City of Redding v. Federal Energy Regulatory Commission

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CITY OF REDDING, CALIFORNIA, 
Petitioner,
NORTHERN CALIFORNIA POWER
AGENCY,
Petitioner-Intervenor,
v.
FEDERAL ENERGY REGULATORY No. 09-72775
COMMISSION,  FERC No.
Respondent, EL00-95-202
PEOPLE OF THE STATE OF
CALIFORNIA; PACIFIC GAS AND
ELECTRIC COMPANY; PUBLIC
UTILITIES COMMISSION OF THE
STATE OF CALIFORNIA; SOUTHERN
CALIFORNIA EDISON COMPANY,
Respondents-Intervenors.

9649
9650 CITY OF REDDING v. FERC
ARIZONA ELECTRIC POWER 
COOPERATIVE, INC.,
Petitioner,
NORTHERN CALIFORNIA POWER
AGENCY,
Petitioner-Intervenor, No. 09-72789
v.  FERC No.
FEDERAL ENERGY REGULATORY EL00-95-202
COMMISSION,
Respondent,
CALIFORNIA INDEPENDENT SYSTEM
OPERATOR CORPORATION,
Respondent-Intervenor.

BONNEVILLE POWER 
ADMINISTRATION; WESTERN AREA
POWER ADMINISTRATION, No. 09-72791
Petitioners,
v.  FERC No.
EL00-95-202
FEDERAL ENERGY REGULATORY OPINION
COMMISSION,
Respondent.

On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Argued and Submitted
September 23, 2010—San Francisco, California
Filed August 27, 2012
CITY OF REDDING v. FERC 9651
Before: Sidney R. Thomas, M. Margaret McKeown, and
Richard R. Clifton, Circuit Judges.
Opinion by Judge Clifton;
Dissent by Judge McKeown
CITY OF REDDING v. FERC 9653
COUNSEL
Michael F. Hertz, Thomas M. Bondy, Mark Pennak (argued),
Department of Justice, Washington, DC, Bonneville Power
Administration and Western Area Power Administration, peti-
tioner.
William L. Slover, Robert D. Rosenberg, Stephanie P. Lyons,
Stephanie M. Adams, Slover & Loftus LLP, Washington, DC,
for Arizona Electric Power Cooperative, Inc., petitioner.
Robert C. McDiarmid, Peter J. Hopkins, Margaret Meiser,
Spiegel & McDiarmid LLP, Washington, DC, for Northern
California Power Agency, petitioner.
Peter J. Scanlon, Lisa S. Gast, Jason T. Gray, Duncan Wein-
berg, Genzer & Pembroke, P.C., Washington, DC, for the
City of Redding, California, petitioner.
Thomas R. Sheets, Robert H. Solomon, Lona T. Perry
(argued), Washington, DC, for Federal Energy Regulatory
Commission, respondent.
Frank R. Lindh, Mary F. McKenzie, Candace J. Morey, San
Francisco, California, for Public Utilities Commission of Cal-
ifornia, respondent-intervenor.
9654 CITY OF REDDING v. FERC
Mark D. Patrizio, Pacific Gas and Electric Company, San
Francisco, California, and Stan Berman, Sidley Austin LLP,
Seattle, Washington, for Pacific Gas and Electric Company,
respondent-intervenor.
Richard L. Roberts (argued) and Catherine M. Giovannoni,
Steptoe & Johnson LLP, Washington, DC, and Russell Swartz
and Leon Bass, Jr., Southern California Edison Company,
Rosemead, California, for Southern California Edison Com-
pany, respondent-intervenor.
Edmund G. Brown, Jr., Attorney General, James M. Humes,
Chief Deputy Attorney General, and Matt Rodriquez, Chief
Assistant Attorney General, Sacramento, California, David M.
Gustafson, Deputy Attorney General, Oakland, California,
Kevin J. McKeon and Lillian S. Harris, Hawke McKeon &
Sniscak LLP, Harrisburg, Pennsylvania, for the People of the
State of California, respondent-intervenor.
Daniel Shonkwiler, Folsom, California, for California Inde-
pendent System Operator Corporation, respondent-intervenor.
OPINION
CLIFTON, Circuit Judge:
This story begins over a decade ago during the California
energy crisis of 2000 and 2001. This court1 and this panel2
1
See, e.g., California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831 (9th
Cir. 2004); In re California Power Exch. Corp., 245 F.3d 1110 (9th Cir.
2001); Pub. Util. Dist. No. 1 of Snohomish Cnty. v. Dynegy Power Mktg.
Inc., 384 F.3d 756 (9th Cir. 2004).
2
See, e.g., Port of Seattle v. FERC, 499 F.3d 1016 (9th Cir. 2007); Bon-
neville Power Admin. v. FERC, 422 F.3d 908 (9th Cir. 2005); California
ex rel. Lockyer v. FERC, 383 F.3d 1006 (9th Cir. 2004); Pub. Utils.
Comm’n of Cal. v. FERC, 462 F.3d 1027 (9th Cir. 2006) (“PUC of Cali-
fornia”).
CITY OF REDDING v. FERC 9655
have become very familiar with those events. After California
deregulated and restructured its electricity market in the mid
1990s, prices skyrocketed. The Federal Energy Regulatory
Commission (“FERC”) attempted to ameliorate this problem
by ordering refunds from both jurisdictional (public) and non-
jurisdictional (non-public) entities for prices paid above what
FERC later determined to be the just and reasonable rate. We
held, in Bonneville Power Administration v. FERC, 422 F.3d
908 (9th Cir. 2005), that FERC lacked authority to order
refunds from those entities not under its jurisdiction, namely
the non-public utilities. In a set of orders subsequent to
Bonneville — the orders that we now review — FERC stated
that it had “revised” or “reset”3 the market rates for the period
for which it had ordered refunds, and that its authority to do
so stemmed from § 206 of the Federal Power Act (“FPA”), 16
U.S.C. § 824e. It is from these Orders that Petitioners,4 a
group of municipal and federal governmental entities, which
sold electricity in the affected markets but who are outside of
FERC’s refund jurisdiction,5 appeal.
3
The terms “revised” and “reset” are used interchangeably, as are “non-
public” and “non-jurisdictional.”
4
The term “Petitioners” inclusively refers to Bonneville Power Admin-
istration (“BPA”), Western Area Power Administration (“Western”), and
the other original Indicated Public Entity Petitioners — Northern Califor-
nia Power Agency, Modesto Irrigation District, City of Redding, Turlock
Irrigation District, Arizona Electric Power Cooperative, Inc., Sacramento
Municipal Utility District, City of Santa Clara, City of Glendale, and City
of Burbank.
5
It is a source of regular confusion among those who do not customarily
reside in the world of regulated utilities that the definition of “public” util-
ities excludes governmental entities such as the Petitioners in this case
(cities, counties, local irrigation districts, and state and federal agencies),
even though in other context those entities are understood to be “public”
agencies. See Bonneville, 422 F.3d at 915-16; 16 U.S.C. § 824(f) (FPA
§ 201(f)). In the FERC context, “public” utilities over which FERC has
greater authority are principally privately owned businesses, commonly
referred to as “investor-owned utilities” or “regulated utilities.”
9656 CITY OF REDDING v. FERC
We do not agree with FERC’s assertion that it has broad
authority under § 206 of the FPA to retroactively reset rates
that were charged in the California electricity markets during
the time in question, October 2, 2000 through June 20, 2001.
As we held in Bonneville, the FPA grants FERC the authority
to investigate rates and to order refunds only from public utili-
ties. Bonneville, 422 F.3d at 911. Nonetheless, we conclude
that the specific FERC Orders that are challenged in the cur-
rent petitions for review do not exceed the limits on FERC’s
authority. As a result, we deny the petitions.
I. Factual and Procedural Background
Only a brief summary of the long and detailed history of
the California energy crisis and subsequent litigation is neces-
sary here. In the mid-1990’s, California restructured its elec-
tric energy markets in an attempt to lower electricity prices
that were far higher than the national average. As part of its
plan, California created two non-profit public benefit corpora-
tions: the California Power Exchange (“CalPX”) and the Cali-
fornia Independent System Operator (“ISO”). The former
oversaw a statewide electricity auction market, which it oper-
ated subject to FERC tariffs and rate schedules. The latter
managed the flow of the electricity transmission grid.
Together CalPX and ISO operated single-price auction spot
markets for the wholesale sale of electricity. California’s
investor-owned (“public”) utilities were required to purchase
the electricity their customers needed in this market. In re
California Power Exch. Corp., 245 F.3d at 1114-15.6 The pri-
mary sellers in the market were merchant generators who
owned power plants that had been divested by the investor-
owned utilities during an earlier phase of deregulation. Id.; 94
6
California’s investor-owned utilities were sellers as well as buyers
because California’s restructuring law required them to offer into the mar-
ket all of the electricity they generated themselves. In re California Power
Exch. Corp., 245 F.3d at 1114-15.
CITY OF REDDING v. FERC 9657
FERC ¶ 61245, at 61864-65, 2001 WL 406581 (2001). These
merchant generators were considered “public utilities” subject
to FERC regulation. 94 FERC ¶ 61245, at 61864-65.
Power-producing municipal and federal government enti-
ties also sold electricity into the market. These entities are
“non-public” utilities not subject to FERC’s jurisdiction.
Sellers of electricity, both public and non-public, would bid
into the market until sufficient power was secured to meet
demand, at which point all sellers were paid the price bid by
the seller whose electricity was needed to “clear the market.”
See generally Bonneville, 422 F.3d at 911-12.
Although intended to reduce prices for electricity, the
CalPX and ISO electric energy markets produced prices far
above those in prior years, at comparable load levels. In
August of 2000, San Diego Gas & Electric Company
(“SDG&E”) filed a complaint with FERC alleging that the
rates charged on the CalPX and ISO markets, the market
clearing prices, “d[id] not reflect legitimate forces of supply
and demand.” In response, FERC initiated hearing proceed-
ings to investigate the justness and reasonableness of the
CalPX/ISO rates. 92 FERC ¶ 61,172, 2000 WL 1204898
(2000). On November 11, 2000, FERC issued an order declar-
ing that it would “determine whether public utility sellers to
the ISO and PX are charging unjust and unreasonable rates.”
93 FERC ¶ 61,121, at 61,357, 2000 WL 1637060 (2000)
(“November 2000 Order”).
Following an investigation, on March 9, 2001, FERC
issued another order in which it concluded that the
CalPX/ISO rates were in fact unjust and unreasonable. In this
order, FERC established a mitigation plan and set a mitigated
market clearing price — the price that would have been in
effect “had there been competitive forces at work” — above
which refunds may be required. 94 FERC ¶ 61,245, at
61,862. The order noted that, as to non-public utility sellers,
9658 CITY OF REDDING v. FERC
FERC “has no authority to order such sellers to make
refunds.” Id. at 61,864.
In a July 25, 2001 order (“July 2001 Order”), FERC
announced that the transactions subject to refund would “in-
clude sales by public and nonpublic utilities into these mar-
kets.” Bonneville, 422 F.3d at 913 (quoting 96 FERC ¶
61,120, at 61,499, 2001 WL 1704964 (2001)) (emphasis in
Bonneville). FERC offered the following description of its
authority to retroactively reset the market rates:
A number of parties confuse the just and reasonable
standard with the authority to order retroactive
refunds of unjust and unreasonable rates. Whether
rates are unjust and unreasonable is a separate issue
from whether the Commission is authorized under
the statute to order refunds retroactively. Under FPA
section 206, if the Commission finds that rates no
longer meet the just and reasonable standard, the
Commission has a statutory obligation to fix a new
rate or to fix practices “to be thereafter observed.” In
amending FPA section 206, Congress did not give
the Commission authority to modify unjust and
unreasonable rates retroactively.
96 FERC ¶ 61,120, at 61,505 (emphasis added) (quoting 16
U.S.C. § 824e(a)).
Following the July 2001 Order, non-public utilities brought
a petition for review to this court. In our 2005 opinion in Bon-
neville, we held that in keeping with Congress’s clearly
expressed intent, FERC lacked jurisdiction over non-public
utilities and could not order them to pay refunds. 422 F.3d at
911, 920. As we observed in passing, for those who purchased
electricity from non-public sellers “the remedy, if any, may
rest in a contract claim, not a refund action,” id. at 925, but
we followed this statement with the proviso that “we take no
position on remedies available outside of the FPA,” id. at 926.
CITY OF REDDING v. FERC 9659
In proceedings following the remand from Bonneville,
FERC issued a new order on October 19, 2007 (“October
2007 Order”). 121 FERC ¶ 61,067, at 61,346, 2007 WL
3047581 (2007). FERC expressed in Paragraph 36 of this
Order its understanding of our decision in Bonneville and of
its impact on FERC’s orders:
California Parties assert that the Commission revised
the pricing formulations contained in the
[CalPX/ISO] tariffs for the period to which the
MMCP [mitigated market clearing price] applies.
We disagree. The Bonneville court found that the
Commission had ordered refunds rather than amend-
ing the [CalPX/ISO] tariffs to reset the market clear-
ing price during the refund period. The court further
found that the Commission had acted outside its
jurisdiction when ordering non-public utility entities
to pay these refunds. Therefore, we vacate each of
the Commission’s orders in the California refund
proceeding to the extent that they order non-public
utility entities to pay refunds.
121 FERC ¶ 61,067, at 61,352 (footnotes omitted).7
The California Parties sought clarification of Paragraph 36,
arguing that FERC had misleadingly implied it did not reset
the market clearing prices and that Bonneville held as much.
See 121 FERC ¶ 61,188, at 61,924, 2007 WL 4103712
(2007) (“November 2007 Order”). FERC responded with
another order on November 19, 2007. Id. This order stated
that FERC’s October 2007 Order had “inadvertently mis-
characterized” both Bonneville and its prior orders. Id. at
61,925. FERC agreed with the California Parties that “estab-
7
The “California Parties”, in the context of this Order, include the State
of California, the California Electricity Oversight Board, the Public Utili-
ties Commission of California, Pacific Gas and Electric, Southern Califor-
nia Edison, and SDG&E. 121 FERC ¶ 61,067, at 61,348 n.20.
9660 CITY OF REDDING v. FERC
lishing a just and reasonable rate is a prerequisite for ordering
refunds,” and “made clear that it was resetting the marketing
clearing prices” in the July 2001 Order. Id. Accordingly,
FERC amended Paragraph 36 of the October 2007 Order to
read:
California Parties assert that the Commission revised
the pricing formulations contained in the
[CalPX/ISO] tariffs for the period to which the
MMCP applies. We do not disagree. The Bonneville
court found that the Commission had ordered
refunds by non-jurisdictional entities rather than
merely amending the [CalPX/ISO] tariffs to reset the
market clearing price during the refund period.
Id. at 61,926.
The controversy was not quelled. The various Petitioners in
this case, all non-public utilities for the purposes of the FPA,
sought rehearing before FERC of its November 2007 Order.
FERC denied this petition in an order issued on May 29,
2009 (“May 2009 Order”). 127 FERC ¶ 61,191, at 61,865,
2009 WL 1508392 (2009). FERC held that it had authority
under FPA § 206(b) to “establish[ ] just and reasonable prices
in markets operated by jurisdictional public entities (the
[CalPX/ISO]), so that [it] may properly order refunds from
public utilities.” Id. at 61,874. In doing so, FERC emphasized
that it was “not engaging in impermissible retroactive action
with respect to rate changes to previously-accepted jurisdic-
tional tariffs.” Id. at 61,868. Instead, the November 2000
Order “determined rates charged under the jurisdictional
[CalPX/ISO] tariffs to be unjust and unreasonable,” and so
pursuant to its authority under § 206(b), FERC ordered
refunds by jurisdictional sellers. Id.
The May 2009 Order also further sought to explain the con-
sistency of FERC’s orders with our decision in Bonneville,
notably in Paragraph 43:
CITY OF REDDING v. FERC 9661
We disagree with the Requesting Parties’ assertion
that the Clarification Order is inconsistent with the
Ninth Circuit’s ruling in Bonneville. In Bonneville,
the Ninth Circuit found that the Commission lacked
authority to order governmental entities or other
non-public utilities to pay refunds. On remand, we
are not ordering those entities to pay refunds, rather
we are establishing just and reasonable prices in
markets operated by jurisdictional public entities (the
[CalPX/ISO]), so that we may properly order refunds
from public utilities.
Id. at 61,874.
Claiming to take up this panel’s invitation in Bonneville,
the California Parties8 (Respondent-Intervenors here) and oth-
ers filed contract actions in California state court and the
United States Court of Federal Claims against the non-public
electricity sellers that prevailed in Bonneville. The plaintiffs
in those actions seek damages from the non-public utilities
(Petitioners here) under the theory that the utilities contractu-
ally agreed to abide by the CalPX/ISO market rates, including
the rates as subsequently revised by FERC.9 These actions
loom large on the outskirts of this appeal and explain the
motivation of most of the parties, but they are not before this
court and we do not consider the contract-related arguments.
8
The “California Parties” in the context of this appeal include the State
of California, the Public Utilities Commission of California, Pacific Gas
and Electric, Southern California Edison, and SDG&E.
9
The Court of Federal Claims recently ruled that BPA and Western
breached contractual duties to pay refunds owed to the California parties
resulting from electricity overcharges during the 2000-2001 energy crisis
in California. Pac. Gas & Elec. Co. v. United States, Nos. 07-157C & 04-
167, 2012 WL 1570962 (Fed. Cl. May 2, 2012).
9662 CITY OF REDDING v. FERC
II. Petitioners’ Standing
Before we reach the scope of FERC’s authority to retroac-
tively “revise” the rates charged in the California energy mar-
kets, we must deal with two threshold challenges: whether
Petitioners have standing to bring the current appeal, and
whether this appeal represents an impermissible collateral
attack on prior FERC orders. We are persuaded by neither
challenge.
The first is an argument that Petitioners lack standing to
seek the requested relief. We conclude that Petitioners do
have standing.
[1] FERC characterizes Petitioners as having “succeeded”
in the FERC proceeding, in that FERC did not order that Peti-
tioners must pay refunds. Thus, FERC argues, Petitioners
were not injured by the Orders on review. However, FERC’s
assertion on appeal that it reset the CalPX/ISO rates for all
market participants, not only the entities over which it has
jurisdiction, results in a sufficiently concrete injury to Peti-
tioners to afford them standing. FERC’s action to reset rates
in a way that could support a contract action against Petition-
ers would have an obvious and real impact on them. Petition-
ers are, therefore, “aggrieved” parties under the FPA and they
have standing to seek review of the Orders.
Section 313 of the FPA “limits judicial review to those par-
ties who have been ‘aggrieved by an order of the Commis-
sion.’ ” Port of Seattle, 499 F.3d at 1028 (quoting 16 U.S.C.
§ 825l(b)). Additionally, a party must meet the constitutional
standing requirements of injury-in-fact, redressability, and
causation. See Exxon Mobil Corp. v. FERC, 571 F.3d 1208,
1219 (D.C. Cir. 2009) (citing Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992)); Port of Seattle, 499 F.3d at
1028 (citing Shell Oil Co. v. FERC, 47 F.3d 1186, 1200 (D.C.
Cir. 1995)). As we noted in Port of Seattle, “both aggrieve-
ment and standing require that petitioners establish, at a mini-
CITY OF REDDING v. FERC 9663
mum, injury in fact to a protected interest.” 499 F.3d at 1028
(internal quotation marks omitted). That injury must be “ac-
tual or imminent, not conjectural or hypothetical.” Lujan, 504
U.S. at 560 (internal quotation marks omitted).
FERC argues that Petitioners fail to demonstrate the requi-
site injury because they prevailed in the challenged Orders on
remand from Bonneville, “which absolved them from any lia-
bility for a refund under FPA § 206(b).” It is true that “[t]he
general rule is that a party may not appeal from a decree in
its favor.” Port of Seattle, 499 F.3d at 1028 (citing Lind-
heimer v. Illinois Bell Tel. Co., 292 U.S. 151, 176 (1934)).
The general rule, however, is subject to exceptions. Id.; see
also Camreta v. Greene, 563 U.S. ___, 131 S. Ct. 2020, 2028-
30 (2011). One such exception, applicable here, allows liti-
gants to appeal a favorable result if they continue to have a
personal stake in the appeal. Camreta, 131 S. Ct. at 2029;
Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 333-34
(1980).
Petitioners’ personal stake is obvious. They have been
forced to defend themselves in lawsuits seeking substantial
contract damages. Those actions are premised on the FERC
Orders challenged here. Counsel for the California Parties, the
plaintiffs in the contract actions and Respondents-Intervenors
here, conceded that FERC’s resetting of the rates charged by
the non-jurisdictional entities is the predicate for these pend-
ing contract actions. Thus, Petitioners’ suit is no “mere dis-
agreement with an agency’s rationale for a substantively
favorable decision.” See Port of Seattle, 499 F.3d at 1028. We
agree with Petitioners that “[t]here would be something rather
askew if standing principles prevented review of agency
orders in the one forum where the agency that issued the
orders and the parties most aggrieved by those orders can
meet to have the agency’s defense of its orders heard.” Peti-
tioners suffered an injury-in-fact sufficient to meet the stand-
ing requirements of FPA § 313, as well as Article III.
9664 CITY OF REDDING v. FERC
FERC challenges Petitioners’ standing as resting on specu-
lation regarding the contract action. Several observations dis-
pel that characterization, most notably FERC’s vigorous
argument in response to this court’s supplemental briefing
order asking the parties about the practical effect of the ruling
in this case. At length, FERC argues that “all market partici-
pants agree by contract to abide by the terms and conditions
of the FERC jurisdictional tariffs and any related FERC rul-
ings.” FERC goes on to underscore that all players, including
non-jurisdictional utilities like Petitioners, are “integrated co-
participants” in the market, and argues that an unfavorable
ruling about the scope of § 206(b) could “preclude contract
actions against governmental market participants.” FERC’s
concern about the outcome of this case underscores the Peti-
tioners’ very real stake in the proceeding.
FERC’s reliance on Federal Power Commission v. Hope
Natural Gas Co., 320 U.S. 591 (1944), is also not persuasive.
There, the Supreme Court held unreviewable the Federal
Power Commission’s (“FPC”) finding that certain past rates
were unlawful. Id. at 618. The FPC had no authority to order
refunds and could fix rates only prospectively, but it argued
that it nevertheless could make findings as to the lawfulness
of past rates. Id. The Court did not reach the merits of this
contention and held that the issue was unreviewable for lack
of standing because the FPC’s findings were “only prelimi-
nary, interim step[s] towards possible future action — action
not by the Commission but by wholly independent agencies.”
Id. at 619. The primary and crucial difference between Hope
and this case is that FERC’s action here was final and not
contingent on another agency. This situation is quite different
from a scenario “where the order sought to be reviewed does
not of itself adversely affect complainant but only affects his
rights adversely on the contingency of future administrative
action.”10 Id. Moreover, the future action that could affect the
10
Nor is this a case like Wisconsin Public Power Inc. v. FERC, 493 F.3d
239, 268 (D.C. Cir. 2007), in which the D.C. Circuit held that cooperatives
CITY OF REDDING v. FERC 9665
impact of the disputed FERC Orders on Petitioners is not
action to be taken by another federal administrative agency
but rather is the contract litigation proceeding in other courts.
If FERC’s authority to issue the disputed Orders cannot be
challenged here, it does not appear that it could be challenged
anywhere. The California appellate courts, for example,
would not be a logical or appropriate forum for resolving the
scope of FERC’s authority. Because Petitioners are aggrieved
by FERC’s Orders under review, or otherwise retain a suffi-
cient stake in the outcome, they have standing to bring their
petition.
III. Collateral Attack on a Prior FERC Order
The California Parties argue that Petitioners’ appeal is an
untimely and impermissible collateral attack on FERC’s July
2001 Order. They note that although Petitioners sought
rehearing and appealed from other aspects of the July 2001
Order, they did not argue on rehearing from that order that
FERC could not revise the market clearing price. Section 313
of the FPA provides that “[n]o proceeding to review any order
of the Commission shall be brought by any entity unless such
entity shall have made application to the Commission for a
rehearing thereon,” 16 U.S.C. § 825l(a), and that “[n]o objec-
tion to the order of the Commission shall be considered by the
court [on review] unless such objection shall have been urged
before the Commission in the application for rehearing unless
there is reasonable ground for failure so to do,” id. § 825l(b).
Our jurisdiction under the FPA “is limited to review of new
orders. We may not entertain a petition for review that collat-
erally attacks a prior FERC order.” Pac. Gas & Elec. Co. v.
lacked standing to challenge the FERC orders based on “[a] petitioner’s
interest in the Commission’s legal reasoning and its potential precedential
effect.” The Petitioner’s challenge here is not “uncoupled from any injury
in fact caused by the substance of FERC’s adjudicatory action.” Id. (inter-
nal quotation marks omitted).
9666 CITY OF REDDING v. FERC
FERC, 464 F.3d 861, 868 (9th Cir. 2006). The D.C. Circuit
has observed that “[t]he question of whether [a party] is col-
laterally attacking prior orders depends on whether those
orders gave sufficient notice of the rule to which [the party]
now objects.” S. Co. Servs., Inc. v. FERC, 416 F.3d 39, 44
(D.C. Cir. 2005) (internal quotation marks omitted). Simi-
larly, we have stated that “[t]o determine whether a petition
for review is barred as a collateral attack on a prior order, we
must determine whether the order upon which the petition is
based was merely a “clarification” of a prior order, or whether
it was a “modification” of a prior order. The latter is review-
able on appeal, while review of the former is barred as an
impermissible collateral attack.” Pac. Gas & Elec., 464 F.3d
at 868. The relevant question is “whether a reasonable party
in the petitioner’s position would have perceived a very sub-
stantial risk that the order meant what the Commission now
says it meant.” Id. (internal quotation marks and alterations
omitted).
It is far from clear that a reasonable party in Petitioners’
position would have understood that FERC’s July 2001 Order
meant what the California Parties now say it meant — that
FERC was retroactively revising the rates charged by non-
jurisdictional sellers during the refund period. It is true that
FERC declared in its July 2001 Order that in ordering refunds
of all sales on the CalPX/ISO markets its “action . . . revise[d]
the market clearing prices that all market participants previ-
ously agreed to accept for their sales.” 96 FERC ¶ 61,120, at
61,512. FERC sent contradictory signals in the same Order,
however, observing that, “[i]n amending FPA Section 206,
Congress did not give the Commission authority to modify
unjust and unreasonable rates retroactively.” Id. at 61,505.
In addition to the lack of clarity in the July 2001 Order
itself, FERC’s later orders did not tell an entirely consistent
story. In its October 2007 Order FERC “disagree[d]” with the
assertion that “the Commission revised the pricing formula-
tions contained in the [CalPX/ISO] tariffs,” and stated that
CITY OF REDDING v. FERC 9667
this panel in Bonneville found that “the Commission had
ordered refunds rather than amending the [CalPX/ISO] tariff
to reset the market clearing price during the refund period.”
121 FERC ¶ 61,067, at 61,352 (emphasis added). On a peti-
tion for rehearing by the California Parties, FERC responded
with its November 2007 Order, in which it stated that its
October 2007 Order had “inadvertently mischaracterized”
both Bonneville and its prior orders. 121 FERC ¶ 61,188, at
61,925-26. As detailed above, FERC there amended para-
graph 36 of the October 2007 Order. Id. at 61,926. If FERC
could not keep straight in its own orders what it was doing,
other parties cannot be expected to do any better.
[2] In sum, FERC’s shifting position with regard to its
authority to order refunds and to retroactively reset market
rates was not mere clarification or even fair notice of its ulti-
mate position. The parties should not be expected to have
known to appeal from the July 2001 Order regarding FERC’s
statutory authority to retroactively reset rates. Because FERC
itself read its July 2001 Order, at least initially, as not retroac-
tively resetting rates for non-jurisdictional entities, Petition-
ers’ identical interpretation of that order was surely not
unreasonable. The collateral attack doctrine requires that Peti-
tioners timely exercise their rights. It does not require pre-
science.
IV. Authority to Retroactively Adjust Rates for Non-
Public Entities
Having concluded that Petitioners’ claims survive the
threshold challenges, we now address the core questions on
the merits. We begin with FERC’s assertion of broad power
under FPA § 206 to retroactively reset rates for all market
participants. In reviewing an agency’s interpretation of the
statute it is charged with administering, we must apply the
familiar test established in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, 467 U.S. 837, 842 (1984). Here, we con-
clude, under the first step of that test, that the intent of Con-
9668 CITY OF REDDING v. FERC
gress is clear that § 206 does not grant FERC the broad
authority to retroactively reset rates charged by all market
participants.
[3] Congress has infused FERC with expansive authority
over energy markets through the FPA. Section 201 of the FPA
grants FERC exclusive jurisdiction over the transmission and
sale of electric energy in interstate commerce. 16 U.S.C.
§ 824(b)(1). Under § 205, Congress gave FERC jurisdiction
over the “rates and charges” of “every public utility.” 16
U.S.C. § 824d.11 This section declares unlawful “any . . . rate
or charge that is not just and reasonable” and requires public
utilities to file their rates with FERC. Id. Section 206(a) pro-
vides that whenever FERC finds a rate to be unjust and unrea-
sonable, FERC “shall determine the just and reasonable rate
. . . to be thereafter observed and in force.” 16 U.S.C.
§ 824e(a). FERC’s authority under this provision, however, is
limited by being prospective only, and does not permit retro-
active adjustments to rates. City of Anaheim v. FERC, 558
F.3d 521, 523 (D.C. Cir. 2009) (“On its face, § 206(a) prohib-
its retroactive adjustments of rates.”); see also Exxon Mobil,
571 F.3d at 1211 (observing that under § 206(a) “FERC may
not retroactively alter a filed rate to compensate for prior
over- or underpayments”).
[4] Congress expanded FERC’s authority to address “un-
just and unreasonable” rates by adding § 206(b) to the FPA in
1988, over fifty years after the enactment of the original law.12
11
In explaining the “public utility” limitation on FERC’s jurisdiction in
§ 205, § 201(f) provides that “[n]o provision in this subchapter shall apply
to . . . the United States, a State or any political subdivision of a State . . .
or any agency, authority, or instrumentality of any one or more of the fore-
going, or any corporation which is wholly owned, directly or indirectly,
by any one or more of the foregoing.” 16 U.S.C. § 824(f).
12
Congress added this subsection with the Regulatory Fairness Act of
1988, Pub. L. No. 100-473, 102 Stat. 2299. Until this time, FERC could
“only order the rates of public utilities to be reduced prospectively from
CITY OF REDDING v. FERC 9669
Section 206(b) provides that after FERC has determined a rate
to be unjust and unreasonable, it “may order refunds of any
amounts paid . . . in excess of those which would have been
paid under the just and reasonable rate . . . which the Com-
mission orders to be thereafter observed and in force.” 16
U.S.C. § 824e(b). To do so, FERC must set a refund effective
date. Id. In the case of the filing of a complaint, FERC may
set the date any time within the five-month period following
the filing of the complaint; in the case of a proceeding insti-
tuted by FERC, within the five-month period following the
publication date of the notice of its intention to initiate the
proceeding. Id. Finally, § 206(b) sets the refund period as the
fifteen months following the refund effective date. Id.
[5] In its briefing, FERC has asserted that it has the author-
ity to retroactively reset the market rates for all market partici-
pants through the exercise of its § 206(b) refund authority
over public utilities. We hold that it does not. Although we
are sympathetic to FERC’s desire to create a market-wide fix
for past rates charged that it later found were unjust and
unreasonable, § 206(b) simply does not endow FERC with
this power. As we previously held in Bonneville, FERC’s
refund authority does not extend to non-jurisdictional govern-
mental entities, such as Petitioners. 422 F.3d at 911, 920.
FERC cites to a number of cases that have characterized its
refund authority under § 206(b) involving “retroactive rate
change,” at least in the colloquial meaning of that phrase. See,
e.g., Exxon Mobil, 571 F.3d at 1211 (noting § 206(b) “pro-
vides a narrow exception” to the rule that “FERC may not
retroactively alter a filed rate to compensate for prior over- or
the date of its decision that existing rates [were] unlawful.” S. Rep. No.
100-491, at 3 (1988), reprinted in 1988 U.S.C.C.A.N. 2584, 1988 WL
169844. The provisions in § 206(b) were added to “give the Commission
the discretion to require public utilities to refund amounts paid in excess
of just and reasonable rates for certain periods prior to the Commission’s
decision.” Id.
9670 CITY OF REDDING v. FERC
underpayments”); Anaheim, 558 F.3d at 524 (“And § 206(b)
authorizes only retroactive refunds (rate decreases)”); Sithe
New England Holdings, LLC v. FERC, 308 F.3d 71, 78 (1st
Cir. 2002) (“[E]very time that FERC or any comparable
agency decides that an existing rate is unjust and orders
refunds to buyers for a past period, it is engaging in permissi-
ble ‘retroactive ratemaking’ in a vernacular sense.”). But
these cases have not addressed whether FERC has the power
under FPA § 206(b) to actually retroactively change rates
charged by non-jurisdictional sellers. Indeed, there is lan-
guage in at least one such opinion to suggest that it does not.
See Exxon Mobil, 571 F.3d at 1215 (“Section 206(a) provides
the only mechanism by which FERC can revise established
rates.”).13
Nor was the question of FERC’s statutory authority to
retroactively revise tariff rates squarely presented to the
Eighth Circuit in Alliant Energy v. Nebraska Public Power
District, 347 F.3d 1046 (8th Cir. 2003), as the California Par-
ties argue. The court in Alliant did not once mention the FPA,
13
FERC references similar statements in a line of cases involving § 4 of
the Natural Gas Act (“NGA”). 15 U.S.C. § 717. See E. Tenn. Natural Gas
Co. v. FERC, 863 F.2d 932, 942 (D.C. Cir. 1988) (noting that NGA § 4
“authorizes the Commission to order that the pipeline pay refunds to any
customers who purchased gas at the (filed) proposed rate, thereby retroac-
tively changing that rate”) (emphasis added); Nw. Pipeline Corp. v.
FERC, 61 F.3d 1479, 1488-89 (10th Cir. 1995) (same); Natural Gas Pipe-
line Co. of Am. v. FERC, 904 F.2d 1469, 1471 (10th Cir. 1990) (same);
Pub. Utils. Comm’n of Cal. v. FERC, 894 F.2d 1372, 1382-83 n.8.
Although “[w]e follow . . . the familiar practice of applying ‘interchange-
ably’ judicial interpretations of provisions from the Natural Gas Act to
their ‘substantially identical’ counterparts in the Federal Power Act,”
NSTAR Elec. & Gas Corp. v. FERC, 481 F.3d 794, 800 (D.C. Cir. 2007),
NGA § 4 speaks to prospective ratesetting and so is a “substantially identi-
cal” counterpart to FPA § 205, not § 206, see E. Tenn., 863 F.2d at 942
n.14. The rates that were “retroactively changed” in this line of NGA cases
were the rates proposed by sellers and accepted by FERC conditionally
pending an investigation prior to final approval. See, e.g., Nw. Pipeline
Corp., 61 F.3d at 1488. As such, these decisions do not squarely implicate
the FERC Orders now under review.
CITY OF REDDING v. FERC 9671
let alone § 206, because it was “not enforcing the FERC
order,” but an agreement freely entered into by the parties.
Alliant, 347 F.3d at 1050. Finally, we did not decide this issue
in Bonneville, when we observed that “FERC’s order does
more than simply reset the market-clearing price for power in
the . . . ISO and CalPX markets,” 422 F.3d at 919-20 (empha-
sis added), and stated that “the remedy, if any, may rest in a
contract claim,” id. at 925.
FERC asserts that its authority to retroactively reset rates
for all market participants flows from its § 206(b) authority to
order refunds and set a refund effective date. Our rejection of
this conclusion derives from the language and structure of the
statute. We begin with the overall structure. Section 206 sepa-
rates the power to set rates in § 206(a) from the power to
order refunds in § 206(b). This bifurcation points to the unam-
biguous congressional decision that these provinces remain
distinct. See Exxon Mobil, 571 F.3d at 1215 (noting § “206(a)
provides the only mechanism by which FERC can revise
established rates” and § “206(b) provides the relief FERC
may order for amounts paid in excess of the just and reason-
able rate”). Section 206(a), not § 206(b), authorizes FERC to
set rates and, as discussed above, it does not permit retroac-
tive ratesetting. See Anaheim, 558 F.3d at 522. Had Congress
intended to give FERC such expansive authority, it would
have said so. See Whitman v. Am. Trucking Ass’ns, 531 U.S.
457, 468 (2001) (“Congress, we have held, does not alter the
fundamental details of a regulatory scheme in vague terms or
ancillary provisions — it does not, one might say, hide ele-
phants in mouseholes.”).
If FERC’s greater power to order refunds included the
lesser power to reset market rates, the jurisdictional reach of
the two powers should logically be coextensive. However,
FERC’s refund authority applies only to jurisdictional entities
as we held in Bonneville, 422 F.3d at 911; it does not extend
to the entire market, which includes non-jurisdictional enti-
ties. In fact, FERC’s initial assertion of the authority to retro-
9672 CITY OF REDDING v. FERC
actively revise prices on a market-wide basis was joined to its
assertion to order refunds from all market participants. See 96
FERC ¶ 61,120, at 61,512. When we rejected the latter asser-
tion of authority in Bonneville, the former assertion remained
intact, but awkwardly so, without its original reason for exis-
tence. FERC does not attempt to explain what it would mean
to have the authority to “reset” rates without ordering a refund.14
FERC maintains that our interpretation reads § 206(b) out
of the statute entirely, because it must be able to retroactively
reset rates to enable it to order refunds under § 206(b). See
127 FERC ¶ 61,191, at 61,868-69. But FERC is free to deter-
mine the just and reasonable rates retroactively, without reset-
ting the rates for all market participants, as it has done in the
past. See, e.g., Exxon Mobil, 571 F.3d at 1215-16 (explaining
refund calculation methodology, which does not include retro-
actively resetting rates for all market participants).
In short, we conclude that FPA § 206(b) is not ambiguous:
While FERC has the authority to state retroactively what a
“just and reasonable” rate would have been pursuant to its
refund authority, Congress did not provide FERC with retro-
active ratesetting authority over non-jurisdictional sellers.
14
FERC’s initial claim that it has the authority to retroactively revise the
market clearing prices in its July 2001 Order is best understood as a justi-
fication for FERC’s imposition of refund liability on non-jurisdictional,
non-public entities. See 96 FERC ¶ 61,120, at 61,512. In Bonneville, we
described FERC’s statement that it was revising the market clearing prices
as an “attempt[ ] to deflect our attention away from the fact that it is order-
ing refunds from the Public Entities,” the non-public utilities over which
it lacked jurisdiction. 422 F.3d at 919. FERC’s holding on that point
needed all the help it could get: two members of the Commission
described the conclusion as “breathtaking,” observing that it would “come
as a shock to most observers.” 96 FERC ¶ 61,120, at 61,523 (Breathitt
and Massey, Comm’rs, dissenting in part). It appears then that in its July
2001 Order FERC did not truly believe it needed to reset the market rates
to be able to order refunds, but characterized its actions as revising the
market rate to obfuscate the implication of its holding regarding its refund
authority.
CITY OF REDDING v. FERC 9673
FPA § 206 attests to congressional intent to maintain a separa-
tion between FERC’s authority to set a just and reasonable
rate under § 206(a) and its ability to order refunds under
§ 206(b). Because Congress spoke with clarity in § 206, we
need not progress to the second step of the Chevron inquiry
to determine whether, in the face of statutory ambiguity,
FERC’s interpretation of the statute on appeal is a reasonable
one. See Chevron, 467 U.S. at 843 (“[I]f the statute is silent
or ambiguous with respect to the specific issue, the question
for the court is whether the agency’s answer is based on a per-
missible construction of the statute.”).
V. The Specific Orders at Issue
[6] Although we are not persuaded by the argument on
appeal that FERC’s power is more expansive (an argument
that we think was presented more forcefully by the California
Parties than by FERC itself), the Orders under review do not
directly contravene our more limited understanding of § 206.
The July 2001 Order “reset” the market clearing prices in the
CalPX and ISO spot markets during the refund period to just
and reasonable levels for the purpose of calculating the
amount of refund due from entities over which FERC had
authority. See PUC of California, 462 F.3d at 1052. This cal-
culation necessarily involved reevaluating the price previ-
ously charged by all market participants because the market
clearing price was the same for all of them:
Our action here establishes a revised method for cal-
culating the just and reasonable clearing prices to
be applied in those markets for the period beginning
October 2, 2000. This is pursuant to the Commis-
sion’s authority under FPA Section 206 to fix the
just and reasonable rate. Our action thus revised the
market clearing prices that all market participants
previously agreed to accept for their sales.
9674 CITY OF REDDING v. FERC
96 FERC ¶ 61,120, at 61,512 (emphasis added). FERC
needed to determine those just and reasonable clearing prices
in order to calculate refunds from jurisdictional entities.
The post-Bonneville Orders now under review are read by
the dissenting opinion to invoke only a more expansive
authority to retroactively reset the rates “observed and in
force” from all market participants. We think the language of
the Orders can and should be read more modestly. The pri-
mary focus of the Orders was on the fair and reasonable clear-
ing prices, not on which parties would be affected by the
Orders. On the latter subject, it may have taken FERC a few
tries to clarify what it meant, as outlined above at 9659-61,
but in the May 2009 Order FERC clearly acknowledged that
it did not have authority to order refunds from the non-public
utilities and explained that it was establishing just and reason-
able rates in order to determine the appropriate refund amount
for public entities:
We disagree with the Requesting Parties’ assertion
that the Clarification Order is inconsistent with the
Ninth Circuit’s ruling in Bonneville. In Bonneville,
the Ninth Circuit found that the Commission lacked
authority to order governmental entities or other
non-public utilities to pay refunds. On remand, we
are not ordering those entities to pay refunds, rather
we are establishing just and reasonable prices in
markets by jurisdictional entities (the [CalPX/ISO]),
so that we may properly order refunds from public
utilities.
127 FERC ¶ 61,191, at 61,874.
[7] Like our dissenting colleague, we reject the argument
that FERC has an expansive statutory authority to retroac-
tively reset rates. But that does not mean that we have to dis-
regard the Order that FERC actually entered. It is simply not
the case that we have put words into FERC’s mouth — or as
CITY OF REDDING v. FERC 9675
expressed by the dissenting opinion, at 9677, that “we just
don’t think [FERC] said what [it] said.” To the contrary, we
have attributed to FERC exactly the position that it expressed
in its May 2009 Order, as quoted above.
That an argument has been presented on appeal for broader
FERC power does not mean that FERC had no power whatso-
ever. The core of our disagreement with the dissenting opin-
ion may be reflected in its own summary: “a review of the
orders, followed by FERC’s litigation position, shows that
FERC did more than passively determine just prices en route
to ordering refunds for jurisdictional entities. It also sought to
retroactively reset market rates for all entities through those
orders, without the necessary legal authority.” Dissenting
opinion, at 9678 (emphasis in original). But the fact that
FERC did not have the authority to do what it “also” might
have tried to do does not mean that it did not have the power
to do what it did in “passively” determining just prices en
route to ordering refunds only from jurisdictional entities.
We are not blind to the potential impact of FERC’s deter-
mination of the just and reasonable prices. In the contract
actions brought in other forums, it is claimed that the Petition-
ers before us are liable for charges collected by them in
excess of the just and reasonable prices subsequently calcu-
lated by FERC. Petitioners seek to protect themselves against
those claims by preventing FERC from recalculating the mar-
ket rates. But FERC’s recalculation was not an empty exer-
cise, because it had to determine just and reasonable market
clearing prices in order to calculate the refunds to be ordered
from sellers from which it could order refunds. What impact
this calculation might have on the contract actions pending in
other courts is not for us to say. FERC has not treated those
claims as an infringement upon FERC’s regulatory authority,
so we do not see need to treat them as such.
9676 CITY OF REDDING v. FERC
VI. Conclusion
[8] As we hold that FERC did not exceed its authority in
issuing the Orders under review, the petitions for review are
DENIED.
PETITIONS FOR REVIEW DENIED.
McKEOWN, Circuit Judge, dissenting:
The Federal Power Act’s (“FPA”) delineation of FERC’s
authority under§ 206(b) is unambiguous: FERC lacks the
“broad power under FPA § 206 to retroactively reset rates for
all market participants.” Maj. Op. 9667. From this rejection of
FERC’s position, the end of the line seems clear—FERC’s
orders exceeded its authority by resetting market rates retroac-
tively, and the petition should be granted. Apparently not so.
In a surprise twist ending, notwithstanding the plain language
of the orders at issue and FERC’s litigation position, the
majority determines that FERC merely declared fair market
clearing prices without actually attempting to “retroactively
alter” these prices. Maj. Op. at 9673-75. This semantic resolu-
tion is at odds with the record and basic principles of adminis-
trative law, and undermines the majority’s standing analysis,
endangering the utilities’ claim to standing.
To understand why the majority’s conclusion takes a wrong
turn, it is helpful to step back and track FERC’s bidding in
this multi-year saga. FERC has stated throughout these pro-
ceedings that it has reset rates retroactively, and claims
authority to do so under § 206(b) of the FPA. It argues that
a contrary interpretation reads § 206(b) out of the statute
entirely, because FERC must be able to retroactively reset
rates to enable it to order refunds under § 206(b). A careful
reading of FERC’s orders also shows that it sought to reset
market rates. See, e.g., 127 FERC ¶ 61,869 (“[T[he ordering
CITY OF REDDING v. FERC 9677
of refunds by its very nature involves the resetting of rates in
a past period.”). The majority’s effort to candy coat and
recategorize what FERC said is inconsistent with the scope of
our review of these administrative agency orders. In effect,
the majority is saying “We know what your position is, we
know what you argued on appeal, and we read what you
wrote, but never mind, we just don’t think you said what you
said.” That can’t be right. Although I join parts I-IV of the
opinion, I cannot endorse the majority’s ultimate conclusion.
I respectfully dissent.
A. Federal Power Act, § 206
Before turning to what FERC actually did do, it is impor-
tant to recognize what FERC may do under the statute. Under
FPA § 206, from which FERC’s (legal) power flows, FERC
may “determine the just and reasonable rate . . . to be thereaf-
ter observed and in force.” 16 U.S.C. § 824e(a). Subsection
206(b) outlines FERC’s retroactive authority. FERC must first
“show that [a] rate” charged during a particular period “is
unjust, unreasonable, unduly discriminatory, or preferential.”
Upon making this showing, it “may order refunds of any
amounts paid” over a particular period. § 206(b).
Under both sections, FERC’s first step is to “determine” the
appropriate rate, and relatedly, that an alternative rate is
unjust. At that point, FERC takes steps to implement the
appropriate rate. Under § 206(a), FERC has the prospective
authority to set the rate as the market rate “thereafter observed
and in force.” Under § 206(b), FERC has the retroactive
authority to order refunds based on its determination. As the
majority correctly determines, the ratesetting authority is dis-
tinct from the refund authority and has prospective application
only. Thus, under the statute, FERC may engage in three
types of actions: the prospective and retroactive determination
of a fair market price, prospective setting of market rates “in
force” based on that price, and the retroactive ordering of
refunds. Maj. Op. at 9672-73. Nowhere in § 206 did Congress
9678 CITY OF REDDING v. FERC
grant FERC the ability to retroactively reset market rates.
FERC’s approach, which is to cherry pick a little from both
subsections of the statute, creates an unprecedented and unau-
thorized option—retroactive resetting of rates.
B. FERC’s Orders
Having correctly read the statute, the majority holds that
FERC was merely “calculat[ing]” the just and reasonable
market prices, rather than attempting to reset rates in the
orders on appeal. Maj. Op. at 9673. As the discussion of the
collateral order doctrine suggests, FERC’s orders were hardly
a model of clarity. Maj. Op. 9665-67. However, a review of
the orders, followed by FERC’s litigation position, shows that
FERC did more than passively determine just prices en route
to ordering refunds for jurisdictional entities. It also sought to
retroactively reset market rates for all entities through those
orders, without the necessary legal authority. In so doing,
FERC exceeded its power under the statute.
It is useful to trace the orders with care. From the outset,
FERC has suggested that it sought to reset market rates. In its
2001 order, which we reviewed in Bonneville Power Adminis-
tration v. FERC, 422 F.3d 908 (9th Cir. 2005), FERC head-
lined the issue:
Our action here establishes a revised method for cal-
culating the just and reasonable clearing prices to be
applied in those markets for the period beginning
October 2, 2000. This is pursuant to the Commis-
sion’s authority under FPA Section 206 to fix the
just and reasonable rate. Our action thus revised the
market clearing prices that all market participants
previously agreed to accept for their sales.
96 FERC ¶ 61,120, at 61,512 (emphasis added).1 In citing the
1
It is true that “FERC sent contradictory signals in the same Order,” by
noting that “[i]n amending FPA Section 206, Congress did not give the
CITY OF REDDING v. FERC 9679
same passage, the majority emphasizes only the sentence con-
cerning “calculating the just and reasonable clearing prices,”
Maj. Op. at 9673; this initial step does not vitiate FERC’s
attempt to reset the prices for all participants. Indeed, the Cal-
ifornia parties contend that the 2001 Order so clearly retroac-
tively reset rates that the petitioners should have challenged
the rate reset at that time, and that this appeal is an impermis-
sible collateral attack on the 2001 Order.
Although the quoted passage concerned a 2001 decision
and petitioners here challenge only orders issued post-
Bonneville, bygones cannot be bygones. The first of FERC’s
post-Bonneville’s orders does not pose a problem. In October
2007, FERC “vacate[d] each of the Commission’s orders,”
including the 2001 order at issue in Bonneville, “to the extent
that they order non-public utility entities to pay refunds” in
compliance with Bonneville. San Diego Gas & Elec. Co. v.
Sellers of Energy & Ancillary Svcs., 121 FERC ¶ 61,067, at
61,352 (2007). Had matters ended there, the order may have
passed muster.
However, at the instigation of the California parties who
had brought contract claims against the petitioners, FERC
clarified its order the following month. Without mincing
words, in its November 2007 Order, FERC explained:
We agree with the California Parties that the Com-
mission inadvertently mischaracterized both its prior
orders and the Ninth Circuit’s decision in Bonne-
ville. [E]stablishing a just and reasonable rate is a
prerequisite for ordering refunds. Accordingly, the
Commission authority to modify unjust and unreasonable rates retroactive-
ly.” 96 FERC ¶ 61,120, at 61,505. Maj. Op. at 9666. However, just
because FERC contradicted itself as to whether it sought to retroactively
reset rates, it does not follow that all FERC did was determine rates, as
the majority holds.
9680 CITY OF REDDING v. FERC
Commission made clear that it was resetting the mar-
ket clearing prices in the [2001] Refund Order:
Our action here establishes a revised
method for calculating the just and reason-
able clearing prices to be applied in those
markets [the CAISO and PX wholesale
electricity markets] for the period begin-
ning October 2, 2000. This is pursuant to
the Commission’s authority under FPA sec-
tion 206 to fix the just and reasonable rate.
Our action thus revises the market clearing
prices that all market participants previ-
ously agreed to accept for their sales.
San Diego Gas & Elec. Co. v. Sellers of Energy & Ancillary
Svcs., 121 FERC ¶ 61,188, at 61,925 (2007) (emphasis in
original). Nor was this unambiguous position merely a pass-
ing observation in the order. FERC performed an exegesis of
Bonneville, claiming that what offended the court was only
that FERC “went beyond resetting the market clearing
prices.” Id. at 61,926 (emphasis in original) (citing Bonne-
ville, 422 F.3d at 919). Thus, although the November Order
did not explicitly amend the October Order to insert language
regarding the resetting of market rates, id., the order went out
of its way to reaffirm the vitality of language from the 2001
Order that stated that FERC retroactively reset market rates
for all participants.
Faced with what they perceived as a turnabout by FERC,
petitioners asked FERC to reconsider. Not only did FERC
deny the request, but reemphasized that it had the power to
reset market clearing prices, claiming more than once that the
retroactive “application during that period of the new rate
determined by the Commission to be just” was essential to its
refund authority. 127 FERC ¶ 61,191, at 61,869 and 61,872
(2009); id. at ¶ 61,869 (“[T]he ordering of refunds by its very
nature involves the resetting of rates in a past period.”). FERC
CITY OF REDDING v. FERC 9681
did not conflate determining rates, resetting market prices
based on those rates, and ordering refunds: as it explains,
“[a]bsent our resetting of rates during the refund period, we
would be unable to determine what amount would be in
excess of a just and reasonable rate, and, therefore, we would
be incapable of [ordering refunds].” Id. (emphasis added).
FERC does not explain why, after it “determine[s]” a rate
to be just, it cannot simply order a refund, without retroac-
tively applying the rate.2 But the orders speak for themselves,
and belie the majority’s claim that “the language of the Orders
can and should be read more modestly.” Maj. Op. at 9674.
Modesty aside, the majority’s approach sidesteps a plain
reading of the orders. The majority quotes from a passage in
the 2009 Order, in which FERC claimed that it was merely
“establishing just and reasonable prices in markets by juris-
dictional entities.” Maj. Op. at 9674 (quoting 127 FERC at
61,874) (emphasis added). However, FERC proceeded to “re-
ject” the distinction between “calculating rates for jurisdic-
tional sellers” and “establishing a single just and reasonable
price” for the market, and repeatedly held that its orders and
statutory market-reset authority extended to “all spot market
sales.” 127 FERC at 61,875, 61,872, 61,874 (emphasis
added). FERC held that its prior orders would “necessarily
affect all sales including sales by governmental entities and
other non-public utilities.” Id. at 61,873.
Our ruling must begin and end with the language of the
orders—unlike in a typical summary judgment appeal from a
district court, we cannot affirm on any ground, nor may we
substitute our view for that of the agency. The majority opin-
ion “implies that if the administrative [agency] opinion con-
sisted of two words—‘[petition] denied’—a persuasive
2
As the majority notes, FERC explained that it may “establish[ ] just
and reasonable prices in markets by jurisdictional entities . . . so that we
may properly order refunds from public utilities.” 127 FERC at ¶ 61,874.
9682 CITY OF REDDING v. FERC
[judicial opinion] could substitute for the missing agency rea-
soning. That is incorrect.” Spiva v. Astrue, 628 F.3d 346, 353
(7th Cir. 2010) (Posner, J.). Under long standing administra-
tive law principles, “the reviewing court should not attempt
itself to make up for any deficiencies in the agency’s reason-
ing.” California Trout v. FERC, 572 F.3d 1003, 1021 (9th
Cir. 2009) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (citing
SEC v. Chenery Corp., 332 U.S. 194, 196 (1947))) (alter-
ations omitted). As the Court explained in Chenery, by dis-
placing FERC’s reasoning with our own, we usurp its
delegated authority, and “propel the court into the domain
which Congress has set aside exclusively for the administra-
tive agency.” 332 U.S. at 196. The Chenery principle also
ensures that agencies provide reasoned explanations for their
decisions, which in turn, are the precondition for judicial def-
erence in other administrative contexts. See id.; Spiva, 628
F.3d at 353; see generally Kevin M. Stack, The Constitutional
Foundations of Chenery, 116 Yale L.J. 952, 1021 (2007).
Chenery requires us to hold FERC to its own words. Reso-
lution of this appeal requires no nuanced interpretation of the
orders, just allegiance to plain English. Because the FERC
orders clearly seek to go beyond its statutory authority—
retroactively resetting rates for all market sales—I would
grant the petition.
C. FERC’s Argument on Appeal
Whatever other criticism is leveled at FERC’s approach, it
cannot be faulted for a lack of consistency. On appeal, keep-
ing faith with Chenery, FERC echoes its orders and maintains
again and again in its brief that those orders “revise[d] the
market clearing prices that all market participants previously
agreed to accept for their sales,” and then seeks to defend this
position. The majority itself recognizes the “argument on
appeal that FERC’s power is more expansive,” allowing
FERC to retroactively reset rates. Maj. Op. at 9673. FERC
CITY OF REDDING v. FERC 9683
also accepts the government utilities’ characterization of the
dispute as involving retroactive rate resetting, arguing, in fact,
that it engaged in this resetting and has the power to do so.
In its brief, FERC actually disagreed with petitioners’ claim
that FERC did not “reset the rates previously charged.” See
127 FERC at 61,870 (disagreeing with petitioners claim that
“tariff changes are not backdated”). By adopting this position
on appeal, FERC surely waives any argument to the contrary.
Koerner v. Grigas, 328 F.3d 1039, 1048 (9th Cir. 2003) ([A]n
issue not “specifically and distinctly argue[d] in [a plaintiff ’s]
opening brief,” is waived.).
In the face of FERC’s position, it seems odd indeed for the
majority to craft a position that even FERC does not endorse.
In resolving this case in favor of FERC, the majority gives
short shrift to basic tenets of administrative law and principles
of appellate practice.
D. Standing
The majority’s position renders precarious its ruling as to
the petitioners’ standing. The FPA “limits judicial review to
those parties who have been ‘aggrieved by an order of the
Commission.’ ” Port of Seattle v. FERC, 499 F.3d 1016, 1028
(9th Cir. 2007) (quoting 16 U.S.C. § 825l(b)). A party must
also meet the constitutional standing requirements of injury-
in-fact, redressability, and causation. Exxon Mobil Corp. v.
FERC, 571 F.3d 1208, 1219 (D.C. Cir. 2009) (citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).
Petitioners’ status as aggrieved parties under the Act, and
the concreteness of their injury, all come down to whether
FERC’s orders had a retroactive effect on the petitioners. If,
however, FERC simply calculated just prices, without taking
any action with respect to the petitioners, the concreteness of
their injury is open to question. The majority concedes as
much: “FERC’s assertion on appeal that it reset the
CalPX/ISO rates for all market participants, not only the enti-
9684 CITY OF REDDING v. FERC
ties over which it has jurisdiction, results in a sufficiently
concrete injury to petitioners to afford them standing.” Maj.
Op. at 9662 (emphasis added).
Without this concrete injury, the majority’s ruling on stand-
ing is on shaky ground. In Federal Power Commission v.
Hope Natural Gas Co., 320 U.S. 591 (1944), the Supreme
Court held that the Federal Power Commission’s finding that
certain past rates were unlawful was unreviewable. Id. at 618.
The Commission had no authority to order refunds and could
fix rates only prospectively, but nevertheless it argued that it
could make findings as to the lawfulness of past rates. Id. The
Court did not reach the merits of this contention because the
findings were “only preliminary, interim step[s] towards pos-
sible future action—action not by the Commission but by
wholly independent agencies,” and therefore standing was
lacking. Id. at 619. Just as in Hope, the petitioners’ injury is
not the result of any action by FERC; rather, it depends com-
pletely on how California state courts read the preclusive
effect of FERC orders, which, as we have noted, are convo-
luted at best, and self-contradictory at worst. There is simply
no daylight between this situation and one “where the order
sought to be reviewed does not of itself adversely affect com-
plainant but only affects his rights adversely on the contin-
gency of future administrative” —or in this case, judicial—
“action.” Maj. Op. 9664 (citing Hope, 320 U.S. at 619).
Because I read the FERC orders as imposing an injury
directly upon the petitioners by retroactively resetting their
market rates, I agree with the majority that there is no stand-
ing problem, but of course for a different reason.
Finally, the majority suggests that it is possible to ignore
the fact that FERC engaged in impermissible rate resetting
because FERC also engaged in permissible rate calculation.
Maj. Op. 9675. This “see no evil” approach is at odds with
both Chenery as well as common sense. As our standing anal-
ysis shows, the petitioners challenge and are injured by the
rate resetting; it is this action they challenge on appeal. We
CITY OF REDDING v. FERC 9685
cannot ignore the point of the litigation simply because there
is a silver lining to the otherwise dark cloud of ultra vires
FERC action. Because the orders also violate FERC’s author-
ity under § 206 of the FPA I respectfully dissent.