Key Points

  • The D.C. Circuit held that Basin Electric was 'aggrieved' under FPA section 313(b) even though FERC denied the complaint against it, because FERC rejected Basin's contract interpretation on the way to that denial.
  • The court affirmed FERC's reading that section 9 of the Basin/Tri-State Agreement permits a member's withdrawal as an asset transfer, not a breach of the all-requirements contract.
  • Basin's argument that permitting one member's exit could lead to termination of the entire contract was deemed a hypothetical that FERC could address in a future proceeding.
  • Other Eastern Interconnection members have tendered withdrawal notices, so the ruling will govern additional exits from Tri-State.

The D.C. Circuit ruled Friday that a rural electric cooperative could challenge a Federal Energy Regulatory Commission order that nominally went in its favor, then upheld FERC's determination that a member's withdrawal from a power supplier does not breach a long-term wholesale contract.

Basin Electric Power Cooperative had argued that Northwest Rural Public Power District's exit from Tri-State Generation and Transmission Association would violate the Basin/Tri-State Agreement, an all-requirements power contract running through 2050. FERC denied a complaint filed against Basin but, in doing so, rejected Basin's breach theory and held that the withdrawal was a permitted asset transfer under the contract.

A three-judge panel unanimously denied Basin's petition for review. Judge J. Michelle Childs, writing for the court, found Basin was "aggrieved" under section 313(b) of the Federal Power Act despite technically prevailing below because FERC's reasoning inflicted a concrete injury.

"The Commission's narrow focus on whether Northwest Rural's complaint was ultimately granted or denied ignores the pertinent inquiry—'the substance of the decision itself,'" Judge Childs wrote, citing the court's 2025 decision in Michigan Electric Transmission Co. v. FERC.

The dispute traces to the cooperative structure of the rural electricity market. Basin is a not-for-profit cooperative selling power to 139 member systems across nine states. Tri-State, one of Basin's members, in turn sells wholesale power to its own members, including Northwest Rural, a Nebraska utility serving households and businesses in the state's northwest corner.

In April 2022, Northwest Rural gave Tri-State two years' notice of its intent to withdraw. Basin responded by suing Tri-State in federal court in North Dakota, seeking to block the exit. After two rounds of litigation that were dismissed or voluntarily dropped, Northwest Rural brought the matter to FERC, asking the agency to declare that its withdrawal did not violate the Basin/Tri-State Agreement.

FERC agreed, focusing on section 9 of the contract, which addresses asset transfers. The first sentence of section 9 requires Basin's written approval before Tri-State can "sell, lease or transfer" all or a substantial portion of its Eastern Interconnection assets. But the second sentence provides an exception: Tri-State may proceed without approval "so long as Tri-State shall pay such pro rata portion of the outstanding indebtedness" and other obligations "as shall be determined by Basin."

The Commission held that Northwest Rural's departure qualifies as such a transfer and that section 9 "explicitly prescribes the procedures" for Basin and Tri-State to manage the implications of a member's exit. Basin sought rehearing, which FERC denied, then petitioned the D.C. Circuit.

FERC argued the court lacked jurisdiction because Basin was the prevailing party below. The court disagreed, applying the logic of Michigan Electric. In that case, the court held that a party was aggrieved when FERC, while rejecting a proposal the party opposed, also rejected the party's ownership claim—leaving it unable to plan for capital expenditures.

Here, the court found Basin faces an analogous harm. Northwest Rural has since given notice to withdraw effective January 1, 2027, and Basin "must make current planning decisions" that account for the loss of those energy demands, Judge Childs wrote. The court cited an affidavit from a Basin official stating that the withdrawal affects the cooperative's load forecasts, power supply planning, financial forecasts, and rate-setting.

On the merits, the court found section 9 "unambiguously supplies Tri-State a mechanism to transfer assets without Basin's approval." Basin had argued that permitting one member's withdrawal would functionally allow Tri-State to terminate the entire contract by opening the door for all six of its Eastern Interconnection members to leave. The court called that scenario a "hypothetical" that FERC was entitled to address in a future proceeding.

"Tri-State's transfer of a single asset (Northwest Rural) is not equivalent to its termination of the entire contract," Judge Childs wrote for the court.

Basin also argued that the Commission's interpretation conflicted with three federal court decisions involving all-requirements power contracts. The court found each distinguishable. In Tri-State Generation & Transmission Ass'n v. Shoshone River Power, Inc., the Tenth Circuit held that a cooperative member had an implied obligation to remain in business and not eliminate its requirements—but also recognized an exception for "an unavoidable circumstance." The D.C. Circuit found Northwest Rural's withdrawal more akin to such a circumstance than to the deliberate self-liquidation at issue in Shoshone.

The court also rejected Basin's argument that the purpose of the contract should inform the interpretation, noting that under Nebraska law—which governs the agreement—unambiguous terms must be given their plain meaning. Basin conceded the contract was unambiguous.

A footnote in the opinion observed that other Eastern Interconnection members have tendered withdrawal notices, meaning the ruling will govern future exits from Tri-State.

Lawyers for Basin Electric included Jesse Halpern. The Commission was represented by J. Houston Shaner.

The case is Basin Electric Power Cooperative v. FERC, No. 25-1060 (D.C. Cir.).