Esi Energy, LLC v. Fed. Energy Regulatory Comm'n , 892 F.3d 321 ( 2018 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 8, 2018 Decided June 8, 2018
No. 16-1342
ESI ENERGY, LLC,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
PJM INTERCONNECTION, L.L.C. AND WEST DEPTFORD
ENERGY, LLC,
INTERVENORS
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Larry F. Eisenstat argued the cause and filed the briefs for
petitioner.
Nicholas M. Gladd, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on
the brief were David L. Morenoff, General Counsel, and Robert
H. Solomon, Solicitor.
Ashley C. Parrish argued the cause for intervenor for
respondent West Deptford Energy, LLC. With him on the
brief were Justin A. Torres, Neil L. Levy, and Stephanie S. Lim.
2
Before: MILLETT and WILKINS, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge WILKINS.
WILKINS, Circuit Judge: For a second time, we consider
the ramifications of a utility filing more than one rate with the
Federal Energy Regulatory Commission (“FERC” or the
“Commission”) during the time in which the utility negotiates
an agreement with a prospective customer. See W. Deptford
Energy, LLC v. FERC, 766 F.3d 10 (D.C. Cir. 2014).
Specifically, we are asked to determine which rate governs: the
rate in effect at the time negotiations commenced or the rate in
effect at the time the agreement was completed. We are also
asked to consider whether, if the rate on file at the time the
agreement was completed governs, FERC reasonably
interpreted the new rate.
Upon review, we uphold FERC’s determination that the
governing rate is the rate in effect at the time the agreement
was completed. Because we find that FERC properly
considered the Court’s findings on remand, adequately
explained its decision, and properly considered the evidence,
FERC did not act arbitrarily and capriciously in interpreting the
new rate. We therefore deny the Petition for Review.
I.
The Federal Power Act, 16 U.S.C. §§ 791a et seq., charges
the Commission with regulating “the transmission of electric
energy” and “the sale of electric energy at wholesale” in
interstate commerce, id. § 824(b)(1). In exercising that
authority, the Commission must ensure that “[a]ll rates and
charges” for the “transmission or sale of electric energy subject
to” its jurisdiction are “just and reasonable,” and that no public
3
utility’s rates are unduly discriminatory or preferential. Id.
§ 824d(a), (b); see NRG Power Mktg., LLC v. Maine Pub. Utils.
Comm’n, 558 U.S. 165, 167 (2010).
To that end, the Act requires every public utility to “file
with the Commission” and “keep open in convenient form and
place for public inspection schedules showing all rates and
charges for any transmission or sale subject to the jurisdiction
of the Commission.” 16 U.S.C. § 824d(c). That obligation
applies whether the rates and charges are set “unilaterally by
tariff” or agreed upon in individual contracts between sellers
and buyers. NRG Power Mktg., 558 U.S. at 171. When a
public utility seeks to change its filed rate, it must “fil[e] with
the Commission . . . new schedules stating plainly the change
or changes . . . and the time when the change or changes will
go into effect.” 16 U.S.C. § 824d(d).
The Federal Power Act’s express mandate of openness,
transparency, and consistency in rates prevents discrimination,
promotes fair and equal access to the utilities’ services, ensures
the stability and predictability of rates, and reinforces the
Commission’s jurisdictional authority. See Maislin Indus.,
U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 130-31 (1990);
Consol. Edison Co. of N.Y. v. FERC, 347 F.3d 964, 969 (D.C.
Cir. 2003); Consol. Edison Co. of N.Y. v. FERC, 958 F.2d 429,
432 (D.C. Cir. 1992).
To foster competition in the wholesale energy market, the
Commission drastically overhauled the regulatory scheme for
public utilities in 1996. As part of that effort, the Commission
ordered regulated utilities to separate financially their
wholesale power-generation and power-transmission services.
See Promoting Wholesale Competition Through Open Access
Non-Discriminatory Transmission Services by Public Utilities;
Recovery of Stranded Costs by Public Utilities and
4
Transmitting Utilities, Order No. 888, 61 Fed. Reg. 21,540
(Apr. 24, 1996); see also New York v. FERC, 535 U.S. 1, 11
(2002) (describing Order No. 888). Accordingly, public
utilities must now file tariffs with the Commission establishing
separate rates for wholesale power-generation service,
transmission service, and any ancillary service. New York, 535
U.S. at 11. In addition, they must “take transmission of [their]
own wholesale sales and purchases under a single general tariff
applicable equally to [themselves] and to others.” Id.
Problems soon arose, however, because every time a new
generator of electricity asked to use a transmission network
owned by another – to interconnect the two entities – disputes
between the generator and the owner of the transmission grid
would arise, delaying completion of the interconnection
process. See Standardization of Generator Interconnection
Agreements and Procedures, Order No. 2003, 104 FERC
¶ 61,103 at P. 11 (2003). The Commission waded into those
disputes case by case, delaying entry into the market by new
generators and providing an unfair competitive advantage to
utilities owning both transmission and generation facilities. Id.
at PP. 10-11.
To address those issues, the Commission in 2003 issued
Order No. 2003, 104 FERC at PP. 11-12. That order replaced
the Commission’s case-by-case approach with a standardized
process. The Order requires all regulated utilities that “own,
control, or operate” transmission facilities to include
standardized interconnection procedures and a form
interconnection agreement in their filed tariffs. Id. at P. 2. By
mandating that “standard set of procedures,” the Commission
“minimize[d] opportunities for undue discrimination and
expedit[ed] the development of new generation, while
protecting reliability and ensuring that rates are just and
reasonable.” Id. at P. 11.
5
II.
A.
PJM Interconnection, LLC (“PJM”), is a regional
transmission organization, an independent entity that operates
transmission facilities in thirteen states and the District of
Columbia. See FPL Energy Marcus Hook, L.P. v. FERC, 430
F.3d 441, 442-43 (D.C. Cir. 2005). Under PJM’s Open Access
Transmission Tariff (“PJM Tariff”), the interconnection
process begins when a generator of electricity submits an
interconnection request to PJM. W. Deptford, 766 F.3d at 13.
Each request is placed into a “first-come, first-served queue.”
Marcus Hook, 430 F.3d at 443; see PJM Tariff § 201.
The submission of an interconnection request triggers a
review by the utility and holds the requestor’s place in the
interconnection queue until it concludes. During this process,
PJM conducts a series of studies to determine the impact of a
generator interconnection request on the PJM transmission
system, including the need for upgrades or additions to those
transmission facilities, W. Deptford, 766 F.3d at 14, and an
estimate of the requestor’s cost responsibility for any needed
upgrades, see Marcus Hook, 430 F.3d at 443. Those studies do
“not set a rate for interconnection service,” however; they
merely provide “a non-binding estimate of costs.” Dominion
Res. Servs., Inc. v. PJM Interconnection, LLC, 123 FERC
¶ 61,025 at P. 52 (2008). Customers are thus free to “terminate
or withdraw their interconnection requests” at any time.
Marcus Hook, 430 F.3d at 443. Once PJM completes the
studies, it provides the requestor with a proposed
interconnection service agreement that “specifies the
customer’s actual cost responsibility,” including the cost of any
upgrades needed to PJM’s transmission network to sustain the
increased demand. Id.
6
While a new service request might be what prompts a
network upgrade, the “integrated transmission grid is a
cohesive network,” Entergy Servs., Inc., 96 FERC ¶ 61,311,
¶ 62,202 (2001), and thus completed upgrades generally
“benefit all transmission customers,” Order No. 2003, 104
FERC at P. 21. For that reason, those generators who have to
pay for upgrades under the PJM Tariff receive incremental
auction-revenue rights that give the generator the right to
revenue from future sales of transmission services associated
with the new or upgraded facility. See W. Deptford, 766 F.3d
at 14; see also PJM Interconnection, LLC, 126 FERC ¶ 61,280,
¶ 62,589 (2009) (describing the function of auction-revenue
rights). That auction revenue, in turn, partially compensates
the generator for the financial burden of improving the
transmission network for all users. See Order No. 2003, 104
FERC at P. 694.
In 1998, three generators submitted interconnection
requests to PJM for the following projects: the Mantua Creek
Project, the Liberty Electric Project, and the Marcus Hook
Project. Order Denying Rehearing, PJM Interconnection, LLC,
139 FERC ¶ 61,184 at P. 3 (2012) (“2012 Order”); Marcus
Hook, 430 F.3d at 444. PJM determined that the projects’
combined load would “push [its] system beyond the breaking
point,” and thus advised a $13 million upgrade (the “Upgrade”
or “Network Upgrade 28”) to a transmission circuit. Marcus
Hook, 430 F.3d at 444. Because that Upgrade was unnecessary
at the time the first project, Mantua Creek, entered the queue,
Mantua Creek was not assigned any cost responsibility for the
Upgrade. Id. Marcus Hook and Liberty Electric bore it all,
with 90% of the Upgrade’s cost assigned to Marcus Hook. See
id.; see also 2012 Order at P. 3. Both generators moved
forward with the project, with Marcus Hook agreeing to pay
“over $10 million of the upgrade’s total cost.” Marcus Hook,
430 F.3d at 444.
7
As the Upgrade neared completion, Mantua Creek
unexpectedly cancelled its project and withdrew from the
queue. See 2012 Order at P. 3. That decrease in the demand
for power made the Upgrade unnecessary to support Marcus
Hook’s and Liberty Electric’s projects. But PJM determined
that completion of the almost-final Upgrade was the “least
costly alternative,” and thus “trudged forward and completed
the upgrade.” Marcus Hook, 430 F.3d at 444. The Upgrade
was placed into service in June 2003.
Marcus Hook felt differently about being required to
continue financing the Upgrade and filed a complaint with the
Commission seeking a refund. Marcus Hook, 430 F.3d at
444-45. The Commission rejected Marcus Hook’s complaint.
See FPL Energy Marcus Hook, L.P. v. PJM Interconnection,
LLC, 107 FERC ¶ 61,069 (2004) (Marcus Hook I), reh’g
denied, 108 FERC ¶ 61,171 (2004) (Marcus Hook II). In 2005,
this Court upheld the Commission’s decision in relevant part.
Marcus Hook, 430 F.3d at 447-49.
The next year, West Deptford submitted an
interconnection request to PJM. 2012 Order at P. 4. Under
Section 37.7 of the PJM Tariff that was in effect on the date
that West Deptford submitted its request (July 31, 2006), PJM
could seek reimbursement for a previously constructed
network upgrade from a new applicant for interconnection like
West Deptford if the new proposed project (i) used the added
capacity created by the upgrade or would have required the
upgrade itself, (ii) the cost of the upgrade was at least $10
million, and (iii) the upgrade was “placed in service no more
than five years prior to the affected Interconnection Customer’s
Interconnection Queue Closing Date.” W. Deptford, 766 F.3d
at 17 (quotation marks and citation omitted).
8
Based on Section 37.7, PJM’s first study of West
Deptford’s project proposed imposing financial responsibility
for the Upgrade on West Deptford. See 2012 Order at PP. 5, 9;
PJM Feasibility Study 8 (Nov. 2006). West Deptford did not
dispute that, if the 2006 Tariff controls its interconnection
agreement, it must reimburse Marcus Hook and Liberty
Electric for the costs of the Upgrade. Order Accepting
Interconnection Service Agreements, PJM Interconnection,
LLC, 136 FERC ¶ 61,195 at P. 28 (2011) (“2011 Order”).
Eighteen months later, while West Deptford’s
interconnection request was still pending, PJM filed several
proposed amendments to its tariff. 2012 Order at P. 11; see
also Dominion, 123 FERC ¶ 61,025 at PP. 1-3 (settlement of
administrative challenge to PJM Tariff resulted in proposed
amendments). One proposed amendment significantly
changed Section 37.7’s assignment of financial responsibility
for prior upgrades. Under Section 219 of the new 2008 tariff,
PJM could seek reimbursement for previously constructed
network upgrades only for a period of five years “from the
execution date of the Interconnection Service Agreement for
the project that initially necessitated the requirement for the
Local Upgrade or Network Upgrade.” PJM Tariff § 219(a).
While the tariff was silent about the effective date of that
change, a transmittal letter from PJM noted that the next
interconnection queue would begin on August 1, 2008, and
then “request[ed] an August 1, 2008 effective date for these
Tariff revisions.” PJM Transmittal Letter 17. Because Liberty
Electric executed its interconnection agreement on May 14,
2001, and Marcus Hook executed its agreement on January 22,
2002, 2012 Order at P. 10, the Commission and PJM agreed
that, if the 2008 tariff controls, then that tariff’s five-year time
limit insulates West Deptford from having to pay for the
Upgrade. 2011 Order at P. 34.
9
Proceedings commenced before the Commission
challenging aspects of the 2008 tariff, but West Deptford was
not a party. In those proceedings, PJM received an inquiry
asking whether the new cost-allocation provisions would
“apply only to projects that enter the interconnection queue on
or after the proposed effective date of August 1, 2008 or
whether they will apply also to projects that have entered the
queue before that date.” Request for Clarification of American
Municipal Power-Ohio, Inc. at 1, Dominion Res. Servs., Inc. v.
PJM Interconnection, LLC, Docket No. EL08-36-001 (FERC
June 20, 2008). PJM responded that one revised provision of
the tariff not at issue here “will become effective on August 1,
2008, and will be initially applied to the U2-Queue (this queue
will close on July 31, 2008).” Answer of PJM Interconnection,
LLC to Request for Clarification of American Municipal
Power-Ohio, Inc. at 4, Dominion Res. Servs., Inc. v. PJM
Interconnection, LLC, Docket No. EL08-36-001 (FERC July 7,
2008). With respect to Section 219(a), the provision at issue
here, PJM separately stated that “[t]hese modifications are
intended to be effective as of August 1, 2008, and will be
initially applied to the U2-Queue.” Id.
On August 19, 2008, the Commission accepted PJM’s
revised tariff, but referenced only PJM’s clarification of the
effective date for the provision not relevant here, stating that
Section 217.3a “will be applied to the U2-Queue effective
August 1, 2008.” FERC Letter Order at 1, Dominion Res.
Servs., Inc. v. PJM Interconnection, LLC, Docket No. EL08-
36-001 (FERC Aug. 19, 2008). The Commission did not
mention PJM’s clarification of the effective date for the
provision at issue in this case, Section 219(a). See id.
Over the next three years, PJM conducted additional
studies of West Deptford’s interconnection request. In these
studies, PJM expressed its intention to charge West Deptford
10
the full $10 million for the Upgrade, as had been permitted by
the superseded tariff. PJM System Impact Study Report 4-5
(Sept. 2010); PJM Facilities Study Report 4, 10 (Apr. 2011).
West Deptford claimed, and no one disputed, that it repeatedly
objected to this attempted cost allocation.
B.
In 2011, PJM provided West Deptford a draft
interconnection service agreement that imposed the full cost of
the Upgrade on West Deptford. Mot. to Intervene & Protest of
West Deptford Energy, LLC 9, PJM Interconnection, LLC,
Docket No. ER11-4073-000 (FERC Aug. 8, 2011) (“West
Deptford Protest”). West Deptford objected, id., and PJM filed
the unexecuted agreement with the Commission, seeking its
resolution of the dispute. 2012 Order at P. 6. West Deptford
argued, as relevant here, that imposing the superseded tariff’s
terms for cost allocation violated both the filed rate doctrine
and past Commission precedent enforcing the terms of tariffs
that were in effect when an interconnection agreement was
executed or filed, rather than when a prospective customer
entered the queue. West Deptford Protest 15.
The Commission rejected West Deptford’s protest.
Acknowledging that West Deptford could not be liable for the
Upgrade under the on-file tariff, the Commission nonetheless
concluded that the cost-allocation provisions of the superseded
tariff should govern “since, at the time when West Deptford
entered the PJM interconnection queue, that provision was the
one that established its financial responsibility.” 2011 Order at
P. 35. According to the Commission, that fact put West
Deptford “on notice of the costs to which it potentially would
be liable.” Id. at P. 38.
11
West Deptford requested rehearing, which the
Commission denied. The Commission said that PJM could
enforce the superseded tariff’s cost-allocation rule because,
during the tariff-revision proceedings to which West Deptford
was not a party, PJM had clarified that the new tariff’s
cost-allocation provision (Section 219) would only apply
starting with projects in the “U2-Queue,” which closed in the
Summer of 2008. 2012 Order at P. 31. The Commission also
reasoned that each of PJM’s interconnection studies had
provided West Deptford notice of PJM’s intent to enforce the
superseded tariff’s cost-allocation provision. Id. at P. 28.
Finally, with respect to past Commission precedent, the
Commission stated that its decisions did not bind it to “a single
policy to address all of the myriad issues that may arise from a
change to cost allocation in the interconnection process.” Id.
at P. 38.
West Deptford timely petitioned for review, and PJM and
Marcus Hook intervened. On review, this Court vacated the
Commission’s orders in part and remanded the case because
the Commission “provided no reasoned explanation for how its
decision comport[ed] with statutory direction, prior agency
practice, or the purposes of the filed rate doctrine.”
W. Deptford, 766 F.3d at 12.
On remand, FERC reversed its prior position and
concluded that Section 219 – the tariff provision in effect at the
time the interconnection agreement was filed – applied to
PJM’s assessment of costs to West Deptford because none of
the evidence gave West Deptford sufficient notice that the old
tariff would govern its interconnection agreement. Order on
Remand, 153 FERC ¶ 61,327 at P. 14 (2015); Order on
Rehearing, Compliance, and Clarification, 156 FERC ¶ 61,090
at P. 11 (2016) (“Rehearing Order”). FERC based its decision
on the “significant skepticism” this Court expressed “with [its]
12
determination that [the old tariff] should apply” and the
“numerous shortcomings” the Court identified in the
Commission’s analysis. Rehearing Order at P. 10.
The Commission also determined that Section 219 was
ambiguous as to what action needed to be taken within the
prescribed five-year window in order to trigger cost
responsibility, but concluded that the most reasonable
interpretation was that the appropriate “end-date” was the date
on which West Deptford signed its interconnection agreement.
Id. at P. 22. In doing so, the Commission rejected Marcus
Hook’s argument that Section 219 should be interpreted such
that an interconnection customer is liable for the cost of
network upgrades that entered service during the five years
preceding the customer’s queue-entry date. Id. at PP. 21-22.
Marcus Hook 1 now contends that on remand the
Commission acted arbitrarily and capriciously and did not
engage in reasoned decisionmaking insofar as the Commission
(1) determined that West Deptford’s responsibility to pay for
the network upgrades was to be determined in accordance with
PJM Tariff Section 219 rather than Section 37.7 and (2)
adopted an interpretation of Section 219 that conflicts with
FERC precedent, the evidence on which FERC relied, and the
policies underlying the judicially recognized exceptions to the
filed rate doctrine.
1
The Court previously granted ESI Energy’s motion to substitute
itself for FPL Energy Marcus Hook, L.P. Doc. No. 1651533.
However, to maintain consistency with the earlier proceedings and
the parties’ briefing, this opinion refers to Petitioner as “Marcus
Hook” instead of ESI Energy.
13
III.
The Court reviews Commission orders under the
arbitrary-and-capricious standard, and we will uphold the
Commission’s factual findings if they are supported by
substantial evidence. See 5 U.S.C. § 706(2); see also, e.g.,
Sacramento Mun. Util. Dist. v. FERC, 616 F.3d 520, 528 (D.C.
Cir. 2010) (per curiam). Under those standards, the Court must
determine whether the Commission “examined the relevant
data and articulated a rational connection between the facts
found and the choice made.” Alcoa Inc. v. FERC, 564 F.3d
1342, 1347 (D.C. Cir. 2009) (internal alterations and citation
omitted). While the Court defers to the Commission’s
interpretation of its own precedent, NSTAR Elec. & Gas Corp.
v. FERC, 481 F.3d 794, 799 (D.C. Cir. 2007), the Commission
cannot depart from those rulings without “‘provid[ing] a
reasoned analysis indicating that prior policies and standards
are being deliberately changed, not casually ignored.’” Alcoa,
564 F.3d at 1347 (quoting Entergy Servs., Inc. v. FERC, 319
F.3d 536, 541 (D.C. Cir. 2003)). Our review of the
Commission’s interpretation of filed tariffs is “Chevron-like in
nature,” which means we give “substantial deference” to the
Commission’s interpretation unless “the tariff language is
unambiguous.” Old Dominion Elec. Co-Op., Inc. v. FERC, 518
F.3d 43, 48 (D.C. Cir. 2008) (internal quotation marks
omitted).
A.
On remand, the Commission held that West Deptford’s
responsibility to pay for the network upgrades was to be
determined in accordance with PJM Tariff Section 219 rather
than Section 37.7. To sustain that determination, the
Commission was obligated to provide a reasoned explanation
of how applying Section 219 comported with the text of the
14
Federal Power Act and prior Commission precedent. Unlike
its prior decision, the Commission’s decision on remand did
both.
First, FERC reasonably relied on our decision in West
Deptford to conclude, contrary to its prior finding, that it was
“not sufficiently clear . . . that the projects in earlier queues
would continue to be governed by section 37.7.” Order on
Remand at P. 15. In its initial decision, the Commission found
that Section 219 was plainly prospective based on PJM’s
Transmittal Letter and PJM’s answer in Dominion, and thus
that Section 37.7 governed West Deptford’s interconnection
agreement. See generally 2011 Order; 2012 Order. In West
Deptford, we concluded that both the letter and PJM’s answer
in Dominion were ambiguous. 766 F.3d at 18-19. As to the
Transmittal Letter, we found that it was “silent about whether
the date of the interconnection agreement or of entry into the
queue had to fall on or after [August 1, 2008],” id., and
explained that the introductory clause – in which PJM noted
that it requested August 1, 2008, as the effective date
“[b]ecause the next interconnection queue will begin” on that
date, PJM Transmittal Letter 17 – “simply add[ed] to the
confusion about what must be in place by August 1st.” W.
Deptford, 766 F.3d at 18-19. We similarly found that PJM’s
answer in Dominion was “confusing,” because one sentence
suggested prospectivity while another suggested the tariff
would apply retrospectively. Id. at 23. Under the
circumstances, it was reasonable for FERC, on remand from
this Court, to rely on these findings, and no additional
explanation was needed to support its changed position.
In light of this ambiguity and “an unbroken Commission
practice of holding that interconnection agreements filed after
the designated effective date of an amended tariff are governed
by the amended tariff, unless the amended tariff has a
15
grandfathering provision,” id. at 19-20 (citing cases); Order on
Remand at P. 15 (adopting our discussion of FERC precedent
in other Commission interconnection-queue cases), the
Commission determined it could not reasonably conclude that
West Deptford was on notice that Section 219 would not apply
to its interconnection agreement. The reliance on our opinion
is proper, and FERC’s explanation suffices. See Hall v.
McLaughlin, 864 F.2d 868, 872 (D.C. Cir. 1989) (“Where the
reviewing court can ascertain that the agency has not in fact
diverged from past decisions, the need for a comprehensive and
explicit statement of its current rationale is less pressing.”).
While Marcus Hook does not contest the Commission’s
understanding of its own precedent, Marcus Hook maintains
that the Commission erred by failing to consider extrinsic
evidence and Marcus Hook’s additional arguments on remand.
As to the first, Marcus Hook contends that the extrinsic
evidence “incontestably shows that Section 219 was not to be
applied to West Deptford,” and yet, FERC ignored such
evidence improperly in reliance on our decision in West
Deptford. Pet’r’s Br. 31-33. However, the Commission’s
interpretation of our decision was correct. In West Deptford,
we rejected reliance on the evidence Marcus Hook cites –
PJM’s Transmittal Letter, PJM’s answer in Dominion, and the
West Deptford Facilities Study Agreement. With respect to the
letter and PJM’s answer, as previously discussed, FERC found,
based on our prior decision, that neither provided any clarity
regarding Section 219’s applicability. Similarly, we rejected
the argument that the facilities studies agreements supported
Marcus Hook’s position. W. Deptford, 766 F.3d at 24 (noting
that because West Deptford repeatedly objected to any such
imposition of cost responsibility, “one-way assertions” in a
facilities study agreement cannot put a party on notice, and
Commission precedent treats such studies as “non-binding
estimate of costs”). There was no need for FERC to reconsider
16
the effect of the evidence because this Court had expressed
skepticism about the evidence’s ability to resolve the present
question.
As to the latter, Marcus Hook contends that the
Commission refused to consider additional arguments it raised
on remand, and therefore, the decision is arbitrary and
capricious. We disagree. The first objection Marcus Hook
claims that FERC ignored was that West Deptford’s parent
company, LS Power Associates, was a party to the Dominion
proceeding – the 2008 proceeding in which the new tariff
replaced the old tariff – and therefore notice provided in that
proceeding could be imputed to West Deptford. This objection
is waived, however, because Marcus Hook did not raise it on
rehearing and has provided no reasonable ground for its failure
to do so. 16 U.S.C. § 825l(b) (“No objection to the order of the
Commission shall be considered by the court unless such
objection shall have been urged before the Commission in the
application for rehearing unless there is a reasonable ground
for failure to do so.”). We find that the remaining objections
Marcus Hook claims were ignored, including arguments
Marcus Hook repeats with respect to the facilities study
agreements, were directly and adequately addressed by the
Commission.
Accordingly, we conclude that the Commission
reasonably determined that Section 219 should govern West
Deptford’s interconnection agreement.
B.
We next address Marcus Hook’s argument that even if the
costs associated with Network Upgrade 28 are governed by
Section 219 of the tariff, the Commission erred in determining
that the execution date of West Deptford’s interconnection
17
agreement was the relevant event for assigning cost
responsibility under the tariff. Pet’r’s Br. 40-41. As previously
discussed, we give substantial deference to the Commission’s
interpretation of filed tariffs unless the language is
unambiguous. Old Dominion, 518 F.3d at 48.
PJM Tariff § 219 provides as follows:
Cost responsibility under this Section 219 may
be assigned with respect to any facility or
upgrade:
(a) the completed cost of which was $5,000,000
or more, for a period of time not to exceed
five years from the execution date of the
Interconnection Service Agreement for the
project that initially necessitated the
requirement for the Local Upgrade or
Network Upgrade.
Both parties agree that the tariff is silent with respect to the
relevant event for determining cost responsibility under
Section 219. Pet’r’s Br. 40; Resp’t’s Br. 31 (citing Rehearing
Order at P. 22); see also Order on Remand at P. 22.
Accordingly, we will defer to the Commission’s construction
so long as that construction is reasonable. Williams Nat. Gas
Co. v. FERC, 3 F.3d 1544, 1551 (D.C. Cir. 1993).
Here, the Commission concluded that the proper date for
determining cost responsibility is the date on which the
interconnection agreement is executed. Order on Remand at P.
22; Rehearing Order at P. 22. In its Order on Remand, the
Commission supported this interpretation by pointing out that
“the tariff identifies the assignment of cost responsibility . . . as
the operative date, and that responsibility is not determined
18
until the interconnection agreement is executed.” Order on
Remand at P. 22. Additionally, FERC explained that this
reading was “consistent with the court’s determination that the
interconnection agreement defines the tariff provisions
applicable to the Marcus Hook interconnection.” Id. On
rehearing, the Commission expanded upon its reasoning,
stating that its decision was “consistent with the purpose of
Section 219, i.e., to assign cost responsibility, since cost
responsibility is assigned upon execution of the
interconnection agreement” and “consistent with the overall
intent of PJM’s interconnection revisions to clarify the
interconnection procedures and to shorten the window of cost
responsibility.” Rehearing Order at P. 22.
Marcus Hook contends that none of the Commission’s
justifications withstand scrutiny, and that the dispositive date
should be either the date West Deptford submitted its
interconnection request (July 31, 2006) or when PJM
determined that Network Upgrade 28 was required for West
Deptford’s generation project to be interconnected (November
2006). Pet’r’s Br. 41, 45. Although Marcus Hook’s suggested
interpretation is a possible reading of the tariff provision, it is
no more reasonable than the one the Commission put forward.
Accordingly, we find that the Commission did not err in its
interpretation of Section 219 of the revised tariff.
For the foregoing reasons, we deny the Petition for
Review.