Court Opinion

ID: 2966181
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Date Created: 2015-09-21 21:50:10.111939+00
Date Added: 2024-06-11T11:43:08.838282
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<pre>                 United States Court of Appeals <br>                     For the First Circuit <br> <br> <br> <br>No. 98-1847 <br>No. 98-1876 <br>No. 98-2072 <br> <br>                 TOWN OF NORWOOD, MASSACHUSETTS, <br> <br>                           Petitioner, <br> <br>                                v. <br> <br>              FEDERAL ENERGY REGULATORY COMMISSION, <br> <br>                           Respondent. <br>                       ____________________ <br> <br>No. 98-2198 <br>No. 98-2199 <br> <br>            NORTHEAST CENTER FOR SOCIAL ISSUES STUDIES <br> <br>                           Petitioner, <br> <br>                                v. <br> <br>              FEDERAL ENERGY REGULATORY COMMISSION, <br> <br>                           Respondent. <br>                       ____________________ <br> <br>             ON PETITIONS FOR REVIEW OF ORDERS OF THE <br>                  FEDERAL REGULATORY COMMISSION <br>                                  <br> <br> <br>                              Before <br> <br>                    Boudin, Stahl and Lipez, <br>                                 <br>                        Circuit Judges. <br>                                 <br>                                 <br>                                 <br>     Charles F. Wheatley, Jr. with whom Wheatley & Ranquist, <br>Kenneth M. Barna, Alan K. Posner and Rubin & Rudman were on <br>consolidated brief for petitioner Town of Norwood, Massachusetts. <br>     Richard Roos-Collins, Natural Heritage Institute, for <br>petitioner Northeast Center for Social Issue Studies.

     Larry D. Gasteiger with whom Douglas W. Smith, General <br>Counsel, Jay L. Witkin, Solicitor, and John H. Conway, Deputy <br>Solicitor, Federal Energy Regulatory Commission, were on <br>consolidated brief for respondent. <br>     Edward Berlin with whom Robert V. Zener, Swidler Berlin <br>Shereff Friedman, LLP, William J. Madden, John A. Whittaker and <br>Winston & Strawn were on brief for intervenor New England Power <br>Company. <br>     Zori G. Ferkin with whom Earle H. O'Donnell, Andrew B. Young, <br>Donald W. Stever and Dewey Ballantine LLP were on brief for <br>intervenor USGen New England, Inc.   <br> <br> <br> <br> <br> <br>February 2, 2000 <br> <br> <br> <br>                                

  BOUDIN, Circuit Judge.  In this case, the Town of <br>Norwood, Massachusetts ("Norwood") and the Northeast Center for <br>Social Issue Studies ("Northeast Center") seek review of a series <br>of orders of the Federal Energy Regulatory Commission ("FERC") <br>directed inter alia to New England Power Company ("New England <br>Power"), which engages in interstate wholesale electric power <br>distribution in New England.  In a companion decision, Town of <br>Norwood v. New England Power Company, No. 99-1047, we decide today <br>a separate appeal by Norwood from the dismissal of an antitrust and <br>breach of contract suit that it brought in the district court <br>against New England Power and others. <br>   <br>                         I.  THE HISTORY  <br>  Our history of this case is drawn primarily from the <br>administrative record.  For many years New England Power served as <br>one of the major wholesalers of electric power in New England.  It <br>operates a high voltage transmission network, and in the past has <br>owned and operated a number of generating plants, including <br>hydroelectric, fossil, and nuclear.  New England Power is a <br>subsidiary of New England Electric System, which also owns four <br>"retail" distribution companies, including Massachusetts Electric <br>Company ("Mass Electric") serving Massachusetts, and Narragansett <br>Electric Company ("Narragansett") serving Rhode Island. <br>  New England Power sells wholesale power that it generates <br>or buys from others both to affiliates like Mass Electric and to <br>non-affiliated wholesale customers like Norwood, which operates its <br>own municipal electric system serving businesses and residents in <br>the Town of Norwood, Massachusetts.  In general, wholesale sales in <br>interstate commerce are subject to regulation by FERC under the <br>Federal Power Act, 16 U.S.C.  791a-828c, see 16 U.S.C.  824(a), <br>while retail rates (e.g., those charged by Mass Electric to its <br>business and residential customers) are subject to state <br>regulation, e.g., Mass. Gen. Laws ch. 164,  93-94E; see also <br>Boston Edison Co. v. City of Boston, 459 N.E.2d 1231, 1233 (Mass. <br>1984). <br>  Traditionally, at both the federal and state level, <br>electricity sales have been regulated on the familiar public <br>utility model:  the rates have been set forth in filed tariffs, <br>unreasonable or unduly discriminatory rates have been forbidden, <br>and an administrative agency has been charged with overseeing rates <br>and other related subjects (such as extension of lines, mergers, <br>and the like).  See generally Town of Concord v. Boston Edison Co., <br>915 F.2d 17, 20 (1990), cert. denied, 499 U.S. 931 (1991).  In many <br>cases, as with New England Power, the suppliers are vertically <br>integrated and are engaged in electricity generation, intercity <br>transmission, and local distribution.  See id. at 19. <br>  As with other, once fully regulated industries, <br>legislators and regulators have over the last 25 years sought to <br>introduce a greater measure of competition into the electric power <br>industry.  In the case of electric power, this has been achieved <br>not by encouraging duplication of intercity transmission or local <br>distribution networks--as is occurring in the telephone industry-- <br>but primarily by regulatory changes.  These include imposing <br>obligations on facilities' owners to carry power for other <br>suppliers ("wheeling"), encouraging customers to choose among <br>competing suppliers, and discouraging anticompetitive practices by <br>a variety of means, including restructuring so as to reduce the <br>incentives for anticompetitive behavior.  See generally Energy <br>Information Administration, U.S. Dep't of Energy, The Changing <br>Structure of the Electric Power Industry:  Selected Issues, 1998, <br>DOE/EIA-0562(98) (1998).  Both Massachusetts and Rhode Island have <br>been seeking to foster retail competition in the supply of <br>electricity. <br>  To this end, in December 1996, New England Power filed <br>with FERC proposed amendments to power sales agreements with Mass <br>Electric and Narragansett.  Prior to the filing, requirements <br>contracts obligated New England Power to supply its affiliates with <br>all of their needs for electric power; the wholesale rates were <br>specified in tariff schedules and termination by either side <br>required lengthy prior notice (e.g. seven years).  The proposed <br>amendments permitted the affiliates to terminate on short notice, <br>but subject to paying as a termination charge a portion of the <br>costs incurred by New England Power in preparing itself to meet <br>their projected longer-term requirements. <br>  FERC referred the new filings to an administrative law <br>judge, New England Power Co., 78 F.E.R.C.  61,080 (1997), under <br>whose auspices settlement discussions occurred.  See New England <br>Power Co., 80 F.E.R.C.  63,003 (1997).  In May 1997, New England <br>Power filed proposed settlement agreements, which again permitted <br>early termination for its affiliates (subject to termination <br>charges), and provided that after termination New England Power <br>would provide Mass Electric and Narragansett (at their option) with <br>new "wholesale standard offer rates" which are described below.  <br>The settlement also committed New England Power to file a plan with <br>FERC, by October 1, 1997, to divest itself of most of its <br>generation business.  Both of these steps, more fully described <br>below, were purportedly designed to foster competition. <br>  On October 1, 1997, New England Power sought approval <br>from FERC to sell practically all of its non-nuclear electrical <br>generating plants to USGen New England, Inc. ("USGenNE"), a <br>subsidiary of a major west coast public utility holding company <br>("PG&E").  The sale required FERC approval both for the sale of <br>certain facilities and the transfer of hydroelectric licenses.  16 <br>U.S.C.  801, 824b.  In connection with its proposed purchase of <br>assets, USGenNE agreed to assume responsibility for providing <br>wholesale standard offer service to Mass Electric and Narragansett, <br>and New England Power proposed to implement a rate freeze that <br>would prevent increases in rates for its remaining wholesale <br>customers, including Norwood. <br>  Since 1983, Norwood has purchased electricity at <br>wholesale from New England Power and resold it to local businesses <br>and residential customers.  Its agreement with New England Power, <br>as extended by Norwood, obligated Norwood to take its requirements <br>from New England Power through October 31, 2008.  Regarding the <br>wholesale standard offer rates proposed for New England Power <br>affiliates as an unfair advantage to retail "competitors," Norwood <br>notified New England Power on March 4, 1998, that it was switching <br>to a different wholesale supplier.  Norwood has now become a <br>wholesale customer of Northeast Utilities, another major supplier <br>of wholesale electricity in New England. <br>  New England Power countered on March 18, 1998, by filing <br>a proposed tariff revision that would permit its remaining <br>wholesale customers to terminate their long-term requirements <br>contracts on 30 days' notice.  But the tariff purported to subject <br>such customers to payment of a contract termination charge to <br>permit New England Power to recover the revenues that it would have <br>collected had the customers continued to pay the fixed tariff rate <br>through the contract term, less the expected costs avoided by not <br>providing service.  New England Power subsequently billed Norwood <br>for a portion of this termination charge but Norwood apparently has <br>declined to pay.  <br>  In the proceedings before FERC, Norwood objected to each <br>of the three measures proposed by New England Power: (1) its <br>proposed settlement with its affiliates to terminate their <br>requirements contracts and to provide them the option of wholesale <br>standard offer rate service; (2) its proposed divestiture of <br>generating facilities to USGenNE and the associated freeze on the <br>wholesale rates New England Power charged to its unaffiliated <br>wholesale customers; and (3) its March 1998 tariff amendments <br>allowing unaffiliated wholesale customers like Norwood to terminate <br>their requirements contracts on short notice but only on payment of <br>a contract termination charge. <br>  In a set of orders in these three proceedings issued <br>between November 1997 and June 1998, FERC rejected virtually all of <br>Norwood's requests for relief.  Among other things, FERC approved <br>the settlement agreement; it approved the sale of non-nuclear <br>generating facilities to USGenNE and the transfer of hydroelectric <br>licenses to it; and it upheld New England Power's imposition of a <br>contract termination charge on unaffiliated purchasers who sought <br>to terminate their existing contracts prematurely.  Norwood sought <br>direct review in this court, 16 U.S.C.  825l(b), and we have <br>consolidated its appeals into the present case. <br>  Separate petitions for review of the FERC orders were <br>filed in this court by Northeast Center.  Its petitions challenged <br>the orders insofar as they approved the sale to USGenNE of New <br>England Power's hydroelectric generating facilities and associated <br>licenses.  Northeast Center challenged these actions on the ground <br>that FERC had violated the Federal Power Act by failing to consider <br>whether the divestiture would reduce property tax revenues of <br>adjacent communities, and that FERC had violated both that statute <br>and environmental laws by failing to give adequate attention to the <br>potential environmental impact of the transfers.  This court <br>consolidated these petitions for review with those of Norwood.     <br>     <br>                          II. DISCUSSION <br>  1.  Norwood's main attack, but not its only one, is upon <br>FERC's approval of the contract termination charge that the New <br>England Power tariff amendment of March 18, 1998, imposes on <br>unaffiliated wholesale customers; this charge, as already <br>explained, applies to a requirements contract customer who chooses <br>to end its purchases before the end of the contract term and <br>without the required notice.  The amendment provides the customer <br>an option to terminate at short notice but sets a specific tariff- <br>based price on early departure. <br>  FERC is entitled to review tariff amendments governing <br>wholesale power sales under a "just and reasonable" standard, 16 <br>U.S.C.  824d(a); and at least on the surface the amendment serves <br>the Commission's goal of fostering competition by giving Norwood an <br>option to enter immediately into competitive purchasing.  But <br>Norwood argues that FERC's action is unlawful for a number of <br>independent reasons, which we next address. <br>  First, Norwood says that the approval is inconsistent <br>with the Commission's "stranded cost recovery" provisions adopted <br>in FERC Order No. 888 and associated regulations.  Order No. 888 <br>imposed on investor-owned power companies a general obligation to <br>wheel power for customers, many of whom had previously bought their <br>power from one transmission company--normally, an integrated <br>supplier--but now wished to use that company merely to transport <br>power bought from another company.  The order conditioned this <br>wheeling obligation on the customers contributing to the recovery <br>of the so-called "stranded costs" of the transporting company. <br>  Stranded costs were defined in detail by FERC formulas <br>but the general concept was this:  in providing "bundled" service <br>(generation and transmission), power companies had made investments <br>expecting to recover them from captive customers.  The wheeling <br>obligation imposed by Order No. 888 could permit such customers to <br>reach cheaper power elsewhere; and in some cases this would leave <br>the power companies with investments, especially in generation <br>facilities, that could not be fully recovered in a competitive <br>environment.  Stranded cost recovery to protect reasonable <br>expectations was FERC's quid pro quo for open access to competing <br>electricity suppliers during this period of transition. <br>  The stranded cost recovery for which the orders and <br>regulations provided was framed as an obligation of those customers <br>who had previously been power customers of the integrated supplier <br>but now chose to use only its transmission system.  See 18 C.F.R. <br> 35.26(b)(1), (c)(2) (1999).  Norwood's first objection to the <br>contract termination charge in this case is that although Norwood <br>previously bought power from New England Power, it got its <br>transmission service for such power from Boston Edison and does not <br>intend to use New England Power transmission service in the future.  <br>Thus, says Norwood, it falls outside the scope of FERC's stranded <br>cost regulation and the tariff is inconsistent with Order No. 888. <br>  FERC concedes that its Order No. 888 regulations do not <br>apply in this case.  But, as FERC notes, there is a separate <br>(although parallel) justification for stranded cost recovery in the <br>present case:  Norwood as a requirements-contract customer of power <br>furnished by New England Power is being afforded an option to <br>switch immediately to a competing supplier, without the seven <br>years' notice required by the contract.  New England Power Co., 83 <br>F.E.R.C.  61,174, at 61,722-23 (1998).  In short, there is a <br>different reason for similar relief; and while Order No. 888 does <br>not mandate the new tariff, neither does it forbid it.  See Order <br>No. 888, 61 Fed. Reg. at 21662 (reserving the possibility of <br>stranded cost recovery in other situations). <br>  Norwood also argues that Order No. 888 and FERC's <br>regulations excluded from stranded cost recovery those cases where <br>a requirements contract was entered into or extended after July 11, <br>1994.  FERC's stated reason for this limitation was that on that <br>date it first gave public notice of its stranded cost proposal; <br>thereafter, for new contracts the supplier and purchaser could make <br>their own arrangements for early termination, recovery, and the <br>like.  Order No. 888, 61 Fed. Reg. at 21641; see also 18 C.F.R.  <br>35.26(b)(7), (c)(1)(ii).  Norwood says that while its original <br>contract was made prior to July 11, 1994, New England Power and <br>Norwood agreed to changes in the agreement after that date.  But <br>the restrictions in Order No. 888 are no more than conditions on <br>stranded cost recovery under that order and do not preclude the <br>Commission from allowing tariffs that permit somewhat similar <br>recovery whenever a customer purports to disregard an existing <br>contractual obligation. <br>  Second, Norwood claims that the tariffed termination <br>charge is nothing more than an effort to collect contract damages <br>for early termination through the Commission's processes, and that <br>this conflicts with FERC's practice of deferring to the courts on <br>matters of contract and deprives Norwood of the chance to counter <br>a contract breach claim by showing that New England Power breached <br>the contract first.  Admittedly, the stranded cost recovery in the <br>tariff is closely akin to contract damages, and the Commission in <br>the past has declined to adjudicate some contract disputes.  E.g., <br>Southern Cal. Edison Co., 85 F.E.R.C.  61,023 (1998). <br>  But FERC's abstention in cases like Southern California <br>Edison appears primarily to reflect an unwillingness to resolve <br>disputes about the meaning of disputed contract provisions.  Here, <br>the Commission has not interpreted Norwood's contract with New <br>England Power or determined whether Norwood has breached the <br>contract or has been freed from the contract based on a breach by <br>New England Power.  See New England Power Co., 84 F.E.R.C.  <br>61,175, at 61,920 (1998).  It has merely upheld, on a generic <br>basis, a termination charge for those customers who are bound by <br>existing contracts but wish to avoid their obligations. <br>  Third, Norwood claims that FERC had to reject the New <br>England Power tariff offering customers the termination option <br>because it conflicts with the Mobile-Sierra doctrine and the filed <br>rate doctrine.  The former, developed in cases interpreting the <br>Federal Power Act and the Natural Gas Act, Federal Power Comm'n v. <br>Sierra Pac. Power Co., 350 U.S. 348, 354-55 (1956); United Gas Pipe <br>Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332, 344 (1956), <br>prevents FERC from overriding a contract unless it finds that the <br>contract is contrary to the public interest.  See Texaco, Inc. v. <br>FERC, 148 F.3d 1091, 1095-97 (D.C. Cir. 1998).  The doctrine <br>protects a party's interest in its contract (unless overridden by <br>a public interest finding). <br>  In a sense, the addition of the express option to <br>terminate earlier (at a specified price) can be viewed as modifying <br>the contract.  But from Norwood's vantage, the option merely gives <br>it something that it did not have before; it remained free to <br>insist that New England Power continue to supply power under the <br>contract until expiration.  The termination charge is certainly a <br>detriment but, absent a showing that its formula is any worse than <br>contract damages, it merely spells out what would have been the <br>law's remedy if Norwood had no option but simply breached the <br>existing contract. <br>  The filed rate doctrine can--so far as relevant here--be <br>regarded as a prohibition on retroactive increases for tariffed <br>services.  See Arkansas La. Gas Co. v. Hall, 453 U.S. 571, 577-78 <br>(1981).  Formally, the filed rate doctrine says that the only <br>lawful rate is that reflected in the tariff on file when the <br>service is performed, id., but the refusal to permit retroactive <br>increases is taken as a corollary, id. at 578.  Most regulatory <br>statutes, but not all, see Federal Power Comm'n v. Sunray DX Oil <br>Co., 391 U.S. 9, 24 (1968), permit reparations to the customer if <br>the tariff rate is later shown to be unreasonably high, but the <br>carrier can never collect more than the tariffed rate. <br>  Norwood is not being asked to pay more for past purchases <br>than provided for by the tariff in effect at the time of such <br>purchases.  The tariff change, as just noted, gives Norwood an <br>option it did not have before to cancel future purchases on short <br>notice by paying a termination charge--hardly a retroactive <br>increase in charges for past purchases.  Norwood says that the <br>change is retroactive because it was imposed after Norwood had <br>ceased to make purchases under FERC Tariff No. 1, Norwood having <br>disclaimed its existing contract and signed on with a new supplier.  <br>But the change only governed Norwood as to its future purchases--or <br>failures to purchase--from New England Power; there was no effort <br>to increase rates for purchases made in the past, which is the <br>pertinent concern of the filed rate doctrine. <br>  Fourth, Norwood says that New England Power has failed to <br>supply data to show that it is "just and reasonable" to require <br>Norwood to pay a contract termination charge allegedly amounting to <br>$78 million for the period from 1998 through 2008.  Norwood derives <br>this figure by projecting the termination charges from April 1, <br>1998, through the expiration of the extended contract which Norwood <br>has now disavowed.  The Federal Power Act requires just and <br>reasonable rates, 16 U.S.C.  824d(a), and the regulations for rate <br>filings generally require the filing of cost of service data for <br>new or increased rates, 18 C.F.R.  35.12, 35.13. <br>  But the termination charge is not a new or increased rate <br>for supplying energy.  It is a formula-driven charge to cover <br>certain projected losses to New England Power caused by not <br>supplying electricity after preparing to do so, calculated based on <br>rates already approved by FERC.  Thus the contract termination <br>charge in no way represents a rate increase for Norwood.  If these <br>charges were miscomputed or unsupported, Norwood might well have a <br>legitimate objection; but it has not explained any such objection <br>to us, let alone tried to support it with citations or figures. <br>  Before FERC, Norwood primarily urged that the contract <br>termination charge filing be rejected in its entirety.  But in a <br>footnote in its motion to intervene, and more fully in its motion <br>for rehearing, Norwood also sought a hearing regarding the <br>reasonableness of the amount that New England Power sought to <br>recover--referring, inter alia, to alleged problems with the <br>contract termination charge calculation.  FERC denied the request <br>for rehearing, concluding that no evidentiary hearing was necessary <br>because no party had raised a disputed issue of material fact.  New <br>England Power Co., 84 F.E.R.C.  61,175, at 61,920 (1998). <br>  To whatever extent there was in fact a disputed issue <br>regarding the termination charge calculation that necessitated a <br>hearing, cf. Louisiana Energy & Power Auth. v. FERC, 141 F.3d 364, <br>371 (D.C. Cir. 1998), Norwood does not identify it to us.  FERC <br>suggested in its initial order that Norwood could file a section <br>206 complaint, 16 U.S.C.  824e, challenging the substance of the <br>contract termination charge, New England Power Co., 83 F.E.R.C.  <br>61,174, at 61,724 (1998), and presumably it can still do so, cf. <br>Oxy USA, Inc. v. FERC, 64 F.3d 679, 690 (D.C. Cir. 1995). <br>  Fifth, Norwood's final set of objections to the <br>termination charge are of a different character.  In substance, <br>Norwood complains that the termination charge imposed on it exceeds <br>the charge imposed on affiliates of New England Power; that the so- <br>called wholesale standard offer rate (available to the affiliates <br>but not to Norwood) is unfairly low during the opening years and <br>dangerously high thereafter; and that these discrepancies, and the <br>threatened effects, require rejection of both the termination <br>charge and the standard offer rates--or at least evidentiary <br>hearings. <br>  The Commission's answer regarding the contract <br>termination charge--that the affiliates "settled" with New England <br>Power, New England Power Co., 83 F.E.R.C.  61,174, at 61,723  n.13 <br>(1998), reh'g denied, 84 F.E.R.C.  61,175, at 61,920 (1998)--would <br>make the hairs stand up on the neck of an old-fashioned utility <br>lawyer.  The utility tradition, growing out of hostility to <br>preferences and rebates, has been to oppose unequal treatment or at <br>least to treat it with great skepticism.  Specifically, the Federal <br>Power Act outlaws unjustifiably disparate treatment of similarly <br>situated entities under the rubric of "undue preference."  16 <br>U.S.C.  824d(b). <br>  But differential treatment does not necessarily amount to <br>undue preference where the difference in treatment can be explained <br>by some factor deemed acceptable by the regulators (and the <br>courts).  E.g., Cities of Newark v. FERC, 763 F.2d 533, 546 (3d <br>Cir. 1985).  The District of Columbia Circuit, which reviews more <br>such regulatory matters than any other court, has approved <br>divergent treatment that stems from a settlement, reasoning that <br>there is a public interest in settlements and that one party should <br>not be able to frustrate a settlement for everyone else.  Cities of <br>Bethany v. FERC, 727 F.2d 1131, 1138-40 (D.C. Cir.), cert. denied, <br>469 U.S. 917 (1984); United Mun. Distribs. Group v. FERC, 732 F.2d <br>202, 212-13 (D.C. Cir. 1984). <br>  Norwood attacks this justification for differential <br>treatment on the ground that it should not apply where the non- <br>settling parties were denied an opportunity to attack the <br>settlement in the administrative proceeding.  However, even <br>assuming that such a limitation exists (and perhaps it should), the <br>Administrative Law Judge found that Norwood's request for a hearing <br>on the settlement was out of time and unsupported, New England <br>Power Co., 80 F.E.R.C.  63,003, at 65,040-41 (1997), and Norwood <br>offers no answer to this ruling. <br>  Under these circumstances, we think that the mere <br>disparity in Norwood's contract termination charge vis  vis that <br>of other companies that settled is not a per se violation of the <br>"undue preference" prohibition.  Norwood passed up the opportunity <br>to settle with New England Power regarding termination, see New <br>England Power Co., 83 F.E.R.C. 61,174, at 61,723 n.13 (1998), and <br>argued to FERC that the contract termination charge approved in the <br>settlement proceeding was too high.  It seems to us that at least <br>where a party has been offered the same settlement and refused it, <br>a claim based simply on an abstract right to be treated the same as <br>settling companies has much less force--and to recognize it would <br>subvert the public interest in promoting settlements.   Whether an <br>undue preference claim might be made based on competitive or other <br>market impacts is a different issue, addressed below. <br>  2.  Norwood's more interesting claim of undue preference <br>is directed not to the contract termination option and charge-- <br>Norwood's main target--but to the wholesale standard offer rates, <br>which appears to have been offered only to affiliates of New <br>England Power.  These rates were not offered to Norwood; and <br>although they were initially included in the FERC settlement, they <br>do not appear to be a resolution of any existing legal obligation <br>between New England Power and its affiliates.  Their origin and <br>justification are quite different. <br>  The wholesale standard offer rates, it appears, are a <br>schedule of wholesale power rates that begins at a rather low level <br>and then climbs over a number of years to a rather high level.  It <br>interlocks with schedules of retail standard offer rates that New <br>England Power's affiliates have agreed, in settlements with their <br>respective state commissions, to offer as a safeguard for retail <br>customers who do not or cannot immediately take advantage of the <br>competitive sources of retail supply that both federal and state <br>regulators foresee developing.  See New England Power Co., 82 <br>F.E.R.C.  61,179, at 61,664 (1998); In re Massachusetts Elec. Co., <br>Mass. D.P.U. 96-25, at 23-25 (Feb. 26, 1997).  To the extent that <br>customers take advantage of these initially favorable retail rates <br>from the affiliates, the retailers themselves will have counterpart <br>wholesale rates. <br>  These "backup" standard offer rates are not intended as <br>a permanent low-cost option.  On the contrary, they increase <br>sharply over a brief period partly in order to encourage customers <br>to migrate into the competitive market once they have had time to <br>negotiate with retailers who, because of wheeling obligations <br>imposed at both the wholesale and retail level, will then be able <br>to compete to supply once-captive customers.  See In re <br>Massachusetts Elec. Co., Mass. D.P.U., at 23-25.  But Norwood, <br>being a municipal system, is not subject to these wheeling <br>obligations and has no obligation to offer retail standard offer <br>rates as a backup for its retail customers.  See Mass. Gen. Laws <br>ch. 164,  47A. <br>  Norwood says that the wholesale standard offer rates were <br>denied to it and are below the market rate; it argues that FERC <br>therefore should have held hearings to determine whether the rates <br>were unduly discriminatory.  FERC explained the special rates by <br>pointing to the New England Power affiliates' obligation to offer <br>retail standard offer rates to their own customers and their <br>consequent need for dovetailed wholesale standard offer rates from <br>their supplier.  New England Power Co., 82 F.E.R.C.  61,179, at <br>61,664.  Norwood was not similarly situated because it had no <br>similar obligation.  On the surface, this is a plausible <br>explanation for differential treatment, at least in the absence of <br>some plausible rejoinder from Norwood. <br>  Norwood also complains that the wholesale standard offer <br>rates were not justified by cost-of-service data.  New England <br>Power did not submit any because it contended that the initial <br>standard offer rates did not amount to a rate increase and cost-of- <br>service data was therefore not required by FERC regulations.  18 <br>C.F.R.  35.13(a)(iii).  When USGenNE proposed to take over the <br>standard offer service from New England Power, it did so as part of <br>its application for "market-based rate" approval:  FERC approved <br>the petition in relevant part, concluding that USGenNE need not be <br>limited to cost-of-service rates because it did not have market <br>power in generation or transmission.  New England Power Co., 82 <br>F.E.R.C.  61,179, at 61,662, 61,665.  See generally Louisiana <br>Energy & Power Auth. v. FERC, 141 F.3d 364, 365 (D.C. Cir. 1998).  <br>Norwood offers no response to these arguments. <br>  3.  This brings us to Norwood's final set of arguments, <br>alleging that the FERC actions it attacks will have a series of <br>anticompetitive effects.  One action is the relatively high <br>contract termination charge imposed on Norwood; the second is the <br>provision to Mass Electric of the favorable wholesale standard <br>offer rates.  Taken together, says Norwood, these steps will have <br>a variety of anticompetitive consequences and, at the very least, <br>FERC should have conducted an evidentiary inquiry into this claim. <br>  Conceivably, a difference in treatment otherwise <br>justified might be less so if it had an anticompetitive impact, see <br>Cities of Bethany v. FERC, 727 F.2d 1131, 1141 (D.C. Cir.), cert. <br>denied, 469 U.S. 917 (1984), and the agency might be faulted if it <br>declined even to inquire into a well-supported claim of this kind, <br>cf. Michigan Pub. Power Agency v. FERC, 963 F.2d 1574, 1578-79 <br>(D.C. Cir. 1992).  In the agency and in this court, Norwood has <br>alleged anticompetitive effects.  But mere allegations of impact do <br>not trigger an evidentiary hearing.  To justify a hearing, the <br>allegations must raise a genuine issue of material fact that cannot <br>be adequately resolved on the written record.  Louisiana Energy & <br>Power Auth. v. FERC, 141 F.3d 364, 371 (D.C. Cir. 1998). <br>  Here, Norwood appears to allege three different effects:  <br>that the initial wholesale standard offer rates are so low that <br>they will discourage the development of wholesale competition in <br>New England that might otherwise provide lower prices for Norwood, <br>enabling it better to serve its customers and to compete with New <br>England Power affiliates; that the denial of standard offer rates <br>to Norwood in these early years, coupled with a high contract <br>termination charge, will force Norwood's costs to a level well <br>above those of New England Power's affiliates, again impairing <br>Norwood's ability to compete with those affiliates; and that higher <br>standard offer rates in later years will force up the general level <br>of wholesale prices in New England, harming consumers and Norwood <br>at the same time. <br>  These assertions appear, with more or less detail, in  <br>the affidavits of two experts that Norwood submitted to FERC.  They <br>were countered in some measure by other expert testimony.  While <br>some of the assertions in Norwood's affidavits are doubtful at <br>best, the Commission's orders offer only a relatively sketchy <br>discussion of competitive impact.  In sum, if Norwood had seriously <br>briefed the issue, we might have a serious issue to decide. <br>  Instead, Norwood's main brief offers us only a couple of <br>conclusory statements coupled with references to its affidavits.  <br>Norwood makes little effort to explain the basis for its <br>predictions, does not match them up with what the Commission said <br>in its orders, and does not address obvious critical issues:  e.g., <br>the actual extent of competition between Norwood and New England <br>Power's affiliates, each of whom primarily serves separate retail <br>areas; why new wholesale competition will not develop as the <br>wholesale standard offer rates rise; and why imports of electricity <br>will not constrain USGenNE. <br>  Since Norwood has virtually abdicated its responsibility <br>to brief the issue to us, FERC's own brief only touches on the <br>competition issues; the New England Power brief, although more <br>helpful, offers only brief comments on a few points.  Thus, we have <br>no coherent and developed argument in this court to address on the <br>competition issue.  In these circumstances, Norwood has forfeited <br>its argument; developing a sustained argument out of economic <br>materials and legal precedents is the job of the appellant, not the <br>reviewing court, as we have previously warned.  U.S. Healthcare, <br>Inc. v. Healthsource, Inc., 986 F.2d 589, 595-97 (1st Cir. 1993); <br>see also Gamma Audio & Video, Inc. v. Ean-Chea, 11 F.3d 1106, 1113 <br>(1st Cir. 1993). <br>  Indeed, in an area this complicated, it is doubtful that <br>we could do an adequate job on our own, although we might still try <br>if a severe threat to the public interest appeared likely from the <br>affidavits.  But a negative long-term effect on power rates in New <br>England is among the less plausible of the conjectures; and the <br>short-term competitive impact on Norwood is something that it <br>should have been able to explain and support in an appellate brief <br>(if the materials were in the record) and it has not done so.  <br>Payment of a large termination charge, due in some measure to <br>Norwood's own maneuvers, is not the same thing as demonstrated harm <br>to competition. <br>  4.  Northeast Center describes itself as a non-profit <br>corporation dedicated to "public education regarding environmental <br>changes related to technology and energy uses."  While Norwood is <br>primarily concerned with rates and termination charges, Northeast <br>Center's focus is on the transfer of generating facilities from New <br>England Power to USGenNE and the related transfer of hydroelectric <br>licenses.  <br>  Both of these steps required the Commission's approval <br>under a broad "public interest" standard.  16 U.S.C.  801, <br>824b(a); 18 C.F.R.  9.3.  Northeast Center intervened in the <br>administrative proceedings and asked the Commission to hold <br>evidentiary hearings on two alleged possible effects of the <br>transfers:  harm to the environment and reduced property tax <br>revenues for towns that collected property taxes on the facilities.  <br>The Commission declined to do so or to prepare an environmental <br>impact statement or assessment.  New England Power Co., 82 F.E.R.C. <br> 62,138, at 64,214-15 (1998), reh'g denied, 83 F.E.R.C.  61,272, <br>at 62,132-34 (1998); New England Power Co., 82 F.E.R.C.  61,179, <br>at 61,661 (1998), reh'g denied, 83 F.E.R.C.  61,275, at 62,148-49 <br>(1998). <br>  In this court, Northeast Center says that these failures <br>were error.  FERC counters that Northeast Center lacks Article III <br>standing to pursue these issues in court.  Article III standing is <br>a threshold issue, Steel Co. v. Citizens for a Better Environment, <br>523 U.S. 83, 88-102 (1998).  The burden to show standing is upon <br>the litigant whose standing is challenged, Benjamin v. Aroostook <br>Med. Ctr., Inc., 57 F.3d 101, 104 (1st Cir. 1995), and is not <br>established merely because the agency permitted intervention, City <br>of Orrville v. FERC, 147 F.3d 979, 985 (D.C. Cir. 1998). <br>  The pertinent ground rules for association standing are <br>clear enough in the abstract:  to pursue judicial review, an <br>association or similar representative organization may have <br>standing if at least one of its members has standing in his or her <br>own right, the interests served by the suit are pertinent to the <br>mission of the organization, and relief does not require the <br>presence of the members in the suit.  United States v. AVX Corp., <br>962 F.2d 108, 116 (1st Cir. 1992).  An individual has standing if <br>he can show that he is suffering or is threatened with injury in <br>fact to a cognizable interest; that the injury is causally <br>connected to the conduct complained of; and that the court is <br>competent to afford relief that will or is likely to redress the <br>injury.  Bennett v. Spear, 520 U.S. 154, 162 (1997).   <br>  We start with the claim of environmental injury.  <br>Northeast Center says that it is concerned with the environment, <br>and its member directors live in Vermont and New Hampshire and use <br>the Connecticut River and its tributaries for recreation.  The <br>hydroelectric facilities being transferred are located in these <br>states on the Connecticut River.  And, it is alleged, the transfer <br>from one licensee and owner (New England Power) to the other <br>(USGenNE) could affect the management of the dams, primarily with <br>regard to water releases and timing, in ways that affect <br>recreational uses, erosion, flooding and water quality. <br>  Thus, the issue of standing and "the merits" <br>substantially overlap.  FERC's public interest standard encompasses <br>environmental concerns, see Wisconsin v. FERC, 104 F.3d 462, 470 <br>(D.C. Cir. 1997), and arguably a substantial threat from the <br>transfer would require attention, cf. Platte River Whooping Crane <br>Critical Habitat Maintenance Trust v. FERC, 876 F.2d 109 (D.C. Cir. <br>1989); Southern Cal. Edison Co., 49 F.E.R.C.  61,091 (1989).  But <br>if there is no credible threat, then the Northeast Center and its <br>members lack standing, Adams v. Watson, 10 F.3d 915, 922-23 (1st <br>Cir. 1993), and, even if they had standing, FERC's refusal to <br>pursue a speculative claim would not be error.  Northeast Utils. <br>Serv. Co. v. FERC, 993 F.2d 937, 958-59 (1st Cir. 1993). <br>  From either standpoint, the present case is not a close <br>one.  FERC was understandably skeptical of the environmental claim; <br>building and operating a major new dam is likely to have <br>environmental consequences, but the transfer of existing facilities <br>from one large utility to another is simply a change in ownership, <br>and USGenNE became subject to the same license conditions and <br>regulations that had bound New England Power.  If there is anything <br>in the history of USGenNE or its west coast parent that suggests <br>that either would mismanage the facilities or disobey the <br>conditions or regulations, Northeast Center has not mentioned it.  <br>  About all that Northeast Center has done is to refer in <br>passing to a report by a joint state commission, which states that <br>New England Power has done a superior job in managing river flows.  <br>But there is nothing to show or even suggest that USGenNE is likely <br>to do a worse job in operating the same facilities or that any <br>predictable variations in its performance are likely to have a <br>significant effect on the environment.  And this report, which is <br>not directed specifically at USGenNE and, moreover, which Northeast <br>Center hardly refers to in its briefs, is all that Northeast Center <br>offers to support its claim of standing or its demand for a full- <br>scale evidentiary investigation by FERC. <br>  Even the more generous of the cases that uphold standing <br>or require an environmental impact statement or assessment under <br>the National Environmental Policy Act ("NEPA") involved projects <br>more likely to threaten harm or a more particularized showing that <br>harm is threatened.  Cf. United States v. Students Challenging <br>Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 683-90 (1973).  <br>FERC's own regulations, made in conformity with the governing <br>regulations under NEPA, categorically classify such transfers of <br>ownership and licensing as the kind of projects not likely to have <br>a significant environmental impact or to require a NEPA <br>environmental impact statement or smaller scale assessment.  18 <br>C.F.R.  380.4(a)(8), (16).  If there was reason here for a <br>different outcome, Northeast Center has not provided it. <br>  A FERC action that otherwise falls within a categorical <br>exclusion to the NEPA requirements may nonetheless warrant an <br>environmental assessment or environmental impact statement if the <br>action may affect, inter alia, wetlands, anadromous fish species, <br>or a National Refuge, 18 C.F.R.  380.4(b), all of which Northeast <br>Center says are affected by the projects at issue.  But the <br>regulation only requires an assessment or impact statement if <br>"circumstances indicate that an action may be a major Federal <br>action significantly affecting the quality of the human <br>environment."  Id.  As discussed above, Northeast Center has not <br>presented any evidence indicating how the license and asset <br>transfers (as opposed to the projects themselves) will have any <br>impact on the environment. <br>  Turning to economic impact, the nature of Northeast <br>Center's claim is quite different.  It asserts that competition in <br>the supply of electric power is likely in some cases to impair the <br>value of the existing utility plant, and it points to a Moody's <br>investment survey to support that view.  The actions taken in this <br>case by the Commission are designed to foster competition.  Ergo, <br>says Northeast Center, the value of the transferred generating <br>facilities may be reduced and the property taxes paid to local <br>communities may decline.  This, it says, should have been <br>investigated. <br>  It is sufficient to dispose of this case that Northeast <br>Center has not shown that its own interests would be affected by <br>such a decline in property taxes; and, even assuming that its <br>members or directors might be so affected (based on residence), <br>Northeast Center has not shown that its representational function <br>extends to such private economic concerns.  Germaneness of the <br>interests served by a lawsuit to the purpose of the organization  <br>is a settled requirement for standing based on membership, Hunt v. <br>Washington State Apple Advertising Comm'n, 432 U.S. 333, 343 <br>(1977), "preventing litigious organizations from forcing the <br>federal courts to resolve numerous issues as to which the <br>organizations themselves enjoy little expertise and about which few <br>of their members demonstrably care."  Humane Soc'y of the United <br>States v. Hodel, 840 F.2d 45, 57 (D.C. Cir. 1988); see also UAW v. <br>Brock, 477 U.S. 274 (1986). <br>  Accordingly, we need not reach the question whether a <br>showing of likely economic impact, made by a person with standing, <br>would compel FERC to pursue the matter, but we are entitled to <br>express our doubts.  It is true that the public interest concept is <br>a broad one, but there are limits.  Here, FERC has approved a set <br>of transactions based on their effects in the electric power <br>industry, its main responsibility and concern.  It is far from <br>clear that a policy aimed at securing lower-cost power for <br>consumers through more competition would or should be curtailed <br>even if it were shown to have some effect on plant value and local <br>taxes in a few communities.  Cf. Northeast Utils. Serv. Co. v. <br>FERC, 993 F.2d 937, 951 (1st Cir. 1993). <br>  It is worth adding that, to the extent such effects may <br>be predicted from competition, the effects are primarily due to <br>actions already taken by FERC in broader proceedings such as the <br>one that led to Order No. 888.  And while competition may well <br>reduce the economic value of some existing plants, this case may be <br>an exception:  ironically, Northeast Center's exhibit suggests that <br>the transferred facilities sold for more than their book value. <br>  The petitions for review are denied.</pre>

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