Can FERC Ignore the Fourth Circuit Ruling Limiting Its Backstop Transmission Authority

by Carolyn Elefant on September 8, 2011

in Appeals, FERC Order 1000

Hot on the heels of FERC’s issuance of Order No. 1000 comes a proposal out of DOE and FERC to fast-track transmission proposals mired in the state siting process, reports the New York Times. Under the proposal, DOE would delegate to FERC its power under EPAct 2005 to designate high-congestion transmission corridors over which FERC has backstop authority over transmission siting when a state fails to act. The DOE-FERC handoff would enable FERC to evaluate the need for transmission lines and generally familiarize itself with a transmission proposal at the same time that the state process is ongoing. As part of the plan, FERC would initiate a rulemaking specifying its process for donating Congestion Studies and designating National Interest Corridors. Additional details are posted here on the DOE website.

It’s no coincidence that FERC and DOE released this plan when they did. As I discussed here, Commissioner Moeller’s dissent, as well as several commenters, pointed out that Order 1000 fell short in addressing the protracted transmission siting process, which poses as much an obstacle to development as the planning and cost allocation issues that were the subject of Order No. 1000. The FERC-DOE proposal represents an effort to respond to siting concerns expressed but not addressed in the Order 1000 rulemaking process.

At the same time, the proposal has already drawn protests from NARUC which argued on rehearing of Order 1000 that the Final Rule may interfere with state siting authority, or serve as a basis for expanding FERC’s backstop siting authority. NARUC Rehearing Petition at 2. The DOE-FERC proposal could impact states more directly than Order 1000 (among other things, states will feel pressure to rule promptly on transmission proposals knowing that FERC will be waiting in the wings and prepared to go forward in the absence of a state ruling) – and thus, is not likely to engender must support from the states. For example, as NARUC’s recent letter to DOE and FERC explains, the dual FERC-state transmission process will lead to forum shopping – and possibly keep the state out of the federal process entirely while it is tied up in reviewing the transmission proposal in the state forum. On the other hand, the DOE-FERC may prove tempting enough to attract support from those hold-out utilities (particularly those in non-RTO/ISO regions) which like NARUC, objected to Order 1000 because of its potential to intrude on states’ traditional power over transmission siting and resource planning.

Meanwhile, what about the Fourth Circuit’s ruling in Piedmont Environmental Council v. FERC, 558 F.3d 304 (2009), which held that FERC’s backstop authority only comes into play when a state delays a ruling on a transmission application, but not where it denies it outright? FERC’s got that covered too, explaining in a staff paper that the ruling isn’t binding outside of the Fourth Circuit.
Like any decent ad-law/appellate attorney, I recognized the general principle articulated by FERC that a circuit court case only binds an agency within that circuit. But I couldn’t summon to mind a case that supports the proposition. So I did a little digging and uncovered the source of authority in a Supreme Court case, United States v. Mendoza . There the Court refused to prevent the government from relitigating issues in lower circuit court cases against other parties. The Court was concerned that holding an agency to the first court ruling – whether form a district or federal circuit court – would effectively bind the nation to a single court ruling. Instead, the Mendoza court expressed a preference for allowing litigation over an agency policy to move through multiple forums – and if conflict emerges, the Supreme Court can exercise certiorari at that time.

Comments on the DOE/FERC proposal are due soon -September 9.

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