Baltimore Gas and Electric Company v. FERC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 17, 2019 Decided March 27, 2020

No. 18-1298

BALTIMORE GAS AND ELECTRIC COMPANY,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

MARYLAND OFFICE OF PEOPLE’S COUNSEL AND MARYLAND

PUBLIC SERVICE COMMISSION, INTERVENORS

On Petition for Review of Orders of the Federal Energy

Regulatory Commission

Matthew E. Price argued the cause and filed the briefs for

petitioner.

Jared B. Fish, Attorney, Federal Energy Regulatory

Commission, argued the cause for respondent. With him on the

brief were James P. Danly, General Counsel, and Robert H.

Solomon, Solicitor.

Stephen C. Pearson argued the cause for intervenors. With

him on the brief were Miles H. Mitchell, Ransom E. Davis,

2

Paula M. Carmody, William F. Fields, Joseph G. Cleaver, and

Scott H. Strauss.

Before: HENDERSON and RAO, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS with respect to Parts I, II, and IV.

Opinion for the Court filed by Circuit Judge RAO with

respect to Part III.

Dissenting Opinion filed by Senior Circuit Judge

WILLIAMS with respect to Part III.

WILLIAMS, Senior Circuit Judge: This case arises out of

the Federal Energy Regulatory Commission’s effort to apply its

“matching” principles to divergences between the timing of

deductions for tax purposes and timing for purposes of

allocating costs to ratepayers. While Congress and other bodies

imposing taxes may want to allow early depreciation of an asset

(to encourage investment), for example, the Commission wants

a cost (less offsetting tax benefits) to be charged in the period

over which the resulting asset provides services to the utility’s

customers.

I.

In December 2016, Baltimore Gas and Electric Company

(“BGE”) filed a new rate proposal with the Commission under

§ 205 of the Federal Power Act, 16 U.S.C. § 824d. The

proposal sought a net recovery of approximately $38 million

from future ratepayers relating to various costs incurred by

BGE dating back to 2005. It is undisputed that consumers had

not been charged for these costs between 2005 and the 2016

filing.

3

The relevant items are in fact a good deal more

complicated than the accelerated depreciation example used

above, but their details do not affect the issues before us. They

arise from (1) a transition problem posed by a switch in

Commission handling of such matters, (2) a change in tax rates,

and (3) differences between ratemaking and tax treatments of

the equity component of construction costs. The sums involved

in the first and third categories totaled about $42 million, offset

by about $4 million in the second (which BGE proposed to

return to the ratepayers). FERC expects utilities to track these

amounts according to Financial Accounting Standard 109

(“FAS 109”), a financial accounting and reporting standard

promulgated by the not-for-profit Financial Accounting

Standards Bureau intended to set forth recording requirements

to facilitate “tax normalization,” i.e., resolution of timing

differences exemplified by the matters discussed above. See

FERC Br. 12; Accounting for Income Taxes, FERC Docket No.

AI93-5-000 (Apr. 23, 1993) (“1993 Guidance”).

FERC denied BGE’s request to recover these amounts,

declining to find BGE’s proposed rate “just and reasonable,” as

required by § 205(a). Specifically, it found BGE’s request in

violation of the procedural requirements that it had developed

for implementation of the matching principle in this context and

had stated in its order, Regulations Implementing Tax

Normalization for Certain Items Reflecting Timing Differences

in the Recognition of Expenses or Revenues for Ratemaking

and Income Tax Purposes, Order No. 144, FERC Stats. & Regs.

¶ 30,254 (1981). Order No. 144 requires that any such

adjustment “be made in the applicant’s next rate case following

applicability of the rule.” Id. at ¶ 31,519. It also requires

applicants “to begin the process of making up deficiencies in or

eliminating excesses in their deferred tax reserves so that,

within a reasonable period of time to be determined on a case-

4

by-case basis, they will be operating under a full normalization

policy.” Id. at ¶ 31,560.

FERC concluded that BGE had breached the requirements

of Order No. 144 by failing to file for recovery of these amounts

in its “next rate case,” which, according to FERC, was BGE’s

2005 rate filing. Order Rejecting Proposed Tariff Revisions,

PJM Interconnection, LLC, 161 FERC ¶ 61,163 (2017)

(“Order”). On requests for clarification and rehearing, the

Commission made clear its position that the “reasonable period

of time” requirement of Order No. 144 “was intended to work

in conjunction with the ‘next rate case’ requirement,” so that it

does not “negate the requirement that applicants must seek

recovery in their next rate case.” Order on Rehearing and

Clarification, PJM Interconnection, LLC, 164 FERC ¶ 61,173,

at P 18 (2018) (“Rehearing Order”).

Although neither party speaks directly to the issue, we take

it that, for purposes of this case anyway, the “next rate case

following applicability of the rule” is the “next rate case” after

the utility has incurred an item (including either a cost or a

benefit) requiring “normalization” under Order No. 144 and the

1993 Guidance, not counting periods in which a rate case or

settlement had itself normalized the treatment of the item (or

adequately addressed its normalization). Indeed, even though

FERC denied recovery of such amounts for years past, its

denial was without prejudice to BGE’s recovery of FAS 109

amounts properly allocable to future years, leaving open BGE’s

opportunity to achieve normalization prospectively. See

Rehearing Order at PP 37–38; see also FERC Br. 15.

BGE petitioned for review and claims that FERC’s

application of Order No. 144 was arbitrary and capricious

under the Administrative Procedure Act, 5 U.S.C. § 706(2)(A),

misapplying the “next rate case” and “reasonable period of

time” requirements. BGE also asserts that FERC erred in

5

failing to recognize BGE’s 2006 settlement of the 2005 rate

case as an example of the sort of settlement briefly discussed in

Order No. 144. That order had said that it left “undisturbed the

ability of the parties to reach a settlement on any of the issues

covered by the rule.” Order No. 144 at ¶ 31,519. BGE argues

the settlement qualified under Order No. 144 and as a result

preserved BGE’s ability to recover the FAS 109 amounts here

at issue.

For the reasons developed below we find that FERC’s

orders were not arbitrary and capricious and therefore deny the

petition for review.

II.

We begin with the 2006 settlement agreement, which BGE

claims preserved its right to recover FAS 109 amounts dating

back to 2005. As BGE acknowledges, BGE Br. 32 n.5, we have

long applied Chevron deference to FERC’s reasonable

interpretations of settlement agreements it approves, Nat’l Fuel

Gas Supply Corp. v. FERC, 811 F.2d 1563, 1569 (D.C. Cir.

1987), and we do so here. The question before us is whether

FERC’s determination that BGE’s settlement agreement did

not preserve FAS 109 amounts for recovery in a later rate case

filing is “reasonable and reasonably explained,” Nw. Corp. v.

FERC, 884 F.3d 1176, 1179 (D.C. Cir. 2018), which we answer

in the affirmative. BGE’s arguments that FERC is wrong in its

application of Order No. 144’s settlement provision are not

convincing.

The rate filing by BGE that led to the 2006 settlement

expressly excluded the FAS 109 amounts, and line items in a

spreadsheet attached to the ultimate agreement described

certain amounts as “net of” or “less” FAS 109 amounts. BGE

claims that the spreadsheets and contemporaneous testimony

explaining the same indicate that the parties intended these

6

amounts to be recoverable at a later date. BGE Br. 45; BGE

Add. 34. But the Commission observed that the settlement “did

not expressly reserve deferred income tax issues,” but rather,

“was silent on this point.” Rehearing Order at PP 16–17. That

seems an apt characterization. A mere description of how the

parties calculated figures says nothing about an intent to agree

on later recovery of amounts not included in the calculation,

especially as such a recovery, starting after lapse of the

settlement but allowing recovery of amounts properly due over

the settlement’s time in effect, would have seriously

compromised the Commission’s matching principle. It is thus

hard to see more in the settlement references than an agreement

to disagree. And FERC’s insistence that a settlement do more

than that fits comfortably within Order No. 144’s admittedly

vague language on settlements.

BGE suggests that because 18 C.F.R. § 35.24 “require[s]

utilities to adopt some mechanism to pass through FAS 109

amounts to customers,” the settlement agreement’s near silence

should be understood as merely leaving undisturbed a

background expectation that FAS 109 amounts will eventually

be recovered. BGE Br. 49 (emphasis in original). But while the

heading of § 35.24(b)(1) reads, “Tax normalization required,”

and the text goes on to specify details for fulfillment of the

requirement, understanding normalization as a requirement is

entirely consistent with Order No. 144’s imposing conditions

on utilities’ recovery of deferred tax amounts and with the

Commission’s reading the Order’s language on settlements as

requiring more than the opaque treatment applied in the 2006

settlement. Indeed, as the Commission requires normalization

in order to fulfill the matching principle, it would seem to

contradict itself if it allowed the 2006 settlement’s language to

allow indefinite postponement of a utility’s recovery of FAS

109 amounts. FERC reasonably interpreted its regulations and

the settlement agreement to mean that BGE simply failed to

7

comply with 18 C.F.R. § 35.24 by its next rate case, as required

by Order No. 144.

BGE also introduces information about its rates before

2005, pointing to settlements reached in 1996 and 1997, and

conjures a new argument out of the settlements. These were

“black box” settlements, meaning that they stated rates without

linking the dollar amounts to specific inputs. BGE argues that

these should be “presumed,” BGE Br. 16–17, 24, 33, to have

addressed the FAS 109 amounts, and that therefore they

fulfilled Order No. 144’s “next rate case” requirement. The

Commission responds, accurately, that BGE never made such

an argument in its petition for rehearing, and that accordingly

it’s not properly before us. See 16 U.S.C. § 825l(b). We

therefore do not address it. We confess ourselves unclear as to

just how recovery of FAS 109 amounts in 1996–2005

(assuming it occurred), followed by a gap from 2005 to the

effective date of BGE’s 2016 filing, could satisfy the matching

principle as to amounts properly allocable to that period.

III.

Finally, BGE argues that, notwithstanding the

requirements of Order No. 144, FERC has been more

permissive with four “similarly situated” utilities and fails to

explain its disparate treatment of BGE’s filing. BGE Br. 38–

42; BGE Reply Br. 15–21.

On arbitrary and capricious review, FERC bears the

burden “to provide some reasonable justification for any

adverse treatment relative to similarly situated competitors.”

ANR Storage Co. v. FERC, 904 F.3d 1020, 1025 (D.C. Cir.

2018). To determine whether an agency must justify a prior

contrary decision, therefore, we ask whether the regulated

parties at issue are “similarly situated.” See, e.g., W. Deptford

Energy, LLC v. FERC, 766 F.3d 10, 20 (D.C. Cir. 2014) (“It is

8

textbook administrative law that an agency must provide[]

a reasoned explanation for departing from precedent or treating

similar situations differently, and Commission cases are no

exception.”) (citations and quotation marks omitted) (emphasis

added); LeMoyne-Owen College v. NLRB, 357 F.3d 55, 60–61

(D.C. Cir. 2004) (Roberts, J.) (“An agency is by no means

required to distinguish every precedent cited to it by an

aggrieved party. But where, as here, a party makes a significant

showing that analogous cases have been decided differently,

the agency must do more than simply ignore that argument.”)

(citations omitted) (emphasis added).

Here, BGE has made a threshold showing that it is

similarly situated to four utilities that received more favorable

treatment by the Commission. FERC responds that these four

prior actions are not binding precedent because three of them

were issued by staff exercising subdelegated authority and none

of the four “squarely presented” or “necessarily resolved” the

issues presented in this case.1 FERC Br. 44–48. The agency

argues in the alternative that it did reasonably distinguish

1

In Midcontinent Independent System Operator, Inc., 153 FERC

¶ 61,374 (2015), the only order of the four issued directly by the

Commission, the utility received approval to recover FAS 109

amounts arising from a 2011 change in tax rates. FERC approved the

other three rate filings in letter orders issued by agency staff. PPL

Electric Utilities Corp., Letter Order, FERC Docket No. ER12-1397

(May 23, 2012), and Duquesne Light Co., Letter Order, FERC

Docket No. ER13-1220 (Apr. 26, 2013), sought recovery of

unfunded FAS 109 amounts related to the Pennsylvania Public

Utility Commission’s decision to pass on certain income tax savings

to customers. Virginia Electric & Power Co. (VEPCO), Letter Order,

FERC Docket No. ER16-2116-000 (Aug. 2, 2016), sought FAS 109

amounts related to the equity component of construction costs and

a recent tax law change. Each letter order purports to constitute final

agency action on the part of the Commission. See, e.g., id. at 2 (“This

order constitutes final agency action.”).

9

BGE’s submission from those in the four prior orders. FERC

Br. 49–52. We take each of the Commission’s arguments in

turn.

A.

First, FERC argues that three of the four prior orders cited

by BGE need not be distinguished because they were issued by

agency staff under authority subdelegated by the Commission.

The agency’s regulations delegate to certain staff the authority

to “[r]eject” or “[a]ccept for filing all uncontested tariffs or rate

schedules” if the filings “comply with all applicable statutory

requirements, and with all applicable Commission rules,

regulations and orders.” 18 C.F.R. § 375.307(a)(1)(i)–(ii).2

Setting aside the permissibility of FERC’s subdelegation,

which is not a question before us, the Commission cannot lend

its authority to staff and then disclaim responsibility for the

actions they take. Delegated staff actions are actions of the

agency. See 5 U.S.C. § 551(13) (“‘[A]gency action’ includes

the whole or a part of an agency rule, order, license, sanction,

relief, or the equivalent or denial thereof.”); id. § 551(6)

(“‘[O]rder’ means the whole or a part of a final disposition …

other than rule making.”); Sprint Nextel Corp. v. FCC, 508 F.3d

1129, 1131 n.3 (D.C. Cir. 2007) (“‘Agency action’

encompasses any reviewable action that an agency might

take.”). Neither the APA nor our precedents distinguish

between binding orders signed by staff and those signed by the

Commission for purposes of arbitrary and capricious review.

Because staff exercise only authority delegated to them by the

2

Under the Federal Power Act, proposed rates go into effect by

operation of law sixty days after filing with the Commission, barring

further action by the agency. See 16 U.S.C. § 824d(d). When filings

are “rejected,” the Commission treats them as never filed, meaning

they cannot lawfully go into effect. See 18 C.F.R. § 385.2001(b)(2).

10

Commission, their decisions to accept, reject, or take other

actions on filings are decisions of the Commission until

superseded by subsequent agency action. 18 C.F.R.

§ 385.1902(a) (“Any staff action … taken pursuant to authority

delegated to the staff by the Commission is a final agency

action that is subject to a request for rehearing.”);3 see also Pub.

Citizen, Inc. v. FERC, 839 F.3d 1165, 1169 (D.C. Cir. 2016)

(“[W]e have previously defined ‘order’ expansively to include

any agency action capable of review on the basis of the

administrative record.”) (citation and quotation marks omitted).

FERC must exercise its statutory authority in accordance

with the APA, and its decision to delegate to staff cannot erase

the requirements of reasoned decisionmaking. Procedural

differences between this case, in which the Commission

rejected BGE’s filing, and cases decided by staff letter orders

are insufficient standing alone to justify disparate treatment of

similarly situated utilities. It is not enough for FERC to say,

“the staff did it.” Reasoned decisionmaking requires FERC to

explain differential treatment under the same rules. See ANR

Storage, 904 F.3d at 1024 (citing W. Deptford, 766 F.3d at 20).

B.

Second, FERC maintains that the four prior orders need not

be distinguished because none “squarely presented” or

“necessarily resolved” the issue in this case. Specifically, the

3

Whether those actions would be reviewable without further

exhaustion of administrative remedies is, of course, a different

question. See 16 U.S.C. § 825l(b) (“No objection to the order of the

Commission shall be considered by the court unless … urged before

the Commission in the application for rehearing unless there is

reasonable ground for failure so to do.”). In this case, BGE raised its

arbitrary and capricious argument based on these four prior orders in

its request for rehearing before the Commission.

11

Commission notes the three staff letter orders cited by BGE

were uncontested and that none of the four provided a reasoned

analysis on the collection of accrued FAS 109 amounts.

These arguments ring hollow because we rejected them in

substantially similar form only two years ago. In ANR Storage

Co. v. FERC, we held in no uncertain terms that distinguishing

prior orders in similar cases simply as “unreasoned” or

“unopposed” fails to satisfy the APA’s reasoned

decisionmaking requirement. 904 F.3d at 1025. As our decision

emphasized, the duty to explain inconsistent treatment is

incumbent on the agency and cannot be waived by the decisions

of third parties. See id. (“[N]either of those parties could

contract away FERC’s statutory duty—imposed by the APA

and owed to all other regulated parties—to provide some

reasonable justification for any adverse treatment relative to

similarly situated competitors.”).

The Commission’s attempt to evade this holding pulls

from dicta in San Diego Gas & Electric Co. v. FERC, in which

we approved the agency’s rejection of an incentive award

despite the granting of the award in prior cases. 913 F.3d 127

(D.C. Cir. 2019). We held that approval of the incentive was

not required by prior orders because earlier decisions “[did] not

amount to policy or precedent.” Id. at 142 (citation and

quotation marks omitted). For this principle, San Diego Gas

cited an earlier decision in which we required FERC to explain

inconsistencies, even though we ultimately concluded such

inconsistencies had been adequately explained. Id. (citing Gas

Transmission Nw. Corp. v. FERC, 504 F.3d 1318, 1320 (D.C.

Cir. 2007)). Applying longstanding principles of arbitrary and

capricious review, San Diego Gas maintained the requirement

that agencies must reasonably explain disparate treatment of

similarly situated parties. Contrary to the view of our dissenting

colleague, San Diego Gas did not, and could not have, altered

settled law.

12

Our standards for arbitrary and capricious review

distinguish between an agency’s burden of explanation when

announcing new rules and when applying existing rules in

individual cases. When an agency seeks to change policy, we

assess its actions under the rigorous standards of FCC v. Fox

Television Stations, Inc., by requiring the agency to “display

awareness that it is changing position,” show “the new policy

is permissible under the statute,” and “show that there are good

reasons for the new policy.” 556 U.S. 502, 515–16 (2009). By

contrast, an agency applying existing policy must explain how

an outcome coheres with previous decisions. We require

agencies to justify different results reached under the same rule

in order to lend predictability and intelligibility to the

announced standard, promote fair treatment, and facilitate

judicial review. See LeMoyne, 357 F.3d at 61. If a party

plausibly alleges that it has received inconsistent treatment

under the same rule or standard, we must consider whether the

agency has offered a reasonable and coherent explanation for

the seemingly inconsistent results. See Point Park Univ. v.

NLRB, 457 F.3d 42, 50 (D.C. Cir. 2006) (“Without a clear

presentation of the [agency’s] reasoning, it is not possible for

us to perform our assigned reviewing function and to discern

the path taken by the [agency] in reaching its decision.”).

In the view of our dissenting colleague, an agency need not

explain disparate outcomes under the same rule unless parties

opposed the agency’s administration of the rule in the prior

cases. Dissenting Op. at 2. Thus, the dissent frames our

decision as fashioning a new requirement for agency action. Id.

at 7. But it cannot be argued “the great principle that like cases

must receive like treatment” is anything but black letter

administrative law. NLRB v. Gen. Stencils, Inc., 438 F.2d 894,

905 (2d Cir. 1971) (Friendly, J.).

13

The APA’s requirement of reasonableness incorporates

basic principles of fair notice and equal treatment inherent to

the rule of law. Regulated parties are entitled to know what an

agency’s rules require and to assume that administration of the

rules will be reasonably predictable and coherent across cases.

FERC cannot avoid its obligation to provide a reasoned

explanation for contrary treatment of “similarly situated”

parties solely because those decisions were uncontested or

unreasoned. See ANR Storage, 904 F.3d at 1025.

C.

Under our standards for reasoned decisionmaking, FERC

fares far better on its final argument: that it in fact provided an

adequate explanation to distinguish this case from prior

decisions. The Commission reasonably determined BGE

waited far longer than the other four utilities to collect

accumulated FAS 109 amounts and failed to offer an adequate

reason for the delay. See Rehearing Order at P 28 (noting PPL

and Duquesne involved delays of four and seven years,

respectively, compared to BGE’s twelve). Moreover, FERC

offered specific ways in which each of the four prior cases

differed from BGE’s filings in at least one key respect. See id.

at P 28 n.86 (distinguishing BGE from PPL, Duquesne, and

VEPCO based on the type of makeup provisions sought and on

specific accounting matters), P 30 (noting Midcontinent and

VEPCO sought collection on deficiencies going forward rather

than accumulated amounts). Because FERC detailed these

differences in the administrative orders rejecting BGE’s filing,

we conclude the Commission met its burden to reasonably

explain the decision. This is enough to survive arbitrary and

capricious review.

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IV.

FERC’s rejection of BGE’s tariff filing is a reasonable and

reasonably explained application of Order No. 144.

Accordingly, the petition for review is

Denied.

WILLIAMS, Senior Circuit Judge, dissenting with respect

to Part III:

BGE argues that, notwithstanding the requirements of

Order No. 144, FERC has been more permissive with four other

“similarly situated” utilities. Pointing to four orders that it

views as reaching decisions inconsistent with FERC’s ruling

here, BGE argues that FERC’s rejection of its rate filing, and

failure (in BGE’s view) to distinguish the prior decisions,

violates the standard requirement that agency decisions be

reasoned. BGE Br. 38; BGE Reply 15–21.

The majority agrees with BGE that the Commission was

obliged to distinguish these orders, but finds that it did so

adequately. I believe that under the circumstances the

Commission was under no obligation to distinguish the orders,

and therefore don’t reach the question of whether its efforts to

do so were good enough.

I would hold that FERC’s duty to distinguish the orders

cited by BGE, or to articulate an intentional break with them

that would satisfy the requirements of FCC v. Fox Television

Stations, Inc., 556 U.S. 502, 515–16 (2009), turns on whether

the pertinent issues were “squarely presented and necessarily

resolved by the agency” in those past cases, as we held in San

Diego Gas & Electric Company v. FERC, 913 F.3d 127, 142

(D.C. Cir. 2019). That standard is met if but only if the

Commission’s seeming resolution of the issue has been clearly

opposed (typically by a party opposing the agency’s decision

though in some cases staff opposition would likely suffice). As

far as we know, no such opposition was presented in the

generation of the four orders at issue here.1

1

I am uncertain whether it should make any difference

whether the agency action was by staff or by the Commissioners

themselves. Cf. Maj. Op. 9–10. Under my view it would make no

2

This approach, established in our case law, ensures that

any comparisons between new and old cases rest on a clash

between an agency rejection of clearly asserted propositions of

fact, law or policy, and is analogous to how, in federal courts,

“[q]uestions which merely lurk in the record, neither brought to

the attention of the court nor ruled upon, are not to be

considered as having been so decided as to constitute

precedents,” Cooper Industries, Inc. v. Aviall Services, Inc.,

543 U.S. 157, 170 (2004) (quoting Webster v. Fall, 266 U.S.

507, 510 (1925), and relied on in San Diego Gas & Electric

Co., 913 F.3d at 142)).

Given the number of uncontested issues that an agency

typically resolves—uncontested, we may infer, either because

any adversely affected parties got no notice or, having notice,

thought it not worth the trouble to oppose—a requirement that

an agency address its past vermicelli, either by reconciling its

current decision with the earlier record or by applying Fox

Television, would tie courts and agencies in linguistic knots for

little or no benefit to the rule of law. Indeed, the majority’s

approach invites a litigant to dive deep into the records of past

agency cases, find one with facts loosely comparable to its own

case, and then require the agency to adjudicate, ex post and

likely on a limited record, whether and to what extent each past

case is like the present one. Our precedents do not require this.

difference here, because in the four allegedly contradictory

decisions neither staff nor Commissioners confronted a claim

contrary to their disposition.

As a general matter I agree with the majority that the

decisionmakers’ lack of reasoning in their prior ruling should not

excuse their disregard of an apparent contradiction with that ruling.

Maj. Op. 10.

3

The majority rests its more sweeping view of the agency’s

duty to distinguish prior cases largely on ANR Storage Co. v.

FERC, 904 F.3d 1020 (D.C. Cir. 2018). But our decision there

appears to have been driven overwhelmingly by the incongruity

between the Commission’s denying ANR Storage marketing

flexibility after having granted the same flexibility to two

subsidiaries of DTE Energy that were direct competitors of

ANR Storage. As measured by FERC’s own criterion for

granting flexibility—absence of market power in the relevant

market—ANR and DTE were nearly identical twins: ANR’s

market share was substantially the same as DTE’s. 904 F.3d at

1025. As we said, “[B]y FERC’s own reckoning, ANR and

DTE appear virtually indistinguishable with respect to their

current market power.” Id. at 1024–25.

Thus, our primary theme in ANR Storage was FERC’s

wholly unexplained divergence in its treatment of two virtually

identical competitors. See id. at 1024 (“DTE was then a strong,

established competitor, just as ANR is today.”); id. at 1025

(referring to “FERC’s statutory duty—imposed by the APA

and owed to all other regulated parties—to provide some

reasonable justification for any adverse treatment relative to

similarly situated competitors” (emphasis added)); id. at 1026

(“ANR and DTE seem indistinguishable as leading competitors

with virtually identical shares in the same relevant markets.”).

In ANR Storage, FERC had offered an astonishing argument (a

promising candidate for a chutzpah award) that ANR’s “market

power posed a greater concern because [its] largest

competitor—DTE—already was charging market rates,” to

which we replied, “We frankly doubt that FERC may pick

winners and losers in this way, based on which of two

otherwise indistinguishable competitors happens to win a race

to the FERC equivalent of a courthouse.” Id. at 1025–26

(emphasis added).

4

ANR Storage’s insistence that the Commission confront its

different treatment of two competing utilities is, incidentally,

boosted by our precedent treating such disparate treatment as a

freestanding violation of the FPA’s ban on discriminatory rates

where two utilities are in competition. In Dynergy Midwest

Generation, Inc. v. FERC, 633 F.3d 1122, 1125, 1127 (D.C.

Cir. 2011), we vacated a FERC order approving a regional

transmission organization’s method of compensating

competing generators for their provision of certain specialized

power. The case is distinct from ANR Storage in that the

competing public utilities were selling the special power to yet

another FERC-regulated utility, the regional transmission

organization. Id. at 1124. But what unifies the cases is they

arise from the technologically induced development of

competition between power generators subject to regulation

under the terms of the FPA—which had been passed in a quite

different era, when generators subject to its terms could

generally be expected to wield monopoly power. Unlike in

ANR Storage, there is no suggestion here that any of the firms

said to have been treated more favorably than BGE was in any

way its competitor.

Besides reversing FERC because of its utterly inconsistent

treatment of competitors, ANR Storage used language

potentially applicable to non-competitive situations. We said,

for example, “In particular, [an agency] decision must give a

‘reasoned analysis’ to justify the disparate treatment of

regulated parties that seem similarly situated, W. Deptford

Energy, LLC v. FERC, 766 F.3d 10, 21 (D.C. Cir. 2014).” ANR

Storage, 904 F.3d at 1024. The majority accordingly treats the

case as applying that precept even in a case where no one

opposed the agency ruling in the prior “precedents.” Some

language of the decision may point that way, but in partial

response to a Commission argument that the application for

flexibility by one of DTE’s two subsidies had been unopposed,

we noted that the other subsidiary’s application “was opposed,”

5

904 F.3d at 1025 (emphasis in original). So ANR Storage

hardly represents adoption of the majority’s demanding rule.

Nor do the other cases cited by the majority support its

position. West Deptford Energy involved a Commission’s

switcheroo on whether a generator joining a regional

transmission organization should be governed by the tariff in

effect at the time it applied to join or at the time it actually

joined. Four times the Commission had confronted filings by

a regional transmission organization proposing the former rule,

and four times the Commission had insisted on the latter. See

766 F.3d at 19–21. We thought that “the Commission failed,

at multiple steps, to provide any reasoned explanation of how

its [latest] decision conformed to the Federal Power Act and

prior precedent,” id. at 24, and we therefore required an

explanation. West Deptford Energy is thus wholly different

from the sort of case, like the instant one, in which the

Commission’s past treatment of the issue now relevant was

uncontested by anyone before the agency.

Similarly, in LeMoyne-Owen College v. NLRB, 357 F.3d

55 (D.C. Cir. 2004) (Roberts, J.), the College contested the

application of the Board’s stated standard for classifying

faculty members as managerial employees. It had called the

Regional Director’s attention to distinctions between its

situations and the cases on which he had relied, as well as to

favorable cases that he had ignored—all cases in which the

conflict had been clearly posed. Its claim having been brushed

off by the Regional Director, the College raised the point before

the Board, which dismissed the matter, “declaring in a one-

sentence order that the College had ‘raised no substantial issues

warranting review.’” Id. at 60. We thought differently and

reversed. NLRB v. General Stencils, Inc., 438 F.2d 894 (2d Cir.

1971), see Maj. Op. 12–13, is also a standard example of an

agency’s failing to explain the relationship between the

6

decision being reviewed and prior contested decisions resting

on an apparently inconsistent theory.

The majority cites Point Park University v. NLRB, 457

F.3d 42, 50 (D.C. Cir. 2006), for the proposition that an agency

must explain its reasoning so we can “perform our assigned

reviewing function.” Maj. Op. 12. While that’s of course true,

the opinion’s concern was with the NLRB’s complete failure to

present reasoning clear enough to enable the court to discern

“the path taken.” 457 F.3d at 50. Very specifically, the Board

had failed to meet our insistence in LeMoyne-Owen that it

explain “which factors are significant and which less so, and

why.” Id. (quoting LeMoyne-Owen). See also NLRB v. Yeshiva

University, 444 U.S. 672 (1980). The case in no way fits the

majority’s idea that an agency must reconcile a decision under

review with all prior rulings, even if never contested.

Finally, in San Diego Gas & Electric Company v. FERC

(mysteriously dismissed as “dicta” by the majority, see Maj.

Op. 11), the court acknowledged that FERC had treated like

parties differently; FERC denied San Diego Gas recovery of

costs incurred before the agency issued an order granting

recovery of those costs, whereas FERC had granted similar pre-

order costs for other utilities. 913 F.3d 127, 142. We found

this apparent inconsistency no cause for reversal. “We have

previously held that, ‘[i]n the absence of protests,’ the

Commission’s decision to approve rate increases does not

amount to ‘policy or precedent.’” Id. (emphasis added) (citing

Gas Transmission Nw. Corp. v. FERC, 504 F.3d 1318, 1320

(D.C. Cir. 2007)). Accordingly, we required no explanation of

the difference.

In my view, the majority breaks from our sensible and

well-reasoned precedents, and I therefore respectfully dissent.