United States Court of Appeals, District of Columbia Circuit
March 21, 2017
Petitions for Review of Orders of the Federal Energy
K. Mitchell argued the cause and filed the cause for
Susanna Y. Chu, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief was Robert H. Solomon, Solicitor.
Courtney Olive, Special Assistant U.S. Attorney, Bonneville
Power Administration, argued the cause for intervenor. With
him on the brief was Jennifer A. Gingrich, Attorney Advisor.
Barbara C. Biddle and Jeffrey A. Clair, Attorneys, U.S.
Department of Justice, and Mary K. Jensen, Attorney,
Bonneville Power Administration, entered appearances.
Before: Pillard, Circuit Judge, and Edwards and Sentelle,
Senior Circuit Judges.
Edwards Senior Circuit Judge.
the Federal Energy Regulatory Commission ("FERC" or
"Commission") invoked Section 205 of the Federal
Power Act (the "Act" or "FPA") to order
Chehalis Power Generating, L.P., ("Chehalis") to
refund a portion of the rates it had charged a customer
because they were not just and reasonable. Several years
later, FERC had second thoughts. It determined that Chehalis
should not, after all, have been required to pay these funds
and held that Chehalis ought to recover funds with interest.
But Bonneville Power Administration ("Intervenor"),
the customer to whom Chehalis had paid the refund, had no
interest in voluntarily returning the money. Chehalis sought
relief from FERC by filing a Motion for an Order Requiring
Recoupment of Payments. FERC, however, in a perplexing
decision, held that it could not order recoupment
because the Commission's refund authority does
not extend to exempt public utilities such as the Intervenor
Bonneville. We hold that FERC erred when it held that it
lacked the authority to grant the Order Requiring Recoupment.
309 of the FPA, which permits FERC to "perform any and
all acts . . . [as may be] necessary or appropriate to carry
out [the Act's] provisions, " 16 U.S.C. § 825h,
clearly affords FERC the authority necessary to make Chehalis
whole. In concluding otherwise, FERC looked to §§
201(f) and 205 which prohibit it from ordering governmental
entities, such as Bonneville, to refund "rates or
charges" that FERC determines are "not
justified." 16 U.S.C. § 824d(e); see 16
U.S.C. § 824(f). FERC determined that because it could
not require Bonneville to grant "refunds" under
§ 205, it was also barred from granting
"recoupment" of a refund in favor of Chehalis. This
reasoning does not hold up. The strictures of §§
201(f) and 205 place no limits on FERC's ability to grant
this form of relief.
clearly had jurisdiction over the subject of this dispute -
i.e., the funds that it ordered Chehalis to pay to
Bonneville in refunds pursuant to § 205 of the FPA.
Therefore, FERC retained the authority to order Bonneville to
return the funds when the agency acknowledged that its
initial order was mistaken. Section 309 vests the Commission
with broad remedial authority, including the authority to
grant recoupment when it is justified. And § 201(f) does
not limit the authority of FERC to grant relief under §
309 with respect to matters that are beyond the strictures of
§ 201(f) and § 205. An order of recoupment, as
distinguished from an order to refund under § 205, is
beyond the strictures of § 201(f) and § 205.
uphold FERC's determination that, on the record of this
case, recoupment of funds by Chehalis is appropriate. We
reverse the Commission's determination that the Act does
not grant the agency authority to order Bonneville to repay
the funds that it should not have received. However, we
remand the case to allow the Commission to determine whether
it should apportion its recoupment order. FERC amply
explained why recoupment is justified in this case, but in
assessing the equities the Commission did not consider
whether something less than full recoupment might be
operates an electric generating plant that is interconnected
with the electric transmission system of Intervenor, a
federal agency within the Department of Energy. See TNA
Merchant Projects, Inc. v. FERC, 616 F.3d 588, 589- 90
(D.C. Cir. 2010); Br. for FERC at 4. Since the commencement
of this litigation, Chehalis's corporate parent, TNA
Merchant Projects, Inc., the Petitioner in this case, has
sold its equity ownership interests in Chehalis but retained
the right to litigate this matter. Br. for Petitioner at 8.
For convenience's sake we, like the parties, will refer
to Petitioner as Chehalis.
to 2005, Chehalis supplied reactive power to Intervenor
pursuant to an Interconnection Agreement that did not provide
for Chehalis to be compensated for this service. TNA
Merchant Projects, Inc., 616 F.3d at 590. In May 2005,
Chehalis filed a proposed rate schedule with FERC, which set
forth "Chehalis' rates for the provision of Reactive
Power Service, " that would allow it to charge
Intervenor for its services for the first time. See
id. (quoting Chehalis Rate Schedule, Joint Appendix
("JA") 10). The accompanying letter informed FERC