Southwestern Power Administration v. Federal Energy Regulatory Commission , 763 F.3d 27 ( 2014 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 9, 2014 Decided August 22, 2014
No. 13-1033
SOUTHWESTERN POWER ADMINISTRATION, ET AL.,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
MID-WEST ELECTRIC CONSUMERS ASSOCIATION, INC., ET AL.,
INTERVENORS
On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Henry C. Whitaker, Attorney, U.S. Department of Justice,
argued the cause for petitioners. With him on the briefs were
Stuart F. Delery, Acting Assistant Attorney General, Ronald
C. Machen Jr., U.S. Attorney, and Michael S. Raab, Attorney.
Sherry Quirk, David Fitzgerald, Jeffrey C. Genzer, and
Kristen Connolly McCullough were on the brief for
intervenors Mid-West Electric Consumers Association, et al.
in support of petitioners. Monica M. Berry entered an
appearance.
2
Lona T. Perry, Senior Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
With her on the brief were David L. Morenoff, Acting General
Counsel, and Robert H. Solomon, Solicitor.
Rebecca J. Michael and Sonia C. Mendonça were on the
brief for intervenor North American Electric Reliability
Corporation in support of respondent. Meredith M. Jolivert
entered an appearance.
Before: GARLAND, Chief Judge, and SRINIVASAN and
PILLARD, Circuit Judges.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge: Section 215(b)(1) of the
Federal Power Act grants the Federal Energy Regulatory
Commission jurisdiction over “all users, owners and operators
of the bulk-power system . . . for purposes of approving
reliability standards . . . and enforcing compliance.” The
terms of that provision specify that the group of “users,
owners and operators” generally subjected to the
Commission’s jurisdiction “include[s]” the United States. A
different provision, section 215(e) of the Federal Power Act,
authorizes the Commission and its designee the North
American Electric Reliability Corporation to impose
monetary penalties on “a user or owner or operator of the
bulk-power system” for violations of reliability standards.
That provision contains no separate specification that “a user
or owner or operator” subject to the imposition of monetary
penalties includes the United States.
The Corporation, asserting its power under section
215(e)(1), assessed a monetary fine against the Southwestern
Power Administration, a federal government entity that
3
markets hydroelectric power. Southwestern, along with the
Department of Energy and the Department of the Interior,
appealed the penalty to the Commission. They argued that
the relevant provisions of the Federal Power Act effect no
unequivocal waiver of the United States’s sovereign
immunity from monetary penalties, as would be necessary to
sustain the fine. The Commission upheld the penalty. It
reasoned that section 215(b)(1) and section 215(e) work in
tandem to establish an unambiguous waiver of sovereign
immunity with regard to monetary penalties.
We disagree. Section 215(b)(1) generally subjects
federal government entities to the Commission’s jurisdiction
to enforce compliance. But to authorize a monetary award
against the federal government, the statute must do more than
generally bring the government within the Commission’s
enforcement jurisdiction—it must unequivocally subject the
government to monetary liability. Neither section 215(b) nor
section 215(e), nor the two considered in combination, speaks
with the requisite clarity to waive the federal government’s
sovereign immunity from monetary penalties. We therefore
vacate the Commission’s order.
I.
Section 215 of the Federal Power Act requires the
development and enforcement of mandatory reliability
standards for the bulk-power system. See 16 U.S.C. § 824o.
The bulk-power system is the interconnected transmission
network that makes up the nation’s electrical power grid,
including the power plants and related facilities responsible
for transferring electrical energy through the system. See id.
§ 824o(a)(1). Section 215 calls for the Federal Energy
Regulatory Commission to certify an Electric Reliability
Organization, which, subject to FERC’s review, would
4
develop and enforce reliability standards for the bulk-power
system. Id. § 824o(a)(2), (c). In 2006, FERC certified the
North American Electric Reliability Corporation, a private
corporation, as the Electric Reliability Organization. See
Alcoa Inc. v. FERC, 564 F.3d 1342, 1345 (D.C. Cir. 2009).
The Corporation, with FERC approval, has promulgated a
number of reliability standards. See, e.g., FERC,
Transmission Relay Loadability Reliability Standard, Order
No. 733, 130 FERC ¶ 61,221 (2010); FERC, Mandatory
Reliability Standards for the Bulk-Power System, Order No.
693-A, 120 FERC ¶ 61,053 (2007).
A.
The Federal Power Act provisions addressing
enforcement of those reliability standards lie at the center of
this case. First, section 215(b)(1), entitled “Jurisdiction and
applicability,” generally outlines FERC’s jurisdiction:
The Commission shall have jurisdiction, within the
United States, over the [Electric Reliability
Organization] certified by the Commission under
subsection (c) of this section, any regional entities,
and all users, owners and operators of the bulk-
power system, including but not limited to the
entities described in section 824(f) of this title, for
purposes of approving reliability standards
established under this section and enforcing
compliance with this section. All users, owners and
operators of the bulk-power system shall comply
with reliability standards that take effect under this
section.
16 U.S.C. § 824o(b)(1). The “entities described in section
824(f)” over which FERC is given jurisdiction consist of “the
5
United States, a State or any political subdivision of a State,”
and certain “electric cooperative[s],” as well as associated
entities and individuals. 16 U.S.C. § 824(f).
A separate provision of the Federal Power Act, section
215(e), entitled “Enforcement,” addresses both FERC’s and
the Electric Reliability Organization’s enforcement authority.
Under section 215(e)(1), the Electric Reliability Organization
“may impose . . . a penalty on a user or owner or operator of
the bulk-power system for a violation of a reliability
standard,” subject to certain procedural requirements. Id.§ 824o(e)(1). The penalties that may be assessed by the
Electric Reliability Organization include monetary sanctions.
See id. § 825o-1(b). The Electric Reliability Organization
files any penalty assessment with FERC, which may review
the penalty on its own motion or upon a sanctioned party’s
motion for review. Id. § 824o(e)(2). Section 215(e) also
speaks to FERC’s own enforcement capabilities. Under
section 215(e)(3), FERC “may order compliance with a
reliability standard and may impose a penalty against a user or
owner or operator of the bulk-power system” upon finding a
violation (or future violation) of a reliability standard. Id.
§ 824o(e)(3).
Finally, section 316A of the Federal Power Act, entitled
“Enforcement of certain provisions,” generally authorizes
FERC to assess a “civil penalty of not more than $1,000,000”
per day against “[a]ny person who violates any provision of
subchapter II of this chapter or any provision of any rule or
order thereunder.” 16 U.S.C. § 825o-1(b). The “provision[s]
of subchapter II” include section 215’s provisions addressing
reliability standards for the bulk-power system. Section
316A’s conferral of power to impose monetary penalties for
violations of those and other provisions does not authorize
penalties against the federal government: Section 316A
6
allows for penalties against “any person” who violates the
referenced provisions and rules, and the Federal Power Act
defines the term “person” in a manner excluding the United
States. See 16 U.S.C. § 796(4) (“person means an individual
or a corporation”) (internal quotation marks omitted).
B.
In this case, the Corporation, relying on its authority
under section 215(e)(1), assessed a monetary penalty of
$19,500 against the Southwestern Power Administration for
violating various reliability standards. Southwestern, a
federal power marketing agency, is a subdivision of the
Department of Energy. It markets hydroelectric power
produced from Army Corps of Engineers projects in the
southwestern United States.
Southwestern, the Department of Energy, and the
Department of Interior contested the monetary penalty before
FERC. They disputed neither Southwestern’s obligation to
adhere to the reliability standards nor its violation of those
standards. Instead, they contested Southwestern’s
amenability to a monetary sanction, arguing that section 215
contains no unambiguous waiver of the federal government’s
sovereign immunity from monetary penalties. FERC
disagreed, determining that section 215 unequivocally waives
sovereign immunity. FERC, Order on Review of Notice of
Penalty, Docket No. NP-11-238-000, 140 FERC 61,048 ¶ 42
(2012), reh’g denied, FERC, Order Denying Rehearing, 141
FERC 61,242 ¶ 26 (2012) (Rehearing Order). FERC
reasoned that section 215(b)(1) “serves to define the scope of
‘all users, owners and operators of the Bulk-Power system’ as
that term is to be applied to the remainder of . . . section 215.”
Rehearing Order ¶ 41. Section 215(b)(1) specifically includes
the United States among the “users, owners and operators”
7
addressed by that provision. In FERC’s view, the inclusion of
the United States among the “users, owners, and operators”
over which FERC is given jurisdiction by section 215(b)(1)
carries through to 215(e)’s reference to the “user[s] or
owner[s] or operator[s]” against which the Corporation or
Commission may assess monetary fines. In that fashion,
FERC concluded, the combination of section 215(b)(1) and
215(e) unambiguously waives the federal government’s
sovereign immunity from monetary penalties.
FERC also rejected Southwestern’s contention that
section 316A confines the reach of section 215’s monetary-
penalty authority to non-governmental entities. Southwestern
argued that section 316A encompasses monetary fines for
violations of section 215 and rules promulgated thereunder,
but confines section 215’s penalty authority only to
“person[s],” a term defined to exclude the United States.
FERC determined that section 215 is unconstrained by section
316A and instead “acts as a separate grant of penalty authority
with respect to violations of mandatory Reliability
Standards.” Id. ¶ 47.
FERC therefore upheld the Corporation’s imposition of a
monetary penalty against Southwestern. Southwestern, the
Department of Energy, and the Department of the Interior
appeal.
II.
This case revolves around the settled understanding that a
waiver of sovereign immunity “must be unequivocally
expressed in statutory text and will not be implied.” Lane v.
Pena, 518 U.S. 187, 192 (1996) (citations omitted). We have
applied that principle in the context of a dispute like this one
pitting an independent agency against another federal
8
government entity. See Dep’t of Army v. Fed. Labor
Relations Auth., 56 F.3d 273, 275-76 (D.C. Cir. 1995). It
requires us to construe “[a]ny ambiguities in the statutory
language . . . in favor of immunity.” FAA v. Cooper, 132 S.
Ct. 1441, 1448 (2012). While Congress need not “use magic
words,” the waiver must be “clearly discernable from the
statutory text in light of traditional interpretative tools.” Id.If the issue specifically concerns whether “the Government is
liable for awards of monetary damages, the waiver of
sovereign immunity must extend unambiguously to such
monetary claims.” Lane, 518 U.S. at 192; see United States v.
Nordic Vill., Inc., 503 U.S. 30, 34 (1992). And “[a]mbiguity
exists if there is a plausible interpretation of the statute that
would not authorize money damages against the
Government.” Cooper, 132 S. Ct. at 1448; accord Nordic
Vill., 503 U.S. at 34, 37.
Viewed through the lens of those strict standards, section
215 of the Federal Power Act effects no unequivocal waiver
of the federal government’s sovereign immunity from
monetary penalties. The Corporation imposed the fine in this
case pursuant to its authority under section 215(e)(1), the
provision addressed specifically to the Corporation’s power to
assess penalties. That provision enables the Corporation to
assess a penalty against “a user or owner or operator of the
bulk-power system” found to violate reliability standards. 16
U.S.C. § 824o(e)(1); see also id. § 824o(e)(3) (authorizing
Commission to impose penalties against “a user or owner or
operator”). The terms of that provision, considered on their
face, make no reference to penalties against the federal
government. A “user or owner or operator” is not a defined
term in section 215’s “Definitions” provision, see id.
§ 824o(a), or in the Federal Power Act’s general “Definitions”
provision, see id. § 796. Because section 215(e) “makes no
mention whatsoever” of the federal government, Lane, 518
9
U.S. at 192, that provision, standing alone, plainly establishes
no unambiguous waiver of the federal government’s
sovereign immunity from monetary penalties.
FERC grounds its assertion of an unequivocal waiver in a
separate provision, section 215(b)(1). That provision
generally sets out FERC’s jurisdiction with regard to the
promulgation and enforcement of electric reliability standards
for the bulk-power system. It grants FERC jurisdiction “over
the [Electric Reliability Organization] certified by the
Commission,” over “any regional entities,” and over “all
users, owners and operators of the bulk-power system,
including but not limited to the entities described in section
824(f) of this title, for purposes of approving reliability
standards established under this section and enforcing
compliance with this section.” 16 U.S.C. § 824o(b)(1)
(emphasis added). The provision’s cross-reference “to the
entities described in section 824(f)” in turn brings within
FERC’s jurisdictional compass “the United States, a State or
any political subdivision of a State,” certain “electric
cooperative[s],” and associated entities and individuals. Id.
§ 824(f). Section 215(b)(1)’s general grant of jurisdiction to
FERC to approve and enforce compliance with reliability
standards thus includes the United States within the field of
covered “users, owners and operators.” In FERC’s view,
because section 215(b)(1) includes the United States among
the “users, owners and operators” over which the Commission
generally possesses jurisdiction to enforce reliability
standards, and because section 215(e) speaks to the exercise
of enforcement authority, the term “user or owner or
operator” in section 215(e) necessarily is defined by section
215(b)(1) to include the United States.
There is a logic to FERC’s interpretation, but we are
required to construe any ambiguity against a waiver of
10
sovereign immunity. The statute is not “so free from
ambiguity that we can comfortably conclude . . . that
Congress intended to subject the Federal Government to
awards of monetary damages.” Lane, 518 U.S. at 200.
Contrary to FERC’s reading, section 215(b)(1) does not
unambiguously define “users, owners and operators” as
including the United States for all of section 215. Another
provision defines certain terms “[f]or purposes of” section
215, but that provision contains no definition of “users,
owners and operators.” 16 U.S.C. § 824o(a). Section
215(b)(1) instead generally grants FERC jurisdiction over a
number of entities and individuals—including the United
States—“for purposes of approving reliability standards . . .
and enforcing compliance.” Id. § 824o(b)(1). That FERC’s
overarching jurisdiction to enforce compliance with reliability
standards encompasses the United States does not necessarily
mean that the specific enforcement authority in subsection (e)
to assess monetary penalties must also be read to encompass
the United States. Rather, “there is a plausible interpretation
of the statute that would not authorize money damages against
the Government.” Cooper, 132 S. Ct. at 1448.
That interpretation runs as follows. Under section
215(b)(1), the terms of which incorporate the United States
through a statutory cross-reference, Congress generally
granted FERC jurisdiction over federal government entities to
enforce compliance with reliability standards. Petitioners thus
concede, for instance, that federal government entities are
subject to FERC’s imposition of non-monetary means of
enforcement, such as compliance orders or directives,
enforcement audits, and the like. Cf. Lane, 518 U.S. at 196-
97 (noting government concession that statute authorized
award of “injunctive relief” against it but finding no waiver of
immunity against monetary damages); U.S. Dep’t of Energy v.
Ohio, 503 U.S. 607, 613, 619 & n.15 (1992) (noting
11
government concession that statute authorizes “injunctive-
type relief” and “coercive sanctions” against it but finding no
waiver of immunity against punitive fines). But with respect
to section 215(e)’s grant of authority to assess monetary
penalties, Congress contemplated the exercise of that power
only against non-government entities, not against the United
States. Accordingly, section 215(b)(1) pointedly incorporates
the United States within the group of “users, owners and
operators” encompassed by its general grant of jurisdiction,
whereas section 215(e) pointedly does not do so with respect
to the “user[s] or owner[s] or operator[s]” encompassed by its
conferral of penalty authority. See Ohio, 503 U.S. at 615(“[W]e presume congressional familiarity” with the rule “that
any waiver of the National Government’s sovereign immunity
must be unequivocal.”). The upshot is that, while section
215(b)(1) “waives sovereign immunity, it fails to establish
unambiguously that the waiver extends to monetary claims”
under section 215(e). Nordic Vill., 503 U.S. at 34; see Fed.
Labor Relations Auth., 56 F.3d at 276 (“Congress can waive
immunity to one type of remedy without waiving immunity to
another.”).
That understanding of the distinction between section
215(b)(1) and section 215(e) draws additional support from
another provision, section 201(f). Under section 201(f), “[n]o
provision in this subchapter shall apply to, or be deemed to
include,” inter alia, “the United States . . . unless such
provision makes specific reference thereto.” 16 U.S.C.
§ 824(f). “[T]his subchapter” includes section 215; and the
sole provision in section 215 that “makes specific reference”
to the United States is paragraph (b)(1), not subsection (e).
See Black’s Law Dictionary 1345 (9th ed. 2009) (“provision”
is a “clause in a statute”). FERC asserts that section 201(f)
has little effect in this case because of section 201(b)(2),
which cross-references section 201(f). Section 201(b)(2)
12
states that, “[n]otwithstanding subsection (f),” i.e., section
201(f), “the provisions” of certain specified “sections,”
including section 215, “shall apply to the entities described in
such provisions, and such entities shall be subject to the
jurisdiction of the Commission.” 16 U.S.C. § 824(b)(2). In
stating that “the provisions” of section 215 “shall apply to the
entities described in such provisions,” that language
essentially begs the question whether “the entities described
in” section 215(e) include the United States. At the least, the
language fails to answer the question with requisite clarity to
establish an unequivocal waiver of sovereign immunity where
no waiver otherwise exists. We are then left with a plausible
interpretation of section 215 under which the general grant of
enforcement jurisdiction in paragraph (b)(1) encompasses the
United States but the specific grant of penalty authority in
subsection (e) does not.
The Supreme Court’s decision in Ohio, 503 U.S. 607,
supports that understanding of the interplay between the two
provisions. The Court there addressed a claimed waiver of
the government’s sovereign immunity from punitive monetary
fines (i.e., fines for past violations). The case involved the
citizen-suit and penalty provisions of the Clean Water Act and
Resource Conservation and Recovery Act. The citizen-suit
provision authorized lawsuits against “any person
(including . . . the United States)” for certain violations of the
Acts, and vested district courts with jurisdiction “to apply any
appropriate civil penalties under [a referenced provision].”
Id. at 615-16 (internal quotation marks omitted) (omissions in
original). The referenced provision concerning civil penalties
encompassed punitive fines, but it provided for penalties
against a “person,” which was in turn defined in a separate
provision in a manner excluding the United States. Id. at 616-
18 & n.11. Although the citizen-suit provision expressly
included the United States within the category of “persons”
13
subject to suit and specifically conferred authority to “apply
any appropriate civil [money] penalties,” the Court found no
unequivocal waiver of sovereign immunity with regard to
punitive fines. Id. at 616-18, 628 (analyzing 33 U.S.C.
§ 1365(a)(1)-(2)). The Court perceived a material “contrast
between drafting that merely redefines ‘person’ when it
occurs within a particular clause or sentence and drafting that
expressly alters the definition for any and all purposes of the
entire section.” Id. at 618. That is because the statute
contained “various provisions specially defining ‘person’ and
doing so expressly for purposes of the entire section in which
the term occurs.” Id. “[T]he inference can only be that a
special definition not described as being for purposes of the
‘section’ or ‘subchapter’ in which it occurs was intended to
have the more limited application to its own clause or
sentence alone.” Id. at 619. As a result, “the inclusion of the
United States as a ‘person’” in the citizen-suit provision
“must go to the clauses subjecting the United States to suit,
but no further.” Id.In Ohio, the term “person” was expressly defined to
include the United States for purposes of the clauses in the
citizen-suit provision subjecting the United States to suit, but
that understanding did not carry through to the clause
allowing for imposition of appropriate civil penalties, at least
with regard to punitive fines. Here, similarly, the term “users,
owners, and operators” expressly includes the United States
for purposes of paragraph (b)(1)’s general conferral of
jurisdiction, but that understanding does not necessarily carry
through to the “user[s] or owner[s] or operator[s]” subject to
monetary penalties under subsection (e)’s grant of penalty
authority. Paragraph (b)(1) “does not purport to apply the
more expansive definition” of “users, owners and operators”
throughout the section. Id. at 619 n.14. By contrast, terms
like “bulk-power system,” “transmission organization,” and
14
“regional entity” are defined “[f]or purposes of [section
215].” 16 U.S.C. § 824o(a). And other terms, like “Electric
Utility” and “Transmitting Utility,” are defined in a manner
encompassing the United States “for purposes of” chapter 16
of the U.S. Code. Id. § 796(22)(A) (electric utility); id.
§ 796(23) (transmitting utility). Congress thus defined certain
terms for purposes of section 215 or the entire Federal Power
Act, but did not do so when including the United States within
“users, owners and operators” in section 215(b)(1). Under the
Court’s approach in Ohio, there is then a plausible
interpretation of section 215 under which the special
understanding of “users, owners and operators” inclusive of
the United States in paragraph (b)(1) “was intended to
have . . . limited application” to that paragraph, “but no
further.” Ohio, 503 U.S. at 619.
FERC relies on the general assumption that identical
words within the same statute or section carry a common
meaning. See Brown v. Gardner, 513 U.S. 115, 118 (1994).
The question here, however, is not whether section 215, on
balance, is better read to allow imposing monetary relief
against the federal government. The question instead is
whether there is any plausible interpretation to the contrary.
Here, there is. The “natural presumption that identical words
used in different parts of the same act are intended to have the
same meaning . . . readily yields whenever there is such
variation in the connection in which the words are used as
reasonably to warrant the conclusion that they were
employed . . . with different intent.” Envtl. Def. v. Duke
Energy Corp., 549 U.S. 561, 574 (2007) (first alteration in
original) (internal quotation marks omitted). The terms of
section 215 suggest “such variation.” The reference to “users,
owners and operators” in paragraph (b)(1) is followed by
“including . . . [the United States].” The references to “user
or owner or operator” in subsection (e), by contrast, are not
15
followed by “including . . . [the United States].” It is at least
plausible to conclude that Congress had a different intent in
those two provisions.
Finally, the intersection between section 316A and
section 215(e) fortifies the plausibility of that interpretation.
Section 316A, entitled “Enforcement of certain provisions,”
authorizes FERC to impose civil monetary penalties, up to $1
million per day of violation, on “[a]ny person who violates
any provision of subchapter II of this chapter or any provision
of any rule or order thereunder.” 16 U.S.C. § 825o-1(b). The
“provision[s] of subchapter II” and the “rule[s] or order[s]
thereunder” include the reliability standards promulgated
pursuant to section 215. Section 316A’s authorization of
monetary penalties, however, is limited to “[a]ny person.” Id.
And “person” in turn is defined for purposes of section 316A
(and other provisions) as “an individual or a corporation,” but
does not include the United States. Id. § 796(4). Section
316A thus undisputedly does not authorize imposition of
monetary penalties against the United States for violations of
reliability standards promulgated under section 215.
FERC maintains that section 215(e) constitutes a more
specific penalty provision for violations of reliability
standards, such that section 316A has no relevance to this
case. But FERC itself has previously looked to section 316A
to guide its interpretation of section 215(e)’s penalty
authority, concluding that section 316A’s cap of $1 million
per day applies to penalties imposed under section 215(e) for
violations of reliability standards. See Rules Concerning
Certification of the Electric Reliability Organization, 71 Fed.
Reg. 8662, 8711 (Feb. 17, 2006). In any event, section 316A
at least raises an ambiguity about whether section 215(e)
waives the federal government’s sovereign immunity from
monetary penalties. Even assuming section 316A does not
16
apply of its own force to fines for violations of section 215’s
reliability standards, section 316A at least counsels against
construing section 215(e) to authorize monetary awards
against the United States. Otherwise, there would be a
notable incongruity between two provisions whose plain
terms both address monetary penalties for violating section
215’s reliability standards—one of which would allow
penalties against federal government entities, and the other of
which would not. In the face of that sort of incongruity, the
requirement to give effect to any plausible construction
preserving sovereign immunity is controlling.
* * * * *
For the foregoing reasons, we vacate FERC’s order and
remand for FERC to set aside the monetary penalty imposed
on Southwestern. In light of our disposition, we need not
consider FERC’s challenge to the standing of intervenors
Mid-West Electric Consumers Association, Southwestern
Power Resources Association, and Southeastern Federal
Power Customers Inc., all of which contend that section 215
does not waive the government’s sovereign immunity. We
“follow the line of precedent in this circuit declining to assess
a would-be intervenor’s standing when answering the
question wouldn’t affect the outcome of the case.” Teva
Pharm. USA, Inc. v. Sebelius, 595 F.3d 1303, 1318 (D.C. Cir.
2010).
So ordered.