United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 16, 2021 Decided December 2, 2022
No. 20-1453
AMERICAN CLEAN POWER ASSOCIATION,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
D. E. SHAW RENEWABLE INVESTMENTS, L.L.C., ET AL.,
INTERVENORS
On Petition for Review of Orders of the
Federal Energy Regulatory Commission
Gabriel Tabak argued the cause and filed the briefs for
petitioner.
Bruce A. Grabow and Jennifer Brough were on the joint
briefs for intervenors in support of petitioner.
Robert M. Kennedy, Senior Attorney, Federal Energy
Regulatory Commission, argued the cause for respondent.
With him on the brief were Matthew R. Christiansen, General
Counsel, and Robert H. Solomon, Solicitor.
2
Christopher R. Jones argued the cause for intervenors in
support of respondent. With him on the joint brief were Miles
H. Kiger, Wendy N. Reed, Wendy B. Warren, Matthew J.
Binette, and Ilia Levitine. Kari Valley entered an appearance.
Before: MILLETT, RAO, and WALKER, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALKER.
Opinion concurring in part and dissenting in part by
Circuit Judge RAO.
WALKER, Circuit Judge: This case is the latest episode in
a long-running dispute over how to fund upgrades to power
lines. On one side are owners and operators of power lines;
we’ll call them “transmission owners.” On the other side are
power generators.
In the orders on review, FERC ruled for the transmission
owners. That decision might have been reasonable. But it was
not reasonably explained. In particular, FERC failed to
adequately address new evidence that many MISO-region
transmission owners also own generators. Because the
Administrative Procedure Act requires a reasonable
explanation, we remand to FERC.
I
A
When power generators build new facilities or update their
existing facilities, they need to connect those facilities to the
power grid. That connection in turn often requires transmission
owners to upgrade their power lines to accommodate the power
influx. See Ameren Services Co. v. FERC, 880 F.3d 571, 572
3
(D.C. Cir. 2018). “Direct” transmission owners must upgrade
their power lines because their lines directly connect to the new
or updated generators. Likewise, “indirect” transmission
owners must often upgrade their power lines because they are
downstream of the direct transmission owners’ lines.
In the Midcontinent Independent System Operator region,
which spans much of middle America and part of Canada,
generators pay for almost the whole cost of those upgrades.
But there are two relevant ways in which they can pay. Option
A: The generators can pay for the upgrades up front. Option
B: The transmission owners can initially fund the upgrades and
charge the generators over time to recoup those costs. Some
transmission owners prefer Option B because they can earn a
profitable return on their investment as they recoup their initial
costs.
Years ago in the MISO region, direct transmission owners
had unilateral funding authority, letting them choose between
the two options. But indirect transmission owners did not.
B
In 2015, an indirect transmission owner called Otter Tail
Power Company filed a complaint with FERC challenging that
differential treatment. Under Section 206 of the Federal Power
Act, FERC may, on its own or on a complaint, change a utility’s
rate through a two-step process. First, it must find that the
current rate is “unjust, unreasonable, unduly discriminatory, or
preferential.” 16 U.S.C. § 824e(a). Second, it must determine
a “just and reasonable” replacement rate. Id.
FERC agreed with Otter Tail. It found that direct and
indirect transmission owners are similarly situated and thus
should have the same ability to choose how to fund power line
4
upgrades. MISO, Inc. Otter Tail Power Co. v. MISO, Inc., 151
FERC ¶ 61,220 (Jun. 18, 2015); Otter Tail Power Co. v. MISO,
Inc., 153 FERC ¶ 61,352 (Dec. 29, 2015).
But rather than leveling up and granting indirect
transmission owners the same unilateral funding authority that
direct transmission owners enjoyed, FERC leveled down by
taking away all transmission owners’ unilateral funding
authority. Otter Tail, 151 FERC ¶ 61,220, at ¶ 48. FERC did
so by initiating a new proceeding to determine whether it is
unjust and unreasonable for transmission owners to enjoy
unilateral funding authority. FERC answered yes because, in
its view, transmission-owner funding could allow certain
transmission owners to discriminate among generators, which
is prohibited by the Federal Power Act. Id.
In Ameren Services Co. v. FERC, this Court vacated and
remanded FERC’s orders. 880 F.3d 571 (D.C. Cir. 2018). We
noted that there would be a discrimination concern if
transmission owners still owned generation facilities, like they
did in the “bad old days.” Id. at 578. But in Ameren there was
only one petitioning transmission owner that owned a
generator, and we found an “absence of evidence” of potential
discrimination. Id.
Ameren also held that FERC should have considered that
its decision could force transmission owners to incur the
financial risks of generator-funded upgrades without the
opportunity for a profit. Id. at 581-82. We declined to decide
whether those enterprise-risk concerns required a particular
result until FERC “developed a record by considering” them.
Id. at 584.
After Ameren, FERC still needed to adjudicate the original
Otter Tail complaint — the one in which Otter Tail had alleged
5
that it is discriminatory for FERC to deny unilateral funding
authority to indirect transmission owners when direct
transmission owners enjoy such authority. Ameren had not
required FERC to reach a particular outcome in the Otter Tail
complaint. But without additional briefing, FERC decided that
all transmission owners in MISO should have the unilateral
authority to choose to fund upgrades. MISO, Inc. Otter Tail
Power Co. v. MISO, Inc., 164 FERC ¶ 61,158 (Aug. 31, 2018).
Then, FERC took briefing on whether to apply that new
rule retroactively from the point that this litigation began. The
generators moved for rehearing on whether FERC’s new
regime would lead to undue discrimination.
In a second order, FERC reaffirmed the first post-remand
order and made its rule retroactive. MISO, Inc. Otter Tail
Power Co. v. MISO, Inc., 169 FERC ¶ 61,233 (Dec. 20, 2019).
Finally, in response to a rehearing request regarding the
retroactivity decision, FERC issued a third order affirming its
decision. MISO, Inc. Otter Tail Power Co. v. MISO, Inc., 172
FERC ¶ 61,248 (Sept. 17, 2020).
C
The American Clean Power Association, an association of
generators that operate in the MISO region, now petitions us to
review those orders. Other generators operating in the MISO
region have intervened on the Petitioner’s side. And
transmission owners have intervened as Respondents in
support of FERC.
The Petitioner argues that FERC failed to follow our
command in Ameren to “develop a record.” It also argues that
it was arbitrary and capricious for FERC to give transmission
6
owners the unilateral authority to fund power line upgrades.
The Petitioner-Intervenors added a third argument: that FERC
incorrectly made its decision retroactive.
II
Our jurisdiction extends only to arguments that a party
raised in a rehearing application before FERC, “unless there is
reasonable ground for failure so to do.” 16 U.S.C. § 825l(b);
see also New England Power Generators Association, Inc. v.
FERC, 879 F.3d 1192, 1198 (D.C. Cir. 2018). We therefore
lack jurisdiction to consider the Petitioner-Intervenors’
argument that FERC improperly made its decision retroactive.
The Petitioner-Intervenors have not shown that they sought
rehearing of FERC’s retroactivity decision. And they have not
argued that there was a “reasonable ground” for their failure to
do so. California Department of Water Resources v. FERC,
306 F.3d 1121, 1126 (D.C. Cir. 2002) (“an intervenor may raise
an issue” only “if the intervenor has preserved the issue in its
own petition for rehearing before the Commission”).
That leaves two issues: whether FERC complied with our
Ameren remand order and whether FERC adequately explained
its decision to require universal, unilateral transmission owner
funding authority in the MISO region. We have jurisdiction to
hear those claims under 16 U.S.C. § 825l(b).
We conclude that FERC did comply with our Ameren
order, but it did not adequately explain its funding decision as
the Administrative Procedure Act requires.
A
FERC complied with our Ameren remand order. There,
we told FERC to “develop[] a record by considering” the
7
transmission owners’ enterprise-risk argument. Ameren
Services Co. v. FERC, 880 F.3d 571, 584 (D.C. Cir. 2018)
(emphasis added). That instruction suggested no particular
briefing. Nor did it demand any additional evidence for a
record that was already voluminous. Rather, it required
nothing more than FERC “considering” the enterprise-risk
argument and putting that consideration on the “record” for our
review. Id.
On remand, FERC did just that: It considered the
enterprise-risk argument and rendered a decision on its merits
in the record for us to review.
B
FERC’s decision to grant unilateral funding authority to
all transmission owners failed to satisfy the Administrative
Procedure Act’s arbitrary-and-capricious standard. See Emera
Maine v. FERC, 854 F.3d 9, 21 (D.C. Cir. 2017); 5 U.S.C.
§ 706(2)(A). Although FERC’s decision may ultimately prove
to be “reasonable,” it was not “reasonably explained.” FCC v.
Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021).
Before providing our reasons for that conclusion, we must
first address a preliminary matter. FERC asserts that the
Petitioner did not seek rehearing on FERC’s decision to grant
unilateral funding authority to all transmission owners. But in
fact, the Petitioner did exactly that. In its request for rehearing,
the Petitioner argued that FERC “reversed its ‘determination
that transmission owners and affected system operators should
not be allowed the unilateral right to elect to provide initial
funding for network upgrades,’ and did so without any
articulated reasoned explanation or record evidence to
support[] its reversal.” JA 193 (emphasis added) (footnote
omitted). An “affected system operator” is an indirect
8
transmission owner. MISO, Inc. Otter Tail Power Co. v. MISO,
Inc., 164 FERC ¶ 61,158, at ¶ 6 (Aug. 31, 2018) (“This
indirectly-connected transmission owner is known as the
affected system operator.”).
As to the merits of the Petitioner’s argument, the Petitioner
does not seriously dispute FERC’s determination that direct
and indirect transmission owners are similarly situated entities,
so treating them differently is unreasonable under the Federal
Power Act. Otter Tail, 164 FERC ¶ 61,158, at ¶ 34.1 But the
Petitioner argues that FERC violated the Administrative
Procedure Act by not adequately explaining its decision to
solve that problem by giving unilateral funding authority to all
transmission owners, rather than by denying unilateral funding
authority to all transmission owners. See FCC v. Prometheus
Radio Project, 141 S. Ct. 1150, 1158 (2021) (An agency must
“reasonably consider[] the relevant issues and reasonably
explain[] [its] decision.”); TransCanada Power Marketing Ltd.
v. FERC, 811 F.3d 1, 12 (D.C. Cir. 2015) (The duty to
reasonably explain extends to “all cases,” including cases in
which FERC sets new just and reasonable rates.).
We agree with the Petitioner that FERC failed to
reasonably explain its decision. In particular, it gave short
shrift to the Petitioner’s concern that transmission owners
might discriminate in favor of generators they own.
In the proceedings before FERC, the Petitioner gave
plausible reasons for that concern. It pointed out that even
1
The Petitioner’s briefs include no express argument that direct
transmission owners and indirect transmission owners are not
similarly situated. And they do not show that the Petitioner raised
such an argument in a petition for rehearing before FERC. See 16
U.S.C. § 825l(b).
9
though only one of the petitioning transmission owners in
Ameren owned generators, many other transmission owners in
the MISO region own generators. And Ameren itself noted that
“if the transmission owners still owned integrated generation
facilities, that would present a competitive motive” for
transmission owners with unilateral funding authority to
discriminate among generators. 880 F.3d at 578 (emphasis
added).
In response, after accepting that many transmission
owners in the MISO region do indeed own generators, FERC
concluded that the generators’ concerns about potential
discrimination did not outweigh the transmission owners’
enterprise-risk concerns. In support, FERC said the Petitioner
did not “show why the ability of [generators] to challenge costs
before the Commission, a point on which the Court relied, is
inadequate to address any concerns with potential undue
discrimination.” MISO, Inc. Otter Tail Power Co. v. MISO,
Inc., 169 FERC ¶ 61,233, at ¶ 38 (Dec. 20, 2019) (footnote
omitted).
There was, however, something important missing from
FERC’s orders: an assessment of the risk of discrimination and
an explanation of why individualized proceedings provide
generators with sufficient protection against that risk.
At oral argument, counsel for the Respondent-Intervenors
supporting FERC gave a relatively detailed assessment and
explanation. According to him, any concerns about
discrimination are largely alleviated by the regulatory regime
in place since 1996. That regime uses transparency to reduce
the risk that transmission owners will provide preferential
treatment to the generators they own. For example,
transmission owners use publicly available pro forma contracts
to build power-line upgrades with generators, and they charge
10
rates of return regulated by FERC. That may have been one
reason why there was no evidence of discrimination at the time
of Ameren. See Transcript of Oral Argument 52, 56-57.
But that is not what FERC’s orders said. In contrast to the
Respondent-Intervenors’ explanation, FERC’s reasoning was
conclusory. So even though FERC’s decision on this point
might ultimately prove to be “reasonable,” it was not
“reasonably explained” as required by the Administrative
Procedure Act. Prometheus, 141 S. Ct. at 1158. FERC had the
chance to explain itself at two different steps in its proceedings.
It could have done so when it found that the unilateral funding
option was not unjust or discriminatory, or later when it
remedied the disparity between direct and indirect transmission
owners in the Otter Tail proceeding. Cf. Partial Dissent at 7-8
(suggesting that FERC had no obligation to explain itself at
either step); see also TransCanada Power Marketing, 811 F.3d
at 12 (“[I]n all cases, the Commission must explain its
reasoning.”). But FERC failed to do so at either point.2
Nothing in Ameren excused FERC from the requirement
to reasonably explain its decision. Indeed, Ameren emphasized
that “if the transmission owners still owned integrated
2
The Petitioner made this argument in its initial brief when it argued
that FERC relied on “summary conclusions” that failed to “address
the underlying discrimination and enterprise risk.” Pet. Br. 24. In
response, FERC made a counterargument: costs can be challenged
through individual adjudications. Resp. Br. 41. Then, in its reply
brief, the Petitioner replied to FERC’s counterargument regarding
individual adjudications. Pet. Reply Br. 11, 15. And although the
Petitioner’s initial brief did not address FERC’s counterargument
about individual adjudications, there was no forfeiture because it
could not have been expected to reply to the counterargument until
the counterargument had been made.
11
generation facilities, that would present a competitive motive”
to discriminate in favor of their own facilities. Ameren, 880
F.3d at 578. And the Petitioner presented evidence to FERC
that, contrary to the facts before the Ameren court, a majority
of transmission owners in the MISO region own generators.
Putting those pieces together, the Petitioner showed that many
transmission owners have an incentive to discriminate between
their own generators and would-be competitor generators.
FERC was obligated to respond to that evidence, which the
Petitioner said was enough to render unilateral funding “unjust,
unreasonable, unduly discriminatory, or preferential.” 16
U.S.C. § 824e(a). Instead, FERC simply said that the evidence
of generation ownership was inadequate to demonstrate
discrimination, without explaining why this was so. That was
not enough. Petitioner’s evidence, coupled with Ameren’s
observation about the potential for discrimination, showed that
restoring and extending the unilateral funding option posed a
discrimination risk. FERC acted arbitrarily and capriciously
by failing to meaningfully respond to Petitioner’s arguments.
See, e.g., Public Service Electric & Gas Co. v. FERC, 989 F.3d
10, 19-20 (D.C. Cir. 2021).
Nor is FERC excused by the fact that the two types of
transmission owners are similarly situated. To be sure, that is
one argument in favor of applying the unilateral funding rate to
indirect transmission owners: a different approach might create
unlawful disparities between transmission owners. But in
deciding that the rates could not be applied to just one set of
transmission owners, FERC took action which required
explanation. First, it determined that it was unjust and
unreasonable to distinguish between the two types of
transmission owners with respect to unilateral funding.
Second, it extended the unilateral funding option to indirect
transmission owners. While this rate had been previously
12
approved for direct transmission owners, it was a new rate for
indirect transmission owners.
FERC was required to reconcile this decision with the
substantial evidence showing that unilateral funding was
potentially discriminatory because a majority of MISO-region
transmission owners also owned generation facilities. And,
again, whether it was required to explain it at step one or step
two of the 206 proceeding, it was arbitrary and capricious when
FERC failed to do so at either step.
True, the required explanation would answer a different
question depending on when FERC offered it. At step one:
why does FERC conclude that the Petitioner has not met its
burden of showing that unilateral funding authority is unjust
and unreasonable? At step two: why does FERC conclude that
unilateral funding authority is just and reasonable? But at
either time and under either standard, the Administrative
Procedure Act requires more than a conclusory explanation for
an agency action. And FERC offered nothing more than that
in response to the Petitioner’s concern that — to again quote
Ameren — “transmission owners . . . own[ing] integrated
generation facilities . . . present[s] a competitive motive” for
discrimination. 880 F.3d at 578.
* * *
We therefore remand for FERC to adequately explain its
decision. But we do so without vacating FERC’s orders
“[b]ecause there seems to be a significant possibility that
[FERC] may find an adequate explanation for its actions, and,
in any event, it appears that the consequences of its current
ruling can be unraveled if it fails to.” Williston Basin Interstate
Pipeline Co. v. FERC, 519 F.3d 497, 504 (D.C. Cir. 2008); see
also United Steel v. Mine Safety & Health Administration, 925
13
F.3d 1279, 1287 (D.C. Cir. 2019) (“The appropriateness of the
remand-without-vacatur remedy turns on two factors: ‘(1) the
seriousness of the deficiencies of the action, that is, how likely
it is the agency will be able to justify its decision on remand;
and (2) the disruptive consequences of vacatur.’” (quoting
Heartland Regional Medical Center v. Sebelius, 566 F.3d 193,
198 (D.C. Cir. 2009))).
So ordered.
RAO, Circuit Judge, concurring in part and dissenting in
part: Without vacating the challenged orders, the majority
remands to the Federal Energy Regulatory Commission
(“FERC”) for further explanation of its decision. But no further
explanation is necessary. In light of our strong suggestion in
Ameren Services Co. v. FERC, 880 F.3d 571 (D.C. Cir. 2018),
that the “unilateral funding option” was valid and perhaps even
required, FERC determined this option was not unjust or
unreasonable. FERC then reasonably extended the unilateral
funding option to all interconnection contracts, eliminating the
disparate treatment between direct and indirect transmission
owners. The majority’s demand for further explanation rests on
a misapprehension of the precise questions before FERC on
remand.
I agree with the majority that the petitioner’s retroactivity
argument was not exhausted and that FERC was not required
to seek new evidentiary submissions on remand. I respectfully
dissent, however, because the Commission properly and
reasonably addressed the questions raised by the Ameren
remand.
I.
I mostly rely on the majority’s statement of the facts, but
a proper evaluation of the petitioner’s challenge requires
understanding this court’s previous decision in Ameren and the
actions taken by FERC on remand.
Section 206 of the Federal Power Act governs challenges
to existing rates and may be invoked by a party’s complaint or
upon the Commission’s own motion. 16 U.S.C. § 824e(a).
Importantly, a section 206 proceeding has two steps: FERC
first evaluates whether an existing rate or tariff provision is
“unjust, unreasonable, unduly discriminatory or preferential.”
Id. Then, if such a finding is made, FERC “shall determine the
2
just and reasonable rate … or contract [term] … and shall fix
the same by order.” Id.
FERC issued orders in two distinct section 206
proceedings following a complaint brought by Otter Tail
Power Company, an indirect transmission owner. In the first
proceeding, FERC responded to Otter Tail’s complaint by
concluding it was unduly discriminatory for the Midcontinent
Independent System Operator (“MISO”) to allow direct
transmission owners but not indirect transmission owners to
unilaterally finance upgrades. See Midcontinent Indep. Sys.
Operator, Inc., 151 FERC ¶ 61,220 at P 47 (June 18, 2015)
[Otter Tail Complaint Order].
In the second section 206 proceeding, brought on FERC’s
own motion, FERC found the unilateral funding option unjust
and unreasonable because a unilateral option to fund upgrades
creates opportunities for transmission owners to give
preferential treatment to generators they own and to impose
additional costs on other generators. Otter Tail Power Co., 153
FERC ¶ 61,352 at PP 29–33 (Dec. 29, 2015). FERC addressed
these problems and the disparity between the two contracts by
eliminating the unilateral funding option altogether. See id.
P 29.
We vacated these two orders in Ameren, leaving open the
possibility that the agency could lawfully reinstate its orders
after developing an appropriate record on remand. 880 F.3d at
584–85. But we expressed serious concerns about any decision
to eliminate the unilateral funding option. Absent such an
option, “transmission owners will be forced to assume certain
costs that are never compensated,” such as the environmental
or reliability risk that comes with an enhanced electrical grid.
Id. at 580. And “more fundamental[ly],” eliminating the
unilateral funding option would “require [transmission owners]
3
to act, at least in part, as … nonprofit business[es].” Id. at 581.
If transmission owners were required to upgrade their grids, but
without earning a profit on the upgrades, the overall
profitability of transmission companies would be diminished.
Id. at 581–82. Burdened with “potentially large non-profit
appendages,” transmission companies would find it difficult to
attract investors. Id. at 581. We vacated the orders because we
doubted that FERC’s “weak” justifications of its orders could
be salvaged. Id. at 585.
On remand, FERC made two threshold findings. First,
FERC changed course and found that the unilateral funding
option was not unjust or unreasonable. Midcontinent Indep.
Sys. Operator, Inc., 164 FERC ¶ 61,158 at P 28 (Aug. 31,
2018) [Remand Order]. The agency expressly tied this
conclusion to the reasoning in Ameren. After the American
Clean Power Association (“ACPA”) contested FERC’s
decision, the Commission stated that nothing the ACPA had
submitted could “overcome” the Ameren court’s “skeptic[ism]
of the idea that a transmission owner need not earn a profit on
all parts of its business.” Midcontinent Indep. Sys. Operator,
Inc., 169 FERC ¶ 61,233 at P 39 (Dec. 20, 2019) [Remand
Rehearing Order]. FERC concluded it lacked adequate
evidence to support its pre-Ameren determination that the
unilateral funding option was “unduly discriminatory.” Id.
P 37; see also Remand Order P 28 (“[W]e find that there was
not enough evidence in the record to sustain the Commission’s
findings in the vacated orders.”). Ameren had effectively
restored the unilateral funding option as an approved tariff
provision and therefore FERC had no reason to make an
affirmative finding that the unilateral funding option was just
and reasonable.
Second, with respect to the Otter Tail complaint
challenging the disparate treatment between direct and indirect
4
transmission owners, Ameren had not disturbed FERC’s earlier
conclusion that uniformity was required. FERC therefore
reaffirmed its finding that differential treatment was unjust and
unreasonable under section 206. See Remand Order P 34.
Because the differential treatment was unlawful, the
Commission had to establish a new just and reasonable rate,
the second part of the section 206 proceeding. FERC imposed
uniformity by choosing an existing rate, namely the unilateral
funding option, and ordering that it be available in both direct
and indirect connection contracts. Id.
In its petition for review, the ACPA disputes FERC’s
findings and challenges the extension of the unilateral funding
option to indirect transmission contracts.
II.
FERC’s decisions were reasonable and reasonably
explained. The majority maintains that at some point FERC
had to say more, but this conclusion blurs the distinction
between the two proceedings and overreads Ameren and
FERC’s procedural obligation on remand from this court.
A.
FERC first addressed whether it could support its pre-
Ameren finding that the unilateral funding option was unjust or
unreasonable. Recall that, following Ameren’s vacatur, the
unilateral funding option was effectively restored as an
approved tariff provision. Because the option was an existing
tariff provision, FERC had to affirmatively find that the option
was unlawful before it could eliminate and replace it. Emera
Me. v. FERC, 854 F.3d 9, 24 (D.C. Cir. 2017) (“[S]ection 206
mandates a two-step procedure that requires FERC to make an
explicit finding that the existing rate is unlawful before setting
a new rate.”) (emphasis added). FERC determined, however,
5
that it could not meet the first step of this “dual burden,” id.,
because “there was not enough evidence in the record to sustain
the Commission’s” previous finding that the option was not
just and reasonable, Remand Order P 28. In making this
evaluation, FERC reasonably gave substantial weight to
Ameren, in which we strongly suggested that the unilateral
funding option was not unlawful and perhaps was even
required. See 880 F.3d at 581 (expressing concern that
eliminating the unilateral funding option would force
transmission owners to “act, at least in part, as a nonprofit
business”).
The majority argues that FERC should have done more to
respond to the ACPA’s arguments that the risk of
discrimination was greater than the Ameren court realized.
While the Ameren court had assumed electricity providers in
the MISO region were not vertically integrated, the ACPA
explained that the majority of such providers were in fact
vertically integrated. In response, FERC acknowledged the fact
of vertical integration but concluded that this was “not
adequate by itself to demonstrate that there is undue
discrimination.” Remand Rehearing Order P 38. The
Commission also explained that concerns about potential
discrimination could be addressed through case-by-case
challenges by transmission owners and that the ACPA had not
demonstrated such challenges would be inadequate. Id. The
Commission acknowledged the ACPA’s evidence but found it
inadequate to overcome the countervailing considerations
highlighted by the Ameren court in favor of the unilateral
funding option. On the evidence before it, FERC reasonably
concluded it could not find the unilateral funding option unjust
or unreasonable.
The majority places great weight on the Ameren court’s
recognition that the presence of vertical integration “would
6
present a competitive motive.” 880 F.3d at 578. But FERC
properly considered the ACPA’s evidence of vertical
integration. It simply found that such evidence could not
overcome the Ameren court’s overwhelming view that
eliminating the unilateral funding option (1) did not “rest on
economic theory [or] logic”; (2) would restrict the return on
capital required by the Supreme Court in FPC v. Hope National
Gas Co., 320 U.S. 591, 603 (1944); and (3) would force
investors “to accept risk-bearing additions to their network
with zero return.” Ameren, 880 F.3d at 578, 581, 582.
Moreover, the Ameren remand from our court did not
focus on the existence of vertical integration, but on the fact
that FERC was required to provide “reasoned consideration”
of the economic risks and capital-attraction problems for
transmission owners. Id. at 582. FERC adequately addressed
both the ACPA’s new evidence and this court’s substantial
economic concerns.1
1
I would also note that the only relevant section 206 proceeding here
was the one that FERC had instituted “upon its own motion” under
section 206 prior to Ameren. 16 U.S.C. § 824e(a). Whether to
institute a proceeding in that way was committed to FERC’s
discretion, and matters committed to an agency’s discretion by law
are generally not reviewable. See 5 U.S.C. § 701(a)(2). FERC
therefore may have lacked any obligation, after Ameren, to revisit
the lawfulness of the unilateral funding option on its “own motion.”
If FERC had declined to do so, that decision may have been
unreviewable. Cf. Heckler v. Chaney, 470 U.S. 821, 837 (1985)
(holding that courts presume “agency decisions not to institute
proceedings are unreviewable” under the APA). Because on remand
FERC did reconsider whether the unilateral funding option was
unjust or unreasonable, its decision must comport with the APA’s
requirements of reasoned decisionmaking. See Am. Gas Ass’n v.
7
FERC properly concluded the record lacked evidence to
make a finding that the unilateral funding option was unjust or
unreasonable or unduly discriminatory.2 Relying on this
court’s decision in Ameren, FERC reasonably explained its
decision not to eliminate this existing tariff provision.
B.
FERC also adequately explained why it applied the
unilateral funding option to both direct and indirect
transmission owners when resolving the original Otter Tail
complaint.
Otter Tail had claimed it was unlawful to treat direct and
indirect transmission owners differently. On remand from
Ameren, FERC reaffirmed its finding that the disparity
between the direct and indirect connection contracts was unjust
and unreasonable. Remand Order P 34 (noting that the Ameren
court had not overturned FERC’s prior determination that “the
same funding options should be available” to direct and
indirect transmission owners alike). At the first step of the Otter
Tail section 206 proceeding, therefore, FERC concluded that
the disparate treatment was indeed unlawful.
After making this finding, the second step of the section
206 proceeding required FERC to establish a just and
reasonable rate that would remedy the disparity between the
FERC, 593 F.3d 14, 19 (D.C. Cir. 2010); Maj. Op. 10. For the
reasons stated above, FERC easily met these standards.
2
I agree with the majority that our Ameren remand did not require
any particular fact gathering procedures and that FERC complied
with our directive to “develop[] a record by considering” the
arguments it failed to address the first time. Ameren, 880 F.3d at 584;
Maj. Op. 6–7.
8
two types of contracts. Ameren had already restored the
unilateral funding option as an approved tariff provision and,
as everyone agrees, indirect and direct contracts are materially
indistinguishable for the purposes of that option. See Maj. Op.
8 n.1. FERC therefore concluded it was “just and reasonable”
to include the unilateral funding option in the indirect
connection contracts to achieve parity with the direct
connection contracts. See id. P 34. This resolution of the Otter
Tail complaint was reasonable, indeed obvious: if the problem
is a lack of uniformity, uniformity is the solution.
The majority maintains that FERC needed some further
explanation somewhere. But this argument rests on a
misunderstanding of the proceedings. The Otter Tail petition
did not question the validity or lawfulness of the unilateral
funding option (which is precisely why FERC had instituted a
separate proceeding to resolve that question). FERC therefore
did not have to set a “new rate for indirect transmission
owners,” Maj. Op. 12, but only remedy the disparate treatment
between similarly situated transmission owners. The
lawfulness of the unilateral funding option was simply not in
play. FERC more than adequately explained why, in equalizing
treatment between direct and indirect transmission owners, it
would allow both to use the unilateral funding option.
III.
Finally, I note that the circumstances for remand without
vacatur are not present in this case. The majority holds FERC’s
orders lack the reasonable explanation required by law. Maj.
Op. 8. In that case, the ordinary and appropriate remedy is
vacatur of the agency’s orders. Although the remedy of remand
without vacatur is available under circuit precedent, it is an
exception to be used only in “limited circumstances” involving
unusually “disruptive consequences,” such as “when vacatur
9
would disrupt settled transactions” and it would be difficult or
impossible to restore the status quo ante. Am. Great Lakes
Ports Ass’n v. Schultz, 962 F.3d 510, 518–19 (D.C. Cir. 2020).
The fact that we might anticipate the agency has some unstated
good reasons for its decision is not sufficient to avoid vacatur.
Remanding without vacatur rarely provokes any action from
the agencies and leaves courts in the posture of merely
prodding an agency to provide a few more words. While
carrying a pragmatic patina, the toothless “remedy” of remand
without vacatur diminishes the authority of the courts to hold
agencies accountable for reasoned decisionmaking.
***
FERC undoubtedly could have made our review easier by
explaining its procedural steps with greater clarity. But once
we recognize the two separate proceedings at issue and the
precise obligations imposed by the Ameren remand, FERC’s
decision was plainly reasonable and reasonably explained. For
the foregoing reasons, I respectfully dissent.