Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

The Department of the Interior sells offshore leases to oil and gas companies for development. This case concerns the adequacy of an environmental impact statement prepared in connection with two lease sales held in 2018. Three environmental groups asserted that the supplemental environmental impact statements (EIS) did not comply with NEPA. They sued Interior and the Bureau of Ocean Energy Management (BOEM), the component agency within Interior that had prepared the EIS. They argued that BOEM failed to assess a true “no action” alternative because it had assumed that energy development would occur sooner or later, even if Lease Sales 250 or 251 did not. The district court granted summary judgment to Interior. In upholding BOEM’s “no action” analysis, it found the Bureau had reasonably assumed that development was inevitable.   The DC Circuit reversed the summary judgment in part and remand the case to the district court with instructions to remand it to the agency for further consideration of the GAO report. In so doing, the court declined to vacate any of the administrative orders under review. The court further affirmed the summary judgment in all other respects. The court held that the Interior adequately considered the option of not leasing, reasonably refused to consider potential future regulatory changes, and unreasonably refused to consider possible deficiencies in environmental enforcement. View "Gulf Restoration Network v. Debra Haaland" on Justia Law

Constellation Mystic Power, LLC (Mystic)—a subsidiary of Exelon Generation Company, LLC (ExGen), which itself is a subsidiary of Exelon Corporation (Exelon)—announced its intention to retire the Mystic Generating Station (Mystic Station). ISO New England entered into a cost-of-service agreement with Mystic and ExGen to keep two of Mystic Station’s generating units, referred to as Mystic 8 and 9, in service between June 2022 and May 2024. The parties filed the proposed agreement (Mystic Agreement) with the Federal Energy Regulatory Commission (Commission or FERC). The Commission ultimately approved the terms of the Mystic Agreement.   At issue are Commission orders related to its approval of the Mystic Agreement. Two groups of petitioners sought review: Mystic and a group of New England state regulators (State Petitioners). The DC Circuit dismissed Mystic’s petition for review in part and denied it in part; the court granted the State Petitioners’ petitions. The court held that the Commission’s application of the original cost test to determine Mystic 8 and 9’s rate base was not arbitrary and capricious. The court dismissed Mystic’s objection to the Commission’s selection of capital structure as moot in light of the Commission’s May 2022 Order. The court further concluded that the Commission properly included historical rate base components in the true-up mechanism but also find that the Commission failed to respond to the State Petitioners’ request for clarification. View "Constellation Mystic Power v. FERC" on Justia Law

LSP Transmission Holdings II, LLC, Cardinal Point Electric, LLC, and LS Power Midcontinent, LLC are transmission development companies. They petition for review of a set of Federal Energy Regulatory Commission (FERC) orders that approve modifications to the criteria used by the Midcontinent Independent System Operator, Inc. (MISO), a regional transmission grid operator, to determine whether opportunities to develop proposed transmission upgrades to the interstate power grid are open to competitive bids from companies like petitioners. Petitioners challenge two aspects of the orders: (1) FERC’s decision to accept MISO’s proposal to use 230 kilovolts (kV) as the minimum voltage threshold for a project to qualify as a Market Efficiency Project (a category of projects subject to competitive bidding) rather than requiring a lower 100 kV threshold; and (2) FERC’s approval of an exception from competitive bidding for certain reliability projects needed soon. FERC defends its orders on their merits, but it first contests Petitioners’ standing to challenge the orders and whether the petitions are ripe for review.   The DC Circuit denied the petitions for review. The court explained that at least one petitioner—LS Power Midcontinent—has standing to raise these claims and that the petitions are ripe. But the petitions fail on their merits: FERC’s decision to accept 230 kV as the new voltage threshold was not arbitrary and capricious, and FERC reasonably approved MISO’s Immediate Need Reliability Exception. View "LSP Transmission Holdings II, LLC v. FERC" on Justia Law

Chevron U.S.A. Inc. intends to decommission two oil platforms located off the coast of California. The activity of those platforms is generally subject to the Clean Air Act. Chevron asked the Environmental Protection Agency for guidance on whether, as the process of decommissioning the two oil platforms moves forward, the platforms will cease to qualify as regulated sources under the Clean Air Act. EPA responded in a letter to Chevron. Unsatisfied with the views set out in EPA’s letter, Chevron now seeks judicial review of EPA’s response.The DC Circuit dismissed Chevron’s petition for review. The court wrote that it does not reach the merits of Chevron’s petition for review. In the circumstances of this case, the Clean Air Act’s venue provision allows for judicial review in this court only if EPA’s challenged action is “nationally applicable,” as opposed to “locally or regionally applicable.” 42 U.S.C. Section 7607(b)(1). The court concluded that EPA’s response letter is locally or regionally applicable, and that venue over Chevron’s challenge lies exclusively in the United States Court of Appeals for the Ninth Circuit. View "Chevron U.S.A. Inc. v. EPA" on Justia Law

The Oglala Sioux Tribe and its nonprofit association Aligning for Responsible Mining seek a review of the Nuclear Regulatory Commission’s decision to grant Powertech (USA), Inc., a source material license to extract uranium from ore beds in South Dakota. The Tribe maintains that the Commission failed to meet its obligations under the National Environmental Policy Act and the National Historic Preservation Act.   The DC Circuit denied the Tribe’s petition because the Commission adequately complied with the relevant statutory and regulatory requirements. The court explained that the Tribe failed to demonstrate any NEPA deficiencies that require setting aside the Commission’s decisions.   First, the Tribe argues the agency did not adequately consult with the Tribe. The Tribe’s refusal to participate in the 2013 Survey and its challenges to the opportunity the Tribe was, in fact, afforded. The Commission satisfied its consultation obligations under the NHPA. Second, the Tribe maintains the agency impermissibly failed to survey the Dewey-Burdock area for the Tribe’s historic properties. NHPA regulations permit an agency to conduct a survey as part of its efforts to identify historic properties, but agencies are free to use a survey or some other method to gather information. Finally, the Tribe suggests the agency impermissibly postponed identifying historic properties until after Powertech had begun operations. NHPA regulations, however, expressly contemplate this approach. View "Oglala Sioux Tribe v. NRC" on Justia Law

PJM Interconnection, LLC (“PJM”)  authorized a series of upgrades to facilities owned by the Public Service Electric and Gas Company (“PSE&G”). PSE&G’s Bergen and Linden switching stations; a second involved repairs to and around PSE&G’s Sewaren substation. Together, these two projects cost around $1.3 billion. Initially, PJM assigned most of the projects’ costs to entities that reroute electricity from northern New Jersey into the New York market. Thereafter, the New York-based entities gave up their rights to withdraw electricity from New Jersey, and PJM reassigned their costs to PSE&G. The Federal Energy Regulatory Commission (“FERC” or “the Commission”) approved both rounds of cost allocations. The petitions for review in these two cases are about whether these cost allocations were “just and reasonable” under the Federal Power Act, and whether FERC’s orders were “arbitrary [and] capricious” in violation of the Administrative Procedure Act (“APA”).   The DC Circuit denied the petitions for review in New Jersey Board v. FERC, and granted in part and denied in part the petitions in ConEd v. FERC. In denying the New York entities’ applications for rehearing of both the First and Second Linden Complaint Orders, the court explained that FERC failed to adequately distinguish its decision in Artificial Island from its treatment of the Bergen and Sewaren projects. Further, FERC upheld the de minimis threshold in its orders denying rehearing of the First and Second Linden Complaint Orders and the ConEd Complaint Order. The court, therefore, vacated FERC’s denial of Linden’s two complaints. The court also vacated its denial of ConEd’s complaint and remanded for further proceedings solely on the de minimis issue. View "New Jersey Board of Public Utilities v. FERC" on Justia Law

The Federal Energy Regulatory Commission is responsible for ensuring that interstate electricity rates are “just and reasonable.” Midcontinent Independent System Operator, Inc. (“MISO”) administers the electric grid on behalf of the companies that own transmission lines. Those transmission owners invested money to build their transmission lines, and MISO must charge customers electricity transmission rates that provide those companies an appropriate return on their investment. That return-on-equity component of the transmission rates, which we’ll just call the Return, is at issue in this case. In this case, a group of customers thought MISO provided transmission owners a too-generous Return. They asked FERC to reduce that aspect of MISO’s rates. FERC did. In the process, it completely overhauled its approach to setting an appropriate Return. Both the customers and transmission owners challenged several aspects of the FERC proceedings as unlawful or arbitrary and capricious.   The DC Circuit agreed with the customers that FERC’s development of the new Return methodology was arbitrary and capricious, thus the court vacated its rate-determination orders and remanded for further proceedings. Because the other challenged aspects of FERC’s orders flow from FERC’s rate determination, the court did not reach them. The court explained that FERC Failed to offer a reasoned explanation for its decision to reintroduce the risk-premium model after initially, and forcefully, rejecting it. Because FERC adopted that significant portion of its model in an arbitrary and capricious fashion, the new Return produced by that model cannot stand. View "MISO Transmission Owners v. FERC" on Justia Law

The Federal Energy Regulatory Commission approved the merger of two electrical grid operators, Louisville Gas & Electric Company and Kentucky Utilities Company. To protect customers from the merger’s potential anticompetitive effects, the Commission required the combined company (collectively, “Louisville Utilities”) to join a then-new regional electrical grid organization, the Midwest Independent Transmission System Operator, Inc. (“MISO”).   Louisville Utilities asked the Commission to end its depancaking responsibilities under Schedule 402. Most of the customers protected by Schedule 402 objected. The Commission largely approved the request on the ground that sufficient competition in electricity sales existed to provide Louisville Utilities customers alternative competitive sources for electricity even without depancaking. At the same time, the Commission took steps to protect customers that had reasonably relied on depancaking under Schedule 402 in their contracting and investing decisions. A group of customers previously protected by Schedule 402 (collectively, “Municipal Customers”) and Louisville Utilities both petitioned for a review of the Commission’s orders.   The DC Circuit vacated the Commission’s decision to end depancaking under Schedule 402. While the Commission adequately supported its conclusion that customers would continue to enjoy a competitive market without depancaking, it was arbitrary for the agency to completely ignore the significant effect that duplicative charges would have on customer rates. The court also concluded that the Commission’s decisions protecting reliance interests were reasonable, with two exceptions. As a result, the court granted the petitions for review in part and vacated and remanded the challenged orders in part. View "Kentucky Municipal Energy Agency v. FERC" on Justia Law

The Wabash Valley Power Association is an Indiana-based cooperative established to generate and transmit electricity. This case centers on a provision newly added to the 2020 contracts. Section 22 of these contracts purport to subject any changes to the Formulary Rate Tariff to the Mobile-Sierra presumption of justness and reasonableness. After Wabash submitted the new contracts to FERC, Tipmont Rural Electric Membership Cooperative, one of the two-member utilities that did not sign, filed a protest arguing that the Mobile-Sierra presumption should not apply to changes to the Formulary Rate Tariff. The Commission agreed. After FERC failed to act on an application for rehearing within 30 days, Wabash filed a petition for review.   The DC Circuit denied the petitions for review finding that the Commission reasonably rejected Wabash’s new contracts. The court wrote that  FERC reasonably determined that the 2020 contracts do not set a contractually negotiated rate. Under the Mobile Sierra doctrine, the key question is whether rates are set bilaterally or unilaterally. Here, the governing contracts give the Wabash board broad discretion to raise rates unilaterally: The board may approve rates that it believes are necessary to cover Wabash’s expenses and to maintain a reasonable profit margin, which is what any utility filing a unilateral tariff rate may seek to do. View "Wabash Valley Power Association, Inc. v. FERC" on Justia Law

Adelphia Gateway, LLC, applied to the Federal Energy Regulatory Commission (Commission)_  for a certificate of public convenience and necessity to acquire an existing pipeline system. It also sought authorization to construct two short lateral pipeline segments extending from the existing pipeline infrastructure it would acquire. Adelphia also sought approval to construct facilities necessary to operate the pipeline. Together, these acquisitions and improvements would comprise the Adelphia Gateway Project (“the Project”).   In their joint brief, Petitioners challenge: (1) the Commission’s finding of market need for the Project under the Natural Gas Act; (2) the sufficiency of the Commission’s environmental review under the National Environmental Policy Act (“NEPA”); and (3) the constitutionality of the Commission’s purported preemption of state and local authorities’ ability to protect public health.   The Court is persuaded that the Commission did not act arbitrarily and capriciously. The court explained that as in Birckhead v. FERC, 925 F.3d 510 (D.C. Cir. 2019), Petitioners here “have identified no record evidence that would help the Commission predict the number and location of any additional wells that would be drilled as a result of production demand created by the Project.” Further, Petitioner did not argue before the Commission that section 1502.21(c) required the use of the Social Cost of Carbon tool. Their rehearing request referred to the regulation once in a footnote, and only in the context of the version of the argument petitioners then relied on and that passing reference was not enough to “alert the Commission” to the position Petitioners now take. View "Delaware Riverkeeper Network v. FERC" on Justia Law