[Federal Register Volume 68, Number 3 (Monday, January 6, 2003)]
[Notices]
[Pages 548-549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-195]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL00-111-002; Docket No. EL01-84-000]


Cities of Anaheim, Azusa, Banning, Colton and Riverside, 
California. v. California Independent System Operator Corporation; Salt 
River Project Agricultural Improvement and Power District v. California 
Independent System Operator Corporation; Order Providing Guidance on 
the Appropriate Procedures for Approval of Settlement

Issued December 30, 2002.

Before Commissioners: Pat Wood, III, Chairman; William L. Massey, 
and Nora Mead Brownell.

    1. This order provides guidance on procedural questions raised by 
certain parties in this proceeding relating to an Offer of Settlement 
filed while settlement judge procedures were ongoing.

Background

    2. There is a lengthy procedural history in this case, some of 
which is not pertinent to the questions raised in the instant request 
for guidance; this order will relate only those events and facts 
necessary to address the request before us.
    3. On September 15, 2000, the Cities of Anaheim, Azusa, Banning, 
Colton, and Riverside, California (Southern Cities) filed a complaint 
against the California Independent System Operator Corporation (Cal 
ISO) regarding costs incurred by the Cal ISO and passed on to customers 
as neutrality adjustment charges. The Commission acted on the complaint 
on March 14, 2001, dismissing it in part and granting it in part.\1\ 
Subsequently, the Commission granted in part and denied in part 
rehearing.\2\ Parties sought further rehearing.
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    \1\ Cities of Anaheim, Azusa, Banning, Colton, and Riverside, 
California v. California Independent System Operator Corp., 94 FERC 
[para]61,268 (2001).
    \2\ Cities of Anaheim, Azusa, Banning, Colton, and Riverside, 
California v. California Independent System Operator Corp., 95 FERC 
[para]61,197 (2001).
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    4. On June 1, 2001, the Salt River Project Agricultural Improvement 
and Power District (SRP) filed a complaint against the Cal ISO in 
Docket No. EL01-84-000 challenging several aspects of the Cal ISO's 
neutrality adjustment charges. On June 22, 2001, the Cal ISO, Southern 
Cities, and SRP filed a motion to institute settlement judge procedures 
to resolve the issues raised in the two complaints and shortly 
thereafter, the Commission issued an order initiating settlement judge 
procedures.\3\ The order did not institute hearing proceedings or 
authorize designation of a presiding administrative law judge.
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    \3\ Cities of Anaheim, Azusa, Banning, Colton, and Riverside, 
California v. California Independent System Operator Corp., 96 FERC 
[para]61,024 (2001).
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    5. The parties participated in numerous settlement conferences to 
resolve the complaints, and on July 31, 2002, Southern Cities, SRP and 
Cal ISO (Settling Parties) submitted to the Commission an Offer of 
Settlement and Settlement Agreement (Offer of Settlement). In addition 
to comments supporting the Offer of Settlement from the Settling 
Parties and trial staff, Pacific Gas and Electric Co. (PG&E) filed 
comments opposing the Offer of Settlement, and the Commission received 
motions to intervene out-of-time, and protests or comments in 
opposition, from Enron Power Marketing, Inc. (Enron), Puget Sound 
Energy, Inc. (Puget Sound), IDACORP Energy, L.P. (IDACORP), and 
California Generators.\4\ Subsequently, participants

[[Page 549]]

filed reply comments. Enron filed a conditional withdrawal of its 
motion to intervene out-of-time; IDACORP and Puget Sound conditionally 
withdrew their protests. The Settling Parties and the California 
Department of Water Resources (DWR) opposed the interventions.
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    \4\ The California Generators are: Duke Energy North America, 
LLC; Duke Energy Trading and Marketing, L.L.C.; Dynegy Power 
Marketing, Inc.; El Segundo Power LLC; Long Beach Generation LLC; 
Cabrillo Power I LLC; Cabrillo Power II LLC; Mirant Americas Energy 
Marketing, LP; Mirant California, LLC; Reliant Energy Power 
Generator, Inc.; Reliant Energy Services, Inc.; and Williams Energy 
Marketing & Trading Company. The California Generators took no 
position on the Offer of Settlement.
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    6. On November 1, 2002, the Settlement Judge issued an order 
granting the motions to intervene. The order noted that it appears the 
Offer of Settlement cannot be certified to the Commission if, as 
alleged by PG&E and trial staff, there are material issues of fact to 
be resolved. The judge determined that an additional settlement 
conference should be convened to clarify whether there are any material 
issues of fact remaining. The judge stated that the motions to 
intervene out-of-time were granted so that the additional intervenors 
could be included in the next settlement conference.
    7. The November 1 Order prompted the Settling Parties to file a 
request for guidance from the Commission, on an expedited basis, 
regarding the appropriate procedures to be followed to approve the 
Offer of Settlement. The Settling Parties state that they are concerned 
that, without guidance from the Commission on the appropriate 
decisional authority, action on the Offer of Settlement will be delayed 
or will become sidetracked if the negotiation process is to begin again 
before a new settlement judge and to include additional parties.
    8. The request for guidance posits that, under the Commission's 
Rules of Practice and Procedure, settlement judges are not authorized 
to certify a settlement or to make other substantive rulings, and that 
the Commission is the appropriate authority to act on the Offer of 
Settlement because the proceedings were never set for hearing before a 
presiding administrative law judge. The Settling Parties also question 
the settlement judge's authority to act on the motions to intervene 
out-of-time, and they state that the Commission should have ruled on 
the motions.
    9. PG&E and IDACORP and Puget filed answers to the request for 
guidance, PG&E states that it does not take issue with the procedural 
questions raised in the request, but objects that the Settling Parties 
have attempted to reargue the merits of the Offer of Settlement. 
IDACORP and Puget remark that the Offer of Settlement fails to ensure 
that all entities who are owed refunds, and not just the Settling 
Parties, will receive them. They continue that denial of their motions 
to intervene in this proceeding would be shortsighted because, if 
excluded, they could simply file complaints and seek consolidation with 
the ongoing proceeding.

Discussion

    10. Rule 602 of the Commission's Rules of Practice and Procedure, 
18 CFR Sec.  385.602 (2002), provides procedures for the submission of 
offers of settlement. An uncontested offer of settlement may be 
certified to the Commission upon a finding that the offer is not 
contested by any participant.\5\ Where an offer of settlement is 
contested, it may be certified to the Commission if there is no genuine 
issue of material fact or if the record contains substantial evidence 
from which the Commission may reach a reasoned decision on the merits 
of the contested issues.\6\ The section does not expressly discuss 
settlement judges, the role they play in the settling of cases, or the 
handling of such settlements.
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    \5\ 18 CFR Sec.  385.602(g) (2002).
    \6\ 18 CFR Sec.  385.602(h)(2)(ii) and (iii) (2002).
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    11. Rule 603 provides procedures for negotiating settlements before 
a settlement judge. The powers and duties of settlement judges include 
convening and presiding over conferences and settlement negotiations, 
assessing the practicalities of a potential settlement, reporting to 
the Chief Administrative Law Judge or the Commission describing the 
status of the negotiations, and recommending the termination or 
continuation of settlement negotiations.\7\ The section does not 
expressly discuss certification of settlements to the Commission.
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    \7\ 18 CFR Sec.  385.603(g) (2002).
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    12. As stated above, the Commission set this case for settlement 
judge procedures under Rule 603. Although settlement judges typically 
will certify to the Commission uncontested settlements,\8\ the 
substantive determinations necessary to certify a contested settlement, 
as described in Rules 602(h)(2)(ii) and (iii), are not appropriately 
made by a settlement judge. Given that the settlement judge may well be 
privy to confidential, non-record information and given that the 
settlement judge may have had off-the-record discussions about the 
merits of issues and not all parties may have been present, Rule 603 
does not empower settlement judges to make substantive findings 
regarding a contested offer of settlement or to certify a contested 
offer of settlement.\9\ Further, it is not necessary that the 
settlement judge do so. Where a contested settlement is filed in a case 
that is pending solely before a settlement judge, the contested 
settlement is already before the Commission itself.\10\ (We add that, 
insofar as the settlement judge is to report to the Chief Judge and/or 
the Commission, in the future when a settlement is contested the 
settlement judge should report the fact that a filed settlement has 
been contested, and identify what the matters at issue may be.\11\
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    \8\ We find that their doing so is appropriate and not 
inconsistent with our regulations.
    \9\ See American Electric Power Service Corp. and American 
Electric Power Company, Inc., 100 FERC [para] 61,346 at P 41-42 
(2002), reh'g pending.
    \10\ See 18 CFR 385.602(b) (2002).
    \11\ However, the settlement judge, as noted, should not make 
substantive findings on the matters at issue.
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    13. The Commission thus does not need the settlement judge in this 
case to pursue the question of whether, in fact, any genuine issues of 
material fact remain. The Commission will consider the record in this 
proceeding as it has been developed to date, address the merits of the 
issues presented, and also determine what, if any, additional 
procedures may be necessary. At the same time, the Commission will 
address the motions to intervene out-of-time, and oppositions thereto, 
filed by Enron, Puget Sound, IDACORP, and the California Generators. 
Rule 603 does not empower settlement judges to rule on motions to 
intervene; these will be addressed by the Commission in this case (and 
interventions sought in similar circumstances in future cases should be 
addressed by the Chief Judge\12\), as appropriate.
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    \12\ See 18 CFR 375.304(a), 385.102(a), 385.214(c) and (d), and 
385.504(b)(12) (2002).
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The Commission orders:

    (A) The Commission hereby responds to the Settling Parties' request 
for guidance, as set forth in the body of this order.
    (B) The Secretary shall promptly publish this order in the Federal 
Register.

    By the Commission.
Linwood A. Watson, Jr.,
Deputy Secretary.
[FR Doc. 03-195 Filed 1-3-03; 8:45 am]
BILLING CODE 6717-01-M