Portland General Electric Co. v. Federal Energy Regulatory Commission , 854 F.3d 692 ( 2017 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 13, 2017 Decided April 25, 2017
No. 15-1237
PORTLAND GENERAL ELECTRIC COMPANY,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
NORTHWEST & INTERMOUNTAIN POWER PRODUCERS
COALITION, ET AL.,
INTERVENORS
Consolidated with 15-1275
On Petitions for Review of Orders of the
Federal Energy Regulatory Commission
Lawrence G. Acker argued the cause for petitioner
Portland General Electric Company. With him on the briefs
was Gary D. Bachman.
Eric Lee Christensen argued the cause for petitioner PáTu
Wind Farm LLC. With him on the briefs were Peter J.
Richardson and Gregory M. Adams.
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Carl M. Fink was on the briefs for intervenors Northwest
& Intermountain Power Producers Coalition and Community
Renewable Energy Association in support of petitioner in case
No 15-1275.
Elizabeth E. Rylander, Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
With her on the brief was Robert H. Solomon, Solicitor.
Eric Lee Christensen, Peter J. Richardson, and Gregory
M. Adams were on the brief for intervenors PáTu Wind Farm,
LLC in support of respondent in case No. 15-1237.
Lawrence G. Acker and Gary D. Bachman were on the
brief for intervenor Portland General Electric Company in
support of respondent.
Before: TATEL and SRINIVASAN, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: This is a dispute between a small
Oregon wind farm and the utility serving Portland over how
much of the former’s power the latter must purchase. The
Federal Energy Regulatory Commission ruled that under the
Public Utility Regulatory Policies Act and the power-purchase
agreement between the parties, the utility must purchase all of
the wind farm’s power, though it rejected the wind farm’s
insistence that the utility do so by utilizing a technology known
as dynamic scheduling. Both petition for review, and for the
reasons set forth in this opinion, we dismiss the utility’s
petition for lack of jurisdiction and deny the wind farm’s on the
merits.
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I.
The centerpiece of these consolidated petitions is section
210 of the Public Utility Regulatory Policies Act of 1978
(PURPA), which Congress enacted in the wake of the 1973
energy crisis in order to “encourage conservation and more
efficient use of scarce energy resources.” FERC v. Mississippi,
456 U.S. 742, 757 (1982); see PURPA, Pub. L. No. 95–617 tit.
II § 210, 92 Stat. 3117, 3144 (codified as amended at 16 U.S.C.
§ 824a-3). To accomplish this objective, section 210 seeks “to
reduce reliance on fossil fuels” by increasing the number of
what are known as energy-efficient cogeneration and small
power-production facilities. American Paper Institute, Inc. v.
American Electric Power Service Corp., 461 U.S. 402, 417
(1983). Cogeneration facilities capture otherwise-wasted heat
and turn it into thermal energy; small power-production
facilities produce energy (fewer than 80 megawatts) primarily
by using “biomass, waste, renewable resources, geothermal
resources, or any combination thereof.” 16 U.S.C. § 796(17)–
(18). PURPA refers to both as “qualifying facilities.” This case
concerns a small power producer.
Recognizing that various obstacles were frustrating the
development of such facilities, including the reluctance of
traditional utilities to buy their power, see Mississippi, 456 U.S.
at 750 (describing “imped[iments to] the development of
nontraditional generating facilities”), Congress enacted in
section 210 a “self-contained scheme” to mitigate those
obstacles as well as to stimulate markets for non-traditional
power, Niagara Mohawk Power Corp. v. FERC, 117 F.3d
1485, 1488 (D.C. Cir. 1997). Subsection (a) of section 210
directs FERC to promulgate broad, generally applicable rules
that encourage small power production by, among other things,
requiring utilities to sell power to and buy power from such
facilities at favorable rates, as detailed in subsections (b)
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through (d). See PURPA § 210(a)–(d). Subsection (e)
authorizes FERC to ease the regulatory burdens on these
facilities by exempting them from the Federal Power Act, as
well as from certain federal and state regulations. Id. § 210(e).
Subsection (f), in turn, requires state public-utility
commissions to implement FERC’s rules at the local level. See
id. § 210(f). And subsections (g) and (h) establish a mechanism
to enforce PURPA rights, allocating distinct responsibilities to
state and federal forums. See id. §§ 210(g)–(h). We shall have
more to say about these provisions in Part II, infra.
In 1980, FERC issued its first set of PURPA regulations,
which required utilities to buy energy from small power
producers “at a rate reflecting the cost that the purchasing
utility [could] avoid [by] obtaining energy . . . from [the small
power producer], rather than [by] generating an equivalent
amount of energy itself . . . .” Small Power Production and
Cogeneration Facilities; Regulations Implementing Section
210 of the Public Utility Regulatory Policies Act of 1978, 45
Fed. Reg. 12,214, 12,215 (1980) (codified at 18 C.F.R. Part
292). This so-called avoided-cost rate usually exceeds the
market price for wholesale power. See, e.g., New Charleston
Power I, L.P. v. FERC, 56 F.3d 1430, 1433 (D.C. Cir. 1995)
(estimating $7 million-per-year difference between avoided-
cost and market rates for one particular biomass facility).
Under PURPA, state utility commissions are responsible for
calculating the avoided-cost rates for utilities subject to their
jurisdiction, which they may “accomplish[] by . . . issu[ing]
regulations, [by addressing particular issues] on a case-by-case
basis, or by [taking] any other action designed to give effect to
the Commission’s rules.” 45 Fed. Reg. at 12,216; see PURPA
§ 210(b), (f), 16 U.S.C. § 824a-3(b), (f).
Oregon implements its PURPA responsibilities largely
through its Public Utility Commission (OPUC), which, as
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relevant here, has directed utilities subject to its jurisdiction to
draft off-the-shelf, standard-form power-purchase
agreements—replete with terms, conditions, and rate
schedules—that OPUC then reviews for compliance with
PURPA. See Oregon Public Utilities Commission Order No.
05-584, at 39–42 (May 13, 2005). OPUC has approved two
standard-form power-purchase agreements submitted by
petitioner Portland General Electric Co.: one for qualifying
facilities directly linked to the utility’s grid and another for “off
system” facilities that must transmit their power through a
separate transmission system to get to Portland’s grid. See
OPUC Order No. 07–065, at 1 (Feb. 27, 2007).
Petitioner PáTu Wind Farm LLC, a six-turbine, nine-
megawatt generator in rural Oregon, is classified under
PURPA as a small power producer. Because PáTu is not
directly linked to Portland’s grid, it sells power to Portland
under the OPUC-approved power-purchase agreement for “off
system” generators. In order to transmit its power to Portland’s
grid, PáTu obtains transmission services from two other
entities: Wasco, a rural electric cooperative, and Bonneville
Power Administration, a federal power agency. Wasco
transmits PáTu’s power to Bonneville, which in turn transmits
it to Portland’s Troutdale substation, the power-purchase
agreement’s designated point of delivery.
Before the ink had dried on the power-purchase
agreement, the parties locked in a dispute over the nature of
Portland’s purchase obligation. PáTu believes that the
agreement requires Portland to buy all of the power that PáTu
generates at any given moment, which, for obvious reasons,
varies with the strength of the wind. According to PáTu,
moreover, the only way for Portland to buy all of its variable
output is to do so using “dynamic transfer” services—a
combination of hardware, software, engineering, and other
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tools that involves “electronically transferring generation from
the balancing authority area in which [the energy] physically
resides to another balancing authority area in real-time.”
Timothy P. Duane & Kiran H. Griffith, Legal, Technical, and
Economic Challenges in Integrating Renewable Power
Generation into the Electricity Grid, 4 SAN DIEGO J. CLIMATE
& ENERGY L. 1, 45 (2013) (citation and internal quotation
marks omitted).
Portland has a different view of its obligations under the
power-purchase agreement. Believing it has purchased a firm
product, Portland requires PáTu to set day-ahead schedules
under which the wind farm commits to deliver whole-megawatt
blocks of energy for each hour of the day. If PáTu
overschedules—that is, if it promises to deliver 3 megawatts
but delivers only 2.3—Portland pays favorable avoided-cost
rates for 2.3 megawatts and requires the wind farm to make up
the difference by buying an additional .7 from Bonneville.
Because the additional .7 megawatts are not generated by
PáTu, however, Portland pays the wind farm only the lower
market rate. By contrast, if PáTu underschedules—that is, if it
predicts 3 megawatts but produces 4.8—then Portland accepts
and pays for only 3, forcing the wind farm to dispose of the
excess 1.8 at less-favorable rates.
In December 2011 PáTu filed a complaint with OPUC
alleging that Portland’s refusal to pay for all power PáTu
delivers, regardless of whether the power is generated by the
wind farm or Bonneville, violates both the power-purchase
agreement and the state’s PURPA rules and regulations. It also
challenged Portland’s refusal to utilize dynamic scheduling.
Although OPUC saw nothing in the power-purchase agreement
requiring Portland to utilize dynamic scheduling, it concluded
that the utility must purchase all power PáTu generates and
delivers. See PáTu Wind Farm, LLC, OPUC Order No. 14–287,
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at 14 (Aug. 18, 2014). But drawing a distinction between power
“produced” and power “delivered,” OPUC appeared to leave
Portland free to refuse to purchase any power produced in
excess of what PáTu schedules (the underschedule situation).
See id.
PáTu appealed to the Oregon Court of Appeals, which
affirmed without opinion. PáTu then filed a Complaint with
FERC, arguing, as it did before OPUC, that Portland must buy
all of its output, scheduled or not, and that dynamic scheduling
is the only way to accomplish that result. It grounded its
argument not only in the language of the power-purchase
agreement, but also in a FERC-promulgated PURPA
regulation requiring utilities to purchase “any energy and
capacity which is made available from a qualifying facility.”
18 C.F.R. § 292.303(a). PáTu also alleged that Portland was
violating FERC-issued Federal Power Act regulations
prohibiting discrimination, as well as the Commissions’
standards of conduct, which require a utility’s transmission and
merchant functions to operate independently.
FERC concluded that the power-purchase agreement and
its PURPA regulations require Portland “to accept PáTu’s
entire net output . . . delivered to Portland . . . .” PáTu Wind
Farm, LLC, 150 FERC ¶ 61,032, P 49 (Jan. 22, 2015) (“Initial
Order”). Although the Commission rejected PáTu’s specific
request for dynamic scheduling, explaining that it has never
required a utility to use any particular method to carry out its
purchase obligation, it nonetheless made clear that, contrary to
what OPUC had suggested, Portland may not escape that
obligation by imposing overly rigid scheduling requirements or
by refusing to purchase all power PáTu “produces.” Id. PP 52–
53. FERC dismissed PáTu’s Federal Power Act claims,
concluding first that because the wind farm is Portland’s
supplier, not its transmission customer, it has no basis for
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alleging discrimination in the provision of transmission
services. For similar reasons, it found that Portland was
violating none of FERC’s standards of conduct, as they, too,
apply only to transmission providers. Id. P 56.
After FERC denied petitions for rehearing, PáTu Wind
Farm, LLC, 151 FERC ¶ 61,223 (June 18, 2015) (“Rehearing
Order”), PáTu and Portland both filed petitions for review. We
consolidated the petitions and permitted Portland and PáTu to
intervene as respondents to defend those aspects of FERC’s
orders they favor. Portland challenges only the PURPA-related
aspects of FERC’s orders, arguing that the Commission lacked
jurisdiction to interpret a state-regulated power-purchase
agreement. PáTu challenges FERC’s rejection of its Federal
Power Act claims.
II.
We begin with Portland’s petition and, as we must, with
FERC’s argument that we lack jurisdiction to entertain it.
American Petroleum Institute v. SEC, 714 F.3d 1329, 1332
(D.C. Cir. 2013) (citing Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83, 94–95 (1998) (“The requirement
that jurisdiction be established as a threshold matter springs
from the nature and limits of the judicial power of the United
States and is inflexible and without exception.” (internal
quotation marks and alteration omitted))). A full appreciation
of the jurisdictional question we face requires some facility
with how the enforcement and judicial-review provisions of
PURPA and the Federal Power Act interact. Although
resolving the jurisdictional question turns out to be relatively
simple, we think it helpful to start with a thorough explanation
of the statutory landscape, as it has long vexed utilities,
qualifying facilities, state utility commissions, and even FERC
itself.
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A.
The Federal Power Act gives FERC broad authority to
supervise “the transmission of electric energy in interstate
commerce” and “the sale of electric energy at wholesale in
interstate commerce.” FPA § 201(b), 16 U.S.C. § 824(b). FPA
section 205 “prohibit[s], among other things, unreasonable
rates and undue discrimination ‘with respect to any
transmission or sale subject to the jurisdiction of the
Commission,’ 16 U.S.C. §§ 824d(a)–(b), and [section] 206
g[ives] the [Commission] the power to correct such unlawful
practices, 16 U.S.C. § 824e(a).” New York v. FERC, 535 U.S.
1, 7 (2002). FERC exercises this authority by initiating
administrative proceedings “upon its own motion or upon
complaint.” FPA § 206(a), 16 U.S.C. § 824e(a).
The Federal Power Act also creates a comprehensive
scheme for obtaining judicial review of and enforcing FERC’s
orders. Section 313(b) establishes a right of review:
Any party to a proceeding under this chapter aggrieved by
an order issued by the Commission in such proceeding may
obtain a review of such order . . . in the United States Court
of Appeals for the District of Columbia . . . .
FPA § 313(b), 16 U.S.C. § 825l(b). Sections 314 through 317,
in turn, direct that any action to enforce any liability or duty
arising under the Federal Power Act—whether by rule,
regulation, or order—lies exclusively in federal district court,
with appellate review to follow in the normal course. See, e.g.,
FPA § 314(a), 16 U.S.C. § 825m(a) (directing FERC
enforcement actions to proceed in district court); FPA
§ 316A(b), 16 U.S.C. § 825o–1(b) (authorizing FERC to assess
civil penalties of up to $1,000,000 per day for disobedience of
10
any “rule or order”); FPA § 317, 16 U.S.C. § 825p (granting
district courts exclusive jurisdiction over enforcement actions).
By contrast, PURPA section 210’s judicial-review and
enforcement provisions focus narrowly on advancing the
statute’s goal of encouraging development of nontraditional
energy facilities like the wind farm at issue here. New York
State Electric & Gas Corp. v. FERC, 117 F.3d 1473, 1476
(D.C. Cir. 1997) (“The Congress declared with specificity the
means by which the ends of the PURPA are to be achieved.”).
Just as PURPA carves out precise responsibilities for FERC
and the states in implementing its substantive goals, it
“specifically delineate[s]” distinct enforcement “roles [for] the
Commission, the state public utility commissions (PUCs), and
the federal courts.” Connecticut Valley Electric Co. v. FERC,
208 F.3d 1037, 1043 (D.C. Cir. 2000).
State-based adjudication serves as the mainstay for
enforcing PURPA rights. PURPA section 210(g), entitled
“Judicial Review and Enforcement,” permits “any person” to
“bring an action against any electric utility [or] qualifying
small power producer . . . to enforce any requirement” created
by a state’s implementation of PURPA. PURPA § 210(g)(2),
16 U.S.C. § 824a-3(g)(2). Reflecting Congress’s judgment that
“federal rights granted by PURPA can appropriately be
enforced through state adjudicatory machinery,” Mississippi,
456 U.S. at 761, the statute channels actions under this
subsection into “the appropriate State court,” PURPA
§ 123(c)(1), 16 U.S.C. § 2633(c)(1); see PURPA § 210(g)(2),
16 U.S.C. § 824a-3(g)(2) (directing any action brought
thereunder to proceed “in the manner, and under the
requirements, as provided under section [123]”). It is this path
that PáTu followed when it took its contract dispute to the
Oregon Public Utility Commission.
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PURPA gives FERC and the federal courts a separate and
more limited role. Although section 210(h), captioned
“Commission Enforcement,” seems at first glance quite
impenetrable, careful attention to its language reveals what
Congress had in mind. We quote it here virtually in full, adding
a few bracketed descriptors to help the reader:
(1) For purposes of enforcement of any rule prescribed by
the Commission under subsection (a) of this section
[requiring FERC to promulgate rules to encourage non-
traditional power generation] with respect to any operations
of an electric utility [i.e., Portland], a qualifying
cogeneration facility or a qualifying small power
production facility [i.e., PáTu] which are subject to the
jurisdiction of the Commission under part II of the Federal
Power Act [FPA § 201 et seq.], such rule shall be treated as
a rule under the Federal Power Act. Nothing in subsection
(g) of this section [providing for state judicial review] shall
apply to so much of the operations of an electric utility [i.e.,
Portland], a qualifying cogeneration facility or a qualifying
small power production facility [i.e., PáTu] as are subject
to the jurisdiction of the Commission under part II of the
Federal Power Act [FPA § 201 et seq.].
(2)(A) The Commission may enforce the requirements of
subsection (f) of this section [requiring states to
“implement” PURPA] against any State regulatory
authority [i.e., OPUC] or nonregulated electric utility. For
purposes of any such enforcement, the requirements of
subsection (f)(1) of this section [requiring states to
“implement” PURPA] shall be treated as a rule enforceable
under the Federal Power Act. For purposes of any such
action, a State regulatory authority [i.e., OPUC] or
nonregulated electric utility shall be treated as a person
within the meaning of the Federal Power Act. No
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enforcement action [FPA §§ 314–317] may be brought by
the Commission under this section other than—
(i) an action against the State regulatory authority [i.e.,
OPUC] or nonregulated electric utility for failure to
comply with the requirements of subsection (f) of this
section [requiring states to “implement” FERC’s
PURPA rules] or
(ii) an action under paragraph (1) [i.e., (h)(1)].
(B) Any electric utility [i.e., Portland], qualifying
cogenerator, or qualifying small power producer [i.e.,
PáTu] may petition the Commission to enforce the
requirements of subsection (f) of this section [requiring
states to “implement” PURPA] as provided in
subparagraph (A) of this paragraph [i.e., subsection
(h)(2)(A)]. If the Commission does not initiate an
enforcement action under subparagraph (A) against a State
regulatory authority [i.e., OPUC] or nonregulated electric
utility within 60 days following the date on which a petition
is filed under this subparagraph with respect to such
authority, the petitioner may bring an action in the
appropriate United States district court to require such State
regulatory authority or nonregulated electric utility to
comply with such requirements, and such court may issue
such injunctive or other relief as may be appropriate. . . .
PURPA § 210(h), 16 U.S.C. § 824a-3(h).
Notice first how enforcement works under subsection (h).
By providing that, in some circumstances, PURPA regulations
“[f]or purposes of” enforcement “shall be treated as . . . rule[s]
enforceable under the Federal Power Act,” PURPA
§ 210(h)(1), (h)(2)(A), the subsection channels all enforcement
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actions brought thereunder into the Federal Power Act’s
general enforcement scheme. Industrial Cogenerators v.
FERC, 47 F.3d 1231, 1234 (D.C. Cir. 1995) (observing that
subsection (h) relies on the Federal Power Act’s enforcement
provisions, citing FPA §§ 314 & 317, 16 U.S.C. §§ 825m &
825p). As explained above (supra at pp. 9–10), that scheme
grants the “District Courts of the United States . . . exclusive
jurisdiction” over all enforcement actions. FPA § 317, 16
U.S.C. § 825p.
The second thing to observe is that subsection (h) permits
only two types of enforcement actions. Subsection (h)(1)
addresses those situations where enforcing a PURPA rule
necessarily requires regulating those “operations of
an electric utility [i.e., Portland] . . . or a qualifying small
power production facility [i.e., PáTu] which are subject to the
jurisdiction of the Commission under part II of the Federal
Power Act.” PURPA § 210(h)(1), 16 U.S.C. § 824a-3(h)(1). In
other words, if a PURPA enforcement action, in effect,
regulates interstate transmission or wholesale generation—
matters falling squarely within FERC’s exclusive Federal
Power Act authority—then FERC, not the state, oversees the
enforcement action. See id. (“Nothing in [PURPA’s state-court
enforcement provisions] shall apply to so much of the
operations of an electric utility [or] . . . qualifying small power
production facility as are subject to the jurisdiction of the
Commission under part II of the Federal Power Act.”).
Consider, for example, a 35-megawatt wind farm which,
as a PURPA qualifying facility, benefits from PURPA’s
requirement that utilities buy its power at avoided-cost rates.
See PURPA § 210(a)(2)–(b), 16 U.S.C. § 824a-3(a)(2)–(b).
Because Congress and FERC have chosen not to exempt from
regulation qualifying facilities that generate more than 30
megawatts, the wind farm in our example—unlike PáTu—
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remains subject to rate regulation under the Federal Power Act.
See PURPA § 210(e), 16 U.S.C. § 824a-3(e) (permitting FERC
to exempt certain qualifying facilities from regulation under the
Federal Power Act); 18 C.F.R. § 292.601(b) (exempting only
small power producers with a capacity of under 30 megawatts).
For this hypothetical wind farm, then, a conflict could arise
between, on the one hand, state authority to set the rate at which
a utility must buy its power, and on the other, FERC authority
to set the rate at which the wind farm must sell its power.
Where such a regulatory overlap occurs, subsection (h)(1)
provides that PURPA must be enforced by FERC via the
Federal Power Act’s district-court enforcement scheme rather
than via PURPA section 210(g)’s state-court adjudication
mechanism. See PURPA § 210(h)(1), 16 U.S.C. § 824a-3(h)(1)
(precluding states from enforcing PURPA rules touching on
FERC-jurisdictional “operations”); Policy Statement
Regarding the Commission’s Enforcement Role Under Section
210 of the Public Utility Regulatory Policies Act of 1978, 23
FERC ¶ 61,304, 61,645–46 & n.6 (May 31, 1983) (interpreting
subsection (h)(1) to give FERC the exclusive authority to
“establish the rate for sale,” and thus the “rate for purchase” for
the 30-to-80 megawatt class of small power producers).
Subsection (h)(2) addresses a very different situation, i.e.,
where a state, contrary to PURPA section 210(f), fails to
“implement” FERC’s PURPA rules. In such a case, subsection
(h)(2) gives FERC authority to direct the state utility
commission to comply, which the Commission accomplishes
by treating PURPA’s implementation obligation “as a rule
enforceable under the Federal Power Act.” PURPA
§ 210(h)(2)(A), 16 U.S.C. § 824a-3(h)(2). Like subsection
(h)(1) actions, subsection (h)(2) actions require FERC to
proceed in district court. See FPA §§ 314–317, 16 U.S.C.
§§ 825m–825p. But unlike subsection (h)(1), subsection (h)(2)
allows private parties to petition FERC to initiate such an
15
enforcement action, and, should FERC decline to do so,
permits those parties to sue the state utility commission in
federal district court. See PURPA § 210(h)(2)(B), 16 U.S.C.
§ 824a-3(h)(2)(B).
The final thing worth noticing about PURPA section
210(h) is the total absence of any provision for direct review of
FERC orders that interpret PURPA. Although at first glance
one might think that the Federal Power Act’s broadly worded
judicial-review provision would cover FERC orders
interpreting PURPA, our court has ruled otherwise. As we
made clear in Midland Power Co-op. v. FERC, FPA section
313(b) “limits review to orders issued in proceedings under the
[Federal Power] Act—and [PURPA] § 210 is not part of th[at]
Act.” 774 F.3d 1, 3 (D.C. Cir. 2014). Instead, review of section
210(h) enforcement actions occurs on appeal from a district
court’s final decision. See Industrial Cogenerators, 47 F.3d at
1234 (“The decision of the district court is reviewable in the
court of appeals in the ordinary course.”).
There is, however, a caveat: in Midland, we speculated,
though with healthy skepticism, that FERC orders purporting
to resolve a PURPA dispute “might” be directly reviewable if
they were “in fact . . . mandatory, in the sense that” they
“fix[ed] the rights” of the parties and that “failure to ‘comply’
could expose [the losing party] to penalties as high as
$1,000,000 a day under” the Federal Power Act’s civil-penalty
provisions. Midland, 774 F.3d at 6–7 (citations and internal
quotation marks omitted). Because the order in Midland posed
no such risk, we declined to decide “whether such a mandatory
order might somehow fall within our jurisdiction.” Id. at 7–8.
It is precisely this hypothetical exception that PáTu believes
applies here.
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B.
With this background in mind, we turn to the question of
whether we have jurisdiction to review Portland’s petition. In
its opening brief, Portland maintained that, by directing it to
buy “all” of PáTu’s power, FERC created binding duties that
are directly reviewable under the narrow—hypothetical—
subsection (h) exception left open by Midland. See 774 F.3d at
7–8. In response, FERC claims that the PURPA-related aspects
of its orders are non-binding and that we therefore lack
jurisdiction to review them. In reply, Portland hinted that it
might agree, and then at oral argument confirmed it would
concede that we lack jurisdiction were we to determine that
FERC’s orders in this case are in fact advisory. Oral Arg. Rec.
3:20–4:00. Intervening on behalf of FERC, PáTu disagrees,
arguing that the orders are reviewable because, in its view, they
bind Portland and represent an exercise of FERC’s subsection
(h)(1) enforcement authority.
We agree with FERC that this jurisdictional issue is
controlled by Midland. Although FERC’s order in that case
contained some language that appeared mandatory—in
particular, it directed that a cooperative utility “shall”
reconnect with a specific PURPA qualifying facility, 774 F.3d
at 3—we nonetheless treated the order as declaratory because
it contained “neither any deadline . . . [for] compl[iance] nor
any possible consequence of non-compliance,” id. at 7. So too
here. Although FERC’s orders contain language that appears
mandatory—e.g., “ordering Portland General to accept PáTu’s
entire net output,” Initial Order, P 49, and stating that Portland
“must take from PáTu its entire net output,” Rehearing Order,
P 44—they neither set deadlines for compliance nor specify
any repercussions for non-compliance. Given this, and given
FERC’s concession that the orders are declaratory, we have no
jurisdiction to review them. See Midland, 774 F.3d at 7 (citing
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New York State Electric & Gas, 117 F.3d at 1477 (“[We lack
jurisdiction] to review a nonbinding declaratory order . . . .”));
Consumers Energy Co. v. FERC, 428 F.3d 1065, 1067 (D.C.
Cir. 2005) (“In evaluating FERC’s interpretation of its own
orders, we afford the Commission substantial deference . . . .”).
Even so, we are mystified by FERC’s continued use of
mandatory language to resolve PURPA disputes in orders that
it later insists are purely hortatory. See, e.g., Xcel Energy
Services Inc. v. FERC, 407 F.3d 1242, 1244 (D.C. Cir. 2005)
(per curiam); Niagara Mohawk, 117 F.3d at 1488. Although
Midland holds that such mandatory language, without more, is
in fact declaratory, FERC could avoid a great deal of confusion
and waste of judicial resources by not using words like “shall”
and “must,” and by making clear in its orders—as opposed to
later in this court—that its discussions of PURPA-related
issues are advisory only.
PáTu’s jurisdictional theory suffers from a second defect.
Recall that the wind farm argues that we have jurisdiction not
just because it thinks FERC’s orders are binding, but also
because it believes that, pursuant to subsection (h)(1), they
directly enforce PURPA against Portland. As explained above,
however, the Federal Power Act and the relevant PURPA
provisions confine FERC enforcement authority to wholesale
generation and the interstate transmission activities of
transmission providers. See PURPA § 210(h)(1), 16 U.S.C.
§ 824a-3(h)(1) (permitting FERC to treat PURPA rules
affecting those “operations of an electric utility . . . subject to
[its Federal Power Act] jurisdiction” as rules enforceable under
the Federal Power Act); FPA § 201(b), 16 U.S.C. § 824(b)
(granting FERC authority over wholesale generation and
transmission). Although Portland is a transmission provider
subject to FERC jurisdiction, it is not PáTu’s transmission
provider; that function is performed by Wasco and Bonneville,
18
who together transmit PáTu’s power to Portland’s Troutdale
Substation. Portland is a purchaser of PáTu’s power, which is
why their relationship is controlled by a state-regulated power-
purchase agreement, not a FERC-approved tariff, and why
FERC’s orders say nothing at all about transmission, focusing
instead on Portland’s obligation to “purchase” PáTu’s power.
See Initial Order, P 50. Because Portland provides PáTu with
no transmission services, this case does not involve the
“operations of an electric utility . . . subject to the jurisdiction
of the Commission under part II of the Federal Power Act.”
PURPA § 210(h)(1), 16 U.S.C. § 824a-3(h)(1).
III.
PáTu’s petition deals exclusively with Portland’s refusal
to utilize dynamic scheduling. The petition is without merit.
Citing FERC’s anti-discrimination regulations, PáTu
claims that Portland is discriminating against it “by
systematically denying [PáTu] dynamic transfer services . . .
while providing those same services to [Portland’s] own
generation resources.” PáTu Br. 28–29. But as FERC explained
in its rehearing order, see Rehearing Order, PP 57–58, every
one of the regulations PáTu cites governs the relationship
between transmission providers and transmission customers,
see, e.g., 18 C.F.R. § 358.2(a) (directing all “transmission
provider[s]” to “treat all transmission customers, affiliated and
non-affiliated, on a not unduly discriminatory basis”), and, as
just explained, PáTu is not Portland’s transmission customer,
see Part II.B, supra.
PáTu next argues that Portland violated FERC’s standards
of conduct “when [its] Merchant personnel directed [its]
Transmission [personnel] to deny dynamic scheduling services
to PáTu.” PáTu Br. 40. Promulgated by FERC as part of its
1996 decision to require utilities to unbundle their service
19
offerings, the standards of conduct were “designed to ensure
that a public utility’s employees . . . engaged in transmission
system operations function independently of [its marketing-
function] employees . . . who are engaged in wholesale
purchases and sales.” Open Access Same-Time Information
System (Formerly Real-Time Information Networks) and
Standards of Conduct, 61 Fed. Reg. 21,737, 21,740 (May 10,
1996). Because a utility’s merchant function will frequently
operate as a transmission customer of its own transmission
function, however, FERC permits “[a] transmission provider’s
transmission function employee [to] discuss with its marketing
function employee a specific request for transmission service
submitted by the marketing function employee.” 18 C.F.R. §
358.7(b). As the Commission explained, that is precisely what
is happening here. Once PáTu delivers its electricity to
Portland’s marketing function, the standards of conduct allow
the marketing function to choose what to do with it—including
whether to use dynamic scheduling to distribute the electricity
within Portland’s grid. “Portland General’s merchant arm,”
FERC explains, “not PáTu[,] is the customer transmitting
energy on Portland General’s system, [and] communications
between Portland General’s merchant arm and Portland
General’s transmission division concerning transmission of
PáTu’s power [therefore] did not violate the” standards of
conduct. FERC Br. 54. That said, although Portland’s actions
are permissible under the Federal Power Act, they may, as
FERC suggested, violate Portland’s PURPA obligation to
purchase PáTu’s entire net output. See Initial Order, P 53
(noting that Portland cannot escape its “mandatory purchase
obligation”).
Finally, PáTu challenges FERC’s refusal to address a
filing it made during the proceedings before the Commission
in which it asked FERC to modify Portland’s transmission
tariff to include dynamic scheduling. FERC rejected the filing
20
because it viewed the document as an “answer to a[n] . . .
answer,” which its procedural rules prohibit. Id. at P 48 (citing
18 C.F.R. § 385.213(a)(2) (“An answer may not be made
to . . . an answer.”)); see Rehearing Order, P 60. Protesting,
PáTu argues, in essence, that its filing was not labeled an
answer to an answer. That, however, makes no difference given
that FERC, interpreting its own procedural rules, has long held
that “the style in which a party frames a document . . . does not
dictate how the Commission must interpret and treat it.” High
Prairie Pipeline, LLC, 149 FERC ¶ 61,004, P 8 (Oct. 1, 2014)
(citing Stowers Oil & Gas Co., 27 FERC ¶ 61,001 n.3 (Apr. 2,
1984)). Because PáTu nowhere argues that the Commission’s
interpretation of its own regulation is unreasonable, we have no
basis for even considering whether FERC erred in rejecting
PáTu’s request. See TRT Telecommunications Corp. v. FCC,
857 F.2d 1535, 1552 (D.C. Cir. 1988) (concluding that courts
owe considerable deference to an agency’s “interpretation and
administration of its own procedural rules”) (emphasis
omitted).
IV.
For the foregoing reasons, we deny PáTu’s petition and
dismiss Portland’s for lack of jurisdiction.
So ordered.