The changing landscape of federal energy law

Administrative Law Review

Volumn 61, Issue 3, 2009, Pages 611-651

  Kelliher, Joseph T ^a   Farinella, Maria ^b  

^a Federal Regulatory Affairs   (United States)

^b FEDERAL ENERGY REGULATORY COMMISSION   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 79959408748     PISSN: 00018368     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (244)

1. 16 U. S. C. §§ 792-823d (2006).
2. Id. §§ 824-824w.
3. 15 U. S. C. §§ 717-717w (2006).
4. Id. §§ 3301-3432.
5. Hepburn Act, ch. 3591, 34 Stat. 584 (1906) (codified as amended in scattered sections of 49 U. S. C).
6. Although the Hepburn Act is the oldest of these four statutes, it was only entrusted to FERC administration relatively recently, in 1977. 42 U. S. C. §§ 7155, 7172 (2006). Interestingly, FERC administers the Hepburn Act as it existed in 1977, not as it exists today, under the terms of the Department of Energy Reorganization Act of 1977.
7. Natural Gas Amendments of 1947, 15 U. S. C. § 717f (h) (2006).
8. Clean Air Act Amendments of 1990, Pub. L. No. 101-549, 104 Stat. 2399 (1990)
9. (codified as amended at 42 U. S. C. §§ 7401-7671 (2006)).
10. Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996)
11. (codified at 47 U. S. C. §§ 151-161 (2000)).
12. Joseph T. Kelliher, Market Manipulation, Market Power, and the Authority of the Federal Energy Regulatory Commission, 26 ENERGY1 L. J. 1, 6 & n. 27 (2005).
13. Id.
14. See, e.g., Tenn. Elec. Power Co. v. Tenn. Valley Auth., 306 U. S. 118, 139 (1939) ("The franchise to exist as a corporation, and to function as a public utility... creates no right to be free of competition....");
15. see also Kelliher, supra note 9, at 6 & n. 27.
16. Kelliher, supra note 9, at 6.
17. See generally Regulatory Aspects of Carbon Capture, Transportation, and Sequestration: Hearing Before the S. Comm. on Energy and Natural Resources, 110th Cong. (2008) [hereinafter Hearing].
18. See STAFF OF PERMANENT SUBCOMM. ON INVESTIGATIONS, S. COMM. ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS, 110TH CONG., EXCESSIVE SPECULATION IN THE NATURAL GAS MARKETS 24 (Comm. Print 2007) ("In recent years, instead of using a published monthly index price derived from reported prices, buyers and sellers are increasingly referencing the relevant NYMEX futures contract for delivery of natural gas and using the price that is finally settled on for delivery of gas under that standard monthly contract.") (emphasis added);
19. FERC, 2006 STATE OF THE MARKETS REPORT 48 (2006) ("As a practical matter, monthly cash physical and futures natural gas prices are and must be closely related to one another.... [A]ny material differences will be arbitraged away.... [B]ig changes in cash physical market values naturally affect futures trading, and vice versa.").
20. 7 U. S. C. §§ 1-25 (2006).
21. For example, in Amaranth Advisors L. L. C., 120 F. E. R. C. U 61, 085 (2007), FERC required various entities to show cause why they had not violated a Commission regulation which prohibits the manipulation of natural gas prices. The Commission explained, This case concerns the important nexus between the wholesale interstate natural gas markets subject to our jurisdiction and the New York Mercantile Exchange (NYMEX) Natural Gas Futures Contract (NG Futures Contract). In recent years, many market participants in the physical natural gas markets have used the NG Futures Contract as a significant benchmark for prices in physical natural gas. In this case, manipulation of Commission- jurisdictional prices resulted from manipulation of the NG Futures Contract.
22. Id. para. 2.
23. See, e.g., id. para. 108 ("First, the settlement price directly sets the price for any contracts that ultimately go to delivery at Henry Hub. Second, the settlement price is directly incorporated into the price for physical basis transactions.").
24. See MEMORANDUM OF UNDERSTANDING BETWEEN THE FEDERAL ENERGY REGULATORY COMMISSION (FERC) AND THE COMMODITY FUTURES TRADING COMMISSION (CFTC) REGARDING INFORMATION SHARING AND TREATMENT OF PROPRIETARY TRADING AND OTHER INFORMATION 3 (2005) ("[T]he CFTC and the FERC may from time to time engage in oversight or investigations of activity affecting both CFTC-jurisdictional and FERC-jurisdictional markets.").
25. Id.
26. Amaranth Advisors L. L. C., 120 F. E. R. C. ¶ 61, 085 (2007);
27. Energy Transfer Partners, L. P., 120 F. E. R. C. ¶ 61, 086 (2007);
28. CFTC v. Amaranth Advisors L. L. C., 554 F. Supp. 2d 523 (S. D. N. Y. 2008).
29. Section 315 of the Energy Policy Act of 2005 added a new § 4 A to the Natural Gas Act, prohibiting manipulation of wholesale natural gas markets. Energy Policy Act of 2005, Pub. L. No. 109-58, § 315, 119 Stat. 691 (2005)
30. (codified as amended at 15 U. S. C. § 717c-1 (2006)). The prohibition on market manipulation applies to any entity, an undefined term, but a term broader than natural gas company as defined in the Natural Gas Act.
31. Natural Gas Act § 2 (6), 15 U. S. C. § 717a (6) (2006). FERC has defined any entity to include any person or form of organization regardless of its legal status, function, or activities. Prohibition of Energy Market Manipulation
32. Fed. Reg. 4244, 4248 (Jan. 26, 2006) (to be codified at 18 C. F. R.pt. lc).
33. Economy Fails to Stem Rise in Marketing Volumes, GAS DAILY, Dec. 16, 2008, at 1, 5-7;
34. Leading Power Traders on Borrowed Time: Constellation and Big Banks Keep Q2 Lively, POWER MARKETS WK., Sept. 29, 2008, at 1, 18-26.
35. Top-Heavy Marketer Rankings Reflect Volatility, GAS DAILY, Feb. 9, 2001, at 1, 8;
36. Merrill Lynch Now Among Big Sellers, May Augur New Role for Financial Firms, POWER MARKETS WK., June 5, 2000, at 1, 18-19.
37. See Horizon Asset Mgmt., Inc., 125 F. E. R. C. ¶ 61, 209 (2008);
38. Entegra Power Group L. L. C., 125 F. E. R. C. ¶ 61, 143 (2008) (rehearing pending);
39. Legg Mason, Inc., 121 F. E. R. C. ¶ 61, 061 (2007);
40. Morgan Stanley, 121 F. E. R. C. ¶ 61, 060 (2007)
41. clarified, 122 F. E. R. C. ¶ 61, 094 (2008);
42. Goldman Sachs Group Inc., 121 F. E. R. C. ¶ 61, 059 (2007)
43. clarified, 122 F. E. R. C. ¶ 61, 005 (2008);
44. Capital Research & Mgmt. Co., 116 F. E. R. C. ¶ 61, 267 (2006).
45. Cal. Indep. Sys. Operator Corp., 119 F. E. R. C.¶ 61, 061 (2007).
46. See generally Transmission Barriers to Entry, 73 Fed. Reg. 61, 854 (issued Oct. 17, 2008) (supplemental notice of technical conference).
47. American Clean Energy and Security Act of 2009, H. R. 2454, 111th Cong. § 341 (2009).
48. See generally Hearing, supra note 13.
49. See, e.g., Kids in the House, How Laws Are Made, http://clerkkids.house. gov/laws/index.html (last visited July 11, 2009). A far better description of the legislative process can be found in The Dance of Legislation by Eric Redman, tracing enactment of a minor law by a skilled legislator.
50. ERIC REDMAN, THE DANCE OF LEGISLATION (1973).
51. Joseph T. Kelliher Nomination: Hearing Before the S. Comm. on Energy and Natural Resources, 108th Cong. 20-21 (2003) (statement of Joseph T. Kelliher) ("As I pointed out in my testimony, at one level I consider myself a creature of Congress. I have spent a lot of my career working for Congress, and I have a tremendous respect for Congress's role in energy policy.").
52. 146 CONG. REC. 13, 414 (2000).
53. Energy Policy Act of 1992, Pub. L. 102-486, §§ 721-722, 106 Stat. 2915, 2915-19 (1992)
54. (codified as amended at 16 U. S. C. § 824j (2006));
55. see also Joseph T. Kelliher, Comment, Pushing the Envelope: Development of Federal Electric Transmission Access Policy, 42 AM. U. L. REV. 543, 589-91 (1993). Strictly speaking, the Energy Policy Act of 1992 did not grant wheeling authority to FERC; that authority had been granted by the Public Utility Regulatory Policies Act of 1978. But that law, which added § 211 to the Federal Power Act, was defective. Under § 211, as added by the Public Utility Regulatory Policies Act of 1978, FERC could not order wheeling if doing so would disturb "existing competitive relationships."
56. U. S. C. § 824j (c) (1) (1988). As a result of this provision, the wheeling provisions in the Public Utility Regulatory Policies Act of 1978 proved ineffective.
57. Kelliher, supra, at 551. This subsection was deleted by § 721 (4) (A) of the Energy Policy Act of 1992. If the Energy Policy Act of 1992 did not "grant" FERC wheeling authority, it is probably fair to say that it granted FERC "effective" wheeling authority.
58. Energy Policy Act of 1992 § 725 (b). Curiously, the civil penalty provisions of the Energy Policy Act of 1992 were limited to violations of sections of the Federal Power Act added or substantially amended by the 1992 Act, namely §§ 211-214.
59. Id.
60. Id. §201.
61. Energy Policy Act of 2005, Pub. L. No. 109-58, § 1283, 119 Stat. 594, 979-80 (2005).
62. Id. § 1289.
63. Id. § 1231.
64. Id. § 1285.
65. Id. § 1281.
66. Id. § 1211 (a).
67. Id. § 1221 (a).
68. Id. § 1241.
69. Id. §315.
70. Id. §316.
71. Id. §311.
72. Id. §312.
73. Id. §313.
74. Id.§§ 314 (b), 1284 (e).
75. Compare § 222 of the Federal Power Act, 16 U. S. C. § 824v (2006)
76. and § 4A of the Natural Gas Act, 15 U. S. C. § 717c-1 (2006)
77. with § 10 of the Securities Exchange Act of 1934, 15 U. S. C. § 78j (2006).
78. NAACP v. FPC, 520 F.2d 432, 438 (D. C. Cir. 1975) ("Of the Commission's primary task there is no doubt, however, and that is to guard the consumer from exploitation by non-competitive electric power companies.").
79. See generally Kelliher, supra note 9.
80. See Energy Transfer Partners, L. P., 121 F. E. R. C. ¶ 61, 282, paras. 80-85 (2007) (respondent asserted that the procedural due process requirements of the Fifth Amendment dictate that enforcement litigation take place in federal district court).
81. See NORMAN J. SINGER & J. D. SHAMBIE SINGER, SUTHERLAND STATUTES AND STATUTORY CONSTRUCTION §§ 45. 1, 45.8 (7th ed. 2007), available at Sutherland s 45:1 (Westlaw) (discussing the process of statutory interpretation and construction).
82. 347 U. S. 672 (1954).
83. Id. at 677-78.
84. Id. at 682-83 & n. 10.
85. In Greek mythology, Sisyphus was cursed to roll a large boulder up a hill, only to watch it roll down again, repeating the process throughout eternity. EDITH HAMILTON, MYTHOLOGY 439-40 (Little, Brown and Company 1998) (1942).
86. 383 F.3d 1006 (9th Cir. 2004)
87. cert, denied, 549 U. S. 882 (2006).
88. Id. at 1015-16.
89. 16 U. S. C. § 824e (b) (2000).
90. Energy Policy Act of 2005, Pub. L. No. 109-58, § 1285, 119 Stat. 594, 980 (2005)
91. (codified as amended at 16 U. S. C. § 824e (b) (2006)) (revising refund effective date).
92. Lockyer, 383 F.3d at 1016.
93. Id. at 1017.
94. Id. at 1015-17.
95. Id. at 1016.
96. See Brief for the Federal Energy Regulatory Commission in Opposition at 25, Coral Power, L. L. C. v. California ex rel. Brown, 127 S. Ct. 2972 (2007) (Nos. 06-888, 06-1100), available at http://www.usdoj.gov/osg/briefs/2006/ 0responses/2006-0888.resp.pdf ("Those new statutory provisions and measures instituted by [FERC] since the California energy crisis in 2000-2001 also reinforce the conclusion that the remedial issue raised in the principal petition... does not warrant review by this Court, especially at this interlocutory stage of the proceedings.").
97. 549 U. S. 497 (2007).
98. 42 U. S. C. § 7521 (a) (1) (2000). In the Clean Air Act, welfare is defined to include "effects on... weather... and climate."
99. Id. § 7602 (h).
100. Massachusetts, 549 U. S. at 511.
101. See id. at 511-12 (claiming that Congress "declined to adopt a proposed amendment establishing binding emissions limitations").
102. See id. at 513 (implying that EPA relied heavily on a report suggesting that the causal link between tailpipe emissions and global warming could not be established).
103. See id. at 533 ("If EPA makes a finding of endangerment, the Clean Air Act requires the agency to regulate emissions of the deleterious pollutant from new motor vehicles.").
104. ld. at 534. In April 2009, EPA issued a proposed endangerment finding. Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202 (a) of the Clean Air Act, 74 Fed. Reg. 18, 886 (proposed Apr. 24, 2009)
105. (to be codified at 40 C. F. R. ch. 1).
106. Regulating Greenhouse Gas Emissions Under the Clean Air Act, 73 Fed. Reg. 44, 354 (proposed July 30, 2008).
107. Former House Energy and Commerce Committee Chairman John Dingell predicted that regulating carbon emissions under the Clean Air Act would lead to a "glorious mess." Strengths and Weaknesses of Regulating Greenhouse Gas Emissions Using Existing Clean Air Act Authorities: Hearing Before the Subcomm. on Energy and Air Quality of the H. Comm. on Energy and Commerce, 110th Cong. (2008), http://archives.energycommerce.house.gov/cmte-mtgs/110-eaq-hrg. 041008.CleanAirAct.shtml (follow "Connect to the Archived Video Webcast of this Hearing" hyperlink).
108. FPC v. Hope Natural Gas Co., 320 U. S. 591, 610 (1944);
109. see also NAACP v. FPC, 520 F.2d 432, 438 (D. C. Cir. 1975)
110. afd, NAACP v. FPC, 425 U. S. 662 (1976) ("Congress's central concern with exploitation is of course reflected in the statute's emphasis on just and reasonable prices-").
111. The wheeling provisions of the Energy Policy Act of 1992 ratified FERC's policy of promoting transmission open access through its merger and market-based rate conditioning authority in the late 1980s.
112. See Kelliher, supra note 32, at 589-97. At least three provisions of the Energy Policy Act of 2005 ratified FERC interpretations of its preexisting authority under the Federal Power Act and Natural Gas Act. Section 311 (c) of the Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594, 685-86 (2005)
113. ratified FERC's interpretation of its authority to site LNG import terminals under § 3 of the Natural Gas Act. Initial Decision of the Presiding Examiner on a Pipeline Certificate Application, 47 F. P. C. 567, 572 (1970);
114. Distrigas Corp. v. FPC, 495 F.2d 1057, 1064 (D. C. Cir. 1974).
115. Section 1241 of the Energy Policy Act of 2005 ratified the FERC policy of granting rate incentives to members of regional transmission organizations. Section 1242 of the Energy Policy Act of 2005 ratified FERC's discretion to approve certain participant funding schemes. The Energy Policy Act of 2005 urged FERC to go even further than it had on its earlier reinterpretation of its existing legal authority. For example, § 211A of the Energy Policy Act of 2005 followed the Supreme Court's affirmation of Order No. 888, the open transmission access rule. Since the rule was affirmed by the Supreme Court in a unanimous decision, there was no need for Congress to ratify the rule per se. Instead, Congress enacted § 211A, which granted FERC authority to go further than Order No. 888, by authorizing the agency to require open access by unregulated transmitting utilities not subject to Order No. 888
116. United Distribution Cos. v. FERC, 88 F.3d 1105, 1123 (D. C. Cir. 1996).
117. See Order No. 436, 50 Fed. Reg. 42, 408, 42, 411 (Oct. 18, 1985) (codified in scattered sections of 18 C. F. R.) ("The Commission's overriding goal in this docket is to adapt our regulations to these fundamental legal and technical changes so that we may continue to fulfill our statutory mandates under the NGA and the NGPA.").
118. Md. People's Counsel v. FERC, 761 F.2d 780, 781 (D. C. Cir. 1985);
119. see also Md. People's Counsel v. FERC, 761 F.2d 768, 776 (D. C. Cir. 1985).
120. United Distribution Cos., 88 F.3d at 1123.
121. Associated Gas Distribs. v. FERC, 824 F.2d 981, 997 (D. C. Cir. 1987).
122. United Distribution Cos., 88 F.3d at 1124.
123. See id. at 1126 ("[T]he principal innovation of Order No. 636[] was mandatory unbundling of pipelines' sales and transportation services.");
124. see also Order No. 636, 57 Fed. Reg. 13, 267, 13, 269 (Apr. 16, 1992)
125. (codified at 18 C. F. R. pt. 284) (discussing the necessity of functional unbundling when transitioning to a competitive market).
126. United Distribution Cos., 88 F.3d at 1127-30;
127. see also New York v. FERC, 535 U. S. 1, 28 (2002) (finding that FERC made a "statutorily permissible policy choice").
128. See Order No. 636, 57 Fed. Reg. at 13, 268 ("[Order No. 636] will therefore reflect and finally complete the evolution to competition in the natural gas industry.... [T]his promotion of competition among gas suppliers will benefit all gas consumers....");
129. Order No. 436, 50 Fed. Reg. at 42, 411 ("[Order No. 436] adjusts, within the scope of the authority delegated by the Congress, those aspects of our current regulations that now appear to hinder the development of competition in those areas where competition will better protect the public interest than will traditional public utility regulatory rules.").
130. See Order No. 636, 57 Fed. Reg. at 13, 269 (discussing the consistency of the goals of Order No. 636 and the Wellhead Decontrol Act);
131. Order No. 436, 50 Fed. Reg. at 42, 411 ("[Order No. 436] also secures to consumers the benefits of competition in natural gas markets consistent with both the NGA and the NGPA.").
132. H. R. REP. No. 101-29, at 6 (1989)
133. reprinted in 1989 U. S. C. C. A. N. 51, 56.
134. Order No. 888, 61 Fed. Reg. 21, 540, 21, 541-43 (May 10, 1996)
135. (codified at 18 C. F. R. pts. 35 and 385 (2008)).
136. Section 205 broadly precludes public utilities, in making any transmission or sale subject to FERC's jurisdiction, from "mak[ing] or grant[ing] any undue preference or advantage to any person or subject[ing] any person to any undue prejudice or disadvantage."
137. U. S. C. § 824d (b) (2006). Section 206 provides, Whenever the Commission, after a hearing held upon its own motion or upon complaint, shall find that any rate, charge, or classification, demanded, observed, charged, or collected by any public utility for any transmission or sale subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order.
138. Id. § 824e (a).
139. The sections were largely unchanged with the exception of the change to the refund effective date in § 206 effected through enactment of the Regulatory Fairness Act in 1988.
140. Id. § 824e (b).
141. See id. § 824j (requiring that an entity or person generating power may request from FERC an order requiring transmission of the generated power over a utility's transmission lines);
142. see also Kelliher, supra note 32, at 589-91 ("The bill's sponsors shared FERC's view that transmission access may be a barrier to enhanced competition in wholesale power markets and removed many of the restrictions on FERC's wheeling authority....").
143. Order No. 888, 61 Fed. Reg. at 21, 541.
144. Id.
145. Associated Gas Distribs. v. FERC, 824 F.2d 981, 1008-09 (D. C. Cir. 1987) ("Agencies do not need to conduct experiments in order to rely on the prediction that an unsupported stone will fall; nor need they do so for predictions that competition will normally lead to lower prices."). Even in the decision vacating the FERC Standards of Conduct final rule, the court invited the Commission to attempt to justify the rule on theoretical grounds alone.
146. See Nat'l Fuel Gas Supply Corp. v. FERC, 468 F.3d 831, 844 (D. C. Cir. 2006) ("In the absence of factual evidence... FERC may try to support the Standards by setting out its best case for relying solely on a theoretical threat of abuse.").
147. However, FERC decided against making the attempt.
148. Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D. C. Cir. 2000)
149. ajffd sub nom. New York v. FERC, 535 U. S. 1 (2002). FERC's authority to impose openaccess requirements was upheld by the D. C. Circuit and not raised before the Supreme Court. The Supreme Court decision focused on FERC's authority over unbundled retail transmission.
150. New York, 535 U. S. at 4-5.
151. New York, 535 U. S. at 25, 29.
152. See Transmission Access Policy Study Group, 225 F.3d at 667, 683 ("[T]he open access requirement of Order 888 is premised not on individualized findings of discrimination by specific transmission providers, but on FERC's identification of a fundamental systemic problem in the industry."). One of the challenges to Order No. 888 was based on the Commission's reliance on economic theory, namely the incentive for transmission-owning utilities to use their ownership of transmission facilities to exercise vertical market power and discriminate against competing wholesale power sellers.
153. The court dismissed this line of attack, distinguishing Electricity Consumers Resource Council v. FERC, 747 F.2d 1511 (D. C. Cir. 1984), where the court reversed a FERC order because it "was persuaded that the Commission had distorted the economic theory it claimed to apply."
154. Transmission Access Policy Group, 225 F.3d at 688. The rule seems to be that to the extent broad FERC regulatory requirements are based on economic theory, they must rest on sound economic theory.
155. See supra note 75.
156. See Kelliher, supra note 32, at 553-70 (noting that an increased level of merger applications provided FERC an opportunity to condition the mergers on open-access requirements).
157. Public Utility Regulatory Policies Act of 1978, 16 U. S. C. §§ 1601-2645 (2006).
158. See id. § 824a-3 (2006) (requiring FERC to establish rules encouraging cogeneration and mandating that utilities offer to "purchase electric energy from such facilities").
159. See Federal Power Act, 16 U. S. C. § 796 (17) - (18) (2006) (defining relevant terms).
160. See 16 U. S. C § 796 (17) (C) (ii), (18) (B) (ii) (2000) (limiting "qualifying small power production facility" and "qualifying cogeneration facility" to facilities that are "owned by a person not primarily engaged in the generation or sale of electric power" other than from qualifying facilities).
161. Kelliher, supra note 9, at 8.
162. Id.
163. Id. at 8-9.
164. Id.
165. see California ex rel. Lockyer v. FERC, 383 F.3d 1006, 1012 (9th Cir. 2004) ("[A]pproximately a decade ago, companies began to file market-based tariffs that did not specify the precise rate to be charged. as a result, FERC then departed from its historical policy of basing rates upon the cost of providing service plus a fair return on invested capital, and began approving market-based tariffs.").
166. Kelliher, supra note 9, at 9.
167. See Kelliher, supra note 9, at 13-14 (noting that FERC required additional filing requirements in 2002 for utilities engaged in wholesale cost and market rate sales).
168. Entergy Servs., Inc., 58 F. E. R. C. ¶ 61, 234, at 61, 753 (1992) (approving marketbased rates for wholesale power sales in order to provide greater efficiencies than traditional cost-based rate regulation);
169. Pub. Serv. Co. of Ind., 51 F. E. R. C. ¶ 61, 367, at 62, 225 (1990) ("[I]mproved supply options should allow the purchasing utilities to reduce their costs, which will benefit their ratepayers when these cost reductions are passed through in their bills.")
170. modified sub nom. PSI Energy, Inc., 52 F. E. R. C. ¶ 61, 260
171. clarified, 53 F. E. R. C. ¶ 61, 131
172. petition dismissed sub nom. N. Ind. Pub. Serv. Co. v. FERC, 954 F.2d 736 (D. C. Cir. 1992);
173. Pac. Gas & Elec. Co., 38 F. E. R. C. ¶ 61, 242, at 61, 790 (1987) (allowing experimental competitive rates for wholesale power sales because "competition... encourages utilities to make efficient decisions with a minimum of regulatory intervention. Ultimately, consumers should benefit from lower prices as competition improves efficiency")
174. modified, 47 F. E. R. C. ¶ 61, 121 (1989)
175. modified, 50 F. E. R. C. ¶ 61, 339 (1990)
176. modified sub nom. W. Sys. Power Pool, 55 F. E. R. C. ¶ 61, 099, at 61, 319 (1991) (rejecting flexible pricing for bulk power sales because applicant had failed to eliminate anticompetitive effects by mitigating market power in generation and transmission)
177. granting stay, 55 F. E. R. C. ¶ 61, 154 (1991)
178. reh'g granted in part, 55 F. E. R. C. ¶ 61, 495 (1991)
179. modified, 59 F. E. R. C. ¶ 61, 249 (1992);
180. Pub. Serv. Co. of N. M., 25 F. E. R. C. ¶ 61, 469, at 62, 059-60 (1983) (approving experiment to promote efficiency in wholesale power markets through market-based pricing of sales).
181. Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities, 72 Fed. Reg. 39, 904 (July 20, 2007)
182. (to be codified at 18 C. F. R. pt. 35);
183. Fed. Reg. 25, 832 (May 7, 2008) (order on rehearing).
184. Id.
185. See California ex rel. Lockyer v. FERC, 383 F.3d 1006, 1013 (9th Cir. 2004) (determining that market-based tariffs do not, per se, violate the Federal Power Act);
186. see also La. Energy & Power Auth. v. FERC, 141 F.3d 364, 365 (D. C. Cir. 1998) (rejecting that FERC acted arbitrarily and capriciously by approving market-based rates without a hearing);
187. see also Kelliher, supra note 9, at 12.
188. Lockyer, 383 F.3d at 1013. The court also found FERC did not adequately enforce the ex post reporting requirement.
189. Id. at 1014.
190. Id.
191. Id. at 1006
192. cert, denied, 127 S. Ct. 2972 (2007);
193. Colo. Office of Consumer Counsel v. FERC, 490 F.3d 954 (D. C. Cir. 2007)
194. cert, denied, 128 S. Ct. 1872 (2008).
195. In Morgan Stanley, the Supreme Court specifically noted it had not ruled on the legality of the FERC market-based rate program. Morgan Stanley Capital Group, Inc. v. Pub. Util. Dist. No. 1, 128 S. Ct. 2733, 2741 (2008) ("Both the Ninth Circuit and D. C. Circuit have generally approved FERC's scheme of market-based tariffs. We have not hitherto approved, and express no opinion today, on the lawfulness of the market-based-tariff system, which is not one of the issues before us.") (citations omitted).
196. The Federal Water Power Act of 1920 became Part I of the Federal Power Act upon enactment of the Public Utility Act of 1935, Pub. L. 74-333, 49 Stat. 803, 838, 839
197. (codified as amended at 16 U. S. C. §§ 791, 791a (2006)).
198. See generally FERC, HYDROELECTRIC INFRASTRUCTURE TECHNICAL CONFERENCE, (2006), http://elibrary.ferc.gov/idmws/nvcommon/NVViewer.asp?Doc=11217148:0.
199. Federal Power Act § 6, 16 U. S. C. § 799 (2006).
200. As of January 5, 2009, FERC had issued 138 preliminary permits for hydrokinetic licenses under the pilot program, with 68 applications for preliminary permits pending.
201. See, e.g., EP Operating Co. v. FERC, 876 F.2d 46, 48 (5th Cir. 1989);
202. Sea Robin Pipeline Co. v. FERC, 127 F.3d 365, 368 (5th Cir. 1997).
203. Natural Gas Act § 1 (b), 15 U. S. C. § 717 (b) (2006).
204. Barnes Transp. Co., 18 F. P. C. 369, 372 (1957);
205. see also ExxonMobil Gas Mktg. Co. v. FERC, 297 F.3d 1071, 1076 (D. C. Cir. 2002).
206. Natural Gas Act § 1 (c), 15 U. S. C. § 717 (c) (2006).
207. FERC first articulated the primary function test in Farmland Indus., Inc., 23 F. E. R. C. ¶ 61, 083 (1983).
208. The Commission later modified the test in Amerada Hess Corp., 52 F. E. R. C. ¶ 61, 268 (1990).
209. Criteria for Reassertion of Jurisdiction over the Gathering Services of Natural Gas Company Affiliates, 118 F. E. R. C. ¶ 61, 114, para. 4 (2007) [hereinafter Gathering Clarification Order].
210. Id.
211. 18 C. F. R. § 284.10 (c) (1) (2006).
212. Gathering Clarification Order, 118 F. E. R. C. at para. 8.
213. FERC stated its preference for full unbundling of gathering service from transportation in its 1989 Rate Design Policy Statement, Interstate Natural Gas Pipeline Rate Design, 47 F. E. R. C. ¶ 61, 295, at 62, 059 (1989)
214. restating its strong preference for fully unbundling gathering service in Pipeline Service Obligations and Revisions to Regulations Governing Self-Implementing Transportation, and Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, 57 Fed. Reg. 36, 128 (Aug. 12, 1992).
215. Gathering Clarification Order, 118 F. E. R. C. at para. 8.
216. Id. paras. 17-20.
217. Williams Cos. v. FERC, 345 F.3d 910 (D. C. Cir. 2003);
218. Sea Robin Pipeline Co. v. FERC, 127 F.3d 365 (5th Cir. 1997);
219. Nw. Pipeline Corp. v. FERC, 905 F.2d 1403 (10th Cir. 1990);
220. EP Operating Co. v. FERC, 876 F.2d 46 (5th Cir. 1989).
221. Arkla Gathering Servs. Co., 67 F. E. R. C. ¶ 61, 257
222. order on reh'g, 69 F. E. R. C. ¶ 61, 280 (1994)
223. reh'g denied, 70 F. E. R. C. ¶ 61, 079 (1995)
224. reconsideration denied, 71 F. E. R. C. ¶ 61, 297 (1995)
225. ajfd in part and rev 'd in part, Conoco Inc. v. FERC, 90 F.3d 536 (D. C. Cir. 1996).
226. Arkla Gathering Servs. Co., 67 F. E. R. C. at 61, 871.
227. Id.
228. Conoco Inc., 90 F.3d at 553.
229. Id.
230. Regulations Under the Outer Continental Shelf Lands Act Governing the Movement of Natural Gas on Facilities on the Outer Continental Shelf, Order No. 639, 65 Fed. Reg. 20, 354 (Apr. 17, 2000);
231. Fed. Reg. 47, 294 (Aug. 2, 2000) (order on rehearing);
232. F. E. R. C. 161, 274 (2000) (order denying clarification).
233. Williams Cos. v. FERC, 345 F.3d 910, 916 (D. C. Cir. 2003).
234. Transcon. Gas Pipe Line Corp., 96 F. E. R. C. ¶ 61, 115 (2001).
235. Transcon. Gas Pipe Line Corp., 103 F. E. R. C ¶ 61, 177, para. 41 (2003).
236. Williams Gas Processing-Gulf Coast Co. v. FERC, 373 F.3d 1335, 1345 (D. C. Cir. 2004).
237. Id. at 1343.
238. Id. at 1342-43.
239. Criteria for Reassertion of Jurisdiction over the Gathering Services of Natural Gas Company Affiliates, 70 Fed. Reg. 55, 819 (issued Sept. 23, 2005) (notice of inquiry).
240. Gathering Clarification Order, 118 F. E. R. C. at para. 35.
241. See Press Release, FERC, Commission Clarifies Policy on Jurisdiction over Natural Gas Gathering Facilities (Feb. 15, 2007), http://www.ferc.gov/news/ newsreleases/2007/2007-l/02-15-07-G-l.asp.
242. FERC Chairman Joseph T. Kelliher has observed that [t]he Commission has tried a number of times to assert jurisdiction over offshore gathering facilities to protect against undue preference and the exercise of monopoly power, but has been repeatedly rebuffed by the courts. We must accept the judgment of the courts. Under current law, offshore gathering is an unregulated monopoly. That will remain the case unless and until the law changes.
243. Id.
244. Id.