United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 12, 2007 Decided April 20, 2007
No. 05-1411
CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL,
PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
NEW ENGLAND POWER POOL PARTICIPANTS COMMITTEE, ET
AL.,
INTERVENORS
On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Randall L. Speck argued the cause and filed the briefs for
petitioner.
John S. Wright and Michael C. Wertheimer, Assistant
Attorneys General, Attorney General's Office of State of
Connecticut, were on the brief for intervenor Richard
Blumenthal, Attorney General for the State of Connecticut.
James Bradford Ramsay was on the brief for amicus curiae
National Association of Regulatory Utility Commissioners.
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Samuel Soopper, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on the
brief were John S. Moot, General Counsel, and Robert H.
Solomon, Solicitor.
Allan B. Taylor was on the brief for intervenor New
England Power Pool Participants Committee. Scott P. Myers
entered an appearance.
Kathleen A. Carrigan, Clinton A. Vince, Sherry A. Quirk, J.
Cathy Fogel, and Sandra Barbulescu were on the brief for
intervenor ISO New England Inc. Robin E. Remis entered an
appearance.
Before: TATEL and GARLAND, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed PER CURIAM.
PER CURIAM: ISO New England, Inc. (ISO-NE)
administers New England’s electricity grid pursuant to both a
Federal Energy Regulatory Commission–approved tariff (the
ISO tariff) and an agreement between utilities in the region (the
Participants Agreement). In 2005, as required by both the ISO
tariff and the Participants Agreement, ISO-NE filed with FERC
under section 205 of the Federal Power Act (FPA), 16 U.S.C. §
824d, the installed capacity requirement (ICR) for the region for
the 2005/2006 Power Year. The ICR “is a projection of the
minimum amount of capacity required to serve load reliably in
the New England region,” ISO New England Inc., 111 F.E.R.C.
¶ 61,185 at 61,892 (2005) (“Initial Order”), and is used to
allocate the amount of generating capacity each electricity
retailer must purchase in order to ensure grid reliability. See
generally Keyspan-Ravenswood, LLC v. FERC, 474 F.3d 804
(D.C. Cir. 2007) (explaining the purpose and particulars of
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installed capacity requirements). The petitioners in this case,
including Connecticut Department of Public Utility Control
(DPUC), intervened in the section 205 proceeding, asserting
(among other things) that FERC lacked statutory jurisdiction to
regulate generation resource adequacy, a matter DPUC argued
the statute leaves to the states.
In its initial order, FERC rejected DPUC’s challenge to its
statutory jurisdiction, ruling that the ISO tariff and the
Participants Agreement granted the Commission authority to
accept the ICR. Initial Order at 61,896. DPUC sought
rehearing, pointing out that neither the ISO tariff nor the
Participants Agreement could possibly grant FERC statutory
authority to regulate generation resource adequacy. Reiterating
the reasons given in its initial order, FERC denied rehearing.
ISO New England, Inc., 112 F.E.R.C. ¶ 61,254 at 62,202 (2005)
(“Rehearing Order”). DPUC now petitions for review.
In both its brief and at oral argument, FERC abandoned its
earlier reliance on the ISO tariff and the Participants Agreement,
contending instead that FPA section 201 permits the
Commission to regulate generation resource adequacy because
of its effect on interstate electricity transmission. As FERC
conceded at oral argument, however, this new basis for statutory
authority appears nowhere in either of its orders. See Oral Arg.
Tr. 14 (“The Commission does not specifically explain the
statutory basis for jurisdiction in the order.”). It is a
fundamental precept of administrative law that we “may not
accept appellate counsel's post hoc rationalizations for agency
action.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 50 (1984); see also SEC v. Chenery Corp.,
332 U.S. 194, 196-97 (1947) (“It will not do for a court to be
compelled to guess at the theory underlying the agency’s action;
nor can a court be expected to chisel that which must be precise
from what the agency has left vague and indecisive.”); SEC v.
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Chenery Corp., 318 U.S. 80, 95 (1942) (“[A]n administrative
order cannot be upheld unless the grounds upon which the
agency acted in exercising its powers were those upon which its
action can be sustained.”).
For several reasons, FERC insists, we should overlook its
failure to set forth in either of its orders the arguments it now
presents in its appellate brief. We are unpersuaded.
First, FERC contends that DPUC should have made its
jurisdictional argument when the Commission initially approved
ISO-NE’s tariff. As FERC acknowledges, however, an
objection to the Commission’s statutory authority may be made
not only when the Commission approves a tariff, but also “when
the agency later utilizes [the tariff] to cause substantial injury.”
See Niagara Mohawk Power Corp. v. FERC, 452 F.3d 822, 827
(D.C. Cir. 2006).
Second, FERC asserts that it addressed DPUC’s
jurisdictional challenge in a parallel proceeding, Devon Power
LLC, 107 F.E.R.C. ¶ 61,240, on reh’g and clarification, 109
F.E.R.C. ¶ 61,154 (2004), on reh’g and clarification, 110
F.E.R.C. ¶ 61,315 (2005). Although FERC’s orders in this case
do discuss the Devon Power proceedings, they do so only in
connection with other substantive issues. The orders neither
mention nor cite Devon Power in reference to DPUC’s
jurisdictional challenge. FERC may incorporate by reference
discussions in other decisions, but it must actually do so in its
orders.
Third, FERC points to a single, unexplained citation to FPA
section 205 in a footnote in its rehearing order. See Rehearing
Order at 62,202 n.18. In this court, however, FERC argues that
FPA section 201, not section 205, gives it authority to regulate
generation resource adequacy.
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Finally, FERC’s counsel contends that the Commission had
no obligation to respond to DPUC’s jurisdictional argument
because existing case law so clearly establishes its jurisdiction.
But as we have noted, the Commission did respond to DPUC’s
argument, with a response counsel has now abandoned. Perhaps
the Commission did not rely on the case law because it regarded
it as unclear. Indeed, whatever the merits of counsel’s position
none of the cases it cites involve the same circumstances that are
at issue here. See FERC Br. 18-19. As we have previously
stated, “the bottom line is that, if the asserted conclusion were
so obvious, it would have been a simple task for FERC to
clearly state and support [its] view . . . . FERC did not do this,
so we cannot rely on the theory now advanced by its appellate
counsel.” Sithe/Independence Power Partners v. FERC, 165
F.3d 944, 950 (D.C. Cir. 1999).
For the reasons given above, we grant the petition for
review and remand to FERC for further proceedings consistent
with this opinion.
So ordered.