United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 9, 2022 Decided November 17, 2023
No. 20-1449
AMERICAN MUNICIPAL POWER, INC., ET AL.,
PETITIONERS
v.
FEDERAL ENERGY REGULATORY COMMISSION,
RESPONDENT
AMERICAN TRANSMISSION SYSTEMS INCORPORATED, ET AL.,
INTERVENORS
Consolidated with 21-1006, 21-1090, 21-1108, 21-1173,
21-1246
On Petitions for Review of Orders
of the Federal Energy Regulatory Commission
Erin E. Murphy argued the cause for Stakeholder
Petitioners. On the joint briefs were Gerit F. Hull, Michael R.
Engleman, Christina Switzer, Robert A. Weishaar, Jr., Kenneth
R. Stark, Regina A. Iorii, Adrienne E. Clair, Rebecca L.
Shelton, Stefanie A. Brand, T. David Wand, Sandra Mattavous-
Frye, Karen R. Sistrunk, Anjali G. Patel, Barry Cohen, David
2
Yost, Attorney General, Office of the Attorney General for the
State of Ohio, Werner L. Margard III, Assistant Attorney
General, Arthur W. Iler, Matthew J. Platkin, Acting Attorney
General, Office of the Attorney General for the State of New
Jersey at the time the brief was filed, and Paul Youchak, Deputy
Attorney General. Christine C. Ryan entered an appearance.
David M. Gossett argued the cause for Transmission
Owner Petitioners. With him on the briefs were John
Longstreth, Donald A. Kaplan, Richard P. Sparling, MaryAnn
T. Almeida, Morgan E. Parke, Evan K. Dean, Stacey Burbure,
Molly Suda, Christopher R. Jones, Miles H. Kiger, Daniel E.
Frank, Allison E. Speaker, Steven M. Nadel, and Gary E. Guy.
Susanna Y. Chu, Attorney, Federal Energy Regulatory
Commission, argued the cause for respondent. With her on the
brief were Matthew R. Christiansen, General Counsel, and
Robert H. Solomon, Solicitor.
John Longstreth argued the cause for respondent-
intervenors. With him on the joint brief were David M.
Gossett, Richard P. Sparling, MaryAnn T. Almeida, Donald A.
Kaplan, Morgan E. Parke, Evan K. Dean, Stacey Burbure,
Christopher R. Jones, Daniel E. Frank, Allison E. Speaker,
Molly Suda, Gary E. Guy, Cara J. Lewis, Steven M. Nadel, and
Regina Y. Speed-Bost. Richard L. Roberts entered an
appearance.
Before: RAO and CHILDS, Circuit Judges, and TATEL,
Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge CHILDS.
CHILDS, Circuit Judge: Petitioners, consisting of
transmission owners, consumer-side stakeholders, state public
3
utility commissions, and other entities located within the
service territory of the PJM Interconnection, LLC (PJM), filed
petitions, now consolidated, seeking review of seven
underlying orders of the Federal Energy Regulatory
Commission (the Commission). These orders address a series
of issues flowing from an initial request by PJM to revise
Attachment M-3 of its Open Access Transmission Tariff
(Tariff) to provide for the identification and inclusion of asset
management projects with specific reference to the planning
and implementation for “end-of-life” (EOL) needs. First and
foremost, Stakeholder Petitioners challenge the Commission’s
acceptance of the Attachment M-3 revision, but also contend
that many other aspects of the Commission’s decisionmaking
was arbitrary and capricious, including its rejection of a
Stakeholder-supported proposal regarding EOL transmission
project planning. Separately, Transmission Owner Petitioners
seek to overturn the Commission’s finding of ambiguity
regarding the identification of entities responsible for EOL
needs as specified in the relevant governing documents.
For the reasons set forth below, the court dismisses the
petition of Transmission Owner Petitioners and denies
Stakeholder Petitioners’ petitions for review.
I.
A.
The Federal Power Act of 1920, 16 U.S.C. §§ 791a–828c
(the Act), vests the Commission with regulatory authority over
the “transmission of electric energy in interstate commerce and
. . . the sale of electric energy at wholesale in interstate
commerce,” id. § 824(b)(1), and requires all rates subject to the
Commission’s jurisdiction to “be just and reasonable,” id.
§ 824d(a).
4
Regional transmission organizations, or RTOs, “are
independent organizations that manage the transmission of
electricity over the electric grid and ensure electricity is
reliably available for consumers.” Advanced Energy Mgmt.
All. v. FERC, 860 F.3d 656, 659 (D.C. Cir. 2017). RTOs “serve
several functions, including operating the electrical grid in a
defined geographic area, balancing energy supply and demand,
establishing markets for the sale and purchase of electricity,
and ensuring the reliable transmission of electricity.” Citadel
FNGE Ltd. v. FERC, No. 22-1090, 2023 WL 4672098, at *2
(D.C. Cir. July 21, 2023) (citation omitted). Using its authority
under the Act, the Commission has encouraged the creation of
RTOs by requiring all transmission facilities “to participate in
an RTO or to explain their failure to do so.” Braintree Elec.
Light Dep’t v. FERC, 550 F.3d 6, 8 (D.C. Cir. 2008) (per
curiam) (citing, e.g., Regional Transmission Organizations,
65 Fed. Reg. 810, 812 (Jan. 6, 2000) (Order No. 2000)).
B.
PJM is a familiar party to this court. “Formed in 1927,
PJM is the oldest and largest” RTO. Pub. Serv. Elec. & Gas
Co. v. FERC, 783 F.3d 1270, 1271 (D.C. Cir. 2015) (citation
omitted). Today, PJM “oversees [an] electric grid covering all
or parts of thirteen Mid-Atlantic and Midwestern states and the
District of Columbia.” Advanced Energy Mgmt., 860 F.3d at
659. “PJM takes its name from Pennsylvania, New Jersey, and
Maryland, the first three states in which it operated, but its
territory now extends as far west as Illinois.” Long Island
Power Auth. v. FERC, 27 F.4th 705, 709 (D.C. Cir. 2022). “As
an RTO, PJM coordinates the movement of electricity across
the region” and “operates transmission facilities owned by
member utilities, approves the construction of new facilities,
and files tariffs allocating among its members the costs of the
facilities.” Id.
5
PJM carries out its duties in conformity with policies set
forth in its governing agreements, which include PJM’s
Operating Agreement, the Consolidated Transmission Owners
Agreement (Owners Agreement), and the Tariff on file with the
Commission. See Pub. Serv. Elec., 783 F.3d at 1271. PJM’s
authority to oversee and operate the electrical grid is limited to
that granted to it by transmission owners in the Owners
Agreement. Transmission owners are “Member[s] that own[]
or lease[] with rights equivalent to ownership Transmission
Facilities and is a signatory to the . . . Owners Agreement.”
Tariff, OATT Definitions — T — U — V (J.A. 2254).
Transmission owners expressly retain all “[r]ights not
specifically transferred . . . to PJM pursuant to [the Owners]
Agreement or any other agreement.” Owners Agreement § 5.6
(J.A. 2359).
C.
On June 12, 2020, the Transmission Owners Agreement
Administrative Committee (TOA-AC) filed a proposal (June
Proposal), accompanied by a cover letter written by counsel,
with the Commission on behalf of certain transmission owners
pursuant to § 205 of the Act, 16 U.S.C. § 824d. The
transmission owners sought to revise and expand the scope of
Attachment M-3 of the Tariff, which
sets forth the procedures that the Transmission
Owners employ to plan Supplemental Projects,
which are expansions and enhancements to the
Transmission System that are not required to
satisfy certain PJM regional planning criteria, in
a manner that satisfies the requirements of
6
Order No. 890 for openness and transparency.1
Cover Letter of June Proposal at 2–3 (J.A. 0003). Through
counsel, the transmission owners explained the revision to
Attachment M-3 would expand it “from solely prescribing
procedures governing the planning of Supplemental Projects,”
id. at 2 (J.A. 0002), to also include “planning procedures [for]
asset management projects that affect PJM’s modeling of the
transmission system, which will enhance transparency and the
opportunity for stakeholder review of these projects,” id. at 11
(J.A. 0011).
In the June Proposal, “asset management projects” were
defined as
any modification or replacement of a
Transmission Owner’s Transmission Facilities
that results in no more than an Incidental
Increase in transmission capacity undertaken to
perform maintenance, repair, and replacement
work, to address an EOL Need, or to effect
infrastructure security, system reliability, and
automation projects the Transmission Owner
1
In Order No. 890, the Commission addressed issues of unjustness,
unreasonableness, discrimination, and preferential treatment in
transmission service by requiring transmission providers “to
establish an open, transparent, and coordinated transmission
planning process that complied with nine planning principles” of
coordination, openness, transparency, information exchange,
comparability, dispute resolution, regional participation, economic
planning studies, and cost allocation for new projects. S.C. Pub.
Serv. Auth. v. FERC, 762 F.3d 41, 51 (D.C. Cir. 2014) (per curiam)
(citing Preventing Undue Discrimination and Preference in
Transmission Service, 118 FERC ¶ 61,119 at P 445–561 (Feb. 16,
2007)).
7
undertakes to maintain its existing electric
transmission system and meet regulatory
compliance requirements.
J.A. 32. Relevant to this definition, an “Incidental Increase”
was defined as “an increase in transmission capacity achieved
by advancements in technology and/or replacement consistent
with current Transmission Owner design standards, industry
standards, codes, laws or regulations, which is not reasonably
severable from an Asset Management Project.” J.A. 33.
However, “[a] transmission project that results in more than an
Incidental Increase in transmission capacity is an expansion or
enhancement of Transmission Facilities.” J.A. 33.
The transmission owners’ counsel conveyed that asset
management projects included, but were not limited to:
(i) maintenance, repair and replacement
activities, including but not limited to capital
additions; (ii) work on infrastructure at the end
of its useful life; (iii) work to satisfy compliance
requirements; (iv) infrastructure security; (v)
system reliability and automation; (vi)
information technology; (vii) work requested by
others (including generator interconnection);
and (viii) increases in transmission capacity that
are incidental to, and not reasonably severable
from, the asset management project or activity.
Cover Letter of June Proposal at 5 (J.A. 0005) (citation
omitted).
The transmission owners also sought to address in the June
Proposal the coordination of EOL needs with the Regional
Transmission Expansion Plan (RTEP), as outlined in Schedule
8
6 of the Operating Agreement, “when a single solution would
address both the EOL need and the need to plan for a Required
Transmission Enhancement under the RTEP Planning
Process.” Cover Letter of June Proposal at 2 (J.A. 0002). EOL
needs were defined to
mean a need to replace a transmission line
between breakers operating at or above 100 kV
or a transformer, the high side of which operates
at or above 100 kV and the low side of which is
not connected to distribution facilities, which
the Transmission Owner has determined to be
near the end of its useful life, the replacement of
which would be an Attachment M-3 Project.
J.A. 0033.
Less than a week after the June Proposal was filed, two
other transmission owners moved the Commission to dismiss
the June Proposal on the basis that it was filed by the TOA-AC
without proper notice under the Owners Agreement. Mot. to
Dismiss June Proposal at 1–2, 5–7 (J.A. 0107–0108, 0111–
0113). In addition, several interested parties filed a protest to
the June Proposal (IP Protest), citing the notice issue and
advocating that the Commission should instead accept a
separate joint stakeholder proposal dated July 2, 2020. IP
Protest at 10–11 (J.A. 0129–0130).
On August 11, 2020, the Commission accepted the June
Proposal and its Tariff Attachment M-3 revisions. Order
Accepting Proposed Tariff Revisions, 172 FERC ¶ 61,136
(Aug. 11, 2020) (Acceptance Order) (J.A. 0420–55). The
Commission found that transmission owners retained
“exclusive rights” under the Owners Agreement to make filings
related to the planning activities at issue, and they had
9
complied with the terms of the Owners Agreement in so doing.
Id. at P 81 (J.A. 0449–50). The Commission further found that
asset management project planning had not been transferred to
PJM because such projects “relate solely to maintenance of
existing facilities” and “are solely projects that maintain the
existing infrastructure by repairing or replacing equipment.”
Id. at P 83 (J.A. 0450). The Commission explained that the
Owners Agreement only granted PJM “the right to plan for
‘expansion’ or ‘enhancement’ of the grid as part of the RTEP.”
Id. at P 86 (J.A. 0451). As a result, outside of EOL needs
included in Form No. 715, PJM’s transmission owners “did not
transfer the planning responsibility for all end[-]of[-]life
criteria to PJM.”2 Id. Soon thereafter, the Commission denied
2
“Form No. 715 is the Annual Transmission Planning and
Evaluation [Report] filed by the individual transmission owners, and
is not limited to EOL Needs.” Acceptance Order, 172 FERC
¶ 61,136 at P 86 n.139 (J.A. 0451).
Form No. 715 requires each respondent
(transmitting utilities that operate integrated
transmission system facilities that are rated at or
above 100 kilovolts), inter alia, to submit annually,
by April 1, a contact person (Part 1), its base case
power flow data (Part 2), transmission system maps
and diagrams used by the respondent for
transmission planning (Part 3), a detailed
description of the transmission planning reliability
criteria used to evaluate system performance for
time frames and planning horizons used in regional
and corporate planning (Part 4), a detailed
description of the respondent’s transmission
planning assessment practices (Part 5), and a
detailed evaluation of the respondent’s anticipated
system performance as measured against its stated
reliability criteria using its stated assessment
practices (Part 6).
10
a request for rehearing by parties protesting acceptance of the
June Proposal by operation of law, see Notice of Denial of
Rehearing by Operation of Law and Providing for Further
Consideration, 173 FERC ¶ 62,021 (Oct. 13, 2020) (J.A.
0552).
Two months later, the Commission addressed the
protesting parties’ arguments for rehearing and reached the
same result. Order Addressing Arguments Raised on
Rehearing, 173 FERC ¶ 61,225 (Dec. 17, 2020) (PP Reh’g
Order) (J.A. 0560–91). However, the Commission modified
the Acceptance Order with additional explanations to support
the decision. Of note, the Commission expressly rejected the
protesting parties’ contentions that the Owners Agreement
required a vote to initiate the § 205 filing process, and it
disagreed that the proposed Attachment M-3 revisions were
inconsistent with the Operating Agreement, shifted planning
for asset management projects from PJM to the transmission
owners, created a new federal right of first refusal in violation
of the Commission’s decision in Transmission Planning and
Cost Allocation by Transmission Owning and Operating
Public Utilities, 136 FERC ¶ 61,051 (July 21, 2011) (Order No.
1000),3 or generally violated Order No. 2000.
New Reporting Requirements Implementing Section 213(b) of the
Federal Power Act and Supporting Expanded Regulatory
Responsibilities Under the Energy Policy Act of 1992, and
Conforming and Other Changes to Form No. FERC-714, 100 FERC
¶ 61,141 at P 2 (Aug. 1, 2002).
3
The Commission promulgated Order No. 1000 “[t]o promote more
efficient coordination among electric utilities.” Old Dominion Elec.
Coop. v. FERC, 898 F.3d 1254, 1256 (D.C. Cir 2018) (citation
omitted). In Order No. 1000, the Commission “addressed rights of
first refusal” directing “transmission owners to remove from their
tariffs and agreements any provision creating a federal right of first
11
On the same day it issued the Protesting Parties Rehearing
Order, the Commission rejected the joint stakeholders’ July
Proposal. Order Rejecting Proposed Tariff Revisions,
173 FERC ¶ 61,242 (Dec. 17, 2020) (Rej’n Order) (J.A. 1940–
69). The Commission found the July Proposal “goes beyond
the scope of planning responsibilities delegated to PJM” in the
Operating Agreement because EOL needs “involve decisions
regarding retirement and maintenance of existing equipment,”
which are responsibilities expressly retained by transmission
owners. Id. at P 54 (J.A. 1962–63). The Commission
explained that its decision was consistent with its prior
decisions on the scope of RTO planning because PJM did “not
have the authority to perform the[] planning activities”
specified by the joint stakeholders. Id. at P 57 (J.A. 1964). The
Commission denied the joint stakeholders’ request for
rehearing, see Notice of Denial of Rehearing by Operation of
Law and Providing for Further Consideration, 174 FERC
¶ 62,111 (Feb. 19, 2021) (J.A. 2021), and issued an order
explaining the reasons for its denial, Order Addressing
Arguments Raised on Rehearing, 176 FERC ¶ 61,053 (July 29,
2021) (Stakeholder Reh’g Order) (J.A. 2024–64). In the
Stakeholder Rehearing Order, the Commission reached the
same result, but a Commission majority found for the first time
that the Owners Agreement was ambiguous regarding whether
projects addressing EOL needs were entrusted to PJM. Relying
on extrinsic evidence, the Commission majority still
interpreted the Owners Agreement as not transferring
consideration of EOL needs to PJM. Id. at P 17 (J.A. 2032). A
few months thereafter, the Commission denied requests for
rehearing as to the Stakeholder Rehearing Order by operation
refusal over the construction of a new facility included in a regional
transmission plan.” Coal. of MISO Transmission Customers v.
FERC, 45 F.4th 1004, 1010 (D.C. Cir. 2022) (citing Order No. 1000
at P 313).
12
of law. See Notice of Denial of Rehearing by Operation of
Law, 176 FERC ¶ 62,158 (Sept. 30, 2021).
Petitioners from both the stakeholders and the
transmission owners responded by filing in this court six timely
petitions for review of the Commission’s orders.
II.
A.
Before turning to the merits of Stakeholder Petitioners’
claims, we first address the Commission’s challenge to
Transmission Owner Petitioners’ standing to contest the
Stakeholder Rehearing Order. The Commission disputes
whether Transmission Owner Petitioners “have suffered any
concrete injury sufficient for Article III standing purposes.”
Comm’n Br. 57. In this regard, the Commission asserts that
not only did it accept Transmission Owner Petitioners’ June
Proposal, but the ambiguity finding in the Stakeholder
Rehearing Order does not create sufficient harm to constitute
an injury in fact. In response, Transmission Owner Petitioners
contend that they have standing because the “uncertainty” in
the project planning process “where it did not previously exist,”
Transmission Owners Pet’rs. Br. 21, add. 8 ¶ 13, and the
uncertainty regarding their “ongoing rights and responsibilities
under the Owners Agreement,” id. at add. 8 ¶ 14, are
cognizable injuries.
“It is well established that a federal court cannot act in the
absence of jurisdiction,” and “[i]t is equally well established
that Article III standing is a prerequisite to federal court
jurisdiction.” Am. Libr. Ass’n v. FCC, 401 F.3d 489, 492 (D.C.
Cir. 2005) (citations omitted). Transmission Owner Petitioners
have standing if they “have (1) an injury in fact, (2) fairly
13
traceable to the challenged agency action, (3) that will likely be
redressed by a favorable decision.” Kan. Corp. Comm’n v.
FERC, 881 F.3d 924, 929 (D.C. Cir. 2018) (citation omitted).
“An injury in fact is an ‘invasion of a legally protected interest
which is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical.’” Id. (citation
omitted).
In New England Power Generators Ass’n v. FERC, this
court, in addressing an argument regarding the chilling effect
of a decision by the Commission, stated that “broad-based
market effects stemming from regulatory uncertainty are
quintessentially conjectural, and it is difficult to imagine a
FERC action that would not confer standing under this theory.”
707 F.3d 364, 369 (D.C. Cir. 2013) (citation omitted). The
court further reasoned that “[i]t would be a strange thing indeed
if uncertainty were a sufficiently certain harm to constitute an
injury in fact.” Id. Here, Transmission Owner Petitioners
present a similar injury of uncertainty and, therefore, we find
they are unable to establish injury in fact. Accordingly, we do
not address the merits of Transmission Owner Petitioners’
challenge to the Commission’s finding of ambiguity in the
Stakeholder Rehearing Order. The court will later address the
question of ambiguity in regard to Stakeholder Petitioners’
challenge to the Commission’s interpretation of the Owners
Agreement, as Stakeholder Petitioners are able to establish
injury in fact.
B.
This court has jurisdiction to review the Commission’s
orders pursuant to § 313(b) of the Act. 16 U.S.C. § 825l(b)
(“Any party to a proceeding . . . aggrieved by an order issued
by the Commission . . . may obtain a review of such order in
the United States court of appeals” and “[u]pon the filing of
14
such petition such court shall have jurisdiction.”). The court
reviews the Commission’s orders under the familiar arbitrary
and capricious standard of the Administrative Procedure Act.
See Entergy Servs., Inc. v. FERC, 568 F.3d 978, 981 (D.C. Cir.
2009) (citing 5 U.S.C. § 706(2)(A)). The court is empowered
“to reverse any agency action that is ‘arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.’”
Hoopa Valley Tribe v. FERC, 913 F.3d 1099, 1102 (D.C. Cir.
2019) (citation omitted). However, the court will uphold the
Commission’s determination if it “examine[d] the relevant data
and articulate[d] a satisfactory explanation for its action
including a ‘rational connection between the facts found and
the choice made.’” Motor Vehicle Mfrs. Ass’n of U.S. v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156,
168 (1962)). The Commission “must ‘demonstrate that it has
made a reasoned decision based upon substantial evidence in
the record, and the path of its reasoning must be clear.’”
Seminole Elec. Coop., Inc. v. FERC, 861 F.3d 230, 234 (D.C.
Cir. 2017) (citations omitted). “So long as any change is
reasonably explained, it is not arbitrary and capricious for an
agency to change its mind in light of experience, or in the face
of new or additional evidence, or further analysis or other
factors indicating that the agency’s earlier decision should be
altered or abandoned.” New Eng. Power Generators Ass’n v.
FERC, 879 F.3d 1192, 1201 (D.C. Cir. 2018) (citation
omitted).
Stakeholder Petitioners make several challenges to the
Commission’s orders. None persuade us.
1.
First, Stakeholder Petitioners argue the Commission acted
arbitrarily and capriciously by not rejecting the June Proposal
15
because it contained a planning provision that was outside the
scope of the transmission owners’ retained filing rights and the
Owners Agreement required a vote prior to any action taken by
the TOA-AC. Stakeholder Petitioners support this argument
by first explaining that Tariff § 9.1 limited transmission owners
to unilateral § 205 filings addressing rate and revenue issues.
Because the revisions in the June Proposal related to
transmission planning, the transmission owners did not have
authority under either the Tariff or the Owners Agreement to
file the June Proposal with the Commission. Stakeholder
Petitioners also contend the Commission was obligated to
dismiss the June Proposal because the Owners Agreement § 8.5
required a combination of two votes before the TOA-AC could
act and “[n]o such vote[s] occurred.” Pet’rs. Br. 34.
The Commission’s decision to accept the June Proposal
was not unreasonable, as Tariff § 9.1 did not limit filings to
only rate and revenue issues or otherwise revoke the principle
that transmission owners “reserve all rights not specifically
granted to PJM.” Owners Agreement § 5.6 (J.A. 2359). In
Monongahela Power Co., 164 FERC ¶ 61,217 (Sept. 26, 2018),
the Commission explained that PJM transmission owners
“remain responsible for planning Supplemental Projects” and
it was further “just and reasonable for the PJM [t]ransmission
[o]wners to establish the process for planning . . . transmission
projects and to initiate [them] under section 205 [for] any
proposed revisions.” Id. at P 14. Consistent with its reasoning
in Monongahela Power Co., the Commission reasonably
concluded that all § 205 filings have not been ceded to PJM,
and without an unambiguous ceding of filing rights to PJM, the
transmission owners still retained them.
Moreover, the Commission sufficiently explained why the
two-vote requirement to initiate the filing process for the June
Proposal was unnecessary. The Commission identified and
16
described the relevant provisions at issue—§§ 7.3.2 and 8.5 of
the Owners Agreement and § 9.1(b) of the Tariff. The
Commission further explained that these provisions did not
require either (1) a vote to initiate the consultative process or
(2) a formal prerequisite to initiate consultation with PJM and
the PJM Members Committee. See, e.g., Acceptance Order at
P 79 (J.A. 0449) (“However, section 8.5 of the CTOA does not
require a vote to initiate the consultative process . . . Neither
section 7.3.2 of the CTOA nor section 9.1(b) of the Tariff
require any formal prerequisite for initiating the consultation
with PJM and the PJM Members Committee.”). As a result,
the Commission’s consideration of the express language of
these provisions and the stated rationale behind its
interpretation support reasoned decisionmaking. Cf. FERC v.
Elec. Power Supply Ass’n, 577 U.S. 260, 292 (2016) (“A court
is not to ask whether a regulatory decision is the best one
possible or even whether it is better than the alternatives.”).
2.
Stakeholder Petitioners next argue that the Commission’s
finding that transmission owners always retained authority to
plan the new category of “Asset Management Projects” is
arbitrary and capricious because some of these projects fall
within PJM’s authority to plan the existing category of
“enhancement[s] and expansion[s].” Pet’rs. Br. 37 (citation
omitted). Stakeholder Petitioners contend that the Commission
applied a narrow definition of “enhance” and “enhancement”
when the dictionary definition of these terms would have
established that EOL needs have regional benefits subjecting
them to PJM’s regional planning authority.
Succinctly, the Commission advanced counterarguments,
which preclude a finding that its decisionmaking was arbitrary
or capricious. As the Commission interpreted the Owners
17
Agreement and Operating Agreement, the categories of asset
management projects and enhancements did not overlap. The
Commission said the “current division of responsibilities,” that
is, the dividing line between these two categories, was
“consistent with the California Orders,” decisions issued by
the Commission in Southern California Edison Co. Local
Transmission Planning Within the California Independent
System Operator Corp., 164 FERC ¶ 61,160 (Aug. 31, 2018)
(S. Cal. Edison Co.), and California Public Utilities
Commission v. Pacific Gas and Electric Co., 164 FERC
¶ 61,161 (Aug. 31, 2018) (Cal. Pub. Utils. Comm’n).
Stakeholder Reh’g Order at P 20 (J.A. 2034).
The Commission provided the following explanation as to
why the California Orders had relevance in this matter:
In the California Orders, the Commission
determined that “asset management” projects
do not fall under Order No. 890 planning
principles and therefore do not have to go
through the Order No. 890 process. . . . [A]s the
PJM Transmission Owners voluntarily have
included Asset Management Projects under
their Order No. 890 protocols, the Commission
found that the definition of “asset management”
projects in the California Orders supported its
determination that the Asset Management
Projects in the PJM Transmission Owners’
proposal fell under the filing rights that the PJM
Transmission Owners retained. In the
California Orders, the Commission found that
“asset management” projects “do not, as a
general matter, expand the California
Independent System Operator (CAISO) grid.
Rather, these asset management projects and
18
activities include such items as maintenance,
compliance, work on infrastructure at the end-
of-useful life, and infrastructure security, that
SoCal Edison undertakes to maintain its
existing electric transmission system and meet
regulatory compliance requirements.” The
Asset Management Projects included in
Attachment M-3 Revisions in this proceeding
are consistent with this definition as they do not
expand the PJM grid, but encompass
maintenance and replacement of infrastructure.
PP Reh’g Order at P 20 (J.A. 570–71) (citations omitted). In
the California Orders, the Commission recognized that some
replacements with incidental increases in capacity were still
replacements, rather than new transmission capacity. See S.
Cal. Edison Co., 164 FERC ¶ 61,160 at P 33 (“We find that this
type of incidental increase in transmission capacity that is a
function of advancements in technology of the replaced
equipment, . . . would not render the asset management project
or activity in question a transmission expansion that is subject
to the transmission planning requirements of Order No. 890.”);
see also Cal. Pub. Utils. Comm’n, 164 FERC ¶ 61,161 at P 68.
Under our circuit’s Chevron-like deference, the Commission’s
interpretation of both categories was reasonable. NextEra
Desert Ctr. Blythe, LLC v. FERC, 852 F.3d 1118, 1121 (D.C.
Cir. 2017) (“First, we consider de novo whether the relevant
language unambiguously addresses the matter at issue. If so,
the language controls . . . If, however, there is ambiguity, we
defer to the Commission’s construction . . . so long as that
construction is reasonable.”) (cleaned up).
Whether an “enhancement” includes a replacement that
adds no more than an incidental increase is ambiguous. The
Commission’s interpretation that it does not was reasonable.
19
However, whether the transmission owners’ Attachment
M-3 amendment is consistent with the California Orders is a
closer call, yet the Commission’s interpretation is still
reasonable. Despite using the same phrase as the California
Orders, the amendment defines an “Incidental Increase” to
include actions that arguably go beyond the California Orders,
such as improvements up to “current Transmission Owner
design standards.” J.A. 0033. Similar to the California
Orders, however, the amendment specifies that the
improvements must not be “reasonably severable” from the
asset management project.4 J.A. 33. This definition does not
4
In Southern California Edison Company Local Transmission
Planning Within the California Independent System Operator Corp.,
the Commission described the incidental increase concept this way:
We recognize that there may be instances in which
a [participating transmission owners’ or] PTO’s
asset management project or activity may result in
an incidental increase in transmission capacity that
is not reasonably severable from the asset
management project or activity. For example,
CAISO explained that if a PTO, such as SoCal
Edison, needed to replace an aging 1940-vintage
transformer at the end of its useful life, a like-for-
like replacement with equipment from 1940 would
not be feasible. Instead, CAISO states, the PTO
would likely replace the old equipment with a
modern transformer, which could be of a higher
capacity if the PTO has standardized transformer
sizes across its system to allow for sparing should
the transformer fail. Such an increase in
transmission capacity would be incidental to, and
not reasonably severable from, the asset
management project or activity required to meet the
PTO’s need. We find that this type of incidental
increase in transmission capacity that is a function
20
unambiguously answer the interpretive question. We do not
need to determine that the Commission’s narrow interpretation
of “Incidental Increase” in the amendment is synonymous with
“incidental increase” in the California Orders is the best
reading; we ask only whether it is a reasonable one. NextEra
Desert Ctr. Blythe, LLC, 852 F.3d at 1121. The transmission
owners’ submission confirms that they intended to import the
California Orders’ concept of incidental increase. In their
cover letter summarizing the proposed amendment, the
transmission owners described their definition as “based on”
those orders. Cover Letter of June Proposal at 14 (J.A. 0014).
As a result, the Commission’s rationale behind its
interpretation was reasonable.
3.
Third, Stakeholder Petitioners maintain that the
Commission’s use of the California Orders to support its
interpretation of the Owners Agreement was arbitrary and
capricious. Stakeholder Petitioners assert that because there
were differences in contractual terms, facts, and agreements
under review, the Commission’s reliance on the California
Orders was unwarranted in “determining PJM’s planning
authority under the Owners Agreement” and accepting the June
Proposal. Pet’rs. Br. 47–48. For example, Stakeholder
Petitioners argue that the difference in how the Commission
of advancement in technology of the replaced
equipment, and is not reasonably severable from the
asset management project or activity, would not
render the asset management project or activity in
question a transmission expansion that is subject to
the transmission planning requirements of Order
No. 890.
S. Cal. Edison Co., 164 FERC ¶ 61,160 at P 33.
21
defined a term like “asset management” in the California
Orders, in the context of Order No. 890, should have no
bearing here because that term does not appear in the Owners
Agreement. Pet’rs. Br. 48 (referencing 164 FERC ¶ 61,161 at
P 65 n.119 (“While the definitions . . . vary slightly, they all
encompass the maintenance, repair, and replacement work
done on existing transmission facilities as necessary to
maintain a safe, reliable, and compliant grid based on existing
topology.”)).
The Commission provided a sufficient explanation as to
why Stakeholder Petitioners’ arguments overstate the influence
of the California Orders on the acceptance of the June
Proposal. The Commission responded that it never even
considered whether the asset management projects specified in
the June Proposal had to comply with Order No. 890 because
the revision to Attachment M-3 included its own criteria for
asset management projects. The Commission further reasoned
that it did not have to either agree with the California Orders,
although it did in the Acceptance Order, or find that asset
management projects avoid Order No. 890 scrutiny, to approve
the June Proposal. In this respect, the Commission maintains
that its acceptance of the June Proposal was “based [on] its
determination on the planning rights reserved by the PJM
Transmission Owners in the [Owners Agreement] and in the
PJM Operating Agreement” and not in reliance on Order No.
890 or the California Orders. PP Reh’g Order at P 35 (J.A.
0577).
4.
Fourth, Stakeholder Petitioners contend that the
Commission’s assignment of EOL needs to individual
transmission owners is arbitrary and capricious because it
“violates the regional transmission organization planning
22
requirements of Order No. 2000 and the regional planning
requirements of Order No. 1000.” Pet’rs. Br. 49 (citation
omitted). Stakeholder Petitioners complain the Commission’s
orders allow transmission owners “to locally dictate the future
of the Transmission Facilities and system that PJM
administers.” Pet’rs. Br. 51.
In response, the Commission provided a reasonable
explanation for why its acceptance of the June Proposal did not
violate either Order No. 1000 or Order No. 2000, and was
therefore reasoned, principled, and based upon the record.
Firstly, the Commission explained why acceptance of the June
Proposal did not violate Order No. 1000. The proposed
revisions to Attachment M-3 were “limited to those
transmission projects that PJM cannot plan for as the PJM
Transmission Owners retained the planning rights for these
projects.” PP Reh’g Order at P 37 (J.A. 0578). With this
starting point, the Commission then reminded that the projects
retained by transmission owners were the non-regional
transmission projects described in the Attachment M-3
revision. Id. Because Order No. 1000 only applies to regional
transmission plans, id., the Commission found there could be
no violation of the requirement to eliminate the right of first
refusal. See Order No. 1000 at P 313.
Next, the Commission explained why its acceptance of the
June Proposal did not violate Order No. 2000. The
Commission summarized Order No. 2000’s requirements and
planning guidance: “It required that the RTO (1) encourage
market-motivated operating and investment actions for
preventing and relieving congestion, and (2) accommodate
efforts by state regulatory commissions to create multi-state
agreements to review and approve new transmission facilities,
coordinated with programs of existing Regional Transmission
Groups (RTGs) where necessary.” PP Reh’g Order at P 39
23
(J.A. 0579) (citing Order No. 2000, 65 Fed. Reg. at 905). The
Commission further noted that the RTO conversion process
allowed for “considerable flexibility in designing a planning
and expansion process that works best for its region.” Id.
(citing Order No. 2000, 65 Fed. Reg. at 905). Putting aside this
flexibility, PJM’s Tariff, Owners Agreement, and Operating
Agreement were consistent with the requirements of Order No.
2000. Id.
5.
Stakeholder Petitioners next argue that the Commission’s
conclusion that the inclusion of EOL needs in a transmission
owner’s Form No. 715 filing is voluntary was arbitrary and
capricious. Form No. 715 requires identification of “all
‘potentially available transmission capacity and known
constraints,’” and a “description of the transmission planning
reliability criteria used to evaluate system performance.”
Pet’rs. Br. 54 (quoting Old Dominion Elec. Coop. v. FERC, 898
F.3d 1254, 1262–63 (D.C. Cir 2018)). Stakeholder Petitioners
emphasized “[t]here is no question” that EOL needs impact
these criteria and thus would be required to be included on the
“Form [No.] 715, either on a regional basis or on an individual
transmission owner basis.” Pet’rs. Br. 54.
In response, the Commission advanced two
counterarguments, which preclude a finding that its
decisionmaking was arbitrary or capricious. First, the
Commission acknowledged that transmission owners
transferred to PJM planning authority for criteria included on
Form No. 715. See Acceptance Order at P 86 (J.A. 0451); PP
Reh’g Order at P 59 (J.A. 0586). Next, the Commission called
attention to the fact that the revisions to Attachment M-3 were
expressly made inapplicable “to projects to address planning
criteria filed by Transmission Owners in Form No. 715.”
24
Cover Letter of June Proposal at 13 (J.A. 0013); PP Reh’g
Order at P 59 (J.A. 0586). For those reasons, the Commission
concluded that the transmission owners had two options
available to them. They can “include [EOL] criteria in their
Form No. 715 in which case PJM will continue to plan for all
EOL Projects” or, alternatively, they can “choose not to include
[EOL] criteria in its Form No. 715 in which case the
transmission project will be planned under the Attachment M-
3 Revisions.” PP Reh’g Order at P 59 (J.A. 0586–87). The
Commission then noted the distinction “between the right to
‘plan’ an Attachment M-3 Project and the ability to only
‘propose’ a transmission project to address a Form No. 715
planning criteria” Id. at P 60 (J.A. 0587). “PJM will still plan
transmission projects to address Form No. 715 planning criteria
and if it disagrees with the PJM Transmission Owner’s
justification, PJM may determine that a single project resolves
both the PJM Planning Criteria and the end of life criteria.” Id.
In considering the totality of its explanation, the Commission
conclusion was consistent with reasoned decisionmaking.
6.
Finally, Stakeholder Petitioners assert that the
Commission’s failure to either address their arguments that the
June Proposal was “unjust and unreasonable” or acknowledge
the local cost allocation for EOL needs was arbitrary and
capricious. Pet’rs. Br. 56. As to the former, Stakeholder
Petitioners suggest that the Commission could not meet its
obligations under § 205 without considering cost allocation
and, if it had, the Commission would have rejected the June
Proposal for “yield[ing] unjust and unreasonable rates.” Pet’rs.
Br. 57. As to the latter, Stakeholder Petitioners declare that
EOL needs provide regional benefits and require regional cost
allocation.
25
In its initial decision, the Commission explained that the
cost allocation was beyond the scope of the proceedings
because it relates to Schedule 12 of the Tariff and the July
Proposal did not seek to revise either Schedule 12 or cost
allocation provisions. Acceptance Order at P 91 (J.A. 0453).
And the Commission elaborated on its rationale, in its
Protesting Parties Rehearing Order, explaining that it lacked
authority under § 205 to amend cost allocation provisions of
Schedule 12 to address issues only tangentially related to cost
allocation. PP Reh’g Order at P 65, 66 (J.A. 0589). The
Commission addressed Stakeholder Petitioners’ reliance on
Old Dominion stating that the court’s “dicta,” acknowledging
that nothing prevents PJM from amending its governing
documents, “was related to the planning for transmission
projects to address Form No. 715 planning criteria, which are
within PJM’s planning responsibility.” Id. at P 66 (J.A. 0589)
(referencing Old Dominion, 898 F.3d at 1263). However, the
Old Dominion court did not create an apparatus to “enable the
Commission to revise the unchanged cost allocation provisions
of Schedule 12 of the PJM Tariff.” Id. Considering all the
aforementioned, the Commission’s reasoning for not
addressing cost allocation is consistent with reasoned
decisionmaking.
*****
For the foregoing reasons, Transmission Owner
Petitioners fail to establish injury in fact to have standing and
Stakeholder Petitioners fail to demonstrate that the
Commission’s orders at issue in this matter were arbitrary and
capricious. Therefore, the court dismisses the petition of
Transmission Owner Petitioners and denies the petitions of
Stakeholder Petitioners.
So ordered.