Xcel Energy Services Inc. v. Federal Energy Regulatory Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted on the Briefs May 6, 2005

Decided May 17, 2005

No. 04-1182

XCEL ENERGY SERVICES INC.,
PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT

WHEELABRATOR TECHNOLOGIES INC., ET AL.,
INTERVENORS

On Petition for Review of Orders of the
Federal Energy Regulatory Commission

William M. Dudley and Floyd L. Norton, IV were on the
briefs for petitioner.

Kenneth R. Carretta and Harvey L. Reiter were on the brief
for intervenors Public Service Electric & Gas Company and
Maine Public Utilities Commission in support of petitioner.
John E. McCaffrey and Marie D. Zosa entered appearances.

Cynthia A. Marlette, General Counsel, Federal Energy
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Regulatory Commission, Dennis Lane, Solicitor, and Robert H.
Solomon, Deputy Solicitor, were on the brief for respondent.

Margaret A. Moore, Howard E. Shapiro, Vincenzo Franco,
John B. O’Sullivan, and Carol A. Smoots were on the brief of
intervenors American Ref-Fuel Company, et al. in support of
respondent.

Mary McKenzie, Elizabeth McQuillan, and Karen Paull
were on the brief of intervenor Public Utilities Commission of
the State of California in support of respondent. Arocles Aguilar
and Sean H. Gallagher entered appearances.

Before: GINSBURG, Chief Judge, and ROGERS and ROBERTS,
Circuit Judges.

PER CURIAM : Section 210 of the Public Utility Regulatory
Policies Act (PURPA) requires the FERC to promulgate rules
requiring electric utilities to offer to sell electricity to, and to
purchase electricity from, “qualifying facilities” (QFs). 16
U.S.C. § 824a-3(a). The FERC must ensure that a QF’s selling
rate does not exceed the purchasing utility’s “avoided cost,”
which is “the cost to the electric utility of the electric energy
which, but for the purchase from [the QF], such utility would
generate or purchase from another source.” Id. § 824a-3(b).
State public utility commissions (PUCs) are responsible for
implementing the FERC’s rules and for setting the rates. Id. §
824a-3(f).

Over the last several years a number of states have
instituted programs that require a retailer of electricity to
generate renewable energy, to purchase such energy, or to
purchase tradeable certificates representing renewable energy
credits (RECs). In 2003 several QFs petitioned the FERC
seeking “an order declaring that avoided cost contracts entered
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into pursuant to PURPA, absent express provisions to the
contrary, do not inherently convey to the purchasing utility” any
RECs as part of the sale of energy. The FERC granted the
petition and stated that, insofar as the PURPA is concerned, such
contracts “do not convey RECs to the purchasing utility” absent
a contractual provision to the contrary, although the
Commission expressly left open the possibility that state law
might provide otherwise.

Xcel Energy, which opposed the petition before the FERC,
petitioned for rehearing and then for review in this court. Under
the PURPA’s enforcement scheme, however, “it is always the
district court that first passes upon the merits of whatever
position the Commission may take concerning the
implementation of the PURPA.” New York State Elec. & Gas
Corp. v. FERC, 117 F.3d 1473, 1476 (D.C. Cir. 1997). A utility
or a QF may petition the FERC to bring an action against a PUC
in federal district court to enforce the FERC’s rules. If the
FERC does not initiate an enforcement action then the electric
utility or QF may itself sue the PUC in federal district. Id. §
824a-3(h)(2).

Rather than following the mechanism for review laid out in
the PURPA, Xcel contends the review provision of the FPA, 16
U.S.C. § 825l(b), grants this court jurisdiction to consider its
arguments now because the FERC’s order “interprets, and
violates, the definition of small power production facilities” in
the FPA. As Xcel concedes in its reply brief, however, the
status of the QFs “is not relevant to the claims that [it] raises
here.” Xcel then argues “the renewable attributes of QFs are
part of, and inseparable from, the energy that QFs produce,” and
therefore the FERC’s interpretation of its avoided costs rule is
“inextricably linked” to the definition of a “small power
production facility” under the FPA. By Xcel’s own account,
however, the FERC made no ruling related to any provision of
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the FPA. Indeed, the FPA is not mentioned anywhere in the
challenged orders. Xcel therefore fails in its attempt to
characterize its challenge as reviewable under the FPA.

The law of this circuit leads inexorably to the conclusion
that we lack jurisdiction to consider Xcel’s petition for review.
“An order that does no more than announce the Commission’s
interpretation of the PURPA or one of the agency’s
implementing regulations is of no legal moment unless and until
a district court adopts that interpretation when called upon to
enforce the PURPA.” Niagara Mohawk Power Corp. v. FERC,
117 F.3d 1485, 1488 (D.C. Cir. 1997). Here, as in several other
petitions for review we have refused to consider, “the
Commission has in effect merely announced the position it
would take in any future enforcement action that [Xcel] might
bring.” Connecticut Valley Elec. Co. v. FERC, 208 F.3d 1037,
1043 (D.C. Cir. 2000). The FERC’s position is reviewable by
this court only after someone -- a utility, a QF, or the
Commission -- brings an enforcement action in the district court
and appeals therefrom. See Industrial Cogenerators v. FERC,
47 F.3d 1231, 1234 (D.C. Cir. 1995).