Court Opinion

ID: 7848434
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:15:47.156392+00
Date Added: 2024-06-11T16:28:39.104598
License: Public Domain

WALD and MIKVA, Circuit Judges,
would grant the suggestion for rehearing en banc. Their statement is attached.

Statement of Circuit Judges Wald and Mikva

We would rehear the case en banc because of the importance of the issues to major new energy programs of cogeneration and small power production and because of serious doubts over the panel’s resolution of those issues. The main issue before the court is whether the Federal Energy Regulatory Commission (“Commission”) acted arbitrarily and capriciously by choosing a rate that it believed would provide the greatest incentives for cogeneration, as well as the greatest incentives to decrease our national reliance on fossil fuels, without leading to any increase in rates paid by electric utility consumers. The Commission explained that its fully avoided cost rule would serve these goals.1 The panel rejected the Commission’s determination for failure to explain adequately how utility consumers’ interests had been accommodated, specifically with respect to rejection of one particular alternative to fully avoided costs. As we read the Commission’s opinion, however, it found that the appropriate balance of statutory interests had been struck in a rate that would encourage cogeneration without raising rates to consumers. This determination seems reasonable, and we doubt that any further explanation, especially in the way of factual findings, see at 1234, was necessary to satisfy the requirements of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A).2
The panel’s resolution of the interconnection issue is also troubling. The panel has interpreted an incredibly complex and ambiguous interlace of statutory sections to require a fullscale evidentiary hearing prior to any interconnections for the sale or purchase of cogenerated power.3 In so doing, it has rejected FERC’s alternative interpretation of the statute that would simply prevent the Commission from requiring a co-generator to interconnect without providing for an evidentiary hearing. The alternative interpretation is a plausible one and appears to be more closely in line with Congress’ expressed desire to encourage cogeneration. This alternative reading should receive closer scrutiny by this court before it erects a formidable, perhaps insurmountable, roadblock to a major energy program.

.Although the Commission did not expressly address the interests of consumers in its discussion of the fixed percentage method, see R. 3460, it discussed the impact of a full avoided cost method on these interests in its discussion of the comments made to the Commission. The Commission stated:
Although use of the full avoided cost standard will not produce any rate savings to the utility’s customers, several commenters stated that these ratepayers and the nation as a whole will benefit from the decreased reliance on scarce fossil fuels, such as oil and gas, and the more efficient use of energy.
The Commission notes that, in most instances, if part of the savings from cogeneration and small power production were allocated among the utilities’ ratepayers, any rate reductions will be insignificant for any individual customer. On the other hand, if these savings are allocated to the relatively small class of qualifying cogenerators and small power producers, they may provide a significant incentive for a higher growth rate of these technologies.
R. 3457-58.

. The panel’s opinion appears to assume that the substantial evidence test governs review of rules promulgated under the Public Utility and Regulatory Policies Act of 1978, Pub.L. No. 95-617, 92 Stat. 3117 (“PURPA”). See at 1234 (citing Public Sys. v. FERC, 606 F.2d 973 (D.C.Cir.1979)). PURPA, however, does not set forth a heightened standard of review. The avoided cost rule is therefore subject to the general requirements of the APA, and may be overturned if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

. The panel asserts that the Commission could adopt “streamlined” procedures, see at 1240, but fails to explain how anything less than an evidentiary hearing would satisfy the requirements it imports from section 210 of the Federal Power Act, 16 U.S.C. § 824i.