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Court Says It Lacks Authority To Review Deadlocked FERC Which Allowed ISO-NE Capacity Auction Results Clouded By Market Power Allegations To Take Effect

Court Laments "Questionable" Decision By Then-FERC Chair To Disclaim Authority Over Auction Results


October 26, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The U.S. Court of Appeals for the D.C. Circuit said in an order that it lacks authority to review deadlocked FERC decisions, in finding that it cannot review a deadlocked FERC which allowed the results of the 2014 ISO New England Forward Capacity Auction (FCA 8, for 2017/18 delivery year) to stand

FCA 8 was marked by allegations of the exercise of market power, but FERC was deadlocked (2-2) about whether to approve the rates or set them for hearing. Accordingly, the rates became effective by operation of law

Public Citizen and the State of Connecticut sought review of FERC's inaction in federal court.

However, the D.C. Circuit Court of Appeals found that, "FERC’s deadlock does not constitute agency action, and the Notices describing the effects of the deadlock are not reviewable orders under the FPA [Federal Power Act]."

"[T]he deadlock does not reflect an agency decision that fully resolved the issue or completed the process. In fact, it did quite the opposite, leaving FERC mired in indecision and impasse. Thus, the deadlock lacks the requisite finality for," the strong presumption that Congress intends judicial review of administrative action.

The Court distinguished the case from other precedent, noting that in other cases where the Court has reviewed the results of a deadlocked federal agency, statute explicitly granted the Court the authority to do so. No such authority was granted to the courts in the FPA concerning a deadlocked FERC.

The Court also found that the FPA did not compel FERC to either set the disputed rates for hearing or affirmatively disapprove any unjust or unreasonable rates through the Section 205 process

The Court noted that petitioners may seek relief from the rates which became effective through filing a Section 206 complaint at FERC.

"FERC has represented that nothing in its prior orders precludes Petitioners from pursuing relief under Section 206," the Court said

While finding it lacked authority to review the matter, the Court called FERC's actions, "questionable."

"We conclude by repeating what we initially recognized in Sprint Nextel: 'because a deadlocked vote is unreviewable, we lack jurisdiction in what may be the hardest cases.' And so it is with Petitioners. FERC approved a Settlement Agreement providing, '[P]arties may challenge [proposed rates] under the 'just and reasonable standard' and the Commission will address such challenges under that standard.' Devon Power LLC, 117 F.E.R.C. 61,133 at P 93. Not only did the deadlock prevent FERC from accomplishing this review, but the Commission Chairperson [then-Chairman Cheryl LaFleur] disclaimed authority to engage in any review whatsoever, so long as ISO-NE conducted the auction in accordance with its tariff. This interpretation seems questionable at best. And yet, without jurisdiction, we simply lack the power to assess its validity. Any unfairness associated with this outcome inheres in the very text of the FPA. Accordingly, it lies with Congress, not this Court, to provide the remedy," the Court said

No. 14-1244

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