United States Court of Appeals, District of Columbia Circuit
October 17, 2018
Petition for Review of Orders of the Federal Energy
W. Doggett, Deputy Solicitor General, Office of the Attorney
General for the State of North Carolina, argued the cause for
petitioner. With him on the briefs were Joshua H. Stein,
Attorney General, and Matthew W. Sawchak, Solicitor General.
M. Kennedy Jr., Senior Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With him on the
brief was Robert H. Solomon, Solicitor. Holly E. Cafer,
Attorney, entered an appearance.
Michael F. McBride argued the cause for intervenor. On the
brief were Julia S. Wood, Sharon L. White, and Eli W.L.
Before: Wilkins and Katsas, Circuit Judges, and Sentelle,
Senior Circuit Judge.
SENTELLE, SENIOR CIRCUIT JUDGE.
Carolina petitions for review of Federal Energy Regulatory
Commission ("FERC") orders involving the
relicensing of the Yadkin Hydroelectric Project No. 2197
("Yadkin Project"). Petitioner alleges that the
license applicant, Alcoa Power Generating, Inc.
("Alcoa"), misrepresented its plans to discontinue
the use of project power for industrial production at Badin
Works, a major source of employment in the state. North
Carolina alleges that Alcoa gained an unearned advantage and
chilled competition because no other applicant possessed
Alcoa's ace in the hole: the ongoing industrial
production at Badin Works and its impact on the public
interest. North Carolina proposes that FERC reopen licensing
proceedings, or, in the alternative, recommend federal
recapture of the Yadkin Project for transfer to the state. We
conclude that substantial evidence supports FERC's
decision, and we deny North Carolina's petition for
1958, Alcoa was awarded a fifty-year license to operate the
Yadkin Project, a series of hydroelectric dams on the Yadkin
River in North Carolina. The Yadkin Project powered
industrial production at Badin Works, an aluminum smelting
plant that provided approximately 1, 000 jobs to citizens in
the state. In 2002, Alcoa began the process of applying for a
new license, immediately disclosing that aluminum production
had been "temporarily curtailed," and that the
Yadkin Project's excess energy was being "sold on
the open market." Alcoa, again in 2004, informed FERC
that the curtailment continued due to "adverse business
conditions," and that "surplus electricity"
was being sold "into the market." In its 2006
relicensing application, Alcoa explained that the Yadkin
Project was only providing "3 to 5 megawatts (MW) of
electricity" (or ~2% output) to Badin Works, so
"the remaining power [was being] sold to help offset the
cost of electricity purchases required for Alcoa's other
domestic smelting operations." None of Alcoa's
competitors filed timely applications.
2009, North Carolina requested that FERC recommend federal
recapture of the Yadkin Project for transfer to the state,
with North Carolina funding Alcoa's "statutory net
investment and severance damages." Months later, Alcoa
formally announced that Badin Works would permanently close,
and all aluminum smelting and manufacturing facilities would
be dismantled. In July of 2016, Alcoa declared its intent to
sell the Yadkin Project to Cube Yadkin Generation LLC
("Cube"), and it applied for a license transfer. On
September 22, 2016, FERC issued Alcoa a new license and
denied North Carolina's recapture proposal. Alcoa
Power Generating, Inc., 156 FERC ¶ 62, 210 (2016).
The state petitioned for rehearing of that decision. In
December of 2016, FERC approved the transfer of Alcoa's
license to Cube, and the sale of the Yadkin Project was
completed in 2017 for an after-tax value of approximately
$243 million. Final resolution came on September 20, 2017,
when FERC denied North Carolina's petition for rehearing.
Alcoa Power Generating Inc., 160 FERC ¶ 61, 097
November 16, 2017, North Carolina petitioned this Court to
review FERC's orders. The Court permitted Cube to
intervene. The matter was fully briefed, and the Court heard
oral argument on October 17, 2018.
review FERC orders under the Administrative Procedure Act
("APA"), which empowers the Court "to reverse
any agency action that is 'arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law.'" See, e.g., Wisconsin Valley
Improvement Co. v. FERC, 236 F.3d 738, 742 (D.C. Cir.
2001) (quoting 5 U.S.C. § 706(2)(A)). The Court owes
deference to FERC's interpretation of the Federal Power
Act ("FPA") since it is the agency charged with
administering that statute. See Chevron, U.S.A., Inc. v.
Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984);
e.g., TNA Merch. Projects, Inc. v. FERC,
857 F.3d 354, 358 (D.C. Cir. 2017). Unless "plainly
erroneous," the Court also extends deference to