Westar Energy, Inc. v. Federal Energy Regulatory, 05-1193.

• Decision Date: 16 January 2007
• Docket Number: No. 05-1193.,05-1193.
• Citation: 473 F.3d 1239
• Parties: WESTAR ENERGY, INC. and KANSAS GAS AND ELECTRIC COMPANY, Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

473 F.3d 1239

WESTAR ENERGY, INC. and KANSAS GAS AND ELECTRIC COMPANY, Petitioners v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent.

No. 05-1193.

United States Court of Appeals, District of Columbia Circuit.

Argued October 16, 2006.

Decided January 16, 2007.

On Petition for Review of an Order of the Federal Energy Regulatory Commission.

Martin J. Bregman argued the cause and filed the briefs for petitioners.

Judith A. Albert, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief were John S. Moot, General Counsel, and Robert H. Solomon, Solicitor.

Before: GINSBURG, Chief Judge, and TATEL and BROWN, Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge.

Westar Energy, Inc. and its subsidiary Kansas Gas and Electric Company (collectively Westar) sought permission from the Federal Energy Regulatory Commission to file corrected transmission data for 2001 after the December 31, 2002 deadline for doing so. The Commission denied the request, even though it had accepted another utility's similarly corrected filing after the deadline. Westar petitions for review, contending the Commission could not permissibly deny its request for a waiver of the deadline after it had allowed the other company to file late. Because the Commission did not meaningfully distinguish the prior case, we grant the petition for review and remand this matter for the Commission's further consideration.

I. Background

The Commission is required by law to charge regulated entities an annual fee calculated to recoup its cost of regulating them. 42 U.S.C. § 7178. The fee charged a public utility is based upon its share of the megawatt-hours transmitted in interstate commerce by all public utilities. 18 C.F.R. § 382.201(a)-(b). The Commission requires each public utility to file a Form 582 by April 30 reporting the number of megawatt-hours it transmitted in interstate commerce in the preceding year and permits the utility to correct its report until the end of the calendar year in which the report was filed. Id. § 382.201(c).

On November 21, 2002 the Commission notified Kansas City Power and Light Company (KCPL) it had been selected for examination as part of an industry-wide audit of the annual fees assessed by the Commission. On August 14, 2003 the Commission issued its final report on the KCPL audit, which concluded the utility had overstated its transmission volume for 2001. The auditors recommended, and the Commission accordingly ordered, that KCPL file a corrected Form 582 for 2001. The audit report also included a July 7, 2003 letter from KCPL noting it had reviewed a draft of the report, agreed with its findings and recommendations, and had submitted on March 3, 2003 — more than two months after the filing deadline and five months before the audit was completed — a Form 582 corrected "in accordance with the findings and recommendations outlined in the . . . audit."

After learning about KCPL's erroneous filing and its belated correction, Westar reviewed its own filings and discovered that, because of errors similar to those made by KCPL, it too had overstated its transmission volumes. On December 18, 2003 Westar filed revised Forms 582 for both 2001 and 2002 and requested a waiver of the December 31, 2002 deadline for correcting the 2001 data. The Commission accepted the revised 2002 report but refused to accept the revised 2001 report because it was filed after the deadline. Westar sought rehearing, which the Commission denied, and then petitioned this court for review.

II. Analysis

We will set aside a final decision of the Commission only if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). The Commission's insistence upon strict adherence to its rules is, therefore, permissible unless its reason for refusing to waive a rule is arbitrary, capricious, or "so insubstantial as to render that denial an abuse of discretion." Mountain Solutions, Ltd. v. FCC, 197 F.3d 512, 517 (D.C.Cir.1999) (quoting Green Country Mobilephone, Inc. v. FCC, 765 F.2d 235, 238 (D.C.Cir.1985)).

A fundamental norm of administrative procedure requires an agency to treat like cases alike. If the agency makes an exception in one case, then it must either make an exception in a similar case or point to a relevant distinction between the two cases. Green Country, 765 F.2d at 237-38; NLRB v. Washington Star Co., 732 F.2d 974, 977 (D.C.Cir.1984); cf. Colo. Interstate Gas Co. v. FERC, 850 F.2d 769, 774 (D.C.Cir.1988) ("[T]he Commission's dissimilar treatment of evidently identical cases . . . seems the quintessence of arbitrariness and caprice").

When the Commission denied Westar's request for a waiver, it made four points: First, "the Commission's regulations expressly provide that corrections of the information filed on Form No. 582 must be made promptly, by the end of the calendar year in which the information was originally filed." Second, waiving the deadline would "require the recalculation and re-billing of annual charges" and "prompt other utilities to take the same action," thereby "undermin[ing] the certainty . . . that annual charges would not be indefinitely subject to change." Third, Westar overreads a statement the Commission made in the course of denying a petition for rulemaking, Midwest Indep. Transmission Sys. Operator, Inc., 103 F.E.R.C. ¶ 61,048, at 61,180 (2003) ("Should an audit reveal errors . . . or should public utilities provide corrected data, the Commission adjusts the annual charges in the next fiscal year up or down, as appropriate"); the Commission never suggested it would "ignore the deadline expressly spelled out in its regulations." Finally, and most important for the present proceeding, the Commission said denying Westar a waiver was not inconsistent with its allowing KCPL to make a late filing, reasoning as follows:

[T]he Commission's auditors delayed KCPL's filing because of their ongoing investigation. In those very different circumstances, where the Commission itself caused the late filing, it would have been inequitable to penalize the company. Westar, however, was subject to no such delay.

Westar correctly notes the Commission's first three points apply with...