Indiana Business Lawyer Blog
On February 14, 2023, the U.S. Court of Appeals for the District of Columbia Circuit upheld an order from the Federal Energy Regulatory Commission (“Commission”) granting Broadview Solar, LLC’s (“Broadview”) application for its Montana facility to be a qualifying facility under the Public Utility Regulatory Policies Act of 1978 (“PURPA”), holding that FERC’s interpretation of 16 U.S.C. § 796(17)(A) was reasonable and well-supported, and its decision to classify Broadview as a qualifying facility was not arbitrary or capricious. Solar Energy Industries Association v. FERC, No. 21-1126 at 3 (D.C. Cir. 2023). The court further held that Solar Energy Industries Association (“SEIA”) lacked Article III standing to challenge the Commission’s denial of its motion to intervene in the adjudication of Broadview’s application. Id.
The Montana facility consisted of a 160 MW solar array and 50 MW battery storage system, which both produced and stored direct current (“DC”). Id. at 4. The facility also had inverters which converted the DC to alternating current (“AC”) in order to be compatible with the nation’s electric grid. Id. The inverters had a total net capacity of 80 MW, meaning that the maximum amount of AC power produced at the Montana facility fell within the maximum power production capacity of 80 MW under § 796(17)(A). Id. The Commission originally denied Broadview’s application, determining that the 160 MW solar array exceeded the maximum power production capacity of 80 MW, which was a departure from the Commission’s earlier focus on a “facility’s net output, or send-out, capacity.” Id. at 4 (internal quotations omitted). Following Broadview’s request for rehearing, the Commission set aside its prior order and granted Broadview’s application, determining that § 796(17)(A) was “ambiguous as to the proper measure of a facility’s power production capacity” and that the former send-out approach was the best interpretation because “it takes into account all of the facility’s components working together, not just the maximum capacity of one subcomponent, and focuses on grid-useable AC power.” Id. at 5 (internal citations omitted).
The central dispute on appeal hinged on the meanings of “facility” and “power production capacity,” neither of which was defined by PURPA. Id. The court found the Commission’s interpretation of “power production capacity” as “the facility’s net output to the electric utility” and “facility” as “all of the [facility’s] component parts as they work together as a whole,” to be reasonable because the only grid-compatible power that Broadview produced was AC power through the inverters, which “work with the solar array and battery as an integral component in producing that power.” Id. at 7. This interpretation was further supported by the purpose of § 796(17)(A) because “the measure used to determine whether a facility is eligible for qualifying facility status is the same used to determine benefits available to qualifying facilities,” namely the mandatory purchasing requirement which only applies to AC power. Id. at 8. As such, the court determined that excluding a facility that cannot send out more than 80 MWs of AC power, even though some of the facilities components can produce more than 80 MW of DC power, would be inconsistent with PURPA’s goal of encouraging the development of small power production facilities and promoting the use of alternative energy sources. Id. Therefore, because the Commission’s interpretation of § 796(17)(A) was reasonable and well-supported, its decision to classify Broadview as a qualifying facility was not arbitrary or capricious. Id. at 12.
Finally, the court held that SEIA lacked Article III standing because it did not suffer an injury-in-fact because its failure to timely intervene in the adjudicative proceeding that granted Broadview qualifying facility status was “the result of its own mistaken judgment,” and “the mere fact that an adjudication creates a precedent that could harm a non-party does not create the injury-in-fact required for Article III standing.” Id. at 13 (internal citations omitted). Therefore, because SEIA’s failure to anticipate the Commission’s decision to ultimately grant Broadview qualifying facility status in a later adjudicative proceeding did not amount to an injury-in-fact, it lacked standing under Article III to challenge the Commission’s denial of its motion to intervene. Id.
Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.
