Commissioner James Danly Statement
March 31, 2021
Docket No. RP21-543-000
I dissent in part from today’s order requiring Northwest Pipeline LLC (Northwest) to replace its proposal to use the contract date as the tiebreaker for scheduling nominations with a pro rata methodology, or to demonstrate why its proposal is consistent with Commission policy. The order is contrary to the Commission’s obligations under the Administrative Procedure Act (APA) to engage in reasoned decision making and its obligation under FCC[1] to explain its departure from past precedent.
The order states that Northwest’s proposal is inconsistent with Commission precedent (as established in Order No. 636) that “capacity should be allocated based on which customer values it the most, and customers are to be treated equally to enable competition.”[2] In support, the Commission first cites to three cases.[3] Those cases, however, merely state that allocating capacity pro rata is reasonable.[4] They do not hold that using a contract date as a tiebreaker is unjust and unreasonable nor do they hold that such a method is inconsistent with Commission policy. These cases also do not stand for the proposition that allocating capacity pro rata for tying bids is the only acceptable method by which ensure that capacity is allocated on an equal basis based upon which customer values it the most.
Next, the order states “[i]t has not been established that a contract date-based tie-breaker allocates capacity to the customer that values it the most consistent with this policy.”[5] This is untrue. In 1993, the Commission stated “we agree that it is consistent with Order No. 636 to use a first-come, first-served queue as a tiebreaker.”[6] And that was not the sole articulation. There have been many times when the Commission has accepted the use of contract date as a tiebreaker for interruptible service and found such a method reasonable.[7] Can the Commission now be declaring those orders infirm? If so, on what basis?
I agree with the Commission’s precedent. It is logical that an allocation method by which a customer offering the first and highest bid satisfies the Commission’s policy. The customer who most needs the capacity will be monitoring Northwest’s Electronic Bulletin Board (EBB) in order to be the first to request the available interruptible service and all customers have an equal opportunity to monitor the EBB.
This order is legally infirm. Bare conclusory statements without support are insufficient. Even worse are unsupported declarations that are contrary to precedent. The Commission is entitled to change its mind. But it is required to engage in a bare minimum of reasoning. FCC merely requires that the Commission acknowledge and explain its departure.[8] The order fails to meet this minimal burden.
This order also fails on basic APA grounds. The APA requires that the Commission “examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’”[9] The Commission and the precedent it cites fails to do so.[10]
For these reasons, I respectfully dissent in part.
[1] See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).
[2] Northwest Pipeline LLC, 174 FERC ¶ 61,255, at P 19 (2021) (Northwest).
[3] See id. P 19 n.13.
[4] See N. Border Pipeline Co., 70 FERC ¶ 61,034, at 61,110 (1995) (affirming Commission’s finding that “the pro rata allocation of tying bids was reasonable”); PG&E Transmission, 104 FERC ¶ 61,025, at P 35 (2003) (discussing past Commission precedent finding that allocating capacity pro rata for tying bids and finding pipeline’s proposal consistent with past precedent); Equitrans, L.P., 135 FERC ¶ 61,001, at P 15 (2011) (finding proposal to allocate capacity pro rata for tying bids to be just and reasonable). The order inaccurately states that in Northern Border Pipeline Company the Commission found “Northern Border’s proposal to use contract dates, as a tie-breaker rather than pro rata allocations to be unsupported.” Northwest, 174 FERC ¶ 61,255 at P 19 n.13.
[5] Northwest, 174 FERC ¶ 61,255 at P 19.
[6] Tenn. Gas Pipeline Co., 64 FERC ¶ 61,020, at 61,266 (1993).
[7] See Pac. Gas Transmission Co., 77 FERC ¶ 61,163, at 61,622 (1996) (“The Commission has held that it is appropriate to use an established first-come, first-served queue as a tie-breaker when bids are equal.”); Transcon. Gas Pipe Line Corp., 65 FERC ¶ 61,023, at 61,336 (1993) (“In implementing scheduling procedures for IT service under Order No. 636, the Commission has allowed pipelines to incorporate any nondiscriminatory method as a tie-breaker. These methods include first-come, first-served or pro rata.”); Iroquois Gas Transmission Sys., L.P., 62 FERC ¶ 61,167, at 62,172 (1993) (“The Commission has allowed the allocation of interruptible capacity either on the basis of price or on a first-come, first-served basis.”); see also Rockies Express Pipeline LLC, 119 FERC ¶ 61,069, at P 55 (2007) (“the Commission has approved the use of the date a shipper requests service to break ties when allocating interruptible service . . . .”); Pac. Gas Transmission Co. 64 FERC ¶ 61,052, at 61,445 (1993) (“Commission’s policy of scheduling interruptible service by price and using the queue as a default for tie breakers.”).
[8] See FCC, 556 U.S. at 515 (“[T]he requirement that an agency provide reasoned explanation for its action would ordinarily demand that it display awareness that it is changing position.”) (emphasis in original); see also New England Power Generators Ass’n, Inc. v. FERC, 881 F.3d 202, 211 (D.C. Cir. 2018) (finding “that FERC did not engage in the reasoned decisionmaking required by the Administrative Procedure Act” because it “failed to respond to the substantial arguments put forward by Petitioners and failed to square its decision with its past precedent”) (emphasis added).
[9] Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)) (emphasis added); see also id. at 56 (“failed to offer the rational connection between facts and judgment required to pass muster under the arbitrary and capricious standard”).
[10] To the extent that Northwest finds that the Commission’s modification results in an “entirely different rate design,” Northwest should seek rehearing armed with the principles articulated in NRG Power Mktg., LLC v. FERC, 862 F.3d 108 (D.C. Cir. 2017).