PPL EnergyPlus, LLC v. Lee Solomon
766 F.3d 241
| 3rd Cir. | 2014Background
- New Jersey enacted LCAPP to spur construction of new power plants by guaranteeing a fixed capacity price for 15 years through Standard Offer Capacity Agreements.
- LCAPP contracts compel local distribution companies to sign these capacity agreements with selected generators, tying state incentives to capacity delivery.
- FERC maintains exclusive federal authority over interstate capacity prices and wholesale electricity rates, with PJM as the regional market operator under FERC oversight.
- New Jersey restructured its electric market in 1999, separating generation from distribution while preserving state regulation over siting, licensing, and basic generation charges.
- The district court held LCAPP field preempted (and thus invalid) because it set capacity prices in the federal field; the case on appeal focuses on preemption rather than dormant Commerce Clause arguments.
- The court limits its analysis to field preemption of interstate capacity rates and does not resolve conflict preemption or dormant Commerce Clause issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LCAPP is field preempted by federal law | Plaintiffs contend LCAPP intrudes into exclusive federal capacity pricing. | New Jersey argues state authority over local energy matters allows LCAPP to promote generation. | LCAPP is field preempted |
| Whether LCAPP raises conflict preemption concerns with PJM markets | District Court found interference with PJM capacity pricing. | LCAPP arguments were not fully addressed; state incentives are distinct from federal market rules. | Not decided |
Key Cases Cited
- Connecticut Light & Power Co. v. Fed. Power Comm’n, 324 U.S. 515 (U.S. 1945) (federal and state regulation balance in electric markets)
- Public Util. Comm’n of R.I. v. Attleboro Steam & Elec. Co., 273 U.S. 83 (U.S. 1927) (interstate wholesale regulation fundamental to federal authority)
- Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190 (U.S. 1983) (state actions in energy regulation near federal field may be preempted)
- Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953 (U.S. 1986) (exclusive federal control over interstate transmission rates)
- Entergy Louisiana, Inc. v. La. Pub. Serv. Comm’n, 539 U.S. 39 (U.S. 2003) (FERC’s wholesale rate authority and market-based approaches)
- Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (U.S. 1984) (field preemption requires explicit congressional intent or direct conflict)
- Miss. Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354 (U.S. 1988) (concurrence on limits of state regulatory power regarding interstate rates)
- Northwest Central Pipeline Corp. v. State Corp. Comm’n of Kansas, 489 U.S. 493 (U.S. 1989) (state regulation of gathering can have incidental interstate effects but not preemption)