Opinion

PJM Power Providers Group v. FERC

88 F.4th 250

Court: Court of Appeals for the Third Circuit
Filed: Dec 1, 2023
Status: Published
Cited by: 1 cases
Authority: More cited than 44.2%

The opinion

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 21-3068, 21-3205 & 21-3243

____________

PJM POWER PROVIDERS GROUP,

Petitioner in No. 21-3068

FEDERAL ENERGY REGULATORY COMMISSION

___________________________

ELECTRICAL POWER SUPPLY ASSOCIATION,

Petitioner in No. 21-3205

FEDERAL ENERGY REGULATORY COMMISSION

___________________________

PENNSYLVANIA PUBLIC UTILITY COMMISSION;

PUBLIC UTILITIES COMMISSION OF OHIO,

Petitioner in No. 21-3243

FEDERAL ENERGY REGULATORY COMMISSION

On Petition for Review of an Order of the

Federal Energy Regulatory Commission

(FERC No. ER21-2582-000)

Argued on January 10, 2023

Before: JORDAN, PHIPPS and ROTH, Circuit Judges

(Opinion filed December 1, 2023)

Elbert Lin

Charles D. Wallace, III

Hunton Andrews Kurth

951 East Byrd Street

Riverfront Plaza East Tower

Richmond, VA 23219

John L. Shepherd, Jr. (ARGUED)

Hunton Andrews Kurth

2200 Pennsylvania Avenue, NW

Washington, DC 20037

Counsel for Petitioner PJM Power Providers

Group

Paul W. Hughes

McDermott Will & Emery

500 N Capitol Street, NW

Washington, DC 20001

Counsel for Petitioner Electric Power Supply

Association

Kriss E. Brown (ARGUED)

Christian A. McDewell

Pennsylvania Public Utility Commission

Commonwealth Keystone Building

400 N Street

PO Box 3265

Harrisburg, PA 17120

Counsel for Petitioner Pennsylvania Public

Utility Commission

Thomas G. Lindgren

Werner L. Margard, III

Office of Attorney General of Ohio

30 East Broad Street

26th Floor

Columbus, OH 43215

Counsel for Petitioner Public Utilities

Commission of Ohio

Jeffrey W. Mayes

Monitoring Analytics

2621 Van Buren Avenue

Suite 160

Eagleville, PA 19403

Counsel for Intervenor Petitioner Monitoring

Analytics LLC

Denise C. Goulet (ARGUED)

McCarter & English

1301 K Street, NW

Suite 1000 West

Washington, DC 20005

Counsel for Intervenor Petitioner Office of the

Consumers Counsel State of Ohio OCC

Jared E. Fish (ARGUED)

Federal Energy Regulatory Commission

881 1st Street, N.E.

Washington, DC 20426

Counsel for Respondent

Danielle C. Fidler

Earthjustice Legal Defense Fund

1001 G Street, NW

Suite 1000

Washington, DC 20001

Counsel for Intervenor Respondents Union of

Concerned Scientists and Sierra Club

Peter Hopkins

Amber L. Martin Stone

Jeffrey A. Schwartz

Scott H. Strauss (ARGUED)

Cynthia Bogorad

Lauren L. Springett

Spiegel & McDiarmid

1875 Eye Street, NW

Suite 700

Washington, DC 20006

Counsel for Intervenor Respondents Delaware

Division of Public Advocate; Maryland Office

of Peoples Counsel; New Jersey Division of

Rate Counsel and Office of Peoples Counsel for

the District of Columbia

Matthew Price (ARGUED)

Jenner & Block

1099 New York Avenue, NW

Suite 900

Washington, DC 20001

Counsel for Intervenor Respondents

Constellation Energy Corp and Constellation

Energy Generation LLC

Miles H. Mitchell

Maryland Public Service Commission

6 St. Paul Street

6 St. Paul Centre, 16th Floor

Baltimore, MD 21202

Counsel for Intervenor Respondent Maryland

Public Service Commission

David C. Apy

Office of Attorney General of New Jersey

Division of Law

25 Market Street

Hughes Justice Complex

Trenton, NJ 08625

Counsel for Intervenor Respondent New Jersey

Board of Public Utilities

Robert A. Weishaar, Jr.

McNees Wallace & Nurick

1200 G Street, NW

Suite 800

Washington, DC 20005

Counsel for Intervenor Respondent PJM

Industrial Customer Coalition

Ryan J. Collins

Paul M. Flynn

Wright & Talisman

1200 G Street, NW

Suite 600

Washington, DC 20005

Counsel for Intervenor respondent PJM

Interconnection LLC

Caroline Reiser

Natural Resources Defense Council

1152 15th Street, NW

Site 300

Washington, DC 20005

Counsel for Intervenor Respondent Natural

Resource Defense Council

Casey Roberts

Sierra Club

1536 Wynkoop Street

Suite 200

Denver, CO 80202

Megan C. Wachspress

Sierra Club Environmental law Program

2101 Webster Street

13th Floor

Oakland, CA 94612

Counsel for Intervenor Respondent Sierra Club

Sarah A. Hunger

Office of Attorney General of Illinois

100 West Randolph Street

12th Floor

Chicago, IL 60601

Counsel for Intervenor Respondents Illinois

Commerce Commission and People of the State

of Illinois

Cynthia Bogorad

Lauren L. Springett

Spiegel & McDiarmid

1875 Eye Street NW

Suite 700

Washington, DC 20006

Counsel for Intervenor Respondent Buckeye

Power, Inc.

Adrienne E. Clair

Thompson Coburn

1909 K Street, NW

Suite 600

Washington, DC 2006

Counsel for Intervenor Respondent Old

Dominion Electric Cooperative; National Rural

Electric Cooperative Association

Daniel E. Frank

Allison Speaker

Eversheds Sutherland

700 Sixth Street, NW

Suite 700

Washington, DC 20001

Counsel for Intervenor Respondent East

Kentucky Power Cooperative Inc.

Andrew D. Cordo

Shannon E. German

Wilson Sonsini Goodrich & Rosati

222 Delaware Avenue

Suite 800

Wilmington, DE 19801

Counsel for Intervenor Respondent Advanced

Energy Economy

Gerit Hull

American Municipal Power

1111 Schrock Road

Suite 100

Columbus, OH 43229

Counsel for Intervenor Respondent American

Municipal Power Inc.

John E. McCaffrey, III

American Public Power Association

2451 Crystal Drive

Suite 1000

Arlington, VA 22202

Counsel for Intervenor Respondent American

Public Power Association

Anthony J. Corino

PSEG Corporation

80 Park Plaza

Newark, NJ 07102

Counsel for Intervenor Respondents PSEG;

PSEG Power LLC and PSEG ER&T

Donald R. Goodson

Institute for Policy Integrity

139 MacDougal Street

Third Floor

New York, NY 10012

Counsel for Amicus Appellee Institute for

Policy Integrity at New York University School

of Law

Christopher R. Nestor

Overstreet & Nestor

461 Cochran Road

P.O. Box 237

Pittsburgh, PA 15228

Counsel for Amicus Petitioner Pennsylvania

Senate Republican Caucus

Michael E. Rowan

Office of Attorney General of Maryland

Higher Education Div.

200 St Paul Place

20th Floor

Baltimore, MD 21202

Counsel for Amicus Respondents District of

Columbia, State of Delaware and State of

Maryland

Ari Peskoe

Harvard Electricity Law Initiative

6 Everett Street

Suite 4119

Cambridge, MA 02138

Counsel for Amicus Respondent Electricity

Regulation Scholars

O P I N I ON

ROTH, Circuit Judge:

This consolidated action represents the latest salvo in a

years-long battle over whether, and to what extent, state-

subsidized energy resources should be subject to price

mitigation in interstate capacity auctions. The focal point of

the dispute is a tariff filed by PJM Interconnection, L.L.C.

(PJM), which took effect by operation of law in 2021. 1

Three separate petitions now ask us to exercise, for the

first time, our authority to review this “action by inaction”

pursuant to Section 205(g) of the Federal Power Act (FPA), 2 a

2018 provision expressly articulating the right to review under

these circumstances. PJM Power Providers Group (P3) and

Electric Power Supply Association (EPSA) (collectively,

Generators), two nonprofit associations representing energy

generators, filed separate petitions. Pennsylvania Public

Utility Commission and Public Utilities Commission of Ohio

(State Entities) jointly filed the third. 3

16 U.S.C. § 824d(g).

Id. §§ 791 et seq.

More than two dozen intervenors and amici also filed briefs.

Intervenor Petitioners include: Monitoring Analytics LLC and

the Ohio Office of the Consumers Counsel. Amicus for

Petitioners is the Pennsylvania Senate Republican Caucus.

Intervenor Respondents include: Union of Concerned

Scientists, Delaware Division of the Public Advocate,

The Petitioners, Federal Energy Regulatory

Commission (FERC), and numerous intervenors and amici

dispute the proper scope of our review pursuant to § 205(g).

We hold that our review of FERC “action,” whether actual or

constructive, proceeds under the same deferential standards set

forth in the FPA and Administrative Procedure Act. 4

Consistent with Congress’s directive in § 205(g), we further

hold that our review properly encompasses the

Commissioners’ mandatory statements setting forth their

reasons for approving or denying the filing.

Reviewing the petitions accordingly, we will deny all

three because FERC’s acceptance of PJM’s tariff was not

Maryland Office of Peoples Counsel, Maryland Public Service

Commission, New Jersey Board of Public Utilities, New Jersey

Division of Rate Counsel, Natural Resources Defense Council,

Natural Rural Electric Cooperative, Office of Peoples Counsel

for the District of Columbia, PJM Industrial Customer

Coalition, PJM Interconnection LLC, Sierra Club, Illinois

Commerce Commission, People of the State of Illinois,

Buckeye Power Inc., Old Dominion Electric Cooperative, East

Kentucky Power Cooperative Inc., Advanced Energy

Economy, American Municipal Power Inc., American Public

Power Association, PSEG, PSEG Power LLC, PSEG ER&T,

Constellation Energy Corp, Constellation Energy Generation

LLC, and Exelon Generation Co LLC. Amici on behalf of

FERC include: the Institute for Policy Integrity at New York

University School of Law, the District of Columbia, the State

of Delaware, the State of Maryland, and Electricity Regulation

Scholars.

5 U.S.C. §§ 551 et seq.

arbitrary or capricious and was supported by substantial

evidence in the record.

I. Background

To frame the issues presented by the parties, we begin

by reviewing the key statutory provisions governing this

action, with a particular focus on § 205(g), the 2018

amendment to the FPA concerning judicial review of FERC

action by operation of law. We then turn to the factual and

procedural context for their claims.

A. The Federal Power Act and Judicial Review

FERC is the independent agency to which Congress, in

the FPA, granted exclusive jurisdiction to ensure “rates

charged by public utilities for the transmission and sale of

energy in interstate commerce, and the ‘rules and regulations

affecting or pertaining to such rates’, [sic] are ‘just and

reasonable.’” 5 While the FPA empowers FERC to regulate

“all facilities for such transmission or sale of electric energy,”

it reserves jurisdiction over “facilities used for the generation

of electric energy” to state and local authorities. 6

New Jersey Bd. of Pub. Utils. v. FERC, 744 F.3d 74, 79 (3d

Cir. 2014) (quoting 16 U.S.C. § 824d) (hereinafter NJBPU).

NJBPU, 744 F.3d at 80 (quotations omitted) (quoting §

824(b)(1)); FERC v. Elec. Power Supply Ass’n, 577 U.S. 260,

264 (2016) (noting that the FPA “authorizes [FERC] to

regulate ‘the sale of electric energy at wholesale in interstate

commerce,’” but “leaves to the States alone, the regulation of

‘any other sale’ … of electricity”).

Sections 205 and 206 of the FPA set forth the means by

which FERC may “fulfill its statutory charge of ensuring the

justness and reasonableness of rates.” 7 Together, they

comprise part of “a single statutory scheme under which all

rates are established initially by the [public utilities] . . . and all

rates are subject to being modified by the Commission upon a

finding that they are unlawful.” 8 Section 205 provides that

“public utilities may change their rates unilaterally, upon 60

days’ notice to FERC, which then reviews the changed rates to

ensure that they are ‘just and reasonable.’” 9 “It

is not necessary, in a filing pursuant to § 205, that FERC find

that the previous rate was unjust or unreasonable.” 10 Rather,

here FERC “plays ‘an essentially passive and reactive role.’” 11

Section 206, in contrast, provides that FERC may proactively

initiate rate changes, either on its own motion or in response to

a complaint, if the moving party demonstrates that the existing

rate is unjust and unreasonable and the proposed alternative is

just and reasonable. 12 Notably, § 206 does not “give[] FERC

the power to deny a utility the right to file changes” unilaterally

under § 205. 13

Pub. Citizen, Inc. v. FERC, 839 F.3d 1165, 1167 (D.C. Cir.

2016).

Atl. City Elec. Co. v. FERC, 295 F.3d 1, 10 (D.C. Cir. 2002)

(alteration in original) (quoting United Gas Pipe Line Co. v.

Mobile Gas Serv. Corp., 350 U.S. 332, 341 (1956)).

NJBPU, 744 F.3d at 94; see 16 U.S.C. § 824d(d).

NJBPU, 744 F.3d at 94 (citing Atl. City Elec. Co., 295 F.3d

at 9–10); see 16 U.S.C. § 824d(a)-(d).

NJBPU, 744 F.3d at 94 (quoting Atl. City Elec. Co., 295 F.3d

at 9–10).

16 U.S.C. § 824e(a).

Atl. City Elec. Co., 295 F.3d at 10.

Our jurisdiction to review FERC orders arises under the

FPA and Administrative Procedure Act. 14 Specifically, the

FPA provides that a party aggrieved by a FERC order must first

seek rehearing by the Commission, which may grant or deny

rehearing, abrogate or modify its order without rehearing, or

constructively deny rehearing by failing to act within thirty

days. 15 Within sixty days of the Commission’s order on the

application for rehearing, an aggrieved party may seek review

of “order[s] issued by the Commission” in the courts of

appeals. 16 The FPA provides that we “shall have jurisdiction,

which upon the filing of the record with it shall be exclusive,

to affirm, modify, or set aside such order in whole or in part.” 17

Finally, the FPA makes clear that, absent orders to the contrary,

neither the filing of an application for rehearing before the

Commission nor the start of proceedings before the court of

appeals shall “operate as a stay of the Commission’s order.” 18

The question of what constitutes a reviewable

Commission order is central to this dispute. FERC’s enabling

statute establishes that “[a]ctions of the Commission shall be

determined by a majority vote of the members present.” 19

While FERC comprises five commissioners, a quorum requires

See 16 U.S.C. § 825l(b); 5 U.S.C. § 702 (waiving sovereign

immunity for claims for relief “other than money damages”);

28 U.S.C. § 1331.

16 U.S.C. § 825l(a).

Id. § 825l(b)

Id. (“The finding of the Commission as to the facts, if

supported by substantial evidence, shall be conclusive.”).

Id. § 825l(c).

42 U.S.C. § 7171(e).

just three, making it possible for four commissioners to

deadlock two-to-two. 20 In Public Citizen, Inc. v. FERC, the

Court of Appeals for the D.C. Circuit considered whether

judicial review was available for a § 205 rate filing that took

effect after the four sitting Commissioners deadlocked and

failed to act within sixty days. 21 The court determined that it

lacked jurisdiction. 22 With regard to the FPA, the court held

that the secretarial notice issued by the Commission to

“describ[e] the effects of the deadlock are not reviewable

orders” 23 because “FERC did not engage in collective,

institutional action when it deadlocked.” 24 The court held that

it also lacked jurisdiction under the APA because that statute

only makes inaction reviewable “where the agency fails to take

a ‘discrete’ action it is legally required to take,” 25 and the FPA

does not “compel” FERC to act on a § 205 filing.26

Accordingly, the court held that it lacked jurisdiction to review

FERC inaction resulting in an order by operation of law. The

court concluded that “[a]ny unfairness associated with this

outcome inheres in the very text of the FPA. Accordingly, it

lies with Congress, not this Court, to provide the remedy.” 27

Id. § 7171(b)(1), (e).

839 F.3d at 1170.

Id.

Id. at 1172.

Id. at 1170.

Id. at 1172 (quoting Norton v. S. Utah Wilderness All., 542

U.S. 55, 62–63 (2004)).

Id. at 1174 (explaining that the FPA does “not compel FERC

to either set the disputed rates for hearing or affirmatively

disapprove any unjust or unreasonable rates through the

Section 205 process”).

Id.

Congress did so in 2018. Rather than compelling FERC

to act on a § 205 filing, Congress added a provision to clarify

how agency inaction should be construed to permit judicial

review. The new provision, § 205(g), 28 stated that if FERC

“permits the 60-day period . . . to expire without issuing an

order accepting or denying the change because the

Commissioners are divided two against two as to the

lawfulness of the change . . . or if the Commission lacks a

quorum” then:

(A) the failure to issue an order accepting or

denying the change by the Commission

shall be considered to be an order issued by

the Commission accepting the change for

purposes of section 825l(a) of this title [FPA

§ 313(a)]; and

(B) each Commissioner shall add to the record

of the Commission a written statement

explaining the views of the Commissioner

with respect to the change. 29

Section 205(g) further established that if “a person seeks a

rehearing . . . and the Commission fails to act on the merits of

the rehearing request” within 30 days because the deadlock

continues, “such person may appeal under section 825l(b)

[FPA § 313(b)].” 30

16 U.S.C. § 824d(g).

Id. (emphasis added).

Id. § 824d(g)(2).

B. Factual and Procedural Context

“Since the FPA’s passage, electricity has increasingly

become a competitive interstate business, and FERC’s role has

evolved accordingly.” 31 Today, “[i]ndependent power plants

now abound, and almost all electricity flows not through ‘the

local power networks of the past,’ but instead through an

interconnected ‘grid’ of near-nationwide scope.” 32 To ensure

the reliable transmission of electricity from independent

generators to “load serving entities” (LSEs)—the

organizations that deliver electricity to retail consumers—

FERC has empowered nonprofit entities, including Regional

Transmission Organizations (RTOs), to manage segments of

the grid. 33 RTOs constitute “public utilities” under the FPA,

subject to FERC’s regulation. 34

Intervenor PJM is one such RTO, managing a system

that serves approximately fifty million consumers in thirteen

mid-Atlantic and Midwestern states and the District of

Columbia. 35 Like other RTOs, PJM fulfills important

functions that include ensuring the grid maintains sufficient

electrical supply to meet demand during peak periods. 36 To

accomplish this, PJM manages a capacity market that

Elec. Power Supply Ass’n, 577 U.S. at 267.

Id. (quoting New York v. FERC, 535 U.S. 1, 7 (2002)).

Hughes v. Talen Energy Mktg., LLC, 578 U.S. 150, 155

(2016).

NJBPU, 744 F.3d at 82.

PJM Br. 3; see Hughes, 578 U.S. at 155.

NJBPU, 744 F.3d at 82.

essentially “pay[s] participants for a promise to produce

electricity when called by PJM to do so.” 37

In 2006, the Commission found the existing capacity

market was unjust and unreasonable because it maintained

insufficient capacity to keep the system reliable. 38 To remedy

this, FERC issued an order accepting a negotiated settlement

among power providers, utility companies, and state and local

authorities, which provided for the adoption of the Reliability

Pricing Model. 39 This model works essentially as follows:

PJM predicts electricity demand

three years ahead of time, and

assigns a share of that demand to

each participating LSE. Owners of

capacity to produce electricity in

three years’ time bid to sell that

capacity to PJM at proposed rates.

PJM accepts bids, beginning with

the lowest proposed rate, until it

has purchased enough capacity to

satisfy projected demand. . . . [A]ll

accepted capacity sellers receive

the highest accepted rate, which is

called the “clearing price.” LSEs

PJM Br. 4 (citing NJBPU, 744 F.3d at 82 (explaining that

the capacity market ensures that “there are enough . . .

generators connected to the transmission grid for the system to

function at peak load.”)).

See PJM Interconnection, L.L.C., 135 FERC ¶ 61,022 (2011)

(hereinafter 2011 Order) at ¶ 4.

NJBPU, 744 F.3d at 79; see PJM Interconnection, L.L.C.,

117 FERC ¶ 61,331 (hereinafter 2006 Settlement Order).

then must purchase from PJM, at

the clearing price, enough

electricity to satisfy their PJM-

assigned share of overall projected

demand. 40

Besides allowing LSEs to satisfy their obligations to

provide a share of projected demand, this forward-looking

capacity auction serves another purpose, at least in theory:

sending market signals to suppliers to incentivize resource

development. 41 “A high clearing price in the capacity auction

encourages new generators to enter the market, increasing

supply and thereby lowering the [future] clearing price . . .

[while] a low clearing price discourages new entry and

encourages retirement of existing high-cost generators.” 42

Because some participants both buy and sell capacity in

the auction, the auctions are theoretically vulnerable to

manipulation by exercise of monopsony power. 43 That is, net-

buyers—those who buy more capacity than they sell—could

artificially depress prices by selling capacity below its true

cost, skewing the market signals produced by the auction. 44

Hughes, 578 U.S. at 155–56; see PPL Energyplus, LLC v.

Solomon, 766 F.3d 241, 251 (3d Cir. 2014); NJBPU, 744 F.3d

at 83–84. Technically, PJM operates multiple capacity

auctions. The one at issue in this appeal, and described here,

is the Base Residual Auction.

Hughes, 578 U.S. at 155–56; see NJBPU, 744 F.3d at 84.

NJBPU, 744 F.3d at 85.

See FERC Br. 14–15; PJM Br. 6; NJBPU, 744 F.3d at 88–

89.

“[T]o address the concern that some market participants might

have an incentive to depress market clearing prices by offering

supply at less than a competitive level,” the 2006 Settlement

Order approved the implementation of the Minimum Offer

Price Rule (MOPR). 45

The MOPR established in the 2006 Settlement Order

(2006 MOPR) was designed to detect bids suppressed through

monopsony power. An offer that failed a multilevel screening

process would be “mitigated,” or administratively raised to a

competitive level. 46 The 2006 MOPR applied only to new

market entrants, excluding nuclear, coal, and hydroelectric

resources as well as state-mandated resources. 47 In approving

this mechanism, FERC concluded that the MOPR was a

“reasonable method of assuring that net buyers do not exercise

monopsony power by seeking to lower prices through self

supply.” 48 Moreover, FERC determined that the MOPR’s

exception for “reliability projects built under state mandate is

reasonable because it enables states to meet their

responsibilities to ensure local reliability.” 49

Within a few years, consistent with that responsibility,

New Jersey and Maryland launched initiatives to develop new

generation resources to address reliability and capacity

2011 Order at ¶ 6 (citing 2006 Settlement Order at ¶ 103).

NJBPU, 744 F.3d at 85.

Id. at 86 (explaining that state-mandated resources consisted

of “any planned resource being developed in response to a state

regulatory or legislative mandate to resolve a projected

capacity shortfall”).

2006 Settlement Order at ¶ 104; see NJBPU, 744 F.3d at 85.

2006 Settlement Order at ¶ 104.

concerns in their states. 50 Both initiatives required new

generation resources to sell capacity in the PJM markets, and

both intended to offer the capacity a price below cost to ensure

the new resources would clear. 51

P3, who is also one of the Petitioners in this action,

responded by filing a § 206 complaint with FERC, calling for

an end to the state-mandated resources exception in addition to

other modifications. 52 PJM then filed a revised tariff pursuant

to § 205, which FERC approved in 2011 with some alterations

(2011 Order). The 2011 MOPR eliminated the state-mandated

resources exemption, “declin[ing] to accord states an

opportunity to justify their initiatives on policy grounds,

instead . . . requiring them to submit cost-based offers like other

entrants or suffer the consequences of mitigation.” 53 At the

same time, the new MOPR added exemptions for wind and

solar resources, with the result that after 2011, only natural gas

facilities were subject to mitigation. 54

Several parties petitioned this Court for review of the

2011 Orders, which we denied in 2014. 55 With respect to

NJBPU, 744 F.3d at 87.

Id.

Id. at 91 (“FERC . . . conclud[ed] that the exemption needed

to be eliminated due to ‘mounting evidence of risk from what

was previously only a theoretical weakness in the MOPR

rules,’ namely, that state-subsidized resources would suppress

auction prices.”).

Id. at 106.

Id. at 112. During the pendency of this Court’s decision in

NJBPU, aspects of the 2011 tariff not relevant to the instant

FERC’s elimination of the state-mandated resources

exemption on the grounds that they would suppress auction

prices, we observed that while “it could easily be argued that

this danger was foreseeable in 2006 when the MOPR was first

approved, FERC has adequately advanced a rationale for its

about-face . . . . As such, it cannot be said that FERC acted

without substantial evidence.” 56

In 2016, power suppliers filed a § 206 complaint with

FERC, challenging the MOPR’s exclusive application to new

market entrants. They argued that such a limitation was unjust

and unreasonable because it “allowed below-cost offers from

existing resources under newly-enacted state subsidy programs

to unjustly displace non-subsidized resources.” 57 A three-year

process culminated with FERC’s two-to-one vote in December

2019, ordering PJM to extend the MOPR to mitigate offers

from “both new and existing resources” and any resource either

receiving or eligible to receive a state subsidy (2019 MOPR). 58

The goal, FERC said, of this dramatic expansion was to

“protect PJM’s capacity market from the price-suppressive

effects of resources receiving out-of-market support by

ensuring that such resources are not able to offer below a

competitive price.” 59 The sole opposing Commissioner issued

a dissent, arguing, among other things, that while “the MOPR

once targeted efforts to exercise market power on behalf of

matter were amended in a compromise approved by FERC

order in 2013. See id. at 93–94.

Id. at 102.

P3 Br. 15; see Calpine Corp. v. PJM Interconnection, L.L.C.,

169 FERC ¶ 61,239 (hereinafter 2019 Order).

2019 Order at ¶¶ 1–2, 5; see EPSA Br. 8; FERC Br. 18–19.

2019 Order ¶ 5.

load and directly reduce the capacity market price, it now

targets state resource decisionmaking, and particularly state

efforts to address the externalities of electricity generation.” 60

The 2019 MOPR prompted swift opposition. 61 Dozens

of parties sought to overturn the 2019 MOPR, including

“consumer advocate groups, state public utility agencies,

electric cooperatives [and] generators, clean energy

organizations, and environmental groups.” 62 These appeals

were consolidated in the Seventh Circuit and remain in

abeyance pending this action. 63

On July 30, 2021, PJM made another § 205 filing,

setting forth a revised MOPR (2021 MOPR) to replace the

expansive one it set forth in 2019. PJM acknowledged that,

over the previous three years, state investments in renewable

and nuclear resources had proliferated, in part because of

states’ unabated and legitimate interest in “address[ing]

externalities that are not accounted for in PJM’s wholesale

markets.” 64 By “pricing out resources from the capacity

market” and failing to account for those resources when

committing capacity, PJM stated, the 2019 MOPR was

distorting market signals by “incentiv[izing] resources to be

built that are not needed to maintain reliability” in light of those

investments. 65 Moreover, the 2019 MOPR was incenting

2019 Order (Glick, dissenting), ¶ 16.

FERC Br. 20.

FERC Br. 20–21; see Ill. Commerce Comm’n v. FERC, Nos.

20-1645, et al. (7th Cir.).

JA0178.

JA0178, 181.

market participants to exit the capacity market to “meet their

policy and business objectives,” 66 a shift that threatened to

“exacerbate[]the very price suppression issue [that the 2019

MOPR] seeks to mitigate.” 67 The result for consumers, PJM

concluded, would be that those in states providing subsidies

would “pay[] twice, i.e., for both the excluded resources and

the resource committed through the auction because the

excluded resource did not clear” while those in other states

would see “a capacity cost increase, when . . . the auction

commits a resource that had a higher Sell Offer than the

excluded resource’s original offer.” 68 PJM concluded:

[W]hile state policies favoring certain

generation resources may ultimately cause a

reduction in capacity clearing prices, such an

outcome “should not be interpreted as a

harmful secondary impact of one state’s

policies on other states. Rather, the reduction in

prices is a natural consequence of the PJM

market appropriately reflecting state policies

and consumer preferences for certain types of

resources. Such state subsidies only lower total

costs for consumers in other states.” 69

PJM explained that the 2021 MOPR would return to “its

original purpose by focusing on prohibiting and mitigating the

exercise of buyer-side market power.” 70 The 2021 “focused”

MOPR would “generally accommodate both state policies

JA0182.

JA0185.

JA0179–80.

JA0180.

JA0171.

regarding generation resource mix and the long-standing

business models of public power entities,” 71 while nonetheless

barring state action, such as those that New Jersey and

Maryland had pursued in 2011, that would “directly interfere

with the auction clearing outcomes.” 72 To this end, the 2021

MOPR would mitigate offers in just two situations: “(1) where

a capacity resource has the ability and incentive to exercise

buyer-side market power, and (2) where a capacity resource

receives state subsidies under a state program that is likely

preempted by the Federal Power Act.” 73

When the 2021 MOPR was filed, FERC had four sitting

commissioners. The commissioners deadlocked two-to-two

on the new tariff, failing to issue an order accepting or denying

the change within sixty days. On September 29, 2021, the

Commission issued a secretarial notice stating that the new

2021 MOPR was in effect by operation of law. Consistent with

§ 205(g)(1)(B), two commissioners (including the chair) filed

a Joint Statement articulating their reasons for supporting the

new tariff, while the other commissioners filed separate

statements explaining their opposition.

All rehearing requests were denied without an order on

November 29, 2021. This petition followed.

II. Standing

An organization suing on its members’ behalf must

establish associational standing, demonstrating that “(1) at

JA0194.

JA0190.

JA0173; see FERC Br. 22; PJM Br. 23.

least one of its members would have standing to sue in his or

her own right; (2) ‘the interests it seeks to protect are germane

to the organization’s purpose’; and (3) ‘neither the claim

asserted nor the relief requested requires the participation of

[its] individual members.’” 74 To meet the first element of

associational standing, the organization must establish the

three familiar components that form “the irreducible

constitutional minimum of standing”: injury-in-fact,

causation, and redressability. 75

The Petitioners have met their burden. FERC observes

that the Generators do not articulate any injuries in their

opening briefs. 76 Nevertheless, the Joint Appendix

incorporates records from the Generators’ protest before FERC

that demonstrate that their members suffered economic losses

as a result of the 2021 MOPR. An affidavit attached to P3’s

reply brief elaborates on these harms. 77 We find that the

See Sierra Club v. FERC, 827 F.3d 59, 65 (D.C. Cir. 2016);

see also Belmont Mun. Light Dep’t v. FERC, 38 F.4th 173, 185

(D.C. Cir. 2022) (“Where there are multiple plaintiffs who

assert overlapping arguments, at least one petitioner must have

standing to seek each form of relief requested in the petitions

for review.” (citing Nat’l Ass’n of Regul. Util. Commissioners

v. FERC, 964 F.3d 1177, 1184 (D.C. Cir. 2020))).

Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992); see

Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc.,

528 U.S. 167, 180–81 (2000); Kansas Corp. Comm’n v. FERC,

881 F.3d 924, 929 (D.C. Cir. 2018) (quoting Sierra Club v.

EPA, 292 F.3d 895, 899–900 (D.C. Cir. 2002) (citations

omitted)).

FERC Br. 35.

P3 Reply Br. 3, Attachment A (Decl. Glen Thomas).

Generators have met their burden to articulate a concrete and

particularized injury, and that the cause of their injuries is

traceable to FERC’s approval, by operation of law, of the 2021

MOPR. 78 We also hold that the State Entities have met their

burden to establish a cognizable injury, having demonstrated

that they “represent the interests of the states in protecting their

citizens and electric ratepayers in the traditional government

field of utility regulation.” 79

FERC also argues that the Petitioners failed to establish

that their purported injuries are redressable in this action.

Specifically, FERC argues that even if we were to vacate the

order by operation of law that allowed the 2021 MOPR to go

into effect, the 2021 MOPR would remain in effect until a new

tariff could be established upon remand. 80 We disagree.

Contrary to FERC’s assertion, “[v]acating or rescinding

invalidly promulgated regulations has the effect of reinstating

prior regulations.” 81 While these potentially “disruptive

See Belmont Mun. Light Dep’t, 38 F.4th at 185.

Id. at 186 (citing Maryland People’s Counsel v. FERC, 760

F.2d 318, 321 (D.C. Cir. 1985)); see State Entities Reply Br.

5–6.

FERC Br. 39.

Abington Mem’l Hosp. v. Heckler, 750 F.2d 242, 244 (3d

Cir. 1984); Prometheus Radio Project v. F.C.C. (Prometheus

I), 652 F.3d 431, 453 n.25 (3d Cir. 2011) (“Because we vacate

the NBCO rule in the 2008 Order, the rule in existence prior to

that order will remain in effect until the FCC promulgates new

cross-ownership regulations.”); see Council Tree Commc’ns,

Inc. v. F.C.C., 619 F.3d 235, 258 (3d Cir. 2010) (“vacating [an

FCC] rule will mean that” the prior rule “will once again”

govern the regulated activity); Paulsen v. Daniels, 413 F.3d

999, 1008 (9th Cir. 2005) (“The effect of invalidating an

consequences”82 may militate toward less drastic solutions, 83

such a remedy is nonetheless within the scope of our statutory

authority.

III. Standard of Review

At the threshold, the parties dispute the applicable

standard and scope of judicial review upon a petition

proceeding under § 205(g).

agency rule is to reinstate the rule previously in force.”); Action

on Smoking and Health v. CAB, 713 F.2d 795, 797 (D.C. Cir.

1983) (per curiam) (“To ‘vacate,’ as the parties should well

know, means ‘to annul; to cancel or rescind; to declare, to

make, or to render, void; to defeat; to deprive of force; to make

of no authority or validity; to set aside.’ . . . . [T]he judgment

of this court had the effect of reinstating the rules previously in

force.”).

Ameren Servs. Co. v. FERC, 880 F.3d 571, 584 (D.C. Cir.

2018) (quoting Black Oak Energy, LLC v. FERC, 725 F.3d

230, 244 (D.C. Cir. 2013)); see Prometheus Radio Project v.

Fed. Commc’ns Comm’n (Prometheus II), 824 F.3d 33, 52 (3d

Cir. 2016).

See, e.g., Black Oak Energy, 725 F.3d at 244 (“Although we

remand, we do so without vacating . . . [after performing the

disruption analysis] we deem it better to preserve the status quo

as FERC reconsiders”); Ameren Servs. Co., 880 F.3d at 584

(vacating because “we are troubled by the prospect of allowing

the orders to continue”); see Belmont Mun. Light Dep’t v.

FERC, 38 F.4th 173, 187–88 (D.C. Cir. 2022) (determining

that a FERC order is severable and vacating only one

component).

We review FERC orders under § 313(b) of the FPA and

§ 10(e) of the APA. 84 The FPA directs that FERC’s factual

findings, “if supported by substantial evidence, shall be

conclusive.” 85 Substantial evidence exists where the

administrative record contains “more than a scintilla, but . . .

something less than a preponderance of the evidence.” 86 Under

the APA, we must “hold unlawful and set aside” agency action

that is deficient for reasons including that it is “arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law,” or “in excess of statutory jurisdiction,

authority, or limitations, or short of statutory right.” 87 In short,

we affirm FERC orders as long as the administrative record

shows the Commission “examined the relevant data and

16 U.S.C. § 825l(b); 5 U.S.C. § 706(2).

16 U.S.C. § 825l(b).

NJBPU, 744 F. 3d at 94 (quoting La. PSC v. FERC, 522 F.3d

378, 395 (D.C. Cir. 2008)); accord Mars Home for Youth v.

NLRB, 666 F.3d 850, 853 (3d Cir. 2011) (“Substantial

evidence is more than a mere scintilla. It means such relevant

evidence as a reasonable mind might accept as adequate to

support a conclusion.” (citations and quotations omitted)). See

also NJBPU, 744 F.3d at 94 (“The question we must answer ...

is not whether record evidence supports [petitioner]’s version

of events, but whether it supports FERC’s.” (quoting Fla. Mun.

Power Agency v. FERC, 315 F.3d 362, 368 (D.C. Cir. 2003))).

5 U.S.C. § 706(2); see City of Newark v. FERC, 763 F.2d

533, 545 (3d Cir. 1985) (court must determine “whether a

rational basis exists for [FERC’s] conclusion, whether there

has been an abuse of discretion, or . . . whether the

Commission’s order is arbitrary or capricious or not in

accordance with the purpose of the [FPA].”).

articulated a rational connection between the facts found and

the choice made.” 88

FERC urges, and we agree, that § 205(g) did not alter

these familiar standards. 89 Rather, the provision clarified the

universe of action subject to our review. Prior to its enactment,

the plain text of the FPA did not convey Congress’s intent to

allow our review of rate filings enacted by operation of law

pursuant to § 205(d). Congress addressed this deficiency with

§ 205(g), which unambiguously instructed that we construe

FERC’s inaction as an affirmative order “for the purposes of §

[313](a).” 90 Notably, Congress here referred to the very

provision setting forth a party’s right to seek the Commission’s

rehearing of an order by majority vote, which in turn provides

the basis for judicial review. 91 Indeed, § 205(g) specifies that

NJBPU, 744 F.3d at 94 (quoting Sacramento Mun. Util. Dist.

v. FERC, 616 F.3d 520, 528 (D.C. Cir. 2010)); see also

Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist. No. 1 of

Snohomish Cnty., 554 U.S. 527, 532 (2008) (“The statutory

requirement that rates be ‘just and reasonable’ is obviously

incapable of precise judicial definition, and we afford great

deference to the Commission in its rate decisions.”); N. Penn.

Gas Co. v. FERC, 707 F.2d 763, 766 (3d Cir. 1983) (FERC’s

exercise of its expertise carries “a presumption of validity”).

See FERC Br. 34–35, 49. While we generally defer to an

agency’s reasonable interpretation of ambiguity in a statute it

administers “through application of its expertise,” no deference

doctrine controls the scope of a court’s jurisdiction. See

Allegheny Def. Project v. FERC, 964 F.3d 1, 11 (D.C. Cir.

2020).

§ 205(g) (emphasis added); see 16 U.S.C. § 825l(a).

See 16 U.S.C. § 825l(b) (“Any party to a proceeding under

this chapter aggrieved by an order issued by the Commission

if the “Commission fails to act on the merits of the rehearing

request” within 30 days because the deadlock continues, “such

person may appeal under § [313](b).” 92 Thus, by reference, the

standard of review set forth in the FPA 93 applies to FERC

orders issued by operation of law pursuant to § 205(d). 94

We reject the State Entities’ argument that we must

review “on a de novo basis, whether the tariff change is just

and reasonable as a predicate to deciding whether [FERC’s]

discretion to approve was properly exercised.” 95 This reading

contradicts the well-settled administrative law principle,

reflected in both the FPA and APA, that “‘a court is not to

substitute its judgment for that of the agency.’” 96 Moreover,

the sole authority cited by the State Entities to support its

reading concerns an inapposite statute (the Indian Gaming

Regulatory Act or IGRA), which at least one sister court has

rejected as an appropriate analog for the FPA because the

IGRA requires agency action while the FPA gives the agency

discretion to act. 97

in such proceeding may obtain a review of such order in the

United States court of appeals . . . .”).

Id. § 824d(g)(2); see id. § 825l(b).

See id. § 825l(b).

§ 205(g).

State Entities Br. 21–22 (citing Amador County, Cal. v.

Salazar, 640 F.3d 373, 375 (D.C. Cir. 2011)).

Motor Veh. Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto.

Ins. Co., 463 U.S. 29, 43 (1983).

Compare State Entities Br. 22, with Public Citizen, 839 F.3d

at 1173 (“Section 205(a)’s statement concerning the

unlawfulness of unjust and unreasonable rates does not rise to

an inexorable command like that found in IGRA”).

To carry out Congress’s directive to construe FERC

inaction as an affirmative order, we must next determine what

constitutes evidence of the agency’s reasoning for the purposes

of § 205(g). 98 The Generators insist that nothing does, arguing

that a deadlocked Commission can produce “no institutional

findings of fact or conclusions of law to which this Court might

defer.” 99 While they acknowledge Congress’s mandate in §

205(g)(1)(B) that the members of a deadlocked Commission

must enter their reasoning into the record, they argue that these

statements are unattributable to the agency and are intended

only to “facilitate compromises” and promote transparency and

good government. 100 Because any order arising by operation

of law would, by the Generators’ logic, lack any agency

rationale, they conclude that any petition for rehearing

pursuant to § 205(g) must “inevitably” 101 lead us to find such

an order arbitrary and capricious. 102

See Sprint Nextel Corp. v. F.C.C., 508 F.3d 1129, 1132 (D.C.

Cir. 2007) (“When the Commission failed to [act] within the

statutory period, Congress’s decision—not the agency’s—took

effect.”).

P3 Br. 29, 34–36 (“[a]ctions of the Commission shall be

determined by a majority vote of the members present” (citing

42 U.S.C. § 7171(e)); accord EPSA Br. 18, 21, 23; State

Entities Br. 29–30 (citing Public Citizen, 839 F.3d at 1169).

100

P3 Br. 36–37; see EPSA Br. 18, 23, 27 (quoting F.C.C. v.

Prometheus Radio Project (Prometheus III), 141 S. Ct. 1150,

1158 (2021)); see State Entities Br. 29.

101

EPSA Br. 19–20; P3 Br. 33–35.

102

The Generators also wrongly contend that because orders

by operation of law are necessarily arbitrary and capricious,

they must be set aside. See P3 Br. 29, 35 (“[J]udicial review of

The Generators’ argument is inconsistent with our

responsibility to avoid interpreting statutory provisions in ways

that “render statutory language a nullity and leave entire

operative clauses with ‘no job to do.’” 103 Congress established

in § 205(d), and underscored in § 205(g), that a tariff may

change by operation of law, 104 consistent with the principle that

deadlocked FERC proceedings would inevitably end in

vacatur.” (emphasis added)); EPSA Br. 15 n. 3 (incorporating

by reference P3’s arguments concerning vacatur); EPSA Br.

16, 25, 43. But vacatur is never a foregone conclusion. First,

the plain text of the FPA authorizes us not only to vacate, but

also to modify an improper order. 16 U.S.C. § 825l(b).

Second, to determine the appropriateness of vacatur, we

conduct a fact-sensitive analysis accounting for “the gravity of

the orders’ flaws, and the ‘disruptive consequences’ that may

result.” Ameren Servs. Co., 880 F.3d at 584 (quoting Black

Oak Energy, LLC, 725 F.3d at 244; see Prometheus II, 824

F.3d at 52; Belmont Mun. Light Dep’t, 38 F.4th at 187–88

(determining that a FERC order is severable and vacating only

one component). We further observe that while vacatur is the

Generators’ preferred remedy here, to adopt their theory

globally risks hampering the claims of future litigants seeking

redress by modification, and not vacatur. Accordingly, we

reject the Generators’ reading.

103

Allegheny, 964 F.3d at 15 (quoting Doe v. Chao, 540 U.S.

614, 623 (2004)).

104

§ 824d(d) (“No change shall be made by any public utility

in any such rate, . . . rule, regulation, or contract relating

thereto, except after sixty days’ notice to the Commission and

to the public.” (emphasis added)); § 824d(g) (“With respect to

a change described in subsection (d), if the Commission

permits the 60-day period established therein to expire without

the “power to initiate rate changes rests with the utility and

cannot be appropriated by FERC in the absence of a finding

that the existing rate was unlawful.” 105 The Generators’ theory

would flip § 205(d)’s protective intent on its head, enabling any

aggrieved party to invalidate any rate change by operation of

law simply by virtue of requesting judicial review—a process

the Generators’ theory reduces to a mechanical exercise with

only one possible outcome. This cannot be right. If Congress’s

purpose were indeed to strip utilities of the protections afforded

by § 205(d), or to otherwise invalidate orders by operation of

law, it would have amended that portion of the statute

accordingly, not created a cumbersome workaround via §

205(g).

Moreover, the Generators’ reading would sap §

205(g)(1)(B) of purpose. It is a “fundamental canon

of statutory construction that the words of a statute must be

read in their context and with a view to their place in the overall

statutory scheme.” 106 Here, § 205(g)(1)(B) appears as part of

an enumerated list of provisions concerning aggrieved parties’

right to seek rehearing and judicial review of a change arising

from agency inaction. It makes little sense to argue, as P3 does,

that Congress’s purpose in requiring the Commissioners to add

statements explaining their reasoning to the administrative

record could have been to “facilitate compromises” and

issuing an order accepting or denying the change . . . the failure

. . . shall be considered to be an order issued by the Commission

accepting the change for purposes of” judicial review

(emphasis added)).

105

Atl. City Elec. Co., 295 F.3d at 10.

106

King v. Burwell, 576 U.S. 473, 492 (2015) (quoting Util. Air

Reg. Grp. V. EPA., 573 U.S. 302, 320 (2014)).

promote transparency and good government only. 107 The right

to judicial review accrues after a party has been aggrieved by

a change, and therefore after the time for compromise has

passed. 108

We agree with FERC that Congress intended “the

Commissioners’ statements [to] play an integral role in the

Court’s review.” 109 Here, the statements of the deadlocked

Commissioners do more than record each person’s individual

rationale for affirming or rejecting the rate filing. Collectively,

they illuminate the agency’s reasons for inaction, which

Congress has instructed us to construe as an affirmative

order. 110 Because FERC must accept a § 205 rate filing absent

“a finding that the existing rate was unlawful,” 111 our thorough

consideration of the entire record must ensure that the

107

P3 Br. 37.

108

Notably, in neither of § 205(g)’s two enumerated clauses

did Congress qualify “change” with any adjective (e.g.,

“proposed” or “potential”) to indicate that such change was

pending, and not already in effect. Rather, the text plainly

refers to the change in tariff effected by the agency’s inaction,

pursuant to § 205(d).

109

FERC Br. 4.

110

P3 repeatedly asks us to vacate the September 29, 2021

Notice, treating that document as if it were a FERC order. P3

confuses the nature of that instrument, which does not itself

constitute reviewable FERC action but rather memorialized the

results, already in effect, of the Commission’s inaction.

111

Atl. City Elec. Co., 295 F.3d at 10; see Public Citizen, 839

F.3d at 1174 (noting the FPA does “not compel FERC to either

set the disputed rates for hearing or affirmatively disapprove

any unjust or unreasonable rates through the Section 205

process.”).

Commissioners who did not find the 2021 MOPR unlawful

engaged in “decisionmaking [that was] reasoned, principled,

and based upon the record.” 112

While unusual, such a reading has precedent. In the

Federal Election Commission Act, Congress similarly

incorporated language making clear that a party aggrieved “by

a failure of the Commission to act” may seek administrative

appeal and judicial review. 113 As the D.C. Circuit Court of

Appeals explained in Public Citizen, when the Federal Election

Commission deadlocks over whether to exercise its discretion

to act, “[t]o make judicial review a meaningful exercise,’ [the

court must] treat the statements of the Commissioners voting

to dismiss the complaint as the administrative record.” 114 The

court in Public Citizen declined to follow this approach

because, at the time, the FPA did not contain “a similar

congressional indication” about how to construe agency

deadlock. 115 With § 205(g), Congress filled that gap. 116

112

W. Res., Inc. v. FERC, 9 F.3d 1568, 1572 (D.C. Cir. 1993)

(quoting Columbia Gas Transmission Corp. v. FERC, 628

F.2d 578, 593 (D.C. Cir. 1979)); see Fed. Election Comm’n v.

Nat’l Republican Senatorial Comm., 966 F.2d 1471, 1476

(D.C. Cir. 1992) (these commissioners “constitute a

controlling group for purposes of the decision[ and] their

rationale necessarily states the agency’s reasons for acting as it

did.”).

113

52 U.S.C. § 30109(a)(8)(A).

114

Public Citizen, 839 F.3d at 1170 (citing Fed. Election

Comm’n, 966 F.2d at 1476); see Common Cause v. Fed.

Election Comm’n., 842 F.2d 436, 450 (D.C. Cir. 1988).

115

Public Citizen, 839 F.3d at 1171.

116

For this reason, P3 errs by relying on Public Citizen, which

turned on the absence of such an indication, for the proposition

We disagree that § 205(g) contradicts the Commission’s

enabling statute as codified at 42 U.S.C. § 7171(e), which

states that “[a]ctions of the Commission shall be determined by

a majority vote of the members present.” 117 Section 205(g)

concerns only how agency inaction should be construed for the

limited purposes of rehearing and review but does not

illuminate what constitutes agency action per se. 118 Even if §

205(g) did contradict § 7171(e), traditional rules of statutory

interpretation counsel that “[s]pecific terms prevail over the

general in the same or another statute which otherwise might

be controlling.” 119 Here, Congress identified narrow

circumstances under which to construe inaction, in a particular

way, for a specific purpose. 120

that FERC inaction cannot be construed as action for the

purposes of judicial review.

117

P3 Br. 29, 34–36 (citing 42 U.S.C. § 7171(e) (“[a]ctions of

the Commission shall be determined by a majority vote of the

members present”); accord EPSA Br. 18, 21, 23; State Entities

Br. 29–30 (citing Public Citizen, 839 F.3d at 1169).

118

See 42 U.S.C. §7171(e).

119

Superior Oil Co. v. Andrus, 656 F.2d 33, 36 (3d Cir. 1981))

(quoting Fourco Glass Co. v. Transmirra Corp., 353 U.S. 222,

228–29 (1957)).

120

We have no “grave constitutional concern” that a single

Commissioner’s views could stand for all when a rate filing

takes effect because the Commission has deadlocked. EPSA

Br. 27. Under the terms of the statute, this circumstance would

always result in two Commissioners’ views controlling—the

same number that would constitute an unobjectionable

majority among a quorum of three Commissioners.

Nevertheless, we do not decide today whether a constitutional

For the foregoing reasons, we hold first that where a

quorum of FERC Commissioners deadlocks two-to-two on a §

205 rate filing, our review of the resulting order must adhere to

the same standard that would govern our review of an order

approved by a FERC majority. 121 Second, we hold that our

review properly encompasses the entire record, including the

four Commissioners’ § 205(g)(1)(B) statements.

IV. Merits

We now reach the substance of the parties’ dispute.

Construing the agency’s deadlocked vote on the 2021 MOPR

as an affirmative order consistent with § 205(g), and

considering the Commissioners’ recorded statements, we

conclude that the rationale set forth in the Joint Statement for

approving the 2021 MOPR was neither arbitrary nor capricious

and was supported by substantial evidence in the record. We

are not persuaded otherwise by the arguments set forth in the

other Commissioners’ statements. Accordingly, we will deny

the Generators’ petitions on the merits. 122

concern might arise when a rate filing goes into effect in the

absence of a quorum, in which case the “views of a single

Commissioner [could] . . . gain the force of law.” EPSA Br.

27, 28 (citing Seila Law LLC v. Consumer Fin. Prot. Bureau,

140 S. Ct. 2183, 2201 (2020)).

121

NJBPU, 744 F.3d at 94 (citing Sacramento Mun. Util.

Dist., 616 F.3d at 528).

122

P3 suggests that FERC’s order by operation of law pursuant

to § 205 was facially improper because it overturned a tariff

ordered by FERC under § 206, professing to be “unaware of

any authority that permits a public utility to change rates

In reviewing FERC’s orders, we consider only “whether

a rational basis exists for a conclusion, whether there has been

an abuse of discretion, or . . . whether the Commission’s order

is arbitrary or capricious or not in accordance with the purpose

of the [FPA].” 123 “[B]ecause issues of rate design . . . involve

policy judgments that lie at the core of the regulatory mission,

our review of whether a particular rate design is just and

imposed on that utility by FERC under FPA section 206.” P3

Br. 31, 33 (“[T]he Notice must be vacated because it disregards

the text and structure of the FPA by elevating a mere filing

under section 205 above FERC orders under section 206.”).

The State Entities similarly suggest the existence of a “higher

Section 206 standard,” State Entities Br. 28, insisting that as a

per se matter, “FERC cannot overturn its prior precedent

through inaction,” State Entities Br. 28. Both parties are

incorrect. It is well-settled that “[n]othing in section 206

sanctions denying petitioners their right to unilaterally file rate

and term changes.” Atl. City Elec. Co., 295 F.3d at 10

(collecting cases). Indeed, “courts have repeatedly held that

FERC has no power to force public utilities to file particular

rates unless it first finds the existing filed rates unlawful . . . .

Nor may FERC prohibit public utilities from filing changes in

the first instance.” Id. As intervenors for the respondent note,

P3’s interpretation would erode the careful balance that

Congress has achieved in the statute by “gradually

eliminat[ing] the utility’s rights under Section 205 . . . to set

the rates it will charge prospective customers, and change them

at will, subject to review by the Commission.” Respondent-

Intervenors Br. 29 (quoting Atl. City Elec. Co., 295 F.3d at 10)

(cleaned up). Accordingly, we reject P3’s suggestion that a §

205 filing cannot displace a tariff set by § 206.

123

City of Newark, 763 F.2d at 545.

reasonable is highly deferential.” 124 The MOPR dispute

concerns precisely such a judgment: How best to protect the

integrity of the capacity market, in view of the diverse and

legitimate interests of its myriad stakeholders and the

innumerable factors that influence price.

FERC has approved various approaches to this

conundrum since 2006. We have previously observed that

“FERC is permitted to weigh the danger of price suppression

against the counter-danger of over-mitigation, and determine

where it wishes to strike the balance.” 125 Here, the 2021

MOPR reflected a shift away from the regime embraced in the

2019 MOPR, at least arguably toward the purpose of

“address[ing] the concern that some market participants might

have an incentive to depress market clearing prices by offering

supply at less than a competitive level.” 126

Such shifts are permissible. An agency may alter its

“view of what is in the public interest.” 127 The fact that

contrary agency precedent exists “gives us no more power than

usual to question the Commission’s substantive

determinations.” 128 The agency need not establish that “the

124

Md. Pub. Serv. Comm’n v. FERC, 632 F.3d 1283, 1286

(D.C. Cir. 2011).

125

NJBPU, 744 F.3d at 109.

126

2011 Order at ¶ 6 (citing 2006 Settlement Order at ¶ 103).

127

Motor Vehicle Mfrs. Ass’n of United States, Inc. v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983)

(quoting Greater Bos. Television Corp. v. F.C.C., 444 F.2d

841, 852 (D.C. Cir. 1970)); see NJPBU, 744 F.3d at 100.

128

NJPBU, 744 F.3d at 100 (quoting Nat’l Cable &

Telecomms. Ass’n v. F.C.C., 567 F.3d 659, 669 (D.C. Cir.

2009)); see also Elec. Consumers Res. Council v. FERC, 407

reasons for the new policy are better than the reasons for the

old one; it suffices that the new policy is permissible under the

statute, that there are good reasons for it, and that the

agency believes it to be better.” 129

We hold that FERC met these criteria in constructively

approving the 2021 MOPR. The eighty-six-page Joint

Statement acknowledged that the 2021 MOPR reflects a

change in policy and identified reasons for finding the change

just and reasonable. 130 Specifically, the authoring

F.3d 1232, 1239 (D.C. Cir. 2005) (stating that a court’s

deference to FERC on complex rate market design “is based

on the understanding that the Commission will monitor its

experiment and review it accordingly”).

129

F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515

(2009).

130

The two commissioners who concluded the 2021 MOPR

was not just and reasonable issued separate statements

articulating their views. While non-identical, the

commissioners reached the same core conclusion: The 2021

MOPR did not meet the just and reasonable standard because

it was anti-competitive. See JA0129 (Christie Statement)

(“[T]he PJM MOPR Proposal, now in effect by operation of

law, forfeits any remaining credibility to the claim that the PJM

capacity market is based on actual competition or is run for the

benefit of consumers”); JA0169 (Danly Statement) (“PJM’s

proposal eliminating all mitigation of the price-suppressive

effects of state subsidies is irredeemably inconsistent with FPA

section 205’s requirement that proposed rates must be just and

reasonable.”). As discussed herein, these policy concerns are

addressed in the Joint Statement, along with the authoring

commissioners’ reasons for not adopting them, reasons which

Commissioners asserted that a more narrowly targeted MOPR

would benefit “investors and consumers alike” by “more

accurately reflect[ing] the facts and realities on the ground,”131

while “provid[ing] a sufficient opportunity for resources to

recover their costs.” 132 The Joint Statement noted that its

policy might result in lower prices on the capacity market than

under the expanded 2019 MOPR but concluded that such a

result is “just and reasonable because the market will reflect

supply and demand fundamentals,” 133 which include state

policies alongside federal policies, “[s]iting policies, tax rules,

and labor regulations,” among others. 134 According to the

Joint Statement, the 2019 MOPR allowed for an “artificially

inflated price [that] will falsely signal that new entry is needed

or that existing resources should forestall retirement,” with

potentially “detrimental effects on PJM’s energy and ancillary

services markets.” 135

The Joint Statement identified specific changed

circumstances to support these conclusions, including a

proliferation of state policies to shape the resource mix that had

occurred over the prior three years, largely to “address

externalities that are neither accounted for nor compensated in

are neither arbitrary nor capricious and are based on substantial

evidence in the record. Because it may not, our conclusion in

this regard does not derive from our own policy preferences.

Rather, it accepts and reflects our role here as circumscribed

by statute and precedent.

131

JA0060 ¶ 44.

132

JA0060 ¶ 45.

133

JA0067 ¶ 55.

134

JA0068 ¶¶ 56, 57.

135

JA0067 ¶ 54.

PJM’s wholesale markets.” 136 The Joint Statement noted that

“[s]tates are playing a more active role in shaping the resource

mix—including both entry and exit—than they were at the time

the Commission issued previous orders addressing the scope

and purpose of PJM’s MOPR.” 137 Policies passed since 2018

alone could together “support the entry of more than 44,000

MW of capacity into PJM’s capacity market over the next”

fifteen years, the Joint Statement noted. 138 The authoring

Commissioners observed that failing to account for the

contributions of these resources to capacity could cost

consumers a total of $3.4 billion by 2030. 139

The Joint Statement also analyzed the results of the first

base residual auction held under the 2019 MOPR. The

authoring Commissioners noted that a generating station

benefitting from one state’s zero-emission credit failed to clear,

and that “capacity prices likely increased by over $10/MW-

day, or an additional $90 million in the ComEd zone, as a

result”—harms that “can be expected to increase significantly

as states continue to support resources that will not benefit

from the [2019] MOPR’s” exclusions. 140 The Joint Statement

also pointed to evidence that “several states have considered

136

JA0057 ¶ 36.

137

JA0070 ¶ 59.

138

JA0084 ¶ 80.

139

JA0064 ¶ 50. See Constellation Energy Commodities Grp.,

Inc. v. FERC, 457 F.3d 14, 24 (D.C. Cir. 2006) (“[I]t is within

the scope of the agency’s expertise to make . . . a prediction

about the market it regulates, and a reasonable prediction

deserves our deference notwithstanding that there might also

be another reasonable view.”) (cleaned up).

140

JA0066 ¶ 52.

abandoning the capacity market altogether rather than have the

resources needed to meet their public policy goals be subjected

to mitigation,” an outcome that would threaten the purpose and

structure of the market itself. 141

Petitioner EPSA contends that the Joint Statement failed

to address the validity of any potential reliance interests,

arguing the “parties demonstrated that investors have sunk

many billions of dollars into constructing new power plants

and maintaining existing ones, all in reliance on the existence

of PJM market mechanisms that ensure a competitive

marketplace, rather than a marketplace skewed by the

participation of un-economic resources.” 142 But an agency not

“writing on a blank slate” is required only to “assess whether

there were reliance interests, determine whether they were

significant, and weigh any such interests against competing

policy concerns.” 143 Here, the Commissioners considered

“arguments that the Expanded [2019] MOPR must be

preserved because investors relied on it” but determined these

did not “tilt the balance” against their articulated policy

concerns, in light of the fact that the 2019 MOPR had been in

place for a relatively short period during which it was “well-

publicized” that “PJM was exploring the possibility of

replacing the Expanded MOPR.” 144 As we concluded in 2014,

responding to similar arguments, “we are not unsympathetic to

[investor’s] arguments that they reasonably relied” on the

terms of the prior MOPR, but nevertheless “find no fault with

141

JA0070 ¶ 58.

142

EPSA Br. 30.

143

Dep’t of Homeland Sec. v. Regents of the Univ. of

California, 140 S. Ct. 1891, 1915 (2020).

144

JA0071 ¶ 61.

FERC’s ability to, and reasons for” constructively approving

the new one. 145

P3 challenges various technical provisions of the 2021

MOPR, devised by PJM to accomplish its twin policy

objectives of mitigating offers resulting from the exercise of

buy-side market power and conditioned state support. From

these objections, 146 P3 concludes that because PJM’s proposed

mechanism fails to ensure adequately that “neither buyer nor

seller have market power, ‘the prevailing price in the

marketplace cannot be the final measure of “just and

reasonable” rates mandated by the Act.’” 147

145

NJBPU, 744 F.3d at 100.

146

P3 generally alleges that both prongs are “unjust,

unreasonable, and unduly discriminatory,” without articulating

precisely how. With respect to the Buyer Side Market Power

and Conditioned State Support provisions, including that (1)

PJM’s proposed self-certification process is insufficiently

robust, (2) that its requirement that sellers self-certify their

intent is “easily evaded” and runs counter to prior policy

approved by FERC; (3) the tests required upon review by the

PJM and/or Independent Market Monitor are evadable and rely

on concepts rejected, with FERC approval, in earlier MOPRs;

and (4) the test is insufficiently transparent and affords too

much discretion to PJM and the Independent Market Monitor.

See P3 Br. 51–54. With respect to the provisions related to

Conditioned State Support, P3 argues that these are “riddled

with practical defects,” improperly exempts existing policies,

and only mitigates state actions are already unlawful under the

Supreme Court’s decision in Hughes v. Talen Energy Mktg,

LLC, 578 U.S. 150 (2016). P3 Br. 49–50.

147

P3 Br. 47 (quoting FPC v. Texaco Inc., 417 U.S. 380, 397

We disagree. “The statutory requirement that rates be

‘just and reasonable’ is obviously incapable of precise judicial

definition,” 148 and “FERC’s authority to determine whether

wholesale rates are ‘just and reasonable’ is exclusive.” 149 We

“properly defer[] to policy determinations invoking the

Commission’s expertise in evaluating complex market

conditions.” 150 Although “courts have never given regulators

carte blanche,” 151 our review is “limited to ensuring that the

Commission has made a principled and reasoned decision

supported by the evidentiary record.” 152 Here, the Joint

Statement responds to both the technical and policy criticisms

levelled by P3, concluding that the mechanisms proposed by

PJM were sufficient to mitigate anti-competitive offers while

“appropriately balanc[ing] the risk of under- and over-

(1974)); see P3 Br. 47–48 (stating that the new rules “do

virtually nothing to prevent the exercise of state-sponsored

market power. Instead, they establish an opaque and toothless

process of exclusions and exceptions that ‘is even worse than

having no MOPR at all.’”) (quoting Comm’r Christie

Statement, JA0125–26 ¶ 3).

148

Morgan Stanley Cap. Grp. Inc. v. Pub. Util. Dist. No. 1 of

Snohomish Cnty., Wash., 554 U.S. 527, 532 (2008).

149

California ex rel. Lockyer v. FERC, 383 F.3d 1006, 1011

(9th Cir. 2004) (quoting Miss. Power & Light Co. v.

Mississippi, 487 U.S. 354, 371 (1988)).

150

Tenn. Gas Pipeline Co. v. FERC, 400 F.3d 23, 27 (D.C. Cir.

2005).

151

Emera Maine v. FERC, 854 F.3d 9, 22 (D.C. Cir. 2017)

(quoting Elec. Consumers Res. Council v. FERC, 747 F.2d

1511, 1514 (D.C. Cir. 1984)).

152

Id. (quoting S. Cal. Edison Co. v. FERC, 717 F.3d 177, 181

(D.C. Cir. 2013)).

mitigation.” 153 We cannot conclude on this record that the

Commission’s constructive acceptance of PJM’s § 205 filing

as just and reasonable was arbitrary or capricious.

Finally, we reject P3’s argument that the 2021 MOPR

“unlawfully discriminates against competitive power

suppliers,” as compared to state-sponsored resources, by

“reduc[ing] market prices below just and reasonable levels.” 154

As discussed above in depth, the Joint Statement set forth an

adequate rationale for permitting PJM to implement a less

expansive MOPR. 155 Moreover, as FERC argues, the FPA

153

JA0096 ¶¶ 103, 105–06); see generally JA0100 ¶¶ 85–163.

154

P3 Br. 39.

155

Judge Roth also disagrees with the Generators’ contention

that the 2021 MOPR is unlawfully discriminatory because it

allows states to “‘impose [their] own policy choice on

neighboring States’ or otherwise intrude upon the ‘autonomy

of [other] States within their respective spheres.’” P3 Br. 42–

43 (quoting BMW of N. Am. v. Gore, 517 U.S. 559, 571 (1996))

(quotations omitted); EPSA Br. 34–47. Rather, Judge Roth

would conclude, consistent with New Jersey Board of Public

Utilities v. FERC, “what FERC has actually done here is permit

states to develop whatever capacity resources they wish, and to

use those resources to any extent that they wish, while

approving rules that prevent the state’s choices from adversely

affecting wholesale capacity rates.” NJBPU, 744 F.3d at 98;

accord Hughes, 578 U.S. at 166 (“Nothing in this opinion

should be read to foreclose . . . States from encouraging

production of new or clean generation through measures

‘untethered to a generator’s wholesale market participation.’”);

see Energy & Env’t Legal Inst. v. Epel, 793 F.3d 1169, 1173

(10th Cir. 2015) (rejecting a dormant Commerce Clause

unambiguously authorizes the agency to take state policies into

account to the extent that such policies affect its statutorily

prescribed area of focus: the justness and reasonableness of

wholesale rates.

V. Conclusion

For the forgoing reasons, we conclude that FERC’s

constructive acceptance of the 2021 MOPR was neither

arbitrary nor capricious and was supported by substantial

evidence in the record. We will accordingly deny the petitions

for review.

challenge to a state’s renewable energy mandate). Judge Roth

particularly disapproves of EPSA’s assertion, citing no

relevant authority, that “FERC must therefore play the role of

federal referee for state intrusions into other States’

jurisdiction,” EPSA Br. 42.

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