# Transource Pennsylvania, LLC v. DeFrank

> District Court, M.D. Pennsylvania · December 6, 2023

URL: https://www.frixlaw.com/law-library/cases/10413985

## Case

- **Court:** District Court, M.D. Pennsylvania
- **Decided:** December 6, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
TRANSOURCE PENNSYLVANIA, : Civil No. 1:21-CV-01101
LLC, :
:
Plaintiff, :
:
v. :
:
STEVEN M. DEFRANK, et al., :
:
Defendants. : Judge Jennifer P. Wilson
MEMORANDUM
This is a declaratory judgment action filed by Plaintiff Transource
Pennsylvania, LLC (“Transource”) against the Pennsylvania Public Utility
Commission (“PUC”) and its Commissioners (collectively, “Defendants”).
This case concerns federalism and the allocation of powers between federal
and state entities. The federal government has reserved for itself the power to
regulate the transmission of electric energy in interstate commerce, including in
wholesale ratemaking and interstate and regional planning. The federal
government exercises these powers through the Federal Energy Regulatory
Commission (“FERC”). FERC has, in turn, delegated some of these powers to
Regional Transmission Organizations (“RTOs”). The RTOs assess regional needs
by methods approved by FERC, which include economic analyses. By contrast,
the states retain the powers of siting, construction, and permitting for regional
energy infrastructure.
In this case, the RTO at issue determined a need for regional transmission
lines. But, when Transource, the entity with which the RTO was collaborating,

submitted its application to the PUC, the application was denied. Specifically, the
PUC made a determination that the project was not needed. In substance, the PUC
did not base its determination on considerations of siting or construction, but

instead on whether it was worthwhile to ensure that consumers across a region or
across state lines have similar access to low-priced electricity.
The court must decide whether the PUC has violated the Constitution in
making this determination. Specifically, the court must determine whether the

PUC violated the Supremacy Clause, by issuing a decision directly conflicting with
federal law or serving as an obstacle to federal objectives. The court must likewise
determine whether the PUC’s decision violated the dormant Commerce Clause

either by denying the application out of economic protectionism or burdening
interstate commerce. To some extent, these issues overlap, though the court will
address them individually below. For the reasons explained in the following
sections, the court finds that the PUC’s decision violated the Supremacy Clause

and the dormant Commerce Clause. Based on these findings, the court will deny
Defendants’ motion for summary judgment and grant Transource’s motion for
summary judgment.
FACTUAL AND PROCEDURAL BACKGROUND1
A. Federal and state regulatory regimes
In the Federal Power Act (“FPA”), Congress provided FERC with broad

powers. 16 U.S.C. § 791a, et seq. Included among these powers are the authority
to regulate wholesale sales of electricity and transmission of electric energy in
interstate commerce. Id. at § 824. It also provided FERC with authority to

regulate practices that affect the rates for these activities. See id. at §§ 824b, 824d,
824e. FERC must ensure the rates and practices which affect transmission of
electricity are “just and reasonable.” Id. at §§ 824d(a), 824e(a).
The FPA empowers FERC with the ability to regulate “the transmission of

electric energy in interstate commerce,” but with the caveat that “such Federal
regulation, however, to extend only to those matters which are not subject to
regulation by the States.” Id. at § 824(a). Despite this language, the Supreme

Court has observed that the FPA expanded federal powers into areas historically
regulated by states. The Court noted that the FPA did “a good deal more” than
augment FERC’s powers to include areas hitherto exercised neither by federal nor

1 This section of this memorandum includes only the background relevant to the resolution of the
motions for summary judgment. Any additional factual recitation that is necessary for the
discussion of each specific issue is included in the Discussion section of this memorandum. In
considering the instant motion for summary judgment, the court relied on the uncontested facts.
Where facts were disputed, the court viewed the facts in the light most favorable to the
nonmoving party and has drawn all inferences in favor of the nonmovant, pursuant to the
relevant standard for deciding a motion for summary judgment. See Doe v. C.A.R.S. Protection
Plus, Inc., 527 F.3d 358, 362 (3d Cir. 2008).
state regulators. New York v. FERC, 535 U.S. 1, 21 (2002). Instead, the FPA
“authorized federal regulation not only of wholesale sales that had been beyond the

reach of state power, but also the regulation of wholesale sales that had been
previously subject to state regulation.” Id. Two powers which the FPA reserved
for the federal government were regulating interstate transmissions as well as

interstate wholesale sales. Id.
In addition, the Supreme Court described the limiting language of federal
powers in § 824(a) as “a mere policy declaration.” Id. at 22. The Court further
noted that such a policy declaration “cannot nullify a clear and specific grant of

jurisdiction [to FERC], even if the particular grant seems inconsistent with the
broadly expressed purpose.” Id. (internal quotation marks omitted).
Under the FPA, FERC delegates some of its powers and responsibilities to

RTOs. (Doc. 164, ¶ 1.) One such RTO is PJM Interconnection, L.L.C. (“PJM”).
(Doc. 164, ¶ 1.) FERC charged PJM with maintaining the bulk electric
transmission system of a 13-state region, which includes most of Pennsylvania.
(Id.)

In 2011, FERC issued Order No. 1000, which had two primary objectives:
(1) Ensure that transmission planning processes at the regional level
consider and evaluate, on a non-discriminatory basis, possible
transmission alternatives and produce a transmission plan that can meet
transmission needs more efficiently and cost-effectively; and (2) ensure
that the costs of transmission solutions chosen to meet regional
transmission needs are allocated fairly to those who receive benefits
from them.
Transmission Planning and Cost Allocation by Transmission Owning and
Operating Public Utilities, FERC Order No. 1000, 76 Fed. Reg. 49,842, 49,845

(2011) (“Order 1000”). Order 1000 made clear that the federal determination of
regional transmission planning and cost allocation includes “the processes used to
identify and evaluate transmission system needs and potential solutions to those
needs.” Id. at 49,861. But it does not include state matters, such as “siting,

permitting, and construction.” Id. As a result, even where regional planning
identifies and selects a regional transmission plan or project, “such solutions may
not ultimately be constructed should the developer not secure the necessary

approvals from the relevant state regulators.” Transmission Planning and Cost
Allocation by Transmission Owning and Operating Public Utilities, FERC Order
No. 1000-A, 77 Fed. Reg. 32,184, 32,215 (2012) (“Order 1000-A”).
Under the federal regime, the responsibilities of RTOs include “planning,

and [] directing or arranging, necessary transmission expansions, additions, and
upgrades that will enable it to provide efficient, reliable and non-discriminatory
transmission service and coordinate such efforts with the appropriate state

authorities.” 18 C.F.R. § 35.34(k)(7). As part of their planning process, an RTO
“must encourage market-driven operating and investment actions for preventing
and relieving congestion.” Id. at § 35.34(k)(7)(i).
While the federal government and RTOs are responsible for planning and
directing non-discriminatory transmission, the state has a separate purview. The

states’ authority encompasses issues of siting, permitting, and construction for
regional transmission projects. As applicable in this case, Pennsylvania law
provides that before constructing an electric transmission line, public utilities like
Transource must submit a siting application to the PUC. (Doc. 148, p. 20.)2 The

PUC is the Pennsylvania agency responsible for “oversight of the siting and
construction of electric transmission lines.” (Doc. 164, ¶ 83.)
To obtain approval for their application, public utilities must satisfy the

following requirements by a preponderance of the evidence:
1) That there is a need for it.
2) That it will not create an unreasonable risk of danger to the health
and safety of the public.
3) That it is in compliance with applicable statutes and regulations
providing for the protection of the natural resources of this
Commonwealth.
4) That it will have minimum adverse environmental impact,
considering the electric power needs of the public, the state of
available technology and the available alternatives.
52 Pa. Code § 57.76(a).

2 For ease of reference, the court utilizes the page numbers from the CM/ECF header.

There is no dispute as to the existence or characterization of the federal and state regulatory
regimes that apply to the Project. Therefore, some references for this subsection are drawn from
the parties’ briefing.
B. PJM’s regional assessment
In addressing congestion, FERC directed PJM in June 2007 to “file a

formulaic approach to choose economic projects proposed to reduce congestion
that describes exactly how any metrics will be calculated, weighed, considered,
and combined.” PJM Interconnection, L.L.C., 119 FERC ¶ 61,265, 62,492–62,493
(2007); see also Doc. 164, ¶ 16. In October 2007, PJM proposed such a formulaic

approach to FERC. (Doc. 164, ¶ 17.)
In the context of an electricity transmission grid, “[c]ongestion occurs when
the least costly resources that are available to serve load in a given region cannot

be dispatched because transmission facility limits constrain power flow on the
system.” (Doc. 157, ¶ 10; Doc. 164, ¶ 10; Doc. 157-1, p. 18.) According to a 2008
FERC order, “without a process for identifying economic transmission, PJM's
customers located in load pockets and separated from the rest of the system by

congested transmission bottlenecks, will have few opportunities to access
alternative resources that have lower prices for electricity.” PJM Interconnection,
L.L.C., 123 FERC ¶ 61,051, 61,411–61,412 (2008) (“2008 FERC Order”).

In partial fulfillment of its RTO responsibilities, PJM creates an annual
Regional Transmission Expansion Plan (“RTEP”). (Doc. 159, ¶ 7.) A component
of the RTEP is a market efficiency analysis, in which PJM identifies areas where
congestion exists and identifies solutions to reduce the identified congestion. (Id.
¶ 8.)

Under the approach that PJM proposed to FERC in October 2007, it would
conduct market efficiency analysis for proposed projects. (Doc. 164, ¶ 17.) This
analysis would provide a benefit-cost ratio for a given project over a 15-year span.

(Id. ¶¶ 17–18.) For PJM to include a given project in its RTEP, the benefit-cost
ratio must be at least 1.25 to 1.0. (Id. ¶ 18.) On April 17, 2008, FERC approved
PJM’s proposed approach. (Doc. 164, ¶ 21; Doc. 157-8; see also 2008 FERC
Order, 123 FERC at 61,416.)

FERC acknowledged objections to PJM’s proposed method but explained
that PJM’s approach was reasonable. (Doc. 164, ¶ 22.) In PJM’s approach, benefit
and cost of a project would be analyzed by “summing the energy benefit . . . for

only those zones that experience reduced energy payments – which are the zones
that would be assigned the costs of these facilities.” (Id.) The calculation would
not include “the expected energy payment increases, if any, in other zones.” (Id.)
FERC found “this approach reasonable because it would match the project

selection process to the existing cost allocation method. That is, it would evaluate
the load payment benefits of those loads that will be assigned the costs of the new
facilities.” (Id.)
C. The Project
Before soliciting projects for PJM’s 2014/2015 window, PJM identified

congestion within its region, and specifically “on the AP South Reactive Interface”
subregion (“APSRI”). (Doc. 164, ¶¶ 61–62.)3 PJM found that congestion across
the APSRI along the Pennsylvania-Maryland border had imposed “economic
transmission constraint costs totaling approximately $800 million from 2012

through 2016.” (Id. ¶ 62.)4
In October of 2014, PJM opened a “long-term RTEP proposal window . . . to
solicit market efficiency proposals in order to alleviate congestion” in the APSRI.

(Doc. 159, ¶ 21.) In response to PJM’s solicitation, the parent company of
Transource proposed a project (“Project”).5 (Id. ¶ 22.) The Project is a set of
proposed transmission lines beginning in West Virginia and ending in Maryland.
(Id. ¶ 23.) The portion of the Project at issue in this action would place high

voltage transmission lines in Pennsylvania’s Franklin and York Counties, where

3 Defendants state that they dispute this fact, but fail to cite to any evidence that negates the
existence of congestion. Instead, they assert that the amount of congestion dropped precipitously
beginning in 2015. (Doc. 164, ¶ 62.) But this does not negate Transource’s assertion that PJM
found congestion on the AP South Reactive Interface from 2012 to 2016. (Id.)

4 Defendants again state that they dispute this fact, but fail to cite to any evidence that negates
the existence of congestion. Instead, they assert that the amount of congestion dropped
precipitously beginning in 2015. (Doc. 164, ¶ 62.)

5 The Project is alternatively referred to as Project 9A or the Independence Energy Connection
Project (“IEC Project”). (Doc. 159, ¶ 22.) But the IEC Project is also referred to as a subset of
Project 9A. (Id. ¶ 24; Doc. 164, ¶¶ 64–66.) For ease of use and clarity, this memorandum uses
the term “Project.”
they would run from new substations to the Pennsylvania/Maryland border. (Id.
¶ 24.)

The PJM Board approved the Project in 2016, determining that it was “the
more efficient, cost-effective project” to address the congestion in the APSRI.
(Doc. 164, ¶ 68.)6 The Project, if built, would benefit parts of Virginia, Maryland,

Washington, D.C., and Western Pennsylvania. (Id. ¶ 71.) Meanwhile, other
regions which benefit from the current congestion would “no longer have the
benefit of [the] lower-cost power.” (Id. ¶¶ 71–72.)
As of March 2020, PJM projected that the Project would lead to lower costs

in benefited areas by $844,806,909.44. (Id. ¶¶ 73, 77.) At the time, the Project’s
construction cost, which would be paid by the customers of benefiting areas, was
estimated to be between $509 million and $528 million. (Id. ¶ 78.) The Project

thus “exceeded the 1.25:1 benefit-cost threshold required under PJM’s Operating
Agreement for market efficiency projects.” (Doc. 157-7, p. 57.)7

6 Although Defendants dispute this fact, their citation to the record does not actually contradict
this fact. (Doc. 164, ¶¶ 68, 137.)

7 Although Defendants dispute this fact, their citation to the record does not contradict this fact.
Transource relies on a 2020 ALJ recommendation which, in turn, states that “PJM’s basis for
selecting the IEC Project is that it exceeded the 1.25:1 benefit-cost threshold required under
PJM’s Operating Agreement for market efficiency project.” (Doc. 164, ¶ 79; Doc. 157-7, p. 57.)
Defendants seek to contradict this assertion by relying on a 2022 PJM document which provides
a “2021 Re-Evaluation of Project 9A,” including various benefit-to-cost ratios and one of 1.00.
(Doc. 164, ¶ 79; Doc. 164-2, p. 95.) But Defendants’ citation, showing a later and different ratio,
does not refute the accuracy of the earlier figure.
In November 2016, PJM and Transource’s parent company executed a
Designated Entity Agreement (“DEA”), which allocated responsibilities between

PJM and Transource for the Project. (Doc. 164, ¶ 80.) In January 2017, FERC
approved the DEA. (Id. ¶ 81.) In the same order, FERC determined that the
Project would “reduce the cost of delivered power by reducing transmission

congestion.” (Id. ¶ 82.)
On February 8, 2017, Transource filed an application for the Project to the
PUC. (Doc. 164, ¶ 84.) Throughout 2017 and 2018, the PUC granted various
approvals to Transource applications, none of which are relevant to the analysis in

this memorandum. (Id. ¶¶ 84–88.)
On December 22, 2020, the PUC Administrative Law Judge (“ALJ”) issued
a Recommended Decision, which recommended that the PUC deny Transource’s

siting applications because Transource had failed to show a need for the project.
(Id. ¶ 89.) The ALJ stated that, in determining a need under Pennsylvania law, the
PUC may consider economic and environmental impacts. (Id. ¶ 91.)
The ALJ determined that the benefit-cost methodology, approved by FERC

and used by PJM to assess whether the Project was worthwhile, was “deficient
when measured against the constitutional, statutory, and regulatory standards of
Pennsylvania law.” (Doc. 157-7, p. 104.) The ALJ considered Transource’s

argument that “congestion represents a form of rate discrimination.” (Id. at 105.)
The ALJ disagreed and concluded that “[e]conomic congestion is not a form of rate
discrimination, rather, it is a market-based response to a variety of factors.” (Id. at

106.)
The ALJ concluded that “Pennsylvania has benefitted from its participation
in PJM and through regional transmission planning; however, under these

particular circumstances, the IEC Project as a market efficiency project does not
provide sufficient benefits to Pennsylvania or the PJM region as a whole.” (Doc.
164, ¶ 94.) The ALJ was persuaded by witness testimony that, if the Project were
built, it could save “utilities in Maryland, Virginia, and the District of Columbia

almost a billion dollars over 15 years,” but if the Project were not built, the same
power would be used “in Pennsylvania, Ohio, Illinois, and New Jersey at a cost of
about $970 million.” (Id.) The ALJ concluded the following:

PJM’s failure to consider increased wholesale power prices in
Pennsylvania when calculating the benefit-cost ratio, frequent changes
to how the benefit-cost ratio is calculated even during this proceeding,
changes to how the benefits are simulated, and the uncertain nature and
extent to which transmission zones benefit all cast doubt on the
benefits, if any to Pennsylvania.
(Id.) The ALJ concluded that “[i]ncreased wholesale power prices are real costs to
customers that show there is no need for the project.” (Id.) For that reason, the
ALJ recommended that the siting applications and eminent domain applications be
denied because “no need ha[d] been proven.” (Id. ¶ 95.)
Transource appealed the ALJ’s Recommended Decision to the PUC. (Doc.
159, ¶ 39; Doc. 164, ¶ 96.) On May 24, 2021, the PUC issued its order, which

forms the basis of this litigation. (Doc. 159, ¶ 40; Doc. 164, ¶ 97; see Doc. 157-1.)
The order denied Transource’s siting applications and “adopted and incorporated”
the ALJ’s findings. (Doc. 159, ¶ 40; Doc. 164. ¶ 98.)

In considering Transource’s application, the PUC agreed with the ALJ that it
was free to set aside PJM’s economic analysis in determining the need or benefit-
cost ratio of the Project. (See Doc. 164, ¶ 106.) It stated that “[t]he potential
negative and practical impact on the citizens and consumers of Pennsylvania is our

concern, and it is properly within the scope of our consideration of the weight of
all the evidence on the issue of ‘need.’” (Id.)
The PUC concluded that “the federal authority under which PJM operates

does not extend beyond PJM’s approval process, where approval is sought from a
state commission.” (Id. ¶ 104.) Instead, agreeing with and quoting the ALJ, the
PUC found that “while the Federal Power Act (FPA) does grant FERC exclusive
jurisdiction over the interstate transmission of electric energy and electric

wholesale rates, the FPA limits FERC authority, including its designee, PJM, to
‘those matters which are not subject to regulation by the States.’” (Doc. 157-1,
p. 61.)
In assessing whether a “need” existed for the Project under Pennsylvania
law, the PUC rejected the PJM-approved criteria and methodology. (See Doc. 164,

¶ 106.) The PUC stated that “[t]he potential negative and practical impact on the
citizens and consumers of Pennsylvania is our concern, and it is properly within
the scope of our consideration of the weight of all the evidence on the issue of

‘need.’” (Id.)
On that basis, the PUC noted that relief of economic congestion on a
regional level would result in higher utility rates in Pennsylvania. (Id.) The PUC
concluded that “the ALJ properly considered the negative impacts to Pennsylvania

in evaluating the ‘need’” under state law. (Id.) The PUC also questioned the data
upon which PJM’s analysis rested, finding that it needed to better reflect “current
and existing priority needs on the regional level” to have greater persuasive impact.

(Id. ¶ 107.)
Because the PUC concluded that there was insufficient evidence to establish
“need” under Pennsylvania law for the Project, it rescinded Transource’s
provisional certificate of public convenience. (Id. ¶¶ 109–11.)

Once a market efficiency project, like the Project, is selected, PJM conducts
annual re-evaluations to ensure said project still meets the required 1.25:1 benefit-
cost ratio. (Id. ¶ 113.) In a 2018 PJM white paper, PJM stated that, since 2016, it

had evaluated the Project four times. (Id. ¶ 114.) PJM asserted that, in all four
evaluations, including the most recent in September 2018, the Project had passed
the required 1.25:1 ratio. (Id.) Further, in the most recent re-evaluation, in 2022,

the Project had a ratio of 2.48, which included “sunk costs.” (Id. ¶ 115.)8 In re-
assessing the Project’s benefits to consumers, PJM’s analyses account “for all of
the underlying system fundamentals” that drive changes in congestion, including

modeling parameters, new generation, and new load forecasts. (Id. ¶ 116.)
D. The present action
Transource filed its complaint in this action on June 22, 2021, seeking
declaratory and injunctive relief. (Doc. 1.) Transource sought declaratory relief on

the grounds that the PUC’s decision is preempted under federal law and violates
the dormant Commerce Clause. (Id. at 40.) It also sought injunctive relief
preventing enforcement of the PUC’s decision, including its revocation of
Transource’s Certificate of Public Convenience. (Id. at 41.)

On June 23, 2021, Transource filed a direct appeal of the PUC’s decision
revoking its provisional certificate to the Pennsylvania Commonwealth Court. (Pa.
Commw. Ct. Docket No. 689 CD 2021.) In the appeal, Transource argued that the

PUC “erred in rejecting PJM’s determination of the need for the [] Project, which
was presented as evidence to establish need under” Pennsylvania law. (Doc. 148,

8 Although Defendants dispute this fact, their citation to the record does not contradict this fact.
p. 21.) It also argued that the PUC’s “finding that the [] Project is not necessary to
resolve congestion . . . is not supported by substantial evidence.” (Id. at 21–22.)

In the instant action, Transource filed a motion for summary judgment and a
motion to expedite summary judgment on July 2, 2021. (Docs. 20, 21.) The
parties submitted briefs on the motions. (Docs. 23, 24, 61, 70, 74.) Subsequently,

on July 23, 2021, Defendants filed a motion to dismiss the action for lack of
jurisdiction and failure to state a claim. (Doc. 57.) On August 17, 2021, the court
held oral argument on the motions for summary judgment, to expedite, and to
dismiss. (Doc. 74.)

On August 26, 2021, the court issued an opinion and order denying the
motion to dismiss in part, deferring ruling on the remainder of the motion, and
staying the case, on abstention grounds, pending the outcome of the parallel case

pending before the Pennsylvania Commonwealth Court. (Docs. 82, 83.) On May
17, 2022, Transource notified the court that the case pending before the
Pennsylvania Commonwealth Court had resolved and that the parties wished to
proceed with the litigation in this court. (Doc. 90.) The court lifted the stay on the

same date. (Doc. 91.) Thereafter, the court set a schedule for supplemental
briefing on the pending motions and allowed limited fact discovery in connection
with the motion to expedite. (Doc. 96.)
On August 5, 2022, the court denied Transource’s motion to expedite. (Doc.
116.) On August 8, 2022, the court found the motion for summary judgment was

prematurely filed and denied it without prejudice to refiling by the appropriate
deadline set by the court. (Doc. 119.) Also on August 8, 2022, the court denied
without prejudice Defendants’ motion to dismiss. (Doc. 118.) In so doing, the

court addressed claim and issue preclusion arguments which Defendants had
raised. The court concluded that, under Third Circuit precedent, claim preclusion
should be analyzed under Pennsylvania law, “regardless of whether the plaintiff
has classified its reservation as an England9 reservation.” (Id. at 10.)

The court concluded the following:
[W]hile the PUC’s decision could be entitled to preclusive effect under
Pennsylvania law if Transource should have raised its federal claims
before the Commonwealth Court, but chose not to, the court cannot
answer this question without impermissibly making a fact
determination: whether Defendants objected to Transource’s notice of
its intent to split its claims.
(Id. at 10–11.) The court further concluded that “[i]f Defendants did not object to
Transource’s announced intention to split its claims, ‘[t]hey cannot now benefit
from their silence.’” (Id. at 11 (quoting R & J Holding Co. v. Redevelopment
Auth., 670 F.3d 420, 428 (3d Cir. 2011)).)

9 England v. La. St. Bd. of Med. Exam’rs, 375 U.S. 411 (1964).
On August 11, 2022, the court held an on-the-record conference call. (Doc.
122.) During that call, in response to Plaintiff’s counsel, the court stated the

following: “[I]n light of the rulings I’ve made over the past week, what I’m clearly
trying to convey to you, and now I will say expressly, is that I would like all of the
issues in this case addressed in the summary judgment motions.” (Doc. 168-1,

pp. 13–14.)
In accordance with the on-the-record call, the court issued a case
management order on August 12, 2022. (Doc. 123.) The final deadline that the
order provided was for dispositive motions and supporting briefs to be submitted

by February 15, 2023. (Id.) On February 1, 2023, the court granted a jointly
proposed order to modify the briefing schedule provided in its case management
order. (Doc. 145.) The court-approved order provided in part that Defendants

should file their motion on or before March 8, 2023, and Transource should file its
motion on or before March 29, 2023. (Id.) The parties filed their motions and
supporting briefs in accordance with the court’s order. (Docs. 146–48, 156–59,
164–65, 168–69.) Franklin County, Pennsylvania and PJM filed amici curiae

briefs. (Docs. 155, 172.)10 The court has reviewed the filings and the motions for
summary judgment are ripe for disposition.

10 The court has reviewed these briefs, along with those of the parties, and thanks Franklin
County and PJM for their helpful contributions. Although the court found the amici briefs
helpful, this memorandum cites to the filings submitted by the parties.
On August 28, 2023, without moving to amend this court’s established
deadlines, Defendants filed a motion for judgment on the pleadings. (Doc. 173.)

After the issue was briefed, Transource filed a motion, which the court granted, for
leave to docket a sur reply because Defendants’ reply brief expounded on legal
arguments which their initial brief merely mentioned. (Docs. 181, 183.) The court

addresses the motion for judgment on the pleadings in a separate memorandum and
order.
STANDARDS OF REVIEW
A court may grant a motion for summary judgment when “there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A dispute of fact is material if resolution of
the dispute “might affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is

not precluded by “[f]actual disputes that are irrelevant or unnecessary.” Id. “A
dispute is genuine if a reasonable trier-of-fact could find in favor of the
nonmovant’ and ‘material if it could affect the outcome of the case.” Thomas v.

Tice, 943 F.3d 145, 149 (3d Cir. 2019) (quoting Lichtenstein v. Univ. of Pittsburgh
Med. Ctr., 691 F.3d 294, 300 (3d Cir. 2012)).
In reviewing a motion for summary judgment, the court must view the facts
in the light most favorable to the non-moving party and draw all reasonable
inferences in that party’s favor. Jutrowski v. Twp. of Riverdale, 904 F.3d 280, 288
(3d Cir. 2018) (citing Scheidemantle v. Slippery Rock Univ. State Sys. of Higher

Educ., 470 F.3d 535, 538 (3d Cir. 2006)). The court may not “weigh the evidence”
or “determine the truth of the matter.” Anderson, 477 U.S. at 249. Instead, the
court’s role in reviewing the facts of the case is “to determine whether there is a

genuine issue for trial.” Id.
The party moving for summary judgment “bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those
portions of ‘the pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any,’ which it believes demonstrate the
absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). The non-moving party must then

oppose the motion, and in doing so “‘may not rest upon the mere allegations or
denials of [its] pleadings’ but, instead, ‘must set forth specific facts showing that
there is a genuine issue for trial. Bare assertions, conclusory allegations, or
suspicions will not suffice.’” Jutrowski, 904 F.3d at 288–89 (quoting D.E. v. Cent.

Dauphin Sch. Dist., 765 F.3d 260, 268–69 (3d Cir. 2014)).
Summary judgment is appropriate where the non-moving party “fails to
make a showing sufficient to establish the existence of an element essential to that

party’s case, and on which that party will bear the burden of proof at trial.”
Celotex, 477 U.S. at 322. “The mere existence of a scintilla of evidence in support
of the plaintiff’s position will be insufficient; there must be evidence on which the

jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. “Where
the record taken as a whole could not lead a rational trier of fact to find for the
non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co.,

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
DISCUSSION
A. Arguments About Preclusion
1. Transource’s claims are not barred by claim preclusion.
Defendants argue that Transource’s claims are barred by claim preclusion.

They point out that in this court’s prior order, Doc. 118, it held that “the PUC
proceeding was quasi-judicial in nature, and that the Full Faith and Credit Statute
is applicable to this case.” (Doc. 148, p. 45.) They also assert that, in the same

order, this court held that “the PUC’s decision could be entitled to preclusive effect
under Pennsylvania law if . . . Defendants objected to Transource’s notice of its
intent to split its claims.” (Id.)
In making this argument, Defendants alter the quotation in a way that

fundamentally changes the meaning of this court’s finding. The court explained as
follows in the prior order:
[W]hile the PUC’s decision could be entitled to preclusive effect under
Pennsylvania law if Transource should have raised its federal claims
before the Commonwealth Court, but chose not to, the court cannot
answer this question without impermissibly making a fact
determination: whether Defendants objected to Transource’s notice of
its intent to split its claims. If Defendants did not object to Transource’s
announced intention to split its claims, “[t]hey cannot now benefit from
their silence.” Therefore, the court denies Defendants’ motion to
dismiss on claim preclusion grounds without prejudice to renewal at the
summary judgment stage.
(Doc. 118, pp. 10–11 (quoting R & J Holding, 670 F.3d at 428.)
In making their argument, Defendants cite only their brief to the
Commonwealth Court. (Doc. 148, p. 45–46; Doc. 147, ¶ 52; Doc. 147-9, pp. 55–
68.) That is to say, they focus only on whether the PUC “objected to Transource’s
notice of its intent to split its claims” without providing facts or law to suggest that
“Transource should have raised its federal claims before the Commonwealth
Court.”
Transource counters that Defendants’ argument on claim preclusion fails for
two reasons. First, it misunderstands the England doctrine—an exception to
ordinary claim preclusion. (Doc. 158, p. 50.) Second, even applying Pennsylvania
claim preclusion law, Transource’s claims are not precluded because the
Commonwealth Court expressly preserved Transource’s ability to pursue its

federal claims in this court and because the PUC acquiesced. (Id.)
Transource asserts that England reservation is an exception to the Full Faith
and Credit Statute, 28 U.S.C. § 1738. (Id. (citing Instructional Sys., Inc. v.
Comput. Curriculum Corp., 35 F.3d 813, 821–22 (3d Cir. 1994)).) When England
reservation applies, the state preclusion rules no longer apply to the at-issue state

court decision. (See id.) England explicitly held that a party has waived its right
to litigate federal claims in federal court if it “freely and without reservation
submits his federal claims for decision by the state courts, litigates them there, and

has them decided there.” England, 375 U.S. at 419.
In order to preserve its federal claims for resolution in federal court, a party
need only “inform [the state] courts what his federal claims are, so that the state
statute may be construed ‘in light of’ those claims.” Id. at 420. Transource asserts

that, under this standard, it properly reserved its federal arguments under England.
Per Pennhurst State School & Hospital v. Halderman, it could not bring its state-
law claims against Defendants, as state officials, in front of this court due to the

Eleventh Amendment. (Doc. 158, p. 51 (citing 465 U.S. 89 (1984)).) But
Transource brought its federal claims to this court and then its state claims in the
Commonwealth Court. (Id.)
Transource argues that, because it never “voluntarily” and “fully litigated

[its] federal claims in the state courts,” it should not be “denied [its] right to return
to the District Court.” England, 375 U.S. at 421; Doc. 158, p. 51. For that reason,
the Commonwealth Court’s judgement does not bar Transource’s claim in this

court.
Transource also addresses an argument that Defendants raised in their
motion to dismiss, though not in the current cross-motions. There, Defendants had

argued that the validity of an England reservation was contingent on a defendant
acquiescing to claim-splitting. (Doc. 158, p. 53 (citing Doc. 118, pp. 9–10).)
Transource agrees that “defendant’s acquiescence is one scenario in which claim-

splitting is permitted under Pennsylvania law.” (Id.) But, because England
reservation is an exception to the Full Faith and Credit Statute, when this exception
applies, Pennsylvania law is irrelevant. (Id.)
According to Transource, the Third Circuit explicitly rejected the

proposition that a third party’s actions are determinative in whether England
reservation is effective. (Id.) Instead, “[i]t is the actions of the displaced litigant
which are controlling.” (Id. (quoting Instructional Sys., 35 F.3d at 820–21) (citing

Kovats v. Rutgers, 749 F.2d 1041, 1047 (3d Cir. 1984)).) If consent of the
opposing party were required, it would render as meaningless the England court’s
proclamation that reservation of federal claims for federal court is ineffective only
when the litigant has “freely and without reservation litigated his federal claims in

the state courts.” (Id. (quoting England, 375 U.S. at 420).)
Transource also addresses two cases that Defendants raised at the motion to
dismiss phase. Specifically, it argues that, contrary to Defendants’ assertions,

R & J Holding Co. and Bradley v. Pittsburgh Board of Education do not stand for
the proposition that a defendant’s acquiescence is required for an England
reservation to be effective. (Id. at 54–55 (citing 670 F.3d 420; 913 F.2d 1064 (3d

Cir. 1990)).) Instead, both cases hold only that an objection to an England
reservation can be waived. (Id. at 55.)
Lastly, to the extent that this court held otherwise in its order denying

Defendants’ motion to dismiss, Transource points out that the court may
reconsider. (Id. at 55–56.) As the Third Circuit has stated, “[i]nterlocutory orders
. . . remain open to trial court reconsideration, and do not constitute the law of the
case.” (Id. at 55 (quoting United States ex rel. Petratos v. Genentech Inc., 855

F.3d 481, 493 (3d Cir. 2017)).)
In response, Defendants argue that Transource’s request for reconsideration
is untimely under Local Rule 7.10. (Doc. 165, p. 24.) They next argue that

Transource failed to properly invoke England reservation. They posit that Bradley
stands for the proposition that England reservation must be invoked during the
pendency of the state administrative proceeding. (Id.) They submit that
Transource had to raise its England reservation with the PUC. (Id. at 24–25.)

Lastly, Defendants argue that the PUC did not acquiesce to Transource’s
England reservation. (Id. at 25–26.) Instead, pursuant to the Pennsylvania Rules
of Appellate Procedure, which they assert apply here, Defendants objected to

Transource’s untimely England reservation at the earliest opportunity. (Id. at 25.)
Transource counters that its arguments are timely pursuant to the court’s
instructions to raise all issues in this case in the motions for summary judgment.

(Doc. 168, p. 27.) Next, Transource asserts that Defendants’ argument that
Transource had to invoke England in the PUC proceedings makes little sense. (Id.)
Specifically, “it would have been nonsensical to make an England reservation” to

the PUC because there was no federal claim until “after the PUC acted.” (Id.)
Transource argues that Defendants use Bradley to establish a principle that
does not exist. They point to the following passage from Bradley: “Under England
a party who has been forced to litigate in state court may reserve its federal claims

for federal adjudication by informing the state court of its reservation of those
claims.” 913 F.2d at 1071. Transource argues that this quote shows that England
pertains to parallel court proceedings which challenge state action. (Doc. 168,

p. 28.) While the litigant in Bradley cited England in his administrative appeal, the
Third Circuit in Bradley did not hold that he was “required to do so (rather than
waiting until state court).” (Id.)
In the alternative, to the extent that the litigant in Bradley was required to

raise England during his administrative appeal, that is due to a factual distinction
in Bradley. (Id.) There, administrative appeal provided the first stage of appellate
review of the challenged state action. (Id.) Here, the PUC decision is the

challenged state action. (Id.)
Lastly, Transource argues that Defendants are wrong regarding their
acquiescence in two ways. (Id.) First, it reasserts that Defendants acquiesced to

England reservation. Next, it argues that acquiescence is immaterial because, as
stated in England, “[o]nce issue has been joined in the federal court, no party is
entitled to insist, over another’s objection, upon a binding state court determination

of the federal question.” 375 U.S. at 422 n.13.
Transource has the prevailing arguments on this issue. England reservation
is an exception to the Full Faith and Credit Statute. Instructional Sys., 35 F.3d at
821. Defendants do not address this principle or the Third Circuit precedent of

Instructional Systems. Here, there is no dispute that Transource informed the
Commonwealth Court about its federal claims. There is similarly no dispute that
Transource invoked England reservation at the Commonwealth Court. And

Defendants have not provided binding precedent which required Defendants to
acquiesce in order for Transource to successfully invoke England reservation.
Further, this court will not deny Transource’s arguments as untimely simply
because Transource followed the court’s explicit instructions regarding when to

raise them.
Transource’s analyses of Third Circuit and Supreme Court precedent are
correct. Defendants wish to stretch Bradley and England beyond their boundaries.

Bradley is an example of a case in which a party properly raised England
reservation throughout state administrative proceedings, but nowhere requires
raising reservation at the administrative proceeding stage. And, in the present

instance, Transource’s federal claims arise from the PUC decision.
Defendants argue that, by bringing its dispute to the PUC, Transource
without reservation submitted its federal claims for decision by state courts,

thereby waiving its right to invoke England. (Doc. 165, pp. 24–25.) But
Defendants do not sufficiently support their argument that Transource “without
reservation submit[ed its] federal claims for decision” to the PUC. (Id.) Indeed,
there is no evidence to which Defendants point to support their assertion that

Transource submitted its federal claims to the PUC. Furthermore, this argument
suggests that Transource was required to raise its federal claims with the PUC prior
to the decision which gave rise to them. This simply makes no sense and

Defendants have not cited any binding authority that supports this conclusion.
Moreover, Defendants fail to address Instructional Systems or Kovats, which
show that Defendants were not required to acquiesce for Transource to invoke
England reservation. Accordingly, Transource’s federal claims are not precluded.

2. Issue preclusion does not apply.
Defendants, in a footnote in the brief in support of their motion for summary
judgment, request the court reconsider its prior ruling on issue preclusion. (Doc.
148, pp. 5–6 n.1.) If the court will reconsider, Defendants request an opportunity
to provide supplemental briefing. (Id.) But, as noted above, in an on-the-record
conference with counsel, and in response to a request for reconsideration, the court

unambiguously instructed that “all of the issues in this case” should be “addressed
in the summary judgment motions.” (Doc. 168-1, pp. 13–14.)
Defendants’ request for reconsideration fails to follow the court’s clear

instruction. Therefore, the court will not entertain this informal request. Further,
as Transource states, “arguments raised in passing (such as, in a footnote), but not
squarely argued, are considered waived.” (Doc. 158, p. 58 (quoting John Wyeth &
Bro. Ltd. v. CIGNA Int’l Corp., 119 F.3d 1070, 1076 n.6 (3d Cir. 1997).) For this

reason, Transource argues that Defendants have waived their issue preclusion
argument. Defendants do not address this argument in their subsequent briefs.
Therefore, the court deems that Defendants have indeed waived any argument

regarding issue preclusion.
B. Merits Analysis
Transource argues that the PUC’s denial of Transource’s application
conflicts with and is preempted by federal law. (Doc. 158, pp. 23–42.) In the

alternative, Transource argues that the PUC’s denial violates the dormant
Commerce Clause in purpose and effect. (Id. at 42–49.)
Defendants respond that the PUC’s decision is neither preempted by federal
law nor in violation of the dormant Commerce Clause. Regarding preemption,
they argue that the PUC decision neither directly conflicts with federal law nor is it
an obstacle to federal objectives. (Doc. 165, pp. 8–18.) Instead, it is a valid

exercise of siting authority, which is a power that Congress reserved for the states.
(Id. at 18–20.) As for the dormant Commerce Clause, Defendants argue that the
PUC decision neither discriminates against non-Pennsylvanians on its face, nor

does it disproportionately burden interstate commerce. (Id. at 20–23.)
Defendants’ arguments fail for the reasons explained below.
1. The PUC’s decision violates conflict preemption.
The Supremacy Clause of the Constitution provides that the Constitution and

all laws “of the United States which shall be made in Pursuance thereof” are “the
supreme Law of the Land.” U.S. Const. art. VI, cl. 2. Consequently, courts “must
not give effect to state laws that conflict with federal laws.” Armstrong v.
Exceptional Child Ctr, Inc., 575 U.S. 320, 324 (2015). The Supremacy Clause

“invalidates state law that interferes with or is contrary to federal law.” Farina v.
Nokia, Inc., 625 F.3d 97,115 (3d Cir. 2010). As such, federal law may preempt
state law in three ways. Id. (citing Free v. Bland, 369 U.S. 663, 666 (1962)). One

of these is conflict preemption. Id. (citing Hillsborough Cty. v. Automated Med.
Labs., Inc., 471 U.S. 707, 713 (1985)).
Under Supreme Court precedent, conflict preemption arises where (1) “state
and federal laws ‘directly conflict,’” PLIVA, Inc. v. Mensing, 564 U.S. 604, 617
(2011), or where (2) “the state law stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress.” Oneok, Inc. v. Learjet,

Inc., 575 U.S. 373, 377 (2015) (internal quotations omitted). States cannot
“regulate areas where FERC has properly exercised its jurisdiction” or create an
“unavoidable conflict.” Oneok, 575 U.S. at 386, 389. Transource asserts that both

types of conflict preemption are implicated in this dispute. (Doc. 158, p. 27.)
Transource argues that the PUC’s order conflicts head on with FERC’s
method of determining whether a project is needed. Transource also submits that
the PUC’s decision is an obstacle to FERC’s objective of creating transmission

lines which reduce congestion, in turn reducing pricing disparities. (Id.) In effect,
Transource argues, the PUC is vetoing the project because it “wants to preserve
that very wholesale pricing disparity” the Project seeks to resolve. (Id.) If states

could exercise that power, no lines would ever get built to reduce congestion, and
FERC’s regional planning efforts would be frustrated. (Id.)
Transource points out that the Third Circuit has interpreted the Supreme
Court’s preemption case law as indicating that “regulatory situations in which an

agency is required to strike a balance between competing statutory objectives lend
themselves to a finding of conflict preemption.” Farina, 625 F.3d at 123.
Transource argues that is exactly the situation here.
Transource observes that, under the “applicable federal standards imposed
by FERC and implemented by PJM,” there was a finding of a need for the Project.

(Doc. 157-1, p. 58; Doc. 158, pp. 23–24; Doc. 164, ¶ 102.) In spite of that
determination, the PUC rejected the FERC-approved method for evaluating need
and instead adopted an approach that FERC itself had rejected: one that counted as

a project cost increased energy prices resulting from the reduced congestion that
would follow. (Doc. 157-1, p. 63.)11
Transource points out that the PUC’s decision directly conflicts with the
“FERC-approved method for determining whether a new transmission line is

needed to reduce congestion on the interstate grid.” (Doc. 158, p. 24.) It submits
that such an approach is an obstacle to FERC’s efficient regional planning. (Id.)
According to Transource, this situation is untenable: “If states could override

FERC by applying a conflicting method for determining need, solely to preserve
the benefits of congestion for their own citizens, that would eviscerate FERC’s
ability to plan the interstate transmission grid in an efficient and fair manner.”
(Id.)

11 Defendants contest Transource’s characterization insofar as it asserts that the PUC rejected
FERC’s analysis. (Doc. 164, ¶ 105.) They instead rely on the PUC’s statement that, according to
Order 1000, the PUC is the decision maker. (Id.) On that basis, the PUC stated that its decision
was “not influenced by FERC authority, directly or via PJM.” (Id.)
FERC has the power to regulate regional transmission planning. (Id. at 24
(citing S.C. Pub. Serv. Auth. v. FERC, 762 F.3d. 41, 55–64 (D.C. Cir. 2014)).) The

FPA provides FERC the power to regulate “transmission of electric energy in
interstate commerce and the sale of such energy at wholesale in interstate
commerce,” and also “jurisdiction over all facilities for such transmission . . . of

electric energy.” §§ 824(a), (b). And courts, such as the D.C. Circuit, have held
that the FPA provides FERC with “comprehensive and exclusive jurisdiction over
the rates, terms, and conditions of service of the transmission and sale of wholesale
electric energy in interstate commerce.” Ameren Ill. Co. v. FERC, 58 F.4th 501,

502–03 (D.C. Cir. 2023) (citing New York, 535 U.S. at 7–8).
Transource asserts that FERC’s powers over regional transmission planning
stem from two sources: its authority over transmission of energy in interstate

commerce and its requirement to ensure just and reasonable wholesale energy
prices. (Doc. 158, p. 25.) Regarding the first, by ensuring adequate transmission
capacity, FERC’s regional transmission planning promotes reliability and
efficiency. (Id.) And, as the D.C. Circuit has stated, “[e]nsuring the proper

functioning of the interconnected grid spanning state lines . . . fits comfortably”
within the FPA’s “grant of jurisdiction over ‘the transmission of electric energy in
interstate commerce.’” South Carolina, 762 F.3d at 63.
As for the second, Transource observes that regional planning, which is used
to address congestion in the interstate grid, is inextricably related to FERC’s

regulation of wholesale energy prices.12 (Doc. 158, p. 25.) By reducing
congestion, FERC ensures that all consumers throughout the grid have access to
low-cost power plants in a way that is just and reasonable without being unduly

discriminatory or preferential. (See id.)
Transource points out that, in the 2008 FERC Order, FERC specified the
approved method by which PJM would assess whether a project was needed to
reduce persistent congestion. 123 FERC at 61,416. PJM adopted the FERC-

approved approach. (Doc. 158 p. 26; Doc. 164, ¶¶ 36–42.)
Defendants counter that the PUC’s decision neither directly conflicted with
federal law nor was it an obstacle to Congress’ objectives. (Doc. 165, p. 8.) The

court will address these arguments in turn.
i. The court declines to rule on whether the PUC’s decision
conflicts with federal law.
Transource argues that, in adopting a methodology that directly conflicts
with FERC’s methodology, the PUC’s order directly conflicted with federal law.
The argument is that FERC determined the best approach for weighing the relative

12 For example, Section 206(a) of the FPA, 16 U.S.C. § 824e(a), provides that whenever FERC
“shall find that any rate, . . . for any transmission or sale subject to the jurisdiction of” FERC “is
unjust, unreasonable, unduly discriminatory or preferential,” FERC shall fix it. And Order 1000
makes clear that congestion is a factor that causes such discriminatory or preferential rates,
which FERC is required to fix.
costs and benefits of those transmission projects designed to reduce congestion.
(Doc. 158, p. 28.) It chose an approach that did not consider an increase in prices

resulting from that reduced congestion as a cost which should be weighed. (Id.;
see also 2008 FERC Order, 123 FERC at 61,416.) In doing so, it determined that,
in Transource’s words, customers currently benefiting from persistent congestion

had no entitlement to that benefit, which efficient transmission planning aims at
mitigating. (Id.)
Quoting the Third Circuit decision in Farina, Transource argues that, in the
present instance, FERC assessed the situation region-wide and applied its

“reasoned judgment to weigh the relevant considerations and determine how best
to prioritize between these objectives.” 625 F.3d at 123. Accordingly, “[a]llowing
state law to impose a different standard” would conflict with federal law through

“re-balancing of those considerations.” Id. For example, a “state-law standard that
is more protective of one objective may result in a standard that is less protective
of others.” Id.
According to Transource, such is the case here, where the PUC expressly

rejected the FERC-approved method for determining whether need exists for a
congestion-solving transmission project. (Doc. 158, pp. 28–29.) The PUC stated
that “potential negative and practical impact on the citizens and consumers of

Pennsylvania [was its] concern.” (Doc. 157-1, p. 63.) The PUC then adopted its
own methodology for determining “need” that conflicted with PJM’s FERC-
approved approach.

Transource points out that even Independent Market Monitor (“Market
Monitor”), an organization which Defendants invoke and rely upon in critiquing
the FERC-approved approach, acknowledges that the PUC’s method directly

conflicts with the FERC-approved approach. (Doc. 164, ¶ 53; see Doc. 148,
pp. 16, 18.) Not only had FERC not agreed with or adopted the approach, after
Market Monitor repeatedly proposed it, the approach is “irreconcilable” with the
methodology that FERC did approve. (Doc. 164, ¶¶ 47–51, 53–54.)

Transource urges that the court should apply here the same analysis from the
Supreme Court’s decision in Nantahala Power & Light Co. v. Thornburg, 475 U.S.
953 (1986). (Doc. 158, p. 30.) The Court in Nantahala determined that a state

utility commission could not apply a cost-allocation method that conflicted with
FERC’s decision. 475 U.S. 966–67. It held that “Once FERC sets . . . a rate, a
State may not conclude in setting retail rates that the FERC-approved wholesale
rates are unreasonable. A State must rather give effect to Congress’ desire to give

FERC plenary authority over interstate wholesale rates, and to ensure that the
States do not interfere with this authority.” (Doc. 158, p. 30 (quoting 475 U.S. at
966).) Transource argues that Mississippi Power & Light Co. v. Mississippi ex rel.

Moore, 487 U.S. 354, 371 (1988), similarly applies and requires the court to
conclude, once FERC has approved a method in an area in which it exercises
authority, a state may not adopt a conflicting method. (Id.)

Transource argues that these preemption principles are not limited to
scenarios in which utility commissions disregard FERC-filed rates. They are
equally applicable where a utility commission undertakes “identical, independent

inquiries regarding [a project’s] merits” but take a “perspective of different public
interests,” and as a result “reach conflicting conclusions.” (Id. at 31 (quoting
Appalachian Power Co. v. Pub. Serv. Comm’n of W. Va. 812 F.2d 898, 905 (4th
Cir. 1987)).) Such is the case here, according to Transource.

Transource points out that it is unaware of any instance in which a state has
directly disregarded FERC-approved regional planning methodology in the same
way as the PUC. (Id.) In Maryland, the Maryland Public Service Commission

rejected an argument similar to that which the PUC accepted. It determined that it
was “of no consequence” that the Project failed to meet the benefit-cost ratio when
examined at the Maryland level. In re Application of Transource Maryland LLC,
No. 9471, 2020 WL 3977589, at *41 (¶142) (Md. Pub. Serv. Comm’n June 30,

2020). Instead, it determined that, “pursuant to FERC Order No. 1000 and PJM’s
Tariff—[the Project] must be evaluated on a regional, not on a state-specific
basis.” Id.
Defendants provide a single argument to refute Transource’s assertion that
the PUC’s decision conflicts with federal law. They point out that the cases on

which Transource relies, Nantahala, Mississippi Power & Light, and Appalachian
Power, all relate to FERC’s ratemaking authority. (Doc. 165, p. 15.) They assert
that these cases are inapposite because the instant action relates instead to FERC’s

authority over interstate electric transmission planning and not to ratemaking. (Id.
at 15 & n.4.) Defendants cite no precedent in support of this distinction.
Although Transource has provided a well-reasoned argument, no binding
precedent is directly on point. Defendants are correct that the cases Transource

cites all relate to FERC’s ratemaking authority. It is true that cases such as
Nantahala, make clear that a state’s actions need not precisely be ratemaking in
order to interfere with FERC’s rate-making authority. 476 U.S. at 966. Indeed, the

Supreme Court held that “[a] State must rather give effect to Congress’ desire to
give FERC plenary authority over interstate wholesale rates, and to ensure that the
States do not interfere with this authority.” Id. In doing so, it explained that “the
filed rate doctrine is not limited to ‘rates’ per se.” See id. at 967 (“[O]ur inquiry is

not at an end because the orders do not deal in terms of prices or volumes of
purchases.”) (citation omitted).
Yet, in each of these cases, there was an exceedingly close nexus between

the action of the state utility commission and the exercise of FERC’s ratemaking
powers. Although Transource urges that the same analysis should be applied to its
regional transmission planning authority, it provides no federal appellate authority

to support that assertion. (Doc. 158, pp. 30–31.)
Transource may be correct that the PUC’s decision does directly conflict
with federal law. But because the court concludes that the PUC’s decision was

conflict preempted for other reasons and also violated the dormant Commerce
Clause, the court declines to rule on whether the decision directly conflicted with
federal law since a ruling on this argument is not necessary to the resolution of the
instant motion.

ii. The PUC’s order is an obstacle to federal objectives.
Transource also maintains that the PUC’s decision is an obstacle to federal
objectives. (Id. at 32–33.) It points out that, by the very nature of building new
transmission lines to reduce congestion, wholesale energy rates will go down in

some areas and up in others—that is the entire purpose of such projects. (Id. at
32.) If a state could decide that disagreement with the FERC-approved
methodology underlying such projects was a permissible reason to deny siting

approval, then FERC’s regulatory scheme would be obstructed. (Id.) Congestion-
reducing projects would become nearly impossible to build because those states
currently benefitting from congestion could simply deem the proposed projects as
unnecessary. (Id.)
Transource views this outcome as untenable. It would contrast with the
PUC’s own admission that “States . . . carry[ing] out their individual State

jurisdictional responsibilities . . . cannot interfere with the national goals of
creating a strong and fair wholesale energy market.” (Id.; Doc. 164, ¶ 56; Doc.
157-22, p. 16.) Transource argues that Pennsylvania may not reap the benefits

from federal planning when it suits Pennsylvanians, but obstruct federal planning
needed to reduce persistent interstate congestion. (Doc. 158, pp. 32–33.)
Defendants counter that the PUC’s decision was not an obstacle to
Congress’ objectives. (Doc. 165, p. 8.) In furtherance of this argument, they

contest the existence of the underlying congestion and alleged pricing disparity
between Pennsylvania and other states. (Id. at 16.) Then they point to the
Commonwealth Court opinion which, they assert, specifically held that the

congestion–the existence of which they dispute–has decreased since 2014. (Id.)
They also argue that Transource has failed to provide any evidence of pricing
disparities resulting from said congestion. (Id.)
Defendants assert that Transource is incorrect in its assertion that congestion

remediation is the applicable federal objective. (See id.) Instead, the real goal was
the creation of a transmission plan, which was created when the Project was
submitted to the RTEP. (Id.) Because the PUC did not interfere with that step of
the process, it is in essence incapable of now creating obstacles to federal
objectives, which have been entirely achieved. (See id.)

In short, Defendants’ argument is that the only federal objective at play in
this dispute is for PJM to create an essentially academic plan to solve a problem
that–in Defendants’ view–does not actually exist. Once the plan has been created,

the federal objective has been met and federal interests have been satisfied. The
only legal authority Defendants include to support their argument is the
Commonwealth Court's finding that congestion has decreased since 2014, Third
Circuit precedent related to the summary judgment standard, and a passing

unexplained citation to purportedly assert res judicata. (See Doc. 165, pp. 15–18.)
The court finds Defendants’ arguments to be unsupported and unconvincing.
It is undisputed that RTOs like PJM are responsible for “planning, and [] directing

or arranging, necessary transmission expansions, additions, and upgrades that will
enable it to provide efficient, reliable and non-discriminatory transmission service
and coordinate such efforts with the appropriate state authorities.” 18 C.F.R.
§ 35.34(k)(7). As such, PJM “must encourage market-driven operating and

investment actions for preventing and relieving congestion.” Id. at
§ 35.34(k)(7)(i). The apparent preliminary goal of regulations such as these and
the 2008 FERC Order was for PJM to analyze and select congestion-reducing

projects with benefits that exceed their costs by the required ratio. The ultimate
goal is that such projects be built if they obtain the necessary state siting,
construction, and permitting approvals, in order to remove the obstacle of

congestion and thus achieve FERC’s duty of ensuring that wholesale rates are just
and reasonable.
Here, by disagreeing with PJM’s FERC-approved benefit-cost methodology,

the PUC seeks to undercut the foundational goal of congestion-alleviating projects.
The PUC insists that any benefit-cost ratio must include projected rate increases
for areas that currently benefit from congestion—areas which will not contribute to
payment for the Project. This directly contradicts PJM’s FERC-approved tariff.13

Furthermore, the PUC implicitly assumes that congestion-reduction is not a valid
goal in its own right.
It is clear that FERC has determined that regional congestion is a problem

and one that directly affects its core obligation of ensuring just and reasonable
electric rates. As such, it is not within the PUC’s purview to pose obstacles to
FERC’s pursuit of reducing congestion through its approval process. Nor is it

13 As the Third Circuit has explained, a “tariff” is “the term of art used to refer to the
‘classifications, practices, and regulations’ a public utility uses to establish electricity rates.”
N.J. Bd. of Pub. Utils. v. FERC, 744 F.3d 74, 83 (3d Cir. 2014) (citing 16 U.S.C. § 824d(c)).
Once a tariff has been filed with FERC and approved, either explicitly by FERC or by operation
of law, it has the force of federal law. See Mississippi Power & Light, 487 U.S. at 373; PJM
Power Providers Grp. v. FERC, Nos. 21-3068, 21-3205 & 21-3243, at *35 (3d Cir. Dec. 1,
2023) (“Congress established in § 205(d), and underscored in § 205(g), that a tariff may change
by operation of law [.]”).
within the PUC’s authority to pose obstacles to this federal objective when PJM
pursues it under the auspices of a FERC-approved tariff.

Defendants’ arguments about the merits of PJM’s congestion analysis and
how the Project should be assessed do them no favors in this legal context. These
arguments only underscore the extent to which the PUC’s decision constitutes an

obstacle to FERC achieving its goals of reducing congestion and achieving just and
reasonable rates. The PUC is attempting to supplant the role of the RTO and
expand its state authority into the regulatory territory occupied by the federal
government. If permitted, the PUC’s second-guessing of the methods sanctioned

by federal law and employed by the RTO would severely handicap the ability of
FERC to ensure just and reasonable rates. Because the PUC’s decision presents an
obstacle to achieving federal objectives, it is conflict preempted and violates the

Supremacy Clause.
iii. Congress’ explicit preemption in FPA § 216 does not
diminish the existence of conflict preemption here.14
Defendants argue that Congress has shown in the FPA that it is aware of the
language required to preempt traditional authority and has not done so in this

instance. (Doc. 148, pp. 34–35.) Section 216 applies to congestion projects in
areas which the Secretary of Energy has designated as national interest electric
transmission corridors. (Id. at 34 (citing 16 U.S.C. § 824P(a)).) Through
§ 216, the FPA provides a mechanism by which FERC may grant a permit to

develop a congestion project despite a state commission denying the application.
(Id. (citing §§ 824p(a), (b)(1)(C)(iii)).)
By contrast, FERC made clear that “nothing in” Order 1000 was “intended

to leverage the regional transmission planning or interregional transmission
coordination reforms to exceed [FERC]’s section 216 backstop authority.” Order
1000-A, 77 Fed. Reg. at 32,215 n.248. But, according to Defendants, that is
exactly what Transource is arguing for. (Doc. 148, p. 35.)

14 In Defendants’ initial brief, they also argue that FERC lacks the statutory authority to preempt
the PUC decision. (Doc. 148, pp. 30–32.) They argue that where, as here, a state authority
conflicts with, and thus has been displaced by, the existence of Federal Government authority,” a
“presumption against pre-emption” applies. (Id. at 31–31 (quoting New York, 535 U.S. at 17–
18).) But Transource points out that the anti-pre-emption presumption applies to areas
traditionally regulated by the states. (Doc. 158, p. 37.) States have not traditionally regulated
interstate transmission planning. (Id.) Transource points out that Defendants identify no case
holding to the contrary. And Defendants do not respond to Transource’s arguments in their
reply. Transource has the better argument on this point, too.
Transource disagrees. It is not asserting that FERC has the authority to
permit the Project in the face of a valid PUC denial. (Doc. 158, p. 39.) It

acknowledges that the Project is not in a national interest electric transmission
corridor, and FERC therefore has no authority to issue a construction permit. (Id.)
Instead, the issue at hand is whether the PUC may rely on its siting authority to

“override a FERC-approved method for determining whether a line is needed to
reduce interstate congestion.” (Id.)
The court agrees with Transource that Defendants’ argument
mischaracterizes the issue in this case. The preemption question before the court

does not pertain to whether FERC may override an otherwise valid PUC decision
related to Transource’s application or the Project at large. Instead, the issue relates
to whether the PUC decision was an obstacle to achieving federal objectives.

Thus, Congress’ express preemption in § 216 does not undermine Transource’s
conflict preemption argument.
iv. The PUC’s decision was not an exercise in siting.
Defendants also argue that the PUC’s decision was not preempted because it

was a valid exercise of a power which Transource concedes was reserved for the
states: siting authority. (Doc. 165, p. 18–20.) While Defendants concede that
FERC had jurisdiction over transmission planning, they argue that the PUC’s
decision constituted an exercise of its siting authority, a power which Congress has
left exclusively to the states. (Id. at 9.) Invoking a FERC order, they assert that
“[i]t is well-settled that [FERC] does not have authority over the siting and

construction of electric transmission facilities. (Id. (quoting PacifiCorp, 72 FERC
¶ 61,087, 61,488 (1995)).) Instead, “[a]ll such matters should be resolved at the
state and local level.” PacifiCorp, 72 FERC at 61,488. Courts have found that

“states have traditionally assumed all jurisdiction to approve or deny permits for
the siting and construction of electric transmission facilities.” Piedmont Envtl.
Council v. FERC, 558 F.3d 304, 310 (4th Cir. 2009).
According to Defendants, the distinction between transmission planning and

siting is based on the sequence of decisions. (Doc. 165, p. 9.) They invoke Order
1000, in which FERC stated that, “[t]ransmission planning is a process that occurs
prior to the interconnection and coordination of transmission facilities. 76 Fed.

Reg. at 49,860. Defendants submit that transmission planning, therefore, “ends
entirely before any coordination of utility transmission facilities occurs, i.e.,
building and connecting new transmission lines to the existing grid.” (Doc. 165,
p. 9.)

Defendants concede that, pursuant to Order 1000, FERC has determined that
the order’s “transmission planning and cost allocation requirements . . . are
associated with the processes used to identify and evaluate transmission system

needs and potential solutions to those needs.” (Id. (citation omitted).) But, by the
language of Order 1000, nothing in it “requires that a facility in a regional
transmission plan or selected in a regional transmission plan for purposes of cost

allocation be built, nor does it give any entity permission to build a facility.” 76
Fed. Reg. at 49,854.
Defendants assert that, although transmission planning has narrow

objectives, siting and permitting a project involve “a broader inquiry into the
public interest ‘need’ for the project.” (Doc. 165, p. 10.) In making this assertion,
Defendants do not quote any federal law or interpretation thereof. They instead
invoke the PUC’s assessment of the Pennsylvania law which it applied in assessing

Transource’s permit. (Id. at 10–11.) Defendants assert that the PUC’s
determination was based on “the weight of all the evidence” to determine whether
the Project is “reasonable and necessary and in the public interest” in order “to

determine whether Transource has established need” for “approval of the siting” of
the Project. (Doc. 165, pp. 10–11 (quoting Doc. 1-2, p. 60.)
Applying that standard, the PUC determined that there was insufficient need
for the Project. (Id. at 11.) The factors they considered included the fact that

congestion had decreased over the APSRI since the initial study showing need and
“there was insufficient proof of the potential NERC reliability violations.”15 (Id.)

15 Defendants’ point is that the FERC-approved regional transmission planning is deficient.
They do not define the term “NERC,” which stands for North American Electric Reliability
Council. (Doc. 90-1, p. 4.)
Defendants assert that the PUC’s application of Pennsylvania law was in
compliance with “the standard FERC applies when it exercises its ‘backstop’ siting

and permitting authority under FPA Section 216.” (Id. (footnote omitted).)
In determining the appropriate process regarding § 216 projects, “a
commenter proposed that FERC ‘rebuttably presume a need for a project subject to

the independent oversight’” because “participants must already make showings of
local or regional needs to gain approval from an [] RTO.” (Id. (quoting
Regulations for Filing Applications for Permits to Site Interstate Electric
Transmission Facilities, 117 FERC ¶ 61,202, at *10 (2006)).) FERC did not take

this approach, and instead found that “determinations of an [RTO] should be given
due weight in [FERC’s] assessment of whether a particular facility is needed to
protect or benefit customers.” 117 FERC ¶ 61,202 at *10–11. Accordingly, FERC

would “consider any such independent determinations as a factor, along with all
other relevant factors, in determining whether the statutory criteria have been met.”
Id. Defendants argue that is exactly what the PUC did here. (Doc. 165, p. 12.)
The court finds this argument unconvincing. Defendants suggest that the

PUC, by adopting FERC’s approach to determining the need for a particular
project, is not interfering with FERC’s authority. But Defendants have provided
no authority to suggest that public utility commissions are meant to exercise
parallel functions as FERC. Therefore, Defendants have not persuaded the court
that, by mirroring FERC’S approach to the determination of whether a project is

needed, the PUC’s decision is somehow not an obstacle to federal objectives.
Defendants also argue that the PUC’s decision related to siting, and not
regional planning, because it was procedurally different from PJM’s transmission

planning process. (Id. at 12–14.) In support of this argument, they point to various
ways in which PJM’s process was purportedly faulty, whether by not conducting
evidentiary hearings, taking sworn testimony, permitting cross-examination, or
purportedly basing the benefit-to-cost analysis on stale information. (Id.)

Meanwhile, the PUC’s determination was based on timely information which
provides, in Defendants’ words, “an important procedural check on the un-
litigated, un-reviewed conclusions reached by PJM.” (Id. at 13.)

If they were not allowed this important procedural check, Defendants argue,
state laws would merely be a “rubber-stamp [of] every RTO-approved
transmission line application.” (Id. at 14 (internal quotation marks omitted).)
Defendants argue that the court need not parse the meaning of FERC’s instructions

in Order 1000 “because FERC has clearly instructed that its jurisdiction did not
reach siting and permitting.” (Id.) Here, the PUC’s decision was made “after the
transmission planning process was completed. The PUC decision, therefore, was a

valid exercise of its siting authority.” (Id.)
Transource responds that, although federal law reserves siting and
permitting authority for the states, that authority does not support the PUC’s

decision. It asserts that the PUC’s decision “was not a siting decision, even though
it was made in the context of reviewing a siting proceeding. Rather, it was a
planning decision.” (Doc. 158, p. 33.) In support of this position, Transource

invokes Supreme Court precedent, which held that “[i]n a pre-emption case, . . . a
proper analysis requires consideration of what the state law in fact does, not how
the litigant might choose to describe it.” Wos v. E.M.A. ex rel. Johnson, 568 U.S.
627, 637 (2013).

Transource argues that this is indisputably a planning decision in substance,
as observed by the fact that FERC had the power to approve PJM’s tariff on the
issue. (Doc. 158, p. 33.) By contrast, if it were actually a siting issue, FERC

would have lacked the authority to evaluate the issue, as it has no authority
regarding siting. (Id. at 33–34.) But, as FERC state in Order 1000, “transmission
planning . . . requirements . . . are associated with the processes used to identify
and evaluate transmission system needs and potential solutions to those needs.”

Order 1000, 76 Fed. Reg. at 49,861. But the identification of these needs and
solutions “in no way involves an exercise of authority over those specific
substantive matters traditionally reserved to the states,” like siting. Id. Transource
further points out that none of the authorities cited by Defendants held that a
decision like the PUC’s was a siting decision. (Doc. 158, p. 34.)

Transource concedes that nothing requires the PUC to site a project or a
approve one merely because FERC approves it. (Id. at 34–35.) But then
Transource maintains that its concession is immaterial—Transource is not

asserting that the PUC must allow the project to be built in a specific place. (Id. at
35.) Instead, it is asserting that, although the PUC may deny projects for siting
reasons, such as to “mitigate the impacts of construction on public health and
safety, the environment, and natural resources,” it may not deny them on the basis

of regional planning, which is reserved for FERC. (Id.)
Transource also concedes that the PUC could have legitimately denied its
application based on a siting decision. (Id.) The PUC could have done so based

on any number of factors. For example, it may “evaluate the route over which the
transmission line will traverse, and impose requirements to mitigate the impacts of
construction on public health and safety, the environment, and natural resources.”
(Id.) But Transource contends that the PUC may not use these factors as a pretext

for denying permission because it disagrees as to whether congestion needs to be
relieved. (Id. at 35 n.3.)
Defendants maintain that the PUC’s decision was, indeed, an exercise of its

siting authority. (Doc. 165, p. 9–14.) In support, they look to when in the
Project’s timeline the PUC’s decision occurred. As FERC has stated,
“[t]ransmission planning is a process that occurs prior to the interconnection and

coordination of transmission facilities.” (Id. at 9 (quoting Order 1000, 76 Fed.
Reg. at 49,861).) Further, it “does not create any obligations to interconnect or
operate in any certain way.” (Id. (quoting Order 1000, 76 Fed. Reg. at 49,861).) It

asserts that transmission planning occurs entirely before any “coordination of
utility transmission facilities occurs, i.e., building and connecting new transmission
lines to the existing grid.” (Id. at 9–10 (footnote omitted).)
Defendants assert, without support, that although transmission planning has

the narrow objectives of “identifying potential solutions to transmission issues and
allocating projected costs of those solutions—siting and permitting a project
involves a broader inquiry into the public interest ‘need’ for the project.” (Doc.

165, p. 10.) In accordance with Defendants’ asserted broader inquiry, the PUC
followed the process mandated by Pennsylvania statute. (Id. 10–11.)
Defendants further urge that, “[g]iven the FPA’s dual regulatory scheme,
conflict-pre-emption analysis must be applied sensitively in this area, so as to

prevent the diminution of the role Congress reserved to the States while at the
same time preserving the federal role.” (Doc. 165, p. 8 (quoting Coal. for
Competitive Elec., Dynergy Inc. v. Zibelman, 906 F.3d 41, 55 (2d Cir. 2018)).)
After carefully considering Defendants’ arguments, the court is not
persuaded that the PUC’s decision was, in substance, about siting. Much of

Defendants’ argument attempts to deconstruct PJM’s analysis, following FERC-
approved methodology, for assessing the Project. (See id. at 11–14.) Defendants’
argument picks apart the FERC-approved methodology and whether it was

sufficiently open, allowed for evidentiary hearings, permitted cross-examination,
or allowed argument by interested parties. (Id. at 12–13.) But in making these
arguments about the various flaws in PJM’s analysis of the need for the Project,
Defendants have not provided a substantive basis for this court to conclude that the

PUC’s decision actually related to siting as opposed to determining whether there
was a need for the Project.
Instead, the court is convinced that the PUC’s decision was, in fact, a

substantive determination of need in the form of an exercise of siting authority.
The court finds two facts important in this determination. The first is that the
PUC’s analysis in denying Transource’s application clearly overlaps with PJM’s
regional transmission planning analysis. That analysis was undisputedly regional

transmission planning when FERC approved it and PJM carried it out. Why
should it be something else when the PUC does the same kind of analysis?
Second, no party has presented any evidence or compelling law to suggest

that the PUC’s decision related to “siting” as the term is commonly understood.
The Oxford English Dictionary defines “siting” as “[t]he action of locating
something in a particular place.” Siting, Oxford Dictionaries,

https://premium.oxforddictionaries.com/us/definition/american_english/siting (last
visited Nov. 6, 2023). But the PUC’s denial was not related to the particular place
of the Project.

The court is not convinced by Defendants’ sequence-based argument that
siting follows regional transmission planning and therefore anything that occurs
sequentially after the regional transmission plan is, therefore, siting. Rather, as the
Supreme Court has noted, in assessing preemption, “a proper analysis requires

consideration of what the state law in fact does, not how the litigant might choose
to describe it.” Wos., 568 U.S. at 637. Although the PUC now terms its denial as
an exercise of siting authority, it was regional transmission planning in reality.

That is the case even if though it occurred after PJM approved the Project.
Because Defendants have failed to show that the PUC decision was a valid
exercise of its siting authority, Defendants fail to overcome the preemption
analysis.
2. The PUC’s decision violates the dormant Commerce Clause.
The Constitution’s Commerce Clause provides Congress the power to

“regulate commerce . . . among the several States.” U.S. Const. art I, § 8, cl. 3.
The Supreme Court has interpreted the Commerce Clause as containing a
“dormant” component that “denies the States the power unjustifiably to
discriminate against or burden the interstate flow of articles of commerce.” Or.

Waste Sys., Inc. v. Dep’t of Envt’l Quality, 511 U.S. 93, 98 (1994). The dormant
Commerce Clause “prohibits the states from imposing restrictions that benefit in-
state economic interests at out-of-state interests’ expense.” Cloverland-Green

Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 298 F.3d 201, 210 (3d Cir. 2002)
(“Cloverland I”).
There are two ways in which the dormant Commerce Clause invalidates
state regulation. First, where a state regulation is “motivated by simple economic

protectionalism,” it will be “subject to a virtually per se rule of invalidity, which
can only be overcome by a showing that the State has no other means to advance a
legitimate local purpose.” United Haulers Ass’n v. Oneida-Herkimer Solid Waste

Mgmt. Auth., 550 U.S. 330, 338–39 (2007). This heightened scrutiny will apply
where a state acts with “discriminatory purpose,” Bacchus Imports, Ltd. v. Dias,
468 U.S. 263, 270 (1984), or the regulation “discriminates against interstate
commerce ‘either on its face or in practical effect.’” Cloverland I, 298 F.3d at 210–
11. Under this rule, “[t]he party challenging the [law] has the burden of proving
the existence of such discrimination.” Cloverland-Green Spring Dairies, Inc. v.

Pa. Milk Mktg. Bd., 462 F.3d 249, 261 (3d Cir. 2006) (“Cloverland II”). If there is
discrimination, the state is required to show that the law is narrowly tailored to
“advance a legitimate purpose.” Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328,

338 (2008).
If heightened scrutiny does not apply, the Pike balancing test applies. Pike
v. Bruce Church, Inc., 397 U.S. 137 (1970). Under this test, an “even-handed”
regulation that “incidentally” burdens interstate commerce will be found valid

unless the burdens are “clearly excessive in relation to the putative local benefits.”
Cloverland I, 298 F.3d at 211.
Transource argues that the PUC’s decision fails whether analyzed under the

per se test or Pike. (Doc. 158, p. 43.) It fails the per se test because it
discriminates on its face against interstate commerce. (Id.) Quite simply, the PUC
denied the Project because the PUC wished to maintain low prices for
Pennsylvania customers that benefit from congestion. (Id.)

Transource also argues that, even if the Pike test applies, the Defendants fail
because the PUC’s decision burdens interstate commerce by preventing the
alleviation of congestion across state lines. (Doc. 158, p. 46.) Transource

observes that, when assessing burdens on interstate commerce, a court must
evaluate not only the instant burden, “but also by considering how the challenged
[regime] may interact with the legitimate regulatory regimes . . . if not one, but

many or every, State adopted [a] similar [regime].” Healy v. Beer Inst., Inc., 491
U.S. 324, 337 (1989).
On the other hand, Defendants argue there are three reasons why the PUC’s

decision does not amount to a per se violation of the dormant Commerce Clause.
First, Defendants reason that although some Pennsylvanians would pay more if the
Project were completed, others would benefit. The PUC’s decision was not an
attempt to benefit Pennsylvanians to the detriment of others, instead it was a

holistic regional analysis. (Doc. 148, p. 42.)
Next, Defendants argue that the PUC’s decision was “not local
protectionism but the very essence of state sovereignty.” (Id. at 42–43 (citing

Piedmont, 558 F.3d at 314–15).) Defendants argue this is distinct from other cases
which Transource cites, like New England Power Co. v. New Hampshire, because
that case did not relate to the constitutionality of a state regulation preventing the
construction of a utility facility on public land. (Id. at 43 n.5 (citing 455 U.S. 331

(1982)).) Defendants do not explain the significance of this factual distinction. On
this point, Defendants also dispute whether congestion or price disparities actually
exist. (Id. at 43–44.)
Finally, Defendants argue that the PUC decision does not burden interstate
commerce because it takes into account “all the costs and benefits” of the Project,

including “considerable increases in prices to ratepayers both in Pennsylvania and
elsewhere” in the region. (Doc. 148, p. 44.) By contrast, they argue that PJM
applied “local, parochial interests” when assessing the benefits and costs of the

Project. (Id. at 45.)
In response, Transource argues that Defendants’ arguments are meritless.
Where Defendants argue that the PUC enacted a region-wide assessment that was
not self-serving, the record disproves this assertion. (Doc. 158, pp. 47–48.) And,

Transource maintains that it is irrelevant under the dormant Commerce Clause
whether residents of other states incidentally benefit from the PUC’s protectionist
approach. (Id. at 48 (citing Hunt v. Wash. St. Apple Advert. Comm’n, 432 U.S.

333, 349, 350–54 (1977)).) In further support, Transource cites numerous
Supreme Court cases. (See id. at 48–49.)16
Lastly, Transource argues that the PUC’s allegation that no pricing disparity
exists due to congestion, does not save them from the dormant Commerce Clause.

16 Defendants argue that none of these cases apply because “each deals with the sale of goods
that are already in existence within the stream of interstate commerce.” (Doc. 165, p. 22.) By
contrast, Defendants assert that this case is about “the construction of a new utility line not
currently in existence.” (Id.) Defendants provide no legal support for this analytical distinction.
In any event, the court finds it unconvincing. While this case is about the denial of a permit for
new transmission lines, the underlying issue is the flow of electricity across state lines.
Electricity already existed and was already in the stream of commerce.
(Id. at 49.) It points out that the PUC’s own findings recognized higher prices in
Maryland, Virginia, and D.C. due to congestion. (Id.) The PUC also recognized

that the Project would benefit customers region-wide by reducing congestion, but
Pennsylvanians would overall pay higher prices due to the reduced congestion.
(Id.)

Transource likens the PUC’s decision to New England Power, in which the
Supreme Court held that the “order of the New Hampshire Commission,
prohibiting New England Power from selling its hydroelectric energy outside the
State of New Hampshire, is precisely the sort of protectionist regulation that the

Commerce Clause declares off-limits to the states.” 455 U.S. at 339. In that case,
the utility commission issued its order to benefit citizens of New Hampshire to the
detriment of those in neighboring states who could not have access to the low-cost
power. Id.17

Reviewing the PUC’s decision, it is clear that the PUC determined that “the
consequences of [the Project] would be to alleviate the economic congestion on a
regional level, which in turn would result in higher rates in Pennsylvania.” (Doc.

157-1, p. 63.) Regardless of the regional benefits of the Project, the PUC

17 Transource recognizes that in New England Power, the problematic conduct was attributed to
a state statute, whereas here the PUC’s decision is based on a denial stemming from the
application of a state regulation. (Doc. 158, p. 45 n.8.) But Transource asserts that the
distinction makes no difference. (Id. (citing Wyoming v. Oklahoma, 502 U.S. 437, 455 (1992).)
Defendants do not respond to this argument.
determined that the “potential negative and practical impact on the citizens and
consumers of Pennsylvania is our concern.” (Id.)

Here, the court finds that the PUC’s decision was a per se violation of the
dormant Commerce Clause driven by economic protectionism. Although various
statements by the PUC place greater emphasis on Pennsylvania interests and others

place more emphasis on regional interests, the PUC’s own words make clear that it
was focused on protecting the interests of Pennsylvanians. Importantly, the very
nature of the Project is to improve the flow of wholesale electricity across state
lines to places that currently have less access and therefore higher prices. The

Project’s sole purpose is to better facilitate commerce across regional and state
boundaries. And the PUC’s opposition to the Project is rooted in economic
protectionism in the form of maintaining the status quo imbalance of access to low-

priced electricity.
The court recognizes that the PUC also asserts that congestion may not even
exist and the Project may not alleviate it. Even assuming that this argument has
relevance to the dormant Commerce Clause analysis, neither assertion holds up

based on the PUC’s own analysis. The PUC contends that Pennsylvanians (and
others), who will not be paying the costs of building the Project, will pay higher
rates if the Project is completed. That contention is premised on two assumptions.

The first is that congestion exists. The second is that the Project, by reducing
congestion, will increase prices for those currently benefitting from congestion.
Accordingly, the PUC’s own analysis defeats the argument it raises in this case

that congestion did not exist and the Project would not solve it.
Although this finding of a per se violation is supported by the PUC’s own
language in its decision, the court also makes the same finding based on the

practical effect of the PUC decision. By insisting on counting as a Project cost the
projected increase in pricing to those who currently benefit from congestion, the
PUC’s decision recognizes congestion as a benefit. That is, it determines that
similar access to low-cost electricity is only desirable to the extent that it does not

raise prices to those who currently benefit from congestion. Thus, the court
concludes that Transource has met its burden in proving the existence of
discrimination.

Having made that finding, the state is now required to show that the law is
narrowly tailored to “advance a legitimate purpose.” United Haulers, 550 U.S. at
338–39. Defendants’ arguments focus on whether there was a per se violation or
whether the PUC’s decision burdens interstate commerce. But they do not assert a

legitimate local purpose. Because they fail to do so, they cannot show that the
PUC decision is narrowly tailored to advance such a purpose.
The court also notes that the PUC’s decision would violate the dormant

Commerce Clause under Pike. In accordance with Healy, the court concludes that,
if other states adopted a regime similar to the PUC, it would eviscerate FERC’s
attempts to reduce congestion. Instead, each state could put forth its own analysis

and effectively deploy a veto as to whether regional transmission projects were
desirable as congestion-reducing projects.
For these reasons, the PUC’s decision violated the dormant Commerce

Clause.
CONCLUSION
For the reasons explained above, the court finds that the PUC’s decision
violated the Supremacy Clause and the dormant Commerce Clause. Based on

these findings, the court will deny Defendants’ motion for summary judgment and
grant Transource’s motion for summary judgment. (Docs. 146, 156.) An
appropriate order will follow.
s/Jennifer P. Wilson
JENNIFER P. WILSON
United States District Judge
Middle District of Pennsylvania

Dated: December 6, 2023

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10413985. Public record. Not legal advice.