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Parties Involved:
Federal Energy Regulatory Commission
Respondent
New Jersey Board of Public Utilities
Amicus Curiae
New Jersey Division of the Ratepayer Advocate
Amicus Curiae
Pennsylvania Public Utility Commission
Petitioner

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 20, 2007 Decided April 13, 2007 

No. 05-1325 

PUBLIC SERVICE ELECTRIC AND GAS COMPANY, 

PETITIONER

V. 

FEDERAL ENERGY REGULATORY COMMISSION, 

RESPONDENT

NEPTUNE REGIONAL TRANSMISSION SYSTEM, LLC, ET AL., 

INTERVENORS

Consolidated with 05-1330 and 05-1335 

On Petitions for Review of Orders of the 

Federal Energy Regulatory Commission 

Michael E. Ward and John A. Levin argued the cause for 

petitioners. With them on the briefs were James H. McGrew, 

Peter K. Matt, David E. Goroff, Jodi L. Moskowitz, and 

Kenneth G. Jaffe. 

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Robert A. Weishaar, Jr., Vasiliki Karandrikas, Judith B. 

Appel, Attorney, New Jersey Division of the Ratepayer 

Advocate, and Helene S. Wallenstein, Senior Deputy Attorney 

General, Attorney General’s Office of State of New Jersey, 

were on the brief for intervenor Gerdau Ameristeel Corp. and 

amici curiae New Jersey Division of the Ratepayer Advocate

and New Jersey Board of Public Utilities in support of 

petitioners. 

Michael E. Kaufmann, Attorney, Federal Energy 

Regulatory Commission, argued the cause for respondent. 

With him on the brief were John S. Moot, General Counsel, 

and Robert H. Solomon, Solicitor. Patrick Y. Lee, Attorney, 

Federal Energy Regulatory Commission, entered an 

appearance. 

John N. Estes, III argued the cause for intervenor 

Neptune Regional Transmission System, LLC. With him on 

the brief was Donna M. Francescani. 

Before: RANDOLPH and KAVANAUGH, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: PJM Interconnection 

LLC is a regional transmission organization (“RTO”) that 

coordinates the movement of wholesale electricity in all or 

part of thirteen eastern states and the District of Columbia. Its 

more than 450 members include power generators, 

transmission owners, electricity distributors, power marketers, 

and large consumers. An open access tariff, filed with and 

approved by the Federal Energy Regulatory Commission, 

provides the terms and conditions for new interconnections. 

When a firm submits an interconnection request, the RTO 

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undertakes in sequence three types of studies estimating the 

cost of effecting the interconnection. The process culminates 

in an interconnection service agreement. This case addresses 

the circumstances under which PJM is permitted to repeat its 

interconnection studies, thereby changing the amount the 

interconnecting firm must pay. 

Petitioners (transmission owning members of PJM, state 

agencies and an industrial user) argue that the tariff permits 

unlimited restudy prior to the completion of the 

interconnection service agreement. On this view, the charge 

for interconnection would take account of the impact of all 

events transpiring up to that moment. FERC found that the 

tariff was ambiguous on the subject, that unlimited restudy 

would be unreasonable, and that a better reading of the tariff 

would permit restudy in only a limited set of circumstances. 

We find FERC’s reading amply worthy of deference. 

* * * 

Neptune is a firm sponsoring a merchant transmission 

project that will deliver 660 MW of capacity from New Jersey 

to Long Island via a high-voltage, direct-current, underwater 

transmission cable. Projects such as Neptune’s add additional 

capacity to an electric grid, enhancing market integration and 

competition by expanding transmission and trading 

opportunities between regions. Neptune initiated its 

interconnection request with PJM in December 2000, and 

established its place in PJM’s first-come, first-served 

interconnection queue in March 2001. 

Interconnection provisions added to PJM’s tariff in 1999 

require it to undertake three studies of each queued project. 

The first is a “feasibility study” that preliminarily determines 

both what system upgrades are necessary to accommodate a 

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new interconnection and the requesting party’s responsibility 

for those upgrade costs. Tariff Section 36.2. Next, PJM must 

conduct a “system impact study,” which refines cost 

responsibility estimates for necessary system upgrades. Tariff 

Section 36.4.1. Customers may terminate or withdraw their 

interconnection requests based on the impact study’s findings. 

PJM then conducts a final “facilities study” and makes its 

ultimate good faith estimate of the cost to be charged the 

interconnecting customer. Tariff Section 36.7.

By October 2003 PJM completed its initial second-phase 

study (“system impact”), estimating the cost of network 

upgrades due to Neptune’s interconnection at $3.7 million. It 

soon revised that study because of the withdrawal of a higherqueued interconnection project; this revision, undisputed by 

Neptune, yielded a new estimate of $4.4 million. In March 

2004, however, PJM informed Neptune that its system 

interconnection costs had to be restudied yet again on account 

of several generator retirements in the PJM system. PJM thus 

undertook a third restudy—and then a fourth. By June 2004 

the estimate has risen to $26.3 million. (It appears undisputed 

that the withdrawal of generators may imply additional 

upgrade costs associated with an interconnection.) In 

September 2004, on account of further generator retirements, 

PJM informed Neptune of the need for a fifth system impact 

study. Neptune objected to the third, fourth, and fifth studies, 

but PJM refused to conduct a facility study (the third and final 

interconnection study step) or enter into an interconnection 

service agreement until it completed its fifth system impact 

study. 

In December 2004, Neptune filed a complaint with FERC 

under § 206 of the Federal Power Act, 16 U.S.C. § 824e, 

asking it to compel PJM to move forward toward an 

interconnection service agreement based on the second system 

impact study. Without an interconnection service agreement, 

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Neptune was unable to secure construction financing in time 

to build needed facilities and meet a commitment to be 

operational by June 2007. Neptune sought expedited 

consideration. 

In February 2005 the Commission granted Neptune’s 

complaint, finding that PJM’s final three restudies were not 

performed in accordance with its tariff. Neptune Regional 

Transmission System, LLC v. PJM Interconnection, LLC, 110 

FERC ¶ 61,098 (2005) (“Complaint Order”). Noting that the 

PJM tariff was silent as to some aspects of the restudy issue 

and ambiguous as to others, id. at 61,404 P 21, the 

Commission interpreted the tariff to generally preclude 

restudies based on most events post-dating an interconnector’s 

establishment of its place in the queue. It stressed the role of 

queue position in creating a coherent system for assigning 

interconnection costs and facilitating interconnection: 

[T]he queue position provides a potential customer a 

reasonable degree of certainty as to its financial costs. If 

an interconnection customer were to be held financially 

responsible for the costs of events occurring after its 

System Impact Study is completed it would be impossible 

for the customer to make reasoned business decisions. 

Instead, the customer would be susceptible to constant 

changes within the provider’s system. . . . In fact, as in 

this case, there could be a never-ending series of changes, 

creating havoc for interconnection providers and 

customers alike. 

Id. at 61,405 P 23. The Commission concluded that “cost 

allocations due to the announcements of generator retirements 

should have no bearing on the Facility Study [the third type of 

study],” and that “PJM should have provided to Neptune a 

Facility Study immediately upon the completion of its second 

System Impact Study.” Id. at 61,406 P 29. 

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In reaching its decision, the Commission explicitly drew 

on “the principles of Order No. 2003,” id. at 61,406 P 27, 

which it had adopted in 2003, well after its approval of the 

relevant language in PJM’s tariff. See Standardization of 

Generator Interconnection Agreements and Procedures, 

Order No. 2003, 68 Fed. Reg. 49,846 (2003); see also Notice 

Clarifying Compliance Procedures, 106 FERC ¶ 61,009 

(2004). The 2003 order limits restudy to three circumstances: 

(1) when a higher-queued project drops out of the queue, (2) 

when the modification of a higher-queued project is required, 

or (3) when the point of interconnection is re-designated. The 

restudies to which Neptune objected fell completely outside 

these exceptions. Order No. 2003’s reasons for limiting 

restudy (and thus making queue position critical) were 

essentially the same practical considerations as the ones the 

Commission invoked here. See Complaint Order, 110 FERC 

at 61,404-405 P 22. 

FERC deferred issues of classification and recovery of 

any costs above the $4.4 million interconnection costs to a 

later date, when transmission service was requested. Id. at 

61,406 P 31. On petition for rehearing and clarification, the 

Commission “reaffirm[ed] that a project’s queue position 

forms the basis for the determination of an interconnection 

customer’s cost responsibilities,” but said that costs above the 

$4.4 million appropriately charged to Neptune for 

interconnection “are solely reliability upgrade costs [and 

should be] allocated to Transmission Owners and then 

assigned to transmission customers” as specified in the PJM 

tariff. Neptune Regional Transmission System, LLC v. PJM 

Interconnection, LLC, 111 FERC ¶ 61,455 at 63,008 P 19 & 

63,009 P 25 (2005) (“Rehearing Order”). Petitioners brought 

a timely challenge to the orders. 

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* * * 

The Commission raises two preliminary objections to 

petitioners’ challenge. First, it questions their standing, 

denying that they have suffered or are in imminent peril of 

suffering injury in fact—a concrete and particularized injury 

that is actual or imminent. See Lujan v. Defenders of Wildlife, 

504 U.S. 555, 560 (1992) (citations omitted). Second, FERC 

argues that petitioners’ claims are unripe, asking us to 

evaluate “(1) whether delayed review would cause hardship to 

the plaintiffs; (2) whether judicial intervention would 

inappropriately interfere with further administrative action; 

and (3) whether the courts would benefit from further factual 

development of the issues presented.” Ohio Forestry Ass’n v. 

Sierra Club, 523 U.S. 726, 733 (1998). Standing and ripeness 

often overlap significantly, and they do here: As to both, we 

find FERC’s arguments unavailing. 

FERC’s argument rests largely on its conclusion that 

costs above the $4.4 million identified in the second system 

impact study will be classified and recovered in future 

proceedings—that is, that their disposition has not been 

settled, making judicial review more appropriate at a future 

time, if and when those charges are assigned to petitioners. 

But the orders’ effects on allocation of the costs above $4.4 

million, however inconclusive, are only a part of their impact. 

As interconnection studies made under the tariff are paid for 

by the interconnecting party (as opposed to the RTO), see 

Tariff 41.4.3, at the very least FERC’s orders conclusively 

shift the cost of any additional restudies away from Neptune 

and onto the RTO. Moreover, the orders effectively forced 

PJM into proceeding with the interconnection agreement and 

thus, inevitably, the interconnection. Order on Unexecuted 

Service Agreements, 111 FERC ¶ 61,456 (June 23, 2005). 

Both these aspects of FERC’s order are enough for standing. 

They are equally sufficient to show ripeness. FERC has 

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suggested no institutional interests in postponing review of the 

restudy issue, and adjudication will not benefit from 

additional facts. A showing of hardship is therefore 

unnecessary. See Sabre, Inc. v. DOT, 429 F.3d 1113, 1120 

(D.C. Cir. 2005) (“[A]bsent institutional interests favoring the 

postponement of review, a petitioner need not show that delay 

would impose individual hardship to show ripeness.”). 

* * * 

We review FERC’s interpretation of tariffs in much the 

same way we apply deference under Chevron U.S.A., Inc. v. 

NRDC, 467 U.S. 837, 842-43 (1984), to agency interpretations 

of statutes. Koch Gateway Pipeline Co. v. FERC, 136 F.3d 

810, 814 (D.C. Cir. 1998). If the tariff language is 

unambiguous, we (unsurprisingly) follow it; if not, we defer to 

reasonable interpretations by the Commission. Id. at 814-15. 

The language of the tariff tells us little. Section 41.4.3, 

entitled “Re-study,” states simply that: 

If re-study of the System Impact Study is required, the 

Transmission Provider shall notify the Transmission 

Interconnection Customer in writing explaining the 

reason for the re-study and providing a scheduled 

completed date. Any cost of re-study shall be borne by 

the Transmission Interconnection Customer being 

restudied. 

Complaint Order, 110 FERC at 61,405 P 25. This section 

tells us about the process for a restudy but says nothing about 

the circumstances permitting restudy. Given the section’s 

focus, and its failure to mention generator retirements or any 

other possible occasion for restudy, it is of no consequence. 

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Section 42.2, on which the parties largely focus, is little 

more enlightening on the problem at hand: 

A Transmission Interconnection Customer shall be 

obligated to pay for 100 percent of the costs of the 

minimum amount of Local Upgrades and Network 

Upgrades necessary to accommodate its Transmission 

Interconnection Request and that would not have been 

incurred under the Regional Transmission Expansion 

Plan but for such Transmission Interconnection Request 

. . . . 

Petitioners focus on the “but for” reference, and indeed 

do a good deal of rhetorical tub-thumping on the obviousness 

of its meaning. But the language establishes only a 

proposition on which all parties agree: that the subsection 

makes Neptune responsible for all costs of attachment and 

system upgrades that would not have been incurred “but for” 

the interconnection request. It says nothing directly about the 

time as of which “but for” causation should be assessed. 

For this timing question, petitioners would draw the line 

at the signing of the interconnection service agreement 

because, they assert, this is the step in the process that 

definitively “locks in the actual cost of the upgrades” required 

to complete an interconnection. In contrast, FERC would 

draw the line much earlier in the process, when the 

interconnection customer has established its place in the 

interconnection queue, because that is the point at which 

requesting parties often make their business plans. At oral 

argument, Neptune, as intervenor, argued that FERC’s 

position is buttressed by the text of § 42.2 because the 

provision holds Neptune responsible only for costs that would 

not have been incurred “but for [the] Transmission 

Interconnection Request,” and it is that request which 

establishes a party’s position in the queue. 

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We agree with FERC that the tariff language fails to 

resolve the issue. We therefore turn to whether the 

Commission’s interpretation of the tariff was a reasonable 

one. As FERC emphasizes, its reading helps provide 

workability, certainty and predictability in the interconnection 

process. “If an interconnection customer is required to 

anticipate unspecified events occurring after its System 

Impact Study is completed, other than costs arising from 

changes from higher-queued generators, individual 

interconnection customers would be unable to make reasoned 

business decisions.” Complaint Order at 61,405 P 23. 

Moreover, “[a]llowing repeated re-studies for possible 

speculative events occurring after a project joins the queue 

unfairly delays the ability of projects to receive financing and 

commence construction.” Rehearing Order at 63,009 P 23. 

Petitioners’ observation that the interconnection service 

agreement “locks in the actual cost” is in a sense true but in a 

more important sense circular. As time moves on data are 

commonly known with more precision, but the argument 

assumes that the costs to be “locked in” are those that the 

interconnection would cause if made in light of all events 

intervening between application and the agreement. But the 

Commission has offered concerns militating in favor of an 

earlier date—concerns that petitioners never confront, much 

less show to be so weightless as to render FERC’s decision 

unworthy of deference. On this record, therefore, we can 

hardly say that the Commission’s interpretation of the tariff 

was unreasonable. 

Petitioners’ opening brief points to the Commission’s 

disregard of language in the PJM Manual that they say favors 

their view of the tariff, and to the Commission’s reliance in 

the Complaint Order on the policy judgments the Commission 

made in Order No. 2003, which was adopted after it approved 

the tariff. But these problems (if they are problems) were 

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apparent as of the Complaint Order, yet petitioners failed to 

raise them in their petition for rehearing and clarification. 

Accordingly, the objections are barred by § 313(b) of the 

Federal Power Act, 16 U.S.C. § 825l(b). Cf. Columbia Gas 

Transmission Corp. v. FERC, 477 F.3d 739 (D.C. Cir. 2007). 

Petitioners argue in their reply brief that they couldn’t have 

raised these issues on rehearing because the Complaint Order 

had “misled [them] into believing that the upgrades could still 

be charged to Neptune when it applied for transmission 

service.” But the Complaint Order was perfectly clear on the 

relevant points: it rejected petitioners’ theory as to the 

permissibility of restudies and it limited Neptune’s 

responsibility for costs based on the interconnection process 

to the $4.4 million shown in the second system impact study. 

Accordingly, the Manual and Order No. 2003 issues are not 

before us. 

* * * 

Petitioners raise one additional argument that requires 

comment—that FERC violated § 202 of the Federal Power 

Act by failing to provide appropriate notice of these 

proceedings to state commissions. Section 202 authorizes 

FERC “to divide the country into regional districts for the 

voluntary interconnection and coordination of facilities for the 

generation, transmission, and sale of electric energy,” but 

requires that “[b]efore establishing any such district and fixing 

or modifying the boundaries thereof the Commission shall 

give notice to the State commission of each State situated 

wholly or in part within such district . . . .” 16 U.S.C. 

§ 824a(a). Petitioners assert here that FERC’s orders “de 

facto increased” PJM’s geographic scope to include Long 

Island, New York, and did so without giving notice to all the 

state commissions participating in PJM and in the destination 

district. 

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It would be a stretch—and, as we shall see, too great a 

one—to say that petitioners made this argument below. 

Indeed, § 202 is mentioned below only in the request by 

petitioner Pennsylvania Public Utility Commission 

(“PaPUC”) for rehearing; even there, the request merely noted 

the alleged error in a single opaque sentence: 

The Order has failed to afford the State commission of 

each affected state a reasonable opportunity to present 

their views and recommendations, and the Commission 

has failed to receive and consider such views and 

recommendations, contrary to Section 202 of the Federal 

Power Act, 16 U.S.C. § 824a. 

PaPUC Request for Rehearing at 5. Petitioner made no 

argument to substantiate the allegation of error, never 

confronted the language of § 202, offered no analysis, and 

cited no legal authority (other than the stark reference to 

§ 202). It therefore comes as no surprise that FERC dismissed 

the § 202 claim with little more than an observation that the 

participation of PaPUC and three other state agencies belied 

any notion that it had withheld notice or a reasonable 

opportunity to comment. Rehearing Order, 111 FERC 

¶ 61,455 at 63,010 P 32. 

Section 313(b) of the Federal Power Act, 16 U.S.C. 

§ 825l(b), makes articulation of an “objection” on petition for 

rehearing a predicate to judicial review: “No objection to the 

order of the Commission shall be considered by the court 

unless such objection shall have been urged before the 

Commission in the application for rehearing.” See also 

§ 313(b)’s equivalent—§ 19(b) of the Natural Gas Act, 15 

U.S.C. § 717r. In review of decisions of the Commission and 

its predecessor, we, of course, insist that a party claiming 

statutory error have identified the substance of the claim. See, 

e.g., North Carolina v. Federal Power Comm’n, 533 F.2d 

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702, 706 (D.C. Cir.) (declining to review alleged illegality of 

use of water for pollution dilution, and neglect of possible use 

of National Wild and Scenic Rivers System, for failure to 

articulate claim in petition for rehearing), vacated on other 

grounds, 429 U.S. 891 (1976). And in a case involving 

application of the “price squeeze” doctrine we established the 

proposition that “the Commission cannot be asked to make 

silk purse responses to sow’s ear arguments.” City of Vernon 

v. FERC, 845 F.2d 1042, 1047 (D.C. Cir. 1988). 

The advent of heightened deference under Chevron

sharpens the need for reasonable articulation of a statutory 

claim. Such articulation gives the agency an opportunity to 

respond and thus, guided by its familiarity with the statute and 

policy context, to exercise the discretion contemplated by 

Chevron to find a deference-worthy interpretation. Cf. Rhode 

Island Consumers’ Council v. Federal Power Comm’n, 504 

F.2d 203, 212 (D.C. Cir. 1974) (“The purpose of [§ 313(b)] is 

to insure that the Commission has an opportunity to deal with 

any difficulties presented by its action before the reviewing 

court intervenes.”). But when a party advances a wholly 

undeveloped claim—as here—the agency has little occasion 

to present a reasoned explanation. Under these circumstances, 

full appellate review would unfairly undermine the agency’s 

ability to rely on Chevron deference before an appellate court.

We note our practice in this court: When petitioners or 

appellants present no arguments to substantiate a claim of 

error, we normally decline to entertain the issue. See 

Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir. 1983) 

(“[A]ppellate courts do not sit as self-directed boards of legal 

inquiry and research, but essentially as arbiters of legal 

questions presented and argued by the parties before them. 

Thus, [the Federal Rules] require[] that the appellant’s brief 

contain ‘the contentions of the appellant with respect to the 

issues presented, and the reasons therefor, with citations to the 

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authorities, statutes and parts of the record relied on.’ . . . 

[W]here counsel has made no attempt to address the issue, we 

will not remedy the defect . . . .”) (internal citation omitted). 

Simply put, it is not “the court’s duty to identify, articulate, 

and substantiate a claim for the petitioner.” National 

Exchange Carrier Ass’n v. FCC, 253 F.3d 1, 4 (D.C. Cir. 

2001). 

The same hesitation to declare the law prematurely 

counsels against reading § 313(b) to allow petitioners’ onesentence cry of protest as an “objection” requiring an exegesis 

of § 202 from the Commission. Thus, finding PaPUC’s 

inarticulate exclamation insufficient to satisfy § 313(b), we do 

not reach the merits. 

In closing, we also note Neptune’s argument that 

petitioners lack standing to raise the § 202 claim because 

PaPUC is a party to this proceeding and three more state 

agencies participated below. We need not reach the question 

of standing because our decision rests on a different 

“threshold, non-merits” ground. See Sinochem Int’l Co. Ltd. 

v. Malaysia Int’l Shipping Co., 127 S. Ct. 1184 (2007); see 

also Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 

100-101 n.3 (1998) (holding that a federal court has leeway to 

choose among threshold grounds for declining to consider a 

case on the merits). 

Affirmed. 

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