783 F.3d 1270
D.C. Cir.2015Background
- Petitioners are fourteen incumbent transmission owners in PJM Interconnection, a regional transmission organization that plans, upgrades, and coordinates wholesale electricity transmission.
- PJM’s governing documents (Operating Agreement, Owners Agreement, Tariff) contained expansion-protocol language (Section 1.5.6(f) and related provisions) that incumbents read as granting a right of first refusal (ROFR) to build projects in their zones.
- Non-incumbent developers (Primary Power; Central Transmission) sought opportunities to build PJM expansion projects and to obtain cost-based rate recovery; FERC concluded PJM’s protocols permit non-incumbents to be designated and to seek cost-based rates if they become transmission owners.
- FERC issued orders (Primary Power; Central Transmission) rejecting incumbents’ claim of a ROFR and allowing competitive selection; rehearing denials followed.
- After Order No. 1000, FERC directed PJM to remove any language that could be read to create a federal ROFR; PJM complied and the disputed language was superseded effective January 1, 2014.
- Petitioners sought review of the earlier FERC orders; the D.C. Circuit held the case non-justiciable as moot/advisory because the contested contractual language no longer governs and the remaining Mobile-Sierra challenge was pending in a different docket.
Issues
| Issue | Petitioners' Argument | Respondent's Argument | Held |
|---|---|---|---|
| Whether PJM’s pre-2014 governing language created an incumbent ROFR preventing third-party developers from being designated to build regional projects | Incumbents: Section 1.5.6(f) and related clauses create a ROFR for zone incumbents to construct and recover cost-based rates | FERC: The language permits, but does not require, PJM to designate non-incumbent entities; no federal ROFR existed under the pre-2014 text | Dismissed as non-justiciable; court did not reach merits because the language has been removed and no live controversy exists |
| Whether FERC exceeded its statutory authority by interpreting PJM agreements to allow non-incumbents to obtain cost-based rate recovery | Incumbents: FERC unlawfully stripped incumbents of rights they never ceded to PJM; Section 206 cannot support removing ROFRs | FERC: Its interpretation is within its authority and consistent with non-discrimination and the tariff framework | Not decided on merits due to lack of a live case or controversy |
| Whether the petition presents a live Article III controversy after PJM’s compliance with Order No. 1000 | Incumbents: Merits remain important; failure to decide will permit collateral attacks and affect Mobile-Sierra protections in other litigation | FERC: PJM removed the language; the dispute over superseded provisions is moot and advisory; Mobile-Sierra claims are being litigated elsewhere | Court: No live controversy; dismisses petition for review as advisory |
| Whether the court should resolve interpretation now because it could affect ongoing Mobile-Sierra litigation | Incumbents: Need ruling to support Mobile-Sierra challenge and prevent future collateral attack | FERC: Mobile-Sierra challenge is separate and pending in a different case; this appeal does not present a live, adverse contest | Court: Declines to issue advisory opinion; leaves Mobile-Sierra issues to pending related litigation |
Key Cases Cited
- Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist. No. 1 of Snohomish Cnty., 554 U.S. 527 (describing RTOs and their purpose)
- Atlantic City Elec. Co. v. FERC, 295 F.3d 1 (D.C. Cir. 2002) (background on PJM’s status as an RTO)
- Maryland Pub. Serv. Comm’n v. FERC, 632 F.3d 1283 (D.C. Cir. 2011) (jurisdictional context for regional transmission organizations)
- South Carolina Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014) (upholding FERC’s authority under Order No. 1000 to remove federal ROFRs)
- Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (framework for agency deference)
- NRG Power Mktg., LLC v. Maine Pub. Util. Comm’n, 558 U.S. 165 (Mobile-Sierra doctrine on contracts and rate-setting)
- Flast v. Cohen, 392 U.S. 83 (Article III prohibition on advisory opinions)
- Sosna v. Iowa, 419 U.S. 393 (live controversy requirement)
- Burke v. Barnes, 479 U.S. 361 (mootness and timing of live controversy)
- Princeton Univ. v. Schmid, 455 U.S. 100 (impermissibility of advisory opinions)