Last month, in Portland General Electric Co. v. FERC, the D.C. Circuit clarified that the federal appellate courts lack jurisdiction to review non-binding, advisory orders from FERC that merely interpret provisions of the Public Utility Regulatory Policies Act of 1978 (PURPA). The case involved a dispute over the extent of Portland General Electric’s (PGE’s) obligation to purchase power from PáTu Wind Farm, a six-turbine, 9 MW generator in rural Oregon and a PURPA-“qualified facility.”
PGE’s obligation to purchase power from PáTu stemmed from the power-purchase agreement (PPA) between the two entities, an agreement that is governed by PURPA. Enacted as a response to the 1973 oil crisis, PURPA seeks to diversify the nation’s energy supplies and reduce its dependence on imported oil. To accomplish this, PURPA incentivizes the development of “qualifying facilities” (QFs)—including cogeneration facilities and small power production facilities that produce energy using wind, solar, biomass, waste, or geothermal power—and creates a market for QFs to sell their output. The law contains a “must-purchase” obligation that requires utilities to purchase “any energy and capacity which is made available” from these particular generators at the utility’s avoided cost, i.e., the amount it would have cost the utility to generate that electricity on its own or purchase it from another source.
The must-purchase obligation was at the center of the dispute between PáTu and PGE. In PáTu’s view, both PURPA and the PPA required PGE to purchase its entire output, and—because that output varies day to day based on wind conditions—to do so via dynamic scheduling, a technology that electronically transfers generation from one balancing authority area to another in real time. PGE argued that the variable nature of PáTu’s generation meant that it was only required to purchase the output that PáTu committed to deliver in day-ahead schedules.
After a state administrative and court proceeding, PáTu filed a complaint at FERC. In January 2015, the Commission issued an order finding that PURPA regulations and the PPA required PGE to purchase PáTu’s entire net output delivered to PGE, but that PGE was not required to use dynamic scheduling. After the Commission denied rehearing, both PáTu and PGE filed petitions for review with the D.C. Circuit. PáTu argued that the Federal Power Act required PGE to utilize dynamic scheduling. The D.C. Circuit upheld this aspect of FERC’s order and denied PáTu’s petition.
In a separate appeal of the same FERC order, PGE challenged the PURPA-related aspects of FERC’s orders, including FERC’s conclusion that PURPA required PGE to purchase PáTu’s entire net output. In response to the PGE appeal, FERC argued that the Court should dismiss PGE’s petition on the grounds that the Court lacked jurisdiction to review the January 2015 order. The D.C. Circuit agreed with FERC and dismissed PGE’s petition for lack of jurisdiction. The Court explained that PURPA divides responsibility for implementation between the federal government and the states, and delineates distinct enforcement roles for the states, the Commission, and the federal courts. And while PURPA permits actions to proceed in federal court in certain circumstances, it does not allow for direct review of FERC orders that merely interpret PURPA provisions. The court also cited its previous decision in Midland Power Co-op v. FERC, 774 F.3d 1 (D.C. Cir. 2014), explaining that, “[a]lthough at first glance one might think that the Federal Power Act’s broadly worded judicial-review provision would cover FERC orders interpreting PURPA, our court has ruled otherwise.”
While FERC’s January 2015 order contained language that appeared mandatory—i.e., ordering PGE to accept PáTu’s entire net output—FERC conceded at oral argument that its January 2015 order was merely declaratory. As such, the D.C. Circuit concluded that it did not have jurisdiction to review it, and in doing so, delivered some sharp criticism:
[W]e are mystified by FERC’s continued use of mandatory language to resolve PURPA disputes in orders that it later insists are purely hortatory. … FERC could avoid a great deal of confusion and waste of judicial resources by not using words like “shall” and “must,” and by making it clear in its orders—as opposed to later in this court—that its discussions of PURPA-related issues are advisory only.
