United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 13, 2011 Decided February 11, 2011
No. 09-1309
NEW YORK REGIONAL INTERCONNECT, INC.,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
CENTRAL HUDSON GAS & ELECTRIC CORPORATION, ET AL.,
INTERVENORS
On Petition for Review of Orders
of the Federal Energy Regulatory Commission
William D. Booth argued the cause for petitioner. With
him on the briefs was Jennifer A. Morrissey.
Donald K. Dankner and Raymond Wuslich were on the
brief for intervenor Central Hudson Gas & Electric
Corporation in support of petitioner.
Albert A. Foer was on the brief for amicus curiae
American Antitrust Institute in support of petitioner.
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Eugene Grace was on the brief for amicus curiae
American Wind Energy Association
Holly E. Cafer, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on
the brief were Thomas R. Sheets, General Counsel, and Robert
H. Solomon, Solicitor.
Joseph J. Saltarelli argued the cause for intervenors New
York Independent System Operator, Inc., et al. With him on
the joint brief were Jodi L. Moskowitz, Joseph B. Nelson, and
Neil H. Butterklee. Tamara L. Linde, William F. Young, and
Brian M. Zimmet entered appearances.
Before: SENTELLE, Chief Judge, HENDERSON, Circuit
Judge, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Chief Judge SENTELLE.
SENTELLE, Chief Judge: Petitioner, New York Regional
Interconnect, Inc. (“NYRI”), is a New York corporation
whose sole business is the development, construction,
operation, and maintenance of a future high-voltage
transmission line in the state of New York. The high-voltage
transmission line contemplated by NYRI would be within the
jurisdiction of the New York ISO—an independent regional
transmission organization that operates, but does not own, the
power transmission system in New York state. NYRI
petitions for review of a series of three Federal Energy
Regulatory Commission (“FERC” or the “Commission”)
orders that adopted a new transmission planning process for
the New York ISO. NYRI, however, does not have standing
to seek review of the challenged FERC orders, so we dismiss
its petition for review for lack of jurisdiction.
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I.
This case, like many petitions to review the
Commission’s orders, necessitates a brief review of the
regulatory background of federal energy law. In its landmark
Order No. 888, the Commission ordered the national
deregulation of electricity transmission services and required
the vertically-integrated power utilities to unbundle their
electricity generation and transmission services. See
Sacramento Mun. Util. Dist. v. F.E.R.C., 428 F.3d 294, 295-
96 (D.C. Cir. 2005) (citing Promoting Wholesale Competition
Through Open Access Non-Discriminatory Transmission
Services by Public Utilities; Recovery of Stranded Costs by
Public Utilities and Transmitting Utilities, Order No. 888, 61
Fed. Reg. 21540 (Apr. 24, 1996) (hereinafter “Order No.
888”)). “As part of Order 888, FERC adopted a pro forma
Open Access Transmission Tariff (OATT), containing
minimum terms and conditions for non-discriminatory
service, which every transmission-owning public utility must
file with the Commission and by which it must abide in
providing transmission services to itself and others.”
Transmission Access Policy Study Grp. v. F.E.R.C., 225 F.3d
667, 727 (D.C. Cir. 2000).
In an additional effort to increase competition in the
power transmission market, Order No. 888 encouraged the
development of independent system operators (“ISOs”). See
Cal. Indep. Sys. Operator Corp. v. F.E.R.C., 372 F.3d 395,
396-97 (D.C. Cir. 2004). An ISO takes operational control of
the combined transmission grid, but ownership of the
transmission facilities is retained by the public utilities. This
arrangement separates operation of the transmission grid and
access to it from economic interests in generation. See Order
No. 888 at 21551 (describing operational unbundling). The
Commission “deems it crucial that an ISO be independent of
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the market participants so that decisions of policy, operation,
and dispute resolution be free of the discriminatory impetus
inherent in the old system.” Cal. Indep. Sys. Operator Corp.,
372 F.3d at 397.
In accordance with Order No. 888, the bulk power
transmission system in the state of New York is operated, but
not owned, by an independent, non-profit corporation, the
New York Independent System Operator (“New York ISO”).
Among its many other duties, the New York ISO is required
by the Commission to develop a region-wide OATT, a rate
system for all transmission services provided within its
jurisdiction. The New York ISO’s OATT is regulated by the
Commission and must be consistent with or superior to the
Commission’s pro forma OATT. Order No. 888 at 21618-19.
In 2007, a decade after Order No. 888 took effect, the
Commission promulgated Order No. 890 to address and
remedy “opportunities for undue discrimination under the pro
forma Open Access Transmission Tariff (OATT) adopted in
1996 by Order No. 888.” Preventing Undue Discrimination
and Preference in Transmission Service, Order No. 890, 72
Fed. Reg. 12266, 12267 (P1) (Mar. 15, 2007), order on reh’g,
Order No. 890-A, 73 Fed. Reg. 2984 (Jan. 16, 2008), order on
reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on
reh’g, Order No. 890-C, 126 FERC ¶ 61,228 (2009)
(hereinafter “Order No. 890”). To achieve this goal, the
Commission concluded “that it [was] necessary to amend the
existing pro forma OATT to require coordinated, open, and
transparent transmission planning on both a local and regional
level.” Id. at 12320 (P 435). Order No. 890 required ISOs,
including the New York ISO, either to submit a compliance
filing establishing that their existing transmission planning
process was consistent with or superior to the reformed pro
forma OATT, or to submit a proposal for a new planning
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process that was consistent with or superior to the reformed
pro forma OATT. Id. at 12320 (P 437).
One of the changes made to the pro forma OATT
implemented by Order No. 890 was a requirement “for public
utilities to develop cost allocation principles to address the
recovery of costs associated with new transmission projects.”
Id. at 12335-36 (PP 552-61). The Commission declined to
prescribe any specific cost allocation methodology, stating
that it would allow “transmission providers and stakeholders
to determine their own specific criteria which best fit their
own experience and regional needs.” Id. at 12335-36
(PP 557-58). The Commission advised, however, that it
would consider three factors when adjudicating any future
disputes over cost allocation proposals: (1) whether the
proposal “fairly assigns costs among participants, including
those who cause them to be incurred and those who otherwise
benefit from them;” (2) whether the “proposal provides
adequate incentives to construct new transmission;” and (3)
“whether the proposal is generally supported by State
authorities and participants across the region.” Id. at 12336
(P 559).
In response to the cost allocation requirement in Order
No. 890, the New York ISO proposed revisions to its OATT
“to incorporate an enhanced economic planning process” that
established a method by which the costs of new transmission
projects—such as the multi-billion dollar, 190-mile, high-
voltage transmission line contemplated by NYRI—might be
recovered directly from the New York ISO’s transmission
customers. Order No. 890 Transmission Planning
Compliance Filing at 1, 14-15, FERC Docket No.
0A08-52-000 (Dec. 7, 2007). Under the New York ISO’s
proposal, a transmission project approved under the new
economic planning process would be implemented and its
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costs would be allocated to the New York ISO transmission
customers who benefit from the project’s construction. Those
customers would repay the costs through increases in the rates
they pay to the New York ISO for transmission services. The
magnitude of each customer’s rate increase would be
proportional to the economic benefits provided to the
customer by the new project. Id. at 14-15.
Under the New York ISO’s proposal, however, only
some transmission projects would qualify for reimbursement
through the OATT. To receive reimbursement, the project
must meet two requirements. First, the New York ISO must
determine that the project will have a “production cost
benefit.” Id. at 14. Under the terms of the proposed planning
process, a project has a production cost benefit if the
forecasted production cost savings over the first ten years of
the project’s in-service life outweigh the project’s costs. Id.
Projects with a production cost benefit would be eligible for
cost recovery through the OATT, pending the determination
of the second criterion, but those determined to have no
production cost benefit would be denied mandatory cost
allocation.
In addition to having a production cost benefit, new
transmission projects must also be approved by a
supermajority of the project’s beneficiaries—those entities
that would benefit economically from the project and from
whom the project’s costs would be recovered. Id. at 14-15.
The New York ISO would provide information about the
proposed project to the beneficiaries, including estimates of
both economic and non-quantifiable benefits, such as
environmental impacts and renewable integration. Id. The
beneficiaries would then vote to determine whether the
proposed project should receive cost allocation, with each
beneficiary’s vote weighted to correspond to its share of the
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project’s benefits and costs. Id. at 15. Projects approved by
at least eighty percent of the beneficiaries would be
implemented and cost allocation through the OATT would be
approved. Id.
NYRI, which presumably wishes to obtain cost allocation
for its proposed high-voltage transmission line through the
New York ISO’s OATT, opposed the New York ISO’s
proposal at every stage of the administrative process. In July
2008, NYRI filed a protest to the New York ISO’s Order No.
890 compliance filing. See Motion to Intervene and Protest of
New York Regional Interconnect, Inc., FERC Docket No.
OA08-52-000 (July 9, 2008). After the Commission approved
the New York ISO’s transmission planning process in the first
of the three orders challenged by NYRI, New York
Independent System Operator, Inc., 125 FERC ¶ 61,068
(2008), NYRI requested a rehearing. See Request for
Rehearing or Clarifying Action and Expedited Action of the
New York Regional Interconnect, Inc., FERC Docket No.
OA08-52-000 (Nov. 17, 2008). In the second of the three
challenged orders, the Commission denied NYRI’s request for
rehearing. See New York Independent System Operator, Inc.,
126 FERC ¶ 61,320 (2009). Undaunted, NYRI requested
rehearing of the second order, see Request for Rehearing and
Motion to Reopen the Record of the New York Regional
Interconnect, Inc., FERC Docket No. OA08-52-003 (Apr. 29,
2009), which the Commission denied in the third of the three
challenged orders, see New York Independent System
Operator, Inc., 125 FERC ¶ 61,045 (2009). NYRI now
requests that this court review these three orders, arguing that
the Commission acted arbitrarily and capriciously when it
approved the New York ISO’s new transmission planning
process.
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II.
Before this court can consider the merits of NYRI’s
petition, there is a threshold issue that we must resolve.
Certain intervenors in this case—the New York ISO and
several participants in the New York power market—argue
that NYRI lacks standing to petition this court to review the
FERC orders because NYRI has not been “aggrieved” by
those orders as required by the Federal Power Act.1 Because
standing is an “essential and unchanging part of the case-or-
controversy requirement of Article III,” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992), NYRI must demonstrate
that it has standing to raise this challenge before we may
exercise jurisdiction over its claims. County of Delaware, Pa.
v. Dep’t of Transp., 554 F.3d 143, 147 (D.C. Cir. 2009).
Section 313 of the Federal Power Act provides that
“[a]ny party to a proceeding under this chapter aggrieved by
an order issued by the Commission in such proceeding may
obtain a review of such order . . . in the United States Court of
Appeals for the District of Columbia.” 16 U.S.C. § 825l(b).
Parties are “aggrieved” under the Federal Power Act if they
satisfy both the constitutional and prudential requirements for
standing. Exxon Mobil Corp. v. F.E.R.C., 571 F.3d 1208,
1219 (D.C. Cir. 2009); Hydro Investors, Inc. v. F.E.R.C., 351
F.3d 1192, 1195 (D.C. Cir. 2003). “‘The requirement of
aggrievement serves to distinguish a person with a direct stake
in the outcome of a litigation from a person with a mere
interest in the problem.’” City of Orrville, Ohio v. F.E.R.C.,
147 F.3d 979, 985 (D.C. Cir. 1998) (quoting N.C. Utils.
Comm’n v. F.E.R.C., 653 F.2d 655, 662 (D.C. Cir. 1981)).
“[A] party does not acquire such a ‘direct stake in a litigation’
1
Although the Commission failed to raise the issue in its brief, at oral
argument the Commission joined the intervenors in asserting that NYRI has
no standing before this court.
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simply by participating in the antecedent administrative
proceedings whence the litigation arises; it must establish its
constitutional and prudential standing.” City of Orrville, 147
F.3d at 985.
It is well established “that the irreducible constitutional
minimum of standing contains three elements.” Lujan, 504
U.S. at 560. “To establish constitutional standing, a petitioner
must show an actual or imminent injury in fact, fairly
traceable to the challenged agency action, that will likely be
redressed by a favorable decision.” Exxon Mobil Corp., 571
F.3d at 1219 (citing Lujan, 504 U.S. at 560-61). An injury in
fact is “an invasion of a legally protected interest which is (a)
concrete and particularized, and (b) actual or imminent, not
conjectural or hypothetical.” Lujan, 504 U.S. at 560
(quotations and citations omitted). An injury is particularized
if it “affect[s] the plaintiff in a personal and individual way.”
Id. at 560 n.1.
The intervenors and the Commission argue that NYRI
has no standing before this court because it cannot show that
it has suffered an injury in fact. This is so, they contend,
because NYRI does not have any active proposals for new
transmission projects that would be affected by the challenged
FERC orders. Although NYRI previously submitted an
application to the New York Public Service Commission for
the construction of a new high-voltage transmission line,
NYRI admits that it withdrew that application on April 9,
2009. Final Reply Br. of New York Regional Interconnect,
Inc. at 19, N.Y. Reg’l Interconnect, Inc. v. F.E.R.C., No.
09-1309 (D.C. Cir. Nov. 9, 2010).
In response, NYRI argues that it has standing to
challenge FERC’s orders because it “has suffered injury to a
protected interest, i.e., an interest that is ‘within the zone of
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interests to be protected or regulated by FERC under’ the
applicable statute.” Id. at 16 (quoting Moreau v. F.E.R.C.,
982 F.2d 556, 564 (D.C. Cir. 1993)). Specifically, NYRI
asserts that the alleged injury to its interest in “an impartial
assessment of its proposed project” gives it standing to
challenge the FERC orders adopting the new transmission
planning process for the New York ISO. Id. We disagree.
NYRI cannot establish constitutional standing because it
has suffered no actual or imminent injury in fact to a
judicially cognizable interest. Although NYRI argues that the
Commission’s rulings have caused it to suffer a concrete
injury to its protected interest in “an impartial assessment of
its proposed project,” this alleged injury rests upon a
hypothetical chain of events, none of which is certain to
occur. Under NYRI’s theory, if NYRI proceeds with a
transmission project within the New York ISO’s jurisdiction,
and if that proposal obtains siting and permitting from the
New York Public Service Commission, and if NYRI applies
for cost allocation through the New York ISO OATT, then
NYRI will be harmed because either the New York ISO will
wrongfully determine that the benefits of the project do not
outweigh the costs, or the project’s beneficiaries will
wrongfully vote against the project. This theory stacks
speculation upon hypothetical upon speculation, which does
not establish an “actual or imminent” injury. See Lujan, 504
U.S. at 560.
NYRI has presented at most an allegation of injury to its
procedural rights. It is true that “a plaintiff may have standing
if it can show that an agency failed to abide by a procedural
requirement that was ‘designed to protect some threatened
concrete interest’ of the plaintiff.” Ctr. for Biological
Diversity v. U.S. Dep’t of Interior, 563 F.3d 466, 479 (D.C.
Cir. 2009) (quoting Lujan, 504 U.S. at 573 n.8). But it is also
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true that “the omission of a procedural requirement does not,
by itself, give a party standing to sue.” Id. Even “a
procedural-rights plaintiff must show not only that the
defendant’s acts omitted some procedural requirement, but
also that it is substantially probable that the procedural breach
will cause the essential injury to the plaintiff’s own interest.”
Fla. Audubon Soc’y v. Bentsen, 94 F.3d 658, 664-65 (D.C.
Cir. 1996). Petitioner has made no such showing.
Without an active application for a transmission project
in the New York ISO, nothing distinguishes NYRI from any
other party who might someday wish to build a high-voltage
transmission line in New York. See Lujan, 504 U.S. at 560
n.1 (holding that an injury in fact must “affect the plaintiff in
a personal and individual way”). NYRI does not currently
participate in the New York power generation and
transmission market in any manner, either as a generator or as
a transmission owning entity. The challenged FERC orders
do not place any legal burden on NYRI or determine any legal
rights. The orders merely change the criteria by which future
transmission projects will be evaluated when the New York
ISO decides whether those projects will be eligible to receive
cost allocation through the FERC-approved tariff. Although
NYRI argues that the FERC orders create practical, rather
than legal, hurdles that will impede its plan to build a new
high-voltage transmission line in New York, a practical
obstacle is not necessarily coterminous with a cognizable
injury in fact that is necessary to support Article III standing.
NYRI has not suffered an injury in fact and even the alleged
injury is only conjectural. Without an actual injury, NYRI
does not have constitutional standing to challenge the FERC
orders and its petition must be dismissed.
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III.
For the reasons set forth above, we hold that NYRI has
no standing to bring this action. The petition for review is
dismissed.