PJM Power Providers Grp. v. Fed. Energy Regulatory Comm'n

88 F.4th 250

PJM POWER PROVIDERS GROUP, Petitioner in No. 21-3068 v. FEDERAL ENERGY REGULATORY COMMISSION

Electrical Power Supply Association, Petitioner in No. 21-3205 v. Federal Energy Regulatory Commission

Pennsylvania Public Utility Commission; Public Utilities Commission of Ohio, Petitioner in No. 21-3243 v. Federal Energy Regulatory Commission

No. 21-3068

No. 21-3205

No. 21-3243

United States Court of Appeals, Third Circuit

Argued on January 10, 2023

Opinion filed December 1, 2023

On Petition for Review of an Order of the Federal Energy Regulatory Commission (FERC No. ER21-2582-000)

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, 26^th 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 1^st 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, 16^th 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 15^th 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, 12^th 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, 20^th 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

Before: JORDAN, PHIPPS and ROTH, Circuit Judges

OPINION

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

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 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

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

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...