service, we will direct MAPP
      to provide for service agreements in its revised tariff. In addition, we
      require that service agreements for long-term point-to-point services be
      filed with the Commission in a form that delineates the terms of service.
      Therefore, we direct MAPP to submit specification sheets for all long-

      2
       For the revisions and clarifications of Order No. 888, see 76 FERC ¶ 61,009
(1996), 76 FERC ¶ 61,347 (1996), and 79 FERC ¶ 61,182 (1997), on reh'g, Order No.
888-A, FERC Stats. & Regs. ¶ 31,048, 62 Fed. Reg. 12,274 (1997), on reh'g, Order
No. 888-B, 81 FERC ¶ 61,248, 62 Fed. Reg. 64,688 (1997), on reh'g, Order No. 888-
C, 82 FERC ¶ 61,046 (1998), aff'd., Transmission Access Policy Study Group v.
FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom., New York v. FERC, ___ U.S.
___, 122 S. Ct. 1012 (2002).

                                        -3-
      term point-to-point services that have been provided under the MAPP
      tariff.
Mid-Continent Area Power Pool, 87 FERC ¶¶ 61,075, 61,314 (1999). The April 15,
1999 Order did not expressly require MAPP to file TSAs for short-term firm and non-
firm service to MAPP members.

       On May 31, 2001, MAPP filed TSAs for long-term firm, short-term firm, and
non-firm service, including service provided to MAPP members. In a letter order
dated July 24, 2001 (the July 24, 2001 Order), the Commission accepted MAPP's
filings. AEP Operating Cos., Docket No. ER01-2189 (2001). However, pursuant to
agency policy, the Commission required MAPP to refund the time value of revenues
collected under short-term firm and non-firm TSAs filed more than thirty days after
the commencement of service. Id. The total refund assessed was approximately
$180,000.

      MAPP asked the Commission for a rehearing of the issues in the July 24, 2001
Order. In support of its request, MAPP argued that the requirement underlying the
Commission's decision – that MAPP file TSAs for short-term firm and non-firm
service within the power pool – was not contained in the Commission's previous
decisions. As a fallback position, MAPP argued that if the requirement was not new,
MAPP only failed to comply with it because the Commission's prior orders were
confusing, and asked the Commission to waive the refund on this ground. The
Commission rejected MAPP's arguments and denied rehearing. Mid-Continent Area
Power Pool, 97 FERC ¶ 61,038 (2001).

      MAPP now petitions us for review of the Commission's July 24, 2001 Order,
arguing that the Commission's decision to apply the filing requirement was arbitrary
and capricious. We have jurisdiction under 16 U.S.C. § 825l(b).

                                        -4-
II.   DISCUSSION
      The Commission's decision may not be set aside unless it was "arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C.
§ 706(2)(A). When an agency has adopted a general policy, "an irrational departure
from that policy (as opposed to an avowed alteration of it) could constitute action that
must be overturned as 'arbitrary, capricious, [or] an abuse of discretion.'" INS v.
Yang, 519 U.S. 26, 32 (1996) (citing 5 U.S.C. § 706(2)(A)) (alternation in original).
MAPP claims that the July 24, 2001 Order was an irrational and unexplained
departure from the Commission's prior policy on filing TSAs.

       The July 24, 2001 Order did not depart from the Commission's prior decisions.
According to MAPP, the July 24, 2001 Order broke new ground by requiring that
MAPP file TSAs for short-term firm and non-firm service to its own members. That
requirement, however, was implicitly contained in Order No. 888, which the
Commission issued in 1996. Order No. 888 required power pools to file TSAs for
long-term firm, short-term firm, and non-firm service, and it did not create an
exemption for service provided within a pool. The Commission did not reverse this
policy in the April 15, 1999 Order. The April 15, 1999 Order noted that MAPP did
not believe it was required to file TSAs for service within the pool, but nonetheless
directed MAPP to revise its tariff to "provide for service agreements." Like Order
No. 888, the April 15, 1999 Order did not exempt TSAs for service within the pool.

       Neither Order No. 888 nor the April 15, 1999 Order specifically required
power pools to file TSAs for short-term firm or non-firm service within the pool.
And in contrast to its lack of clarity on short-term firm and non-firm TSAs, the April
15, 1999 Order expressly required that TSAs be filed for long-term firm point-to-
point service.3 In light of the Commission's failure to express clearly its policy on

      3
        The Commission apparently singled out TSAs for long-term firm service in
order to emphasize the requirement that such TSAs be filed with specification sheets

                                          -5-
short-term firm and non-firm TSAs, we can see how MAPP might have been
confused about the exact meaning of the Commission's prior orders.

      Nevertheless, we must give deference to the Commission's interpretation of its
own orders. See Minn. Power & Light Co. v. FERC, 852 F.2d 1070, 1072 (8th Cir.
1988). The language of Order No. 888 and the April 15, 1999 Order is broad enough
to encompass a requirement that MAPP file TSAs for short-term firm and non-firm
service to MAPP members. We therefore uphold the Commission's determination
that MAPP was required to file TSAs for short-term firm and non-firm service within
its power pool.

       There remains a question about whether the Commission should have waived
the refund in this case. In Minnesota Power & Light, we affirmed the Commission's
interpretation of its regulations, but remanded the case for further consideration of
whether the interpretation should be imposed retroactively. Id. at 1073-74. We did
so because our opinion affirming the Commission's interpretation changed the
circumstances on which the Commission based its decision. Id.

       In this case, the Commission's refusal to waive the refund was based, in part,
on a determination that its prior orders were clear. As we have explained above, the
Commission's prior orders did not clearly require MAPP to file TSAs for short-term
firm and non-firm service. Considering the lack of definiteness in the Commission's
prior decisions, and the Commission's mistaken opinion that its prior decisions were
clear, we remand this matter to the Commission for further consideration of whether
to waive the refund in this case. We are confident the Commission will fairly
reconsider the refund issue.

– something not necessary for short-term firm and non-firm TSAs. This purpose,
however, was not clear from the text of the April 15, 1999 Order.

                                         -6-
III.  CONCLUSION
      Because the Commission did not depart from its prior rulings when it
determined that MAPP was required to file TSAs for short-term firm and non-firm
service to MAPP members, we affirm the Commission's interpretation of its prior
orders. However, because the Commission's prior decisions were not clear, as the
Commission ruled they were, we remand this case to the Commission for further
consideration of whether the refund imposed upon MAPP should be waived.

       A true copy.

             Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                      -7-