Commissioner James Danly Statement
November 18, 2022
EL22-75-000
Here we go again. Today’s order should simply state: “On June 29, 2022, Nebraska Public Power District (NPPD) filed a request for remedial relief under section 309 of the Federal Power Act (FPA)[1] on equitable grounds, and the request is denied” citing Oklahoma Gas & Electric Company v. FERC.[2] Nevertheless, I concur in today’s order because it denies NPPD’s unlawful waiver request.[3]
I have spent the last five years trying to discipline this agency as to the limits of our legal authority.[4] The Commission is legally barred by the filed rate doctrine and the rule against retroactive ratemaking[5] from granting NPPD’s requested waiver,[6] regardless of the equities at stake.
I acknowledge that many of the waiver requests we receive present sympathetic factual situations. Indeed, many of the entities requesting a waiver will suffer real harm if their requested waiver is denied, and often granting the waiver would not harm any third party. As tempting as it may be to find, as Chairman Chatterjee put it in his concurring statement in Montana-Dakota, that the Commission has a “modicum of regulatory flexibility to address ministerial or inadvertent errors on a case-by-case basis,”[7] we do not. Just wishing that we could do justice as we see it does not confer that power upon us. The inevitable, albeit oftentimes dissatisfying, conclusion is that if we do not have the legal authority to grant a waiver request, we cannot grant it, no matter how much sympathy we may have for the applicant and no matter the harm, however grave, that denial works upon the applicant.
It is true that retroactive rate changes do not always violate the filed rate doctrine or the rule against retroactive ratemaking. There are two judicially recognized exceptions to these doctrines. The first is the notice exception.[8] The second is the contract exception.[9] As a purely legal matter, it is—and always will be—“not appropriate” or “inappropriate” (i.e., unlawful) to grant waiver on equitable grounds where there is a tariff violation. We have no discretion as a legal matter to grant waivers that do not fit within well-defined exceptions, even when an abstract sense of justice would militate toward granting it. Stated in layman’s terms, we have no flexibility to bend the rules, even on a case-by-case basis, under the filed rate doctrine or the rule against retroactive ratemaking for equitable considerations of any kind under any circumstances—ever. The Supreme Court has spoken in unmistakable terms on this very subject, finding that it is necessary to require “strict adherence to the filed rate . . . despite its harsh consequences in some cases.”[10] The D.C. Circuit agrees. While “[t]he Commission may craft a variety of remedies under [s]ection 309 of the Federal Power Act,” the “filed rate doctrine [] limits that remedial authority.”[11] “Once a tariff filed, the Commission has no statutory authority to provide equitable exceptions or retroactive modifications to the tariff.”[12] The D.C. Circuit explained that Old Dominion Electric Cooperative v. FERC “reinforced that FERC has ‘no discretion to waive the operation of a filed rate or to retroactively change or adjust a rate for good cause or for any other equitable considerations.’”[13] “When it applies, the filed rate doctrine is ‘a nearly impenetrable shield’ and does not yield, ‘no matter how compelling the equities.’”[14] Thus, FPA section 309 cannot be invoked to provide equitable exceptions or retroactive modifications to the filed rate.
The D.C. Circuit also recently and unequivocally settled the question of whether both rates and non-rate terms and conditions are part of the filed rate.[15] They are.[16] As the D.C. Circuit explained, the FPA “prohibits changes, not just to a rate, but also to ‘any such rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto.’”[17] Accordingly, “[n]on-rate terms within the tariff may not be changed retroactively.”[18] And, should anyone advance the argument that the lack of opposition to a waiver request means that the waiver request can be granted, that argument is unavailing. While it might mean, as a practical matter, that there will be no party to the proceeding who can perfect their appeal rights and pursue a petition for review, the lack of such a party is ultimately of no consequence. The absence of opposition does not, and cannot, make the unlawful lawful.
The Commission exceeds its authority—and acts hypocritically—when it ignores or misapplies judicial precedent, as it has done in a number of the orders in which it has granted retroactive waiver requests. Nevertheless, the courts have spoken invariantly over the last thirty years on the solidity and inflexibility of the filed rate doctrine and rule against retroactive ratemaking. The D.C. Circuit’s recent pronouncements in Oklahoma Gas likewise are unambiguous, final, and controlling: the Commission has no discretion to waive the operation of a filed rate or to retroactively change or adjust a rate for good cause or for any other reason. Now and going forward we must act in accordance with the law.
For these reasons, I respectfully concur.
[1] 16 U.S.C. § 825h.
[2] Okla. Gas & Elec. Co. v. FERC, 11 F.4th 821, 832 (D.C. Cir. 2021) (Oklahoma Gas).
[3] Neb. Pub. Power Dist., 181 FERC ¶ 61,077 (2022).
[4] See, e.g., Borough of Chambersburg, 179 FERC ¶ 61,014 (2022) (Danly, Comm’r, dissenting); AEP Energy Partners, Inc., 177 FERC ¶ 61,241 (2021) (Danly, Comm’r, dissenting); Allegheny Elec. Coop., Inc., 177 FERC ¶ 61,240 (2021) (Danly, Comm’r, dissenting); Cal. Indep. Sys. Operator Corp., 176 FERC ¶ 61,159 (2021) (Danly, Comm’r, dissenting); Long Island Power Auth., 176 FERC ¶ 61,118 (2021) (Danly, Comm’r, dissenting in part and concurring in part); Caney River Wind Project, LLC, 176 FERC ¶ 61,097 (2021) (Danly, Comm’r, dissenting); Viridity Energy Sols., Inc., 176 FERC ¶ 61,079 (2021) (Danly, Comm’r, dissenting); SunEnergy1, LLC, 176 FERC ¶ 61,004 (Danly, Comm’r, dissenting); Harbor Cogeneration Co., LLC, 175 FERC ¶ 61,232 (2021) (Danly, Comm’r, dissenting); Buchanan Cnty Solar Project, LLC, 175 FERC ¶ 61,109 (2021) (Danly, Comm’r, dissenting); Rolling Hills Generating, L.L.C., 175 FERC ¶ 61,108 (2021) (Danly, Comm’r, dissenting); Novera Energy, LLC, 175 FERC ¶ 61,107 (2021) (Danly, Comm’r, dissenting); TGE Pa. 202, LLC, 175 FERC ¶ 61,080 (Danly, Comm’r, dissenting); Leeward Renewable Energy, LLC, 175 FERC ¶ 61,079 (2021) (Danly, Comm’r, dissenting); N. Nat. Gas Co., 175 FERC ¶ 61,059 (2021) (Danly, Comm’r, dissenting); Kinetica Deepwater Express, LLC, 175 FERC ¶ 61,048 (2021) (Danly, Comm’r, concurring in part and dissenting in part); Cal. Indep. Sys. Operator Corp., 175 FERC ¶ 61,043 (2021) (Danly, Comm’r, dissenting); Grove Hill Wind, LLC, 174 FERC ¶ 61,240 (2021) (Danly, Comm’r, dissenting); Midcontinent Indep. Sys. Operator, Inc., 174 FERC ¶ 61,202 (2021) (Danly, Comm’r, dissenting); Tri-State Generation & Transmission Ass’n, 174 FERC ¶ 61,168 (2021) (Danly, Comm’r, concurring in part and dissenting in part); Stoney Creek Solar LLC, 174 FERC ¶ 61,054 (2021) (Danly, Comm’r, dissenting); RRE Power LLC, 174 FERC ¶ 61,052 (2021) (Danly, Comm’r, dissenting); N. Border Pipeline Co., 174 FERC ¶ 61,038 (2021) (Danly, Chairman, dissenting); Sw. Pub. Serv. Co., 173 FERC ¶ 61,210 (2020) (Danly, Chairman, dissenting); Sw. Power Pool, Inc., 173 FERC ¶ 61,209 (2020) (Danly, Chairman, dissenting); NYC Energy LLC, 173 FERC ¶ 61,193 (2020) (Danly, Chairman, dissenting); CenterPoint Energy Houston Elec., LLC, 173 FERC ¶ 61,170 (2020) (Danly, Chairman, concurring in part and dissenting in part); S. Cal. Edison Co., 173 FERC ¶ 61,128 (2020) (Danly, Comm’r, dissenting); S. Star Cent. Gas Pipeline, Inc., 173 FERC ¶ 61,066 (2020) (Danly, Comm’r, dissenting); Glidepath Ventures, LLC, 173 FERC ¶ 61,085 (2020) (Danly, Comm’r, dissenting); Columbia Gas Transmission, LLC, 173 FERC ¶ 61,064 (2020) (Danly, Comm’r, dissenting); Pub. Serv. Elec. & Gas Co., 173 FERC ¶ 61,056 (2020) (Danly, Comm’r, dissenting); Sunflower Elec. Power Corp., 173 FERC ¶ 61,054 (2020) (Danly, Comm’r, dissenting); Lightsource Renewable Energy Dev., LLC, 172 FERC ¶ 61,294 (2020) (Danly, Comm’r, dissenting); Mont.-Dakota Utils. Co., 172 FERC ¶ 61,278 (2020) (Montana-Dakota) (Danly, Comm’r, dissenting).
See Tex. E. Transmission, LP, 178 FERC ¶ 61,075 (2022) (Danly, Comm’r, concurring in the result at P 3) (“Like its counterpart in [FPA] section 309, the Commission cannot rely upon Natural Gas Act (NGA) section 16 [15 U.S.C. § 717o] to ignore the express terms of the tariff, even for equitable considerations. With this limitation on the Commission’s authority in mind, I agree with the result reached in today’s order. Under these circumstances, in which (1) Texas Eastern did not satisfy a requirement in its tariff to make a filing not less than 30 days in advance of the effective date, and (2) the tariff specifies the effective date for such filings, the Commission should deny the waiver, allow the filing to take effect on the effective date established by the tariff, and then under NGA section 16, decide in its discretion not to take action in light of Texas Eastern’s violation of its tariff. Today’s order reaches that result.”) (emphasis in original) (citations omitted); Andro Hydro LLC, 178 FERC ¶ 61,007 (2022) (Danly, Comm’r, concurring at PP 1, 3) (“I agree with the analysis in the order, but in addition to that, I would deny the waiver because it seeks retroactive changes to the filed rate and thus violates the filed rate doctrine and rule against retroactive ratemaking . . . Neither Andro Hydro LLC in its motion nor the Commission in its order mention the fact that the requested waiver is clearly retroactive and therefore unlawful.”); Kumquat & Citron Cleantech, LLC, 175 FERC ¶ 61,263 (2021) (Danly, Comm’r, concurring at P 1) (“we did not need to apply the four-factor test here because the request was for a retroactive waiver that the Commission has no statutory authority to grant”); Vineyard Wind LLC, 173 FERC ¶ 61,058 (2020) (Danly, Comm’r, concurring) (noting Commission inexcusably denied retroactive waivers on mootness grounds); Upstream Wind Energy LLC, 173 FERC ¶ 61,057 (2020) (Danly, Comm’r, concurring) (tariff provides notice of retroactive adjustments after the settlement dispute deadline); Midcontinent Indep. Sys. Operator, Inc., 173 FERC ¶ 61,055 (2020) (Danly, Comm’r, concurring) (noting order reaches right result but stating the Commission need not rule on the waiver request because of a tariff violation puts the cart before the horse); Mariposa Energy, LLC, 173 FERC ¶ 61,053 (2020) (Danly, Comm’r, concurring) (noting order properly dismissed the waiver request as moot but should have denied it as a retroactive waiver request); Borrego Solar Sys., Inc., 173 FERC ¶ 61,052 (2020) (Danly, Comm’r, concurring) (same); Pac. Gas & Elec. Co., 173 FERC ¶ 61,051 (2020) (Danly, Comm’r, concurring) (noting order correctly denies the waiver request because the Commission does not have the legal authority to grant it under the filed rate doctrine and the rule against retroactive ratemaking).
See also Salt Creek Solar, LLC, 180 FERC ¶ 61,116 (2022) (order denying waiver request and complaint); Associated Elec. Coop., Inc., 180 FERC ¶ 61,111 (2022) (order denying waiver); Sw. Power Pool, Inc., 180 FERC ¶ 61,110 (2022) (order granting petition for declaratory order and finding it would violate the filed rate doctrine and rule against retroactive ratemaking to compensate beyond the rate provided for in the tariff); Sw. Power Pool, Inc., 174 FERC ¶ 61,205 (2021) (Danly, Comm’r, concurring) (noting failure of the Commission to explain why it applied the filed rate doctrine in this case but not others where the doctrine was equally applicable).
[5] Sw. Power Pool, Inc., 180 FERC ¶ 61,110 at P 60 n.83 (“The filed rate doctrine ‘forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate federal regulatory authority.’ Ark. La. Gas Co. v. Hall, 453 U.S. 571, at 577 (1981) [(Arkla)]. The related rule against retroactive ratemaking also ‘prohibits the Commission from adjusting current rates to make up for a utility’s over- or under-collection in prior periods.’ Towns of Concord v. FERC, 955 F.2d 67, 71 & n.2 (D.C. Cir. 1992)[.]”). Further, under the rule against retroactive ratemaking, “[n]ot only do the courts lack authority to impose a different rate than the one approved by the Commission, but the Commission itself has no power to alter a rate retroactively.” Arkla, 453 U.S. at 578 (footnote omitted). See also Waiver of Tariff Requirements, 171 FERC ¶ 61,156, at P 5 (2020) (Proposed Waiver Policy Statement).
[6] See, e.g., Montana-Dakota, 172 FERC ¶ 61,278 (2020) (Danly, Comm’r, dissenting). Even if the requested waiver meets the requirements of the Commission’s four-factor test, that does not resolve the legal infirmity of the requested waiver.
[7] Montana-Dakota, 172 FERC ¶ 61,278 (Chatterjee, Chairman, concurring at P 2).
[8] Old Dominion Elec. Coop. v. FERC, 892 F.3d 1223, 1231 (D.C. Cir. 2018) (Old Dominion) (quoting Nat. Gas Clearinghouse v. FERC, 965 F.2d 1066, 1075 (D.C. Cir. 1992)).
[9] Consol. Edison Co. of N.Y. v. FERC, 347 F.3d 964, 969 (D.C. Cir. 2003) (Consolidated Edison); Columbia Gas Transmission Corp. v. FERC, 895 F.2d 791, 795-97 (D.C. Cir. 1990) (Columbia Gas); City of Piqua v. FERC, 610 F.2d 950, 954-55 (D.C. Cir. 1979).
[10] Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 132 (1990); accord Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 223 (1998) (explaining the applicability of the filed rate doctrine). These cases involved application of the filed rate doctrine to an industry outside of the Commission’s jurisdiction, but the requirement of strict adherence to the doctrine applies equally here.
[11] Oklahoma Gas, 11 F.4th at 832 (citing Verso Corp. v. FERC, 898 F.3d 1, 10 (D.C. Cir. 2018); Pub. Utils. Comm’n of Cal. v. FERC, 988 F.2d 154, 168 n.12 (D.C. Cir. 1993) (“explaining that if FERC’s actions ‘violated the file rate doctrine or the rule against retroactive ratemaking, we would not then invoke the Commission’s assessment of the equities to overcome those violations’”).
[12] Id. at 824-25.
[13] Id. at 826 (citing Old Dominion, 892 F.3d at 1230 (emphasis added)); see also Columbia Gas, 895 F.2d at 794-97).
[14] Id. at 829-30 (citing Old Dominion, 892 F.3d at 1230).
[15] Id. at 830.
[16] Id. (citing 16 U.S.C. § 824d(d)).
[17] Id.
[18] Id.