ELR Citation: 53 ELR 20143
No(s). 20-72788, 20-73375, 21-70083, and 21-70113 (9th Cir. Sep 5, 2023)

The Ninth Circuit granted in part and denied in part a petition to review FERC orders that altered which facilities qualify for benefits under the Public Utility Regulatory Policy Act (PURPA) and how those facilities are compensated. An industry group and several environmental groups argued the orders were inconsistent with PURPA's directive that FERC "encourage" development of "qualifying facilities," a new class of independent, non-utility-owned energy producers; challenged four specific provisions of the orders; and argued FERC violated NEPA by failing to prepare an EA. The court found that PURPA on its face gives FERC broad discretion to evaluate which rules are necessary to encourage qualifying facilities and which are not, and that the Commission's interpretation was not unreasonable. It also found the provisions modifying the rules for determining when facilities are deemed to be located at the same or separate sites, modifying rates paid to qualifying facilities, allowing states to adopt a rebuttable presumption that the locational price represents the purchasing utility’s avoided costs for utilities located within certain organized energy markets, and reducing the threshold that terminates a utility's obligation to purchase from a qualifying facility if the facility has nondiscriminatory access to certain organized markets were neither arbitrary nor capricious. As to the NEPA claim, the court held FERC should have prepared an EA because the more substantive elements of the orders fell outside NEPA's categorical exclusion for rules that do not substantially change the effect of the rules being amended. It remanded without vacatur to FERC to address the NEPA deficiency.