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ISO NE ROFR Not Protected By Mobile-Sierra

Yesterday, the D.C. Circuit court of appeals affirmed FERC’s finding that the ISO New England incumbent transmission owners’ right of first refusal to construct new transmission facilities, contained in their Transmission Operating Agreement, is anticompetitive and harms the public interest. The transmission owners challenged the rationality of FERC stating in Order No. 1000 that the rulemaking record was insufficient for making a Mobile-Sierra evaluation of whether the right of first refusal provision is in the public interest, and then relying primarily on that rulemaking to support its conclusion that the provision harms the public interest in the challenged orders on ISO New England’s Order No. 1000 compliance filing. The court nonetheless found that FERC’s orders contained the “particularized” public interest analysis sufficient to overcome the Mobile-Sierra presumption, which FERC found in 2004 applied to the owners’ right of first refusal provision. Applying a deferential standard of review, the court held FERC’s analysis of the record was within its discretion and supported the removal of the right of first refusal provision. The court also denied the appeal of several ISO New England state commissions regarding the role of the states in assuring that regional transmission planning accords with state public policy objectives.

The court’s finding that the record developed in the generic Order No. 1000 rulemaking was sufficient to overcome the Mobile-Sierra presumption in this specific case calls into question what type of showing FERC or parties will need to make in the future to overcome the Mobile-Sierra presumption.

A copy of the court’s decision is available here.