The Power Co. of Am. v. Fed. Energy Regulator Comm'n

Decision Date17 April 2001
Docket NumberNo. 99-1263,99-1263
Citation245 F.3d 839
Parties(D.C. Cir. 2001) The Power Company of America, L.P., Petitioner v. Federal Energy Regulatory Commission, Respondent & 99-1333
CourtU.S. Court of Appeals — District of Columbia Circuit

PG&E Energy Trading-Power, L.P., et al., Intervenors Consolidated with No. 99-1333

[Copyrighted Material Omitted]

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

Daniel Joseph argued the cause for petitioner. With him on the briefs were Merrill L. Kramer and Beth L. Hirschfelder.

David H. Coffman, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With him on the brief was Dennis Lane, Solicitor. Susan J. Court, Special Counsel, entered an appearance.

Earle H. O'Donnell argued the cause for intervenor PG&E Energy Trading-Power, L.P., et al. With him on the brief were Donna M. Attanasio, Bruce A. Grabow, David P. Sharo, Jacob Dweck, Daniel E. Frank, Paul B. Turner, Terry D. Kernell and David I. Bloom. Joseph R. Hartsoe and Jeffery D. Watkiss entered appearances.

Before: Edwards, Chief Judge, Ginsburg and Randolph, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge:

These are petitions for judicial review of a Federal Energy Regulatory Commission ruling that a 60-day notice-of-termination rule does not apply to power sales contracts terminated by 21 of the counterparties of the Power Company of America (PCA).

PCA is a power marketer. As such, it buys and sells wholesale electricity at market-based rates but does not own generation or transmission facilities. It purchases electricity from other power marketers and from traditional utilities. In contrast to power marketers, traditional utilities not only buy or sell electricity, they also own generation or transmission facilities. Power marketers and traditional utilities receive different regulatory treatment, especially in regard to the transaction documents they are required to file with the Commission.

During the summer of 1998, several entities terminated their contracts to sell power to PCA, purportedly because of PCA's weak financial condition. PCA's creditors then forced it into involuntary bankruptcy.

The present dispute is about the notice PCA's counterparties had to give before unilaterally terminating their contracts. Those contracts apparently do not address the matter of notice, but PCA claims a Commission regulation does. The regulation requires 60 days notice to the Commission to terminate "a rate schedule or part thereof required to be on file with the Commission." 18 C.F.R. § 35.15(a).1 The issue, then, is whether the terminated contracts were "required to be on file with the Commission." The canceling parties filed notices with the Commission as a precautionary measure, but not sufficiently far in advance to satisfy PCA. The Commission dismissed the notices as not required: all of the canceled transactions were "short-term power sales made from time to time at the discretion of the parties," and, as such, did not have to be on file under 18 C.F.R. § 35.15(a). See Southern Co. Energy Marketing, L.P., 84 F.E.R.C. p 61,199, at 61,98687 & n.3 (1998).

I. Jurisdictional Issues
A. Standing

PCA concedes that the contracts at issue have been "irrevocably cancelled." Final Brief of Petitioner at 34. The Commission did not cancel the contracts; private parties did, many of whom are not party to this suit. It is not obvious that PCA can show an "injury in fact" that is "fairly traceable" to the Commission's actions and that will likely be "redressed by a favorable decision," as Article III requires. Bennett v. Spear, 520 U.S. 154, 162 (1997); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Animal Legal Defense Fund, Inc. v. Glickman, 154 F.3d 426, 431 (D.C. Cir. 1998) (en banc).

PCA's ultimate injury is the termination of its contracts. Although the Commission did not terminate them, it ac quiesced in their termination by others. If, as PCA claims, the Commission had a duty to prevent those terminations by requiring more notice than was given, then PCA's injury is two-fold--the terminations by others, and the Commission's failure to prevent this. In these circumstances, the latter injury is cognizable. The "loss of a valuable contractual interest in a licensee is an injury sufficient to invoke our jurisdiction." Telephone and Data Sys., Inc. v. FCC, 19 F.3d 42, 46 (D.C. Cir. 1994). The injury is directly traceable to the Commission's alleged nonfeasance. See id. at 47; see also Animal Legal Defense Fund, 154 F.3d at 440-42.

Redressability is another matter. PCA is not asking for damages or injunctive relief in this court, although it is seeking such relief elsewhere. PCA stated that the Commission "has the power to fashion any number of remedies, and PCA would ask FERC to use that power if this Court holds that violations of the FPA and FERC regulations have occurred." Final Reply Brief of Petitioner at 4. The Commission does not dispute that it has remedies for unlawful contract terminations. In holding that the terminated agreements were not subject to the notice-of-termination rule, however, the Commission effectively held that the contracts were legally terminated. As such, no contract remedies will be forthcoming if the Commission's determination stands. In these circumstances, a declaratory ruling that the terminations at issue are subject to the notice requirement is a " 'necessary first step on a path that could ultimately lead to relief fully redressing the injury'." Telephone and Data Sys., 19 F.3d at 47; see also Hazardous Waste Treatment Council v. U.S. EPA, 861 F.2d 270, 273 (D.C. Cir. 1988). PCA is in the same position as the litigants who had standing in Telephone and Data Systems--they will not necessarily prevail if we overturn the Commission, but they "cannot prevail unless we do so." 19 F.3d at 47.2

B. Failure to Properly Intervene and Obtain Party Status

The Commission treated each contract termination as a separate proceeding and assigned each its own docket number, though it disposed of them on a consolidated basis. PCA sought to become a party to each proceeding by intervention. The Commission permitted PCA to intervene in most proceedings but denied intervention in the six proceedings involving Idaho Power Co.; PG&E Energy Trading-Power, L.P.; South Jersey Energy Co.; Vitol Gas & Electric LLC; El Paso Energy Marketing Co.3; and Cook Inlet Energy Supply, L.P. See New York State Elec. & Gas Corp., 85 F.E.R.C. p 61,196 (1998) (denying PCA's motions to intervene in the Vitol and Cook Inlet proceedings); Southern Co. Energy Mktg. L.P., 86 F.E.R.C. p 61,131 (1999) (denying intervention in the Idaho Power and South Jersey Energy Co. proceedings); PG&E Energy Trading-Power, L.P., 86 F.E.R.C. p 61,303 (1999) (denying intervention in the PG&E Energy and El Paso proceedings). As a consequence, PCA was not party to these six proceedings.

We have no jurisdiction over proceedings in which PCA is not a party because only "part[ies] to a proceeding" may seek judicial review under the Federal Power Act. See 16 U.S.C. § 825l(b). The Commission concluded that PCA did not properly intervene and therefore did not become a party to these six proceedings. PCA did not file timely motions to intervene, and the Commission was not obligated to accept untimely ones.

PCA claims that "FERC had no grounds on which to deny intervention." Final Brief of Petitioner at 35. Under the Commission's rules, however, the burden is on the untimely movant to show good cause to intervene. See 18 C.F.R. § 385.214(b)(3). PCA has not demonstrated good cause, certainly not to a degree sufficient to warrant our upsetting the Commission's application of its own procedural rule. PCA also asserts that the Commission arbitrarily considered only good cause, to the exclusion of four other factors identified in the rule. Final Brief of Petitioner at 36-38. Failure to establish good cause is, however, a sufficient condition to deny intervention, so the Commission was not obligated to consider any other factor. See 18 C.F.R. § 385.214(b)(3).4

II. The Merits

PCA has four arguments: (1) the Commission erroneously viewed 17 of the 21 terminations as involving short-term discretionary sales; (2) the Commission's interpretation of 18 C.F.R. § 35.15(a) violates the Federal Power Act; (3) the Commission's interpretation violates the regulation itself; and (4) the Commission should have applied its new interpretation (assuming its validity) prospectively only.

A. The Nature of the Terminated Transactions

PCA asserts that the Commission misconceived the nature of the terminated transactions, that 17 of them were umbrella agreements or their functional equivalents. See Final Brief of Petitioner at 19-24. We have jurisdiction to consider only PCA's argument regarding 12 of the transactions because PCA was not a party to the proceedings involving the other five.5 See supra section I.B.

One of the 12, Washington Water Power Company (WWPC), clearly did not terminate an umbrella agreement with PCA. WWPC's notices of termination stated that it was terminating transactions under the Western Systems Power Pool Agreement. See Joint Appendix at 358 & 657. While the Pool Agreement may constitute an umbrella agreement "required to be on file," WWPC could not have terminated it merely by terminating individual transactions under it. The Pool Agreement has numerous parties in addition to WWPC and PCA, and as such is not subject to termination by a single party. As the Commission put it in Western Systems Power Pool, 55 F.E.R.C. p 61,495, at 62,716 (1991), the "WSPP is an umbrella arrangement that will continue for at least ten years while members come and go over time. When one member leaves, the arrangement does not terminate." See generally Western Systems Power Pool, 55 F.E.R.C. p...

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