United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 5, 2020 Decided July 10, 2020

No. 19-1142

NATIONAL ASSOCIATION OF REGULATORY UTILITY 

COMMISSIONERS,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

TRANSMISSION ACCESS POLICY STUDY GROUP, ET AL.,

INTERVENORS

Consolidated with 19-1147

On Petitions for Review of Orders of the

Federal Energy Regulatory Commission

Jennifer M. Murphy argued the cause for petitioner 

National Association of Regulatory Utility Commissioners. 

With her on the briefs was James Bradford Ramsay.

Dennis Lane argued the cause for petitioners American 

Public Power Association, et al. With him on the briefs was M. 

Denyse Zosa.

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Cynthia S. Bogorad and William S. Huang were on the 

brief for intervenor Transmission Access Policy Study Group 

in support of petitioners. Jeffrey M. Bayne entered an 

appearance.

Anand R. Viswanathan, Attorney, Federal Energy 

Regulatory Commission, argued the cause for the respondent. 

With him on the brief were James P. Danly, General Counsel, 

Robert H. Solomon, Solicitor, and Jared B. Fish, Attorney.

Kim Smaczniak, Charles Carter Hall, Michael Panfil, and 

John N. Moore were on the joint brief for Industry intervenors 

in support of respondent. Vickie Patton entered an appearance.

Heather Curlee, Jeffery S. Dennis, and Andrew O. Kaplan 

were on the joint brief for intervenors Solar Energy Industries 

Association, et al. in support of respondent. Todd Glass, Gary 

Greenstein, and Randall S. Rich entered appearances.

Xavier Becerra, Attorney General, Office of the Attorney 

General for the State of California, Robert W. Byrne, Senior 

Assistant Attorney General, Harrison Pollak, Acting Senior 

Assistant Attorney General, David A. Zonana, Supervising 

Deputy Attorney General, Dennis L. Beck Jr., Theodore 

McCombs, and M. Elaine Meckenstock, Deputy Attorneys 

General, Maura Healey, Attorney General, Office of the 

Attorney General for the Commonwealth of Massachusetts, 

Liam J. Paskvan and Megan M. Herzog, Special Assistant 

Attorneys General, Karl A. Racine, Attorney General, Office 

of the Attorney General for the District of Columbia, Dana 

Nessel, Attorney General, Office of the Attorney General for 

the State of Michigan, and Peter F. Neronha, Attorney 

General, Office of the Attorney General for the State of Rhode 

Island, were on the brief for amici curiae Commonwealth of 

Massachusetts, et al. in support of respondent.

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Samuel T. Walsh and Jason Neal were on the brief for 

amici curiae Sunrun, Inc., et al. in support of respondent.

Before: ROGERS, GARLAND and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge: In this consolidated action, the 

Court must once again referee the Federal Power Act’s 

jurisdictional line separating the Federal Energy Regulatory 

Commission’s jurisdiction over the federal wholesale market

and States’ jurisdiction over facilities used in local distribution.

This time, Petitioners argue FERC is off-sides in Order No. 841 

by prohibiting States from barring electric storage resources on 

their distribution and retail systems from participating in 

federal markets. We find no foul here, so we deny the Petitions.

I.

Under the Federal Power Act (“FPA” or “Act”), 16 U.S.C. 

§ 791a et seq., Congress gives the Federal Energy Regulatory 

Commission (“FERC” or “the Commission”) exclusive 

authority over the regulation of “‘the sale of electric energy at 

wholesale in interstate commerce,’ including both wholesale 

electricity rates and any rule or practice ‘affecting’ such rates,” 

FERC v. Elec. Power Supply Ass’n (EPSA), 136 S. Ct. 760, 766 

(2016) (quoting 16 U.S.C. §§ 824(b), 824e(a)), along with

“jurisdiction over all facilities for such transmission or sale of 

electric energy,” 16 U.S.C. § 824(b)(1). Congress charged

FERC with ensuring that “both wholesale rates and the panoply

of rules and practices affecting them” are “just and reasonable.” 

EPSA, 136 S. Ct. at 773 (citing 16 U.S.C. § 824d(a)) (“FERC 

has the authority – and, indeed, the duty – to ensure that rules 

or practices ‘affecting’ wholesale rates are just and 

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reasonable.”). To achieve this goal, FERC often issues orders 

aimed at “break[ing] down regulatory and economic barriers 

that hinder a free market in wholesale electricity.” Id. at 768 

(quoting Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist. 

No. 1, 554 U.S. 527, 536 (2008)). 

However, relevant to the Orders challenged here, Congress 

left states with jurisdiction “over facilities used in local 

distribution or only for the transmission of electric energy in 

intrastate commerce, or over facilities for the transmission of 

electric energy consumed wholly by the transmitter,” 16 U.S.C. 

§ 824(b)(1), “except as specifically provided in” the Act, id. 

II.

The Orders challenged in this case concern FERC’s efforts 

to remove existing barriers to the participation of electric 

storage resources (“ESRs”) in the Regional Transmission 

Organization and Independent System Operator markets 

(“RTO/ISO markets”), independent, nonprofit companies that 

manage segments of the federal grid. Hughes v. Talen Energy 

Mktg., LLC, 136 S. Ct. 1288, 1292 (2016); Atl. City Elec. Co. 

v. FERC, 295 F.3d 1, 5 (D.C. Cir. 2002). Each RTO/ISO 

market creates its own set of “participation models,” which set 

forth the tariff provisions, technical requirements, and other 

rules for specific types of electric-energy-providing resources.

Because many participation models were designed for 

traditional generation resources, e.g., power plants, newly 

developed resources may be limited in the way in which they 

can participate – that is, buy and sell electric energy – in these 

markets. These limitations or “barriers to participation” 

constrain competition, according to FERC, because novel 

resources technically capable of participating are precluded 

from doing so as they are forced to operate under participation 

models designed for different technologies. ESRs, such as 

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batteries, are especially affected by such participation barriers 

because ESRs have “unique physical and operational 

characteristics” distinct from traditional resources: ESRs can

“both inject energy into the grid and receive energy from it.” 

Elec. Storage Participation in Mkts. Operated by Reg’l 

Transmission Org. & Indep. Sys. Operators, Order No. 841, 

162 FERC ¶ 61,127, ¶¶ 2, 7 (Feb. 15, 2018). 

To illustrate, consider the pumped-hydro storage resource, 

which moves water between two reservoirs as a means of 

storing and generating electricity. Id. ¶ 7 n.12. Or, 

demonstrative of recent innovations, consider the end-user who 

installs rooftop solar panels connected to batteries, which 

enable the end-user to maintain power indefinitely even when 

the end-user is unable to receive power from local service 

stations, e.g., during a blackout. ESRs are quickly becoming 

industry disrupters because they obliterate a foundational 

notion underpinning our electrical systems – that electricity 

cannot be efficiently stored for later use. See EPSA, 136 S. Ct. 

at 768 (explaining, only a few years ago, that generation 

resources are forced to generate electricity to match demand in 

real time). As amici for FERC put it, “[t]he same technological 

and economic forces that allow us to carry battery-powered 

computers in our pockets” are now able to efficiently store 

energy “anywhere on the grid” and can wait to release the 

electricity when supply is scarce. Br. of Sunrun Inc. et al., as 

amici curiae in Supp. of Resp’t, at 1. 

To accommodate the technical and operational 

“unique[ness]” of ESRs, FERC issued Order No. 841,1

requiring each market to establish a participation model that

ensures ESRs’ eligibility “to provide all capacity, energy, and 

1 Order No. 841 modifies 18 C.F.R. § 35.28 (2018). 

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ancillary services that [they are] technically capable of 

providing in the RTO/ISO markets.” Order No. 841 ¶¶ 3, 4.

FERC, seeking to clarify the set of resources for which the 

federal markets must create a participation model, and also 

seeking to ensure that the models will not be designed for any 

particular electric storage technology, defined an ESR as “a 

resource capable of receiving electric energy from the grid and 

storing it for later injection of electric energy back to the grid.” 

Id. ¶ 29. In Order No. 841, FERC explained that this definition 

is intended to encapsulate “all types of electric storage 

technologies, regardless of their size, storage medium . . . , or 

whether the resource is located on the interstate grid or on a 

[local] distribution system.” Id. ¶ 22. It is important to note 

that any resource located on the local distribution system or 

behind the meter2 must use the distribution facilities over 

which the States3exercise control to reach the federally 

controlled markets. 

To meet this definition, the ESR must be “both physically 

designed and configured to inject electric energy back onto the 

2

“Behind the meter” refers to a location on the customer’s side of 

the point of delivery or retail level. Transmission Access Policy 

Study Grp. v. FERC, 225 F.3d 667, 725 n.14 (D.C. Cir. 2000), aff'd 

sub nom. New York v. FERC, 535 U.S. 1 (2002).

3

“State” is a short-hand for all non-federal “relevant electric retail 

regulatory authorities,” or RERRAs, as Order No. 841 refers to them. 

A RERRA is any “entity that establishes the retail electric prices and 

any retail competition policies for customers,” Wholesale 

Competition in Regions with Organized Elec. Mkts., Order 719, 125 

FERC ¶ 61,071, ¶ 158(c) (Oct. 28, 2008), and thus the term captures 

the state-level public utility commissions down to locally owned

electric utilities or electric cooperatives. See 16 U.S.C. § 824(b)(1) 

(using “State” and “State commission” interchangeably); Order No. 

841, Comm’r McNamee Concurrence in Part and Dissent in Part ¶ 2 

n.3. 

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[federal] grid and, as relevant, [be] contractually permitted to 

do so (e.g., per the interconnection agreement between an 

[ESR] that is interconnected on a distribution system or behindthe-meter with the distribution utility to which it is 

interconnected).” Id. ¶ 33. Finally, although an ESR is not 

required to participate in the federal markets, the Commission 

expressly rejected commenters’ requests for a type of state optout in which States could “decide whether [ESRs] in their state 

that are located behind a retail meter or on the distribution 

system are permitted to participate in the RTO/ISO markets 

through the [ESR] participation model.” Id. ¶ 35. FERC

added, however, that “nothing in this Final Rule is intended to 

affect or implicate the responsibilities of distribution utilities to 

maintain the safety and the reliability of the distribution system 

or their use of [ESRs] on their systems.” Id. ¶ 36. (For ease of 

reference, we shall refer to this subset of ESRs – those that must 

transmit their electric energy through state-regulated systems 

and facilities in order to reach the federal markets – as “local 

ESRs.”) 

In Order No. 841-A, FERC denied rehearing with respect 

to Order No. 841’s lack of State opt-out for local ESRs. Elec. 

Storage Participation in Mkts. Operated by Reg’l 

Transmission Orgs. & Indep. Sys. Operators, Order No. 841-

A, 167 FERC ¶ 61,154 (May 16, 2019). FERC explained that 

its authority to regulate the RTO/ISO markets gave it the 

“authority to determine which resources are eligible to 

participate in [those] markets.” Id. ¶ 38. FERC emphasized, 

again, that Order No. 841 did “not specify[] any terms of sale 

at retail,” id., but a State may not “broadly prohibit[] all retail 

customers from participating in RTO/ISO markets,” id. ¶ 41, 

since States cannot “intrude on the Commission’s jurisdiction 

by prohibiting all consumers from selling into the wholesale 

market,” id. Finally, FERC noted that “Order No. 841 does not 

modify [S]tates’ authority to regulate the distribution system,

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including the terms of access, provided that they do not aim 

directly at the RTO/ISO markets.” Id. ¶ 48 (internal quotation 

marks, alterations, and emphasis omitted). 

Two petitions for review followed. The Court 

consolidated No. 19-1142, filed by National Association of 

Regulatory Utility Commissioners (“NARUC”), and No. 19-

1147, filed by American Public Power Association, National 

Rural Electric Cooperative Association, Edison Electric 

Institute, and American Municipal Power, Inc. (collectively, 

“Local Utility Petitioners”). Petitioners do not question 

FERC’s authority to require ESR-specific participation models 

at the federal grid, nor do they disagree with FERC’s “laudable 

goal of lowering barriers for entry for [ESRs’] participation in 

the wholesale markets.” NARUC Opening Br. at 2; see also 

Local Utility Pet’rs’ Opening Br. at 5 (indicating general 

support for Order No. 841). Instead, both NARUC and Local 

Utility Petitioners argue that FERC has exceeded its 

jurisdiction by barring States from “broadly prohibiting” local

ESRs from participating in RTO/ISO markets. Order No. 841-

A ¶ 41. Along the same lines as its exceeding-jurisdiction 

argument, NARUC argues that the lack of opt-out “impinge[s] 

on the States’ authority,” EPSA, 136 S. Ct. at 767, and 

“commandeer[s]” the state administrative processes. 

NARUC’s Opening Br. 31. Lastly, Local Utility Petitioners 

argue that even if FERC did stay within the bounds of its

statutory authority, the lack of an opt-out is otherwise arbitrary 

and capricious under 5 U.S.C. § 706(2)(A). 

III.

Before reaching the merits of the petitions, we must assure 

ourselves of subject-matter jurisdiction. See, e.g., Am. Bankers 

Ass’n v. Nat’l Credit Union Admin., 934 F.3d 649, 660 (D.C. 

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Cir. 2019). We conclude that Petitioners have standing to bring 

these claims and the matters are ripe for review. 

“To establish Article III standing, an injury must be 

‘concrete, particularized, and actual or imminent; fairly 

traceable to the challenged action; and redressable by a 

favorable ruling.’” Clapper v. Amnesty Int’l USA, 568 U.S. 

398, 409 (2013) (quoting Monsanto Co. v. Geertson Seed 

Farms, 561 U.S. 139, 149 (2010)). Because these Petitioners 

bring these petitions on behalf of their members, they “must 

demonstrate [that their] members would otherwise have 

standing to sue in their own right, the interests at stake are 

germane to the organization[s’] purpose[s], and neither the 

claim asserted nor the relief requested requires the participation 

of individual members in the lawsuit.” Sierra Club v. EPA, 926 

F.3d 844, 848 (D.C. Cir. 2019) (internal quotation marks 

omitted). Finally, “[a]t least one [petitioner] must have 

standing to seek each form of relief requested in the [petitions 

for review].” Town of Chester v. Laroe Estates, Inc., 137 S. 

Ct. 1645, 1651 (2017).

NARUC, an association representing the interests of state 

utility commissions charged with regulating the electric 

utilities in their respective jurisdictions, has standing to seek 

the requested relief. Its members, the state utility commissions, 

have a plausible claim that they have the authority to block 

local ESRs from entering the federal market and FERC’s 

Orders expressly take away that authority. The state utility 

commissions therefore plead an injury to their “judicially 

cognizable interest in the preservation of [their] own 

sovereignty” at the hands of FERC. Bowen v. Pub. Agencies 

Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 50 n.17 (1986) 

(internal quotation marks omitted); accord Bond v. United 

States, 564 U.S. 211, 221 (2011) (“The federal balance is, in 

part, an end in itself, to ensure that States function as political 

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entities in their own right.”). Cf. Del. Dep’t of Nat. Res. & 

Envtl. Control v. FERC, 558 F.3d 575, 578-79 (D.C. Cir. 2009) 

(finding no injury where the state suffered no injury to a

“concrete substantive interest” under the statutory scheme).

An order from this Court vacating the challenged Orders and 

remanding to FERC to comply with the Act’s jurisdictional 

provisions would redress the claimed injury of allegedly 

improper intrusion upon the States’ jurisdiction. 

Additionally, Local Utility Petitioners have standing to 

seek vacatur of the relevant portions of the challenged 

Orders. As Commissioner McNamee recognized in his dissent 

to the Commission’s denial of rehearing, and as FERC failed 

to contest at oral argument, Local Utility Petitioners’ members, 

which include local electric utilities that own or operate local 

distribution systems, have decision-making roles with respect 

to the connections of behind-the-meter ESRs to local 

distribution systems. They bear the operational burdens of 

those ESRs delivering electricity to federal wholesale 

markets. FERC’s “refusal to adopt a framework” that provides 

state and local decision-makers with greater flexibility over 

their facilities causes injury to Local Utility Petitioners’ 

members, Local Utility Pet’rs’ Br. at 37, and such injury would 

be redressed by an order from this Court vacating FERC’s 

Orders.

Finally, these matters are ripe for judicial resolution. 

While there are no conflicting state laws presented to the Court

at this time, the challenge here is akin to a facial challenge, and 

the Court is merely asked to decide whether the Orders, on their 

face, either violate the Act’s jurisdictional division or 

constitute an arbitrary and capricious agency action. See Ass’n

of Private Sector Colls. & Univs. v. Duncan, 681 F.3d 427, 442 

(D.C. Cir. 2012) (facial challenges to regulations rest on the 

premise that “no set of circumstances exist under which the 

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regulations would be valid”) (brackets omitted). Thus, the 

purely legal issues presented here are fit for review, and there 

is no reason the court cannot now address the challenges 

presented. See Nat’l Park Hosp. Ass’n v. Dep’t of the Interior, 

538 U.S. 803, 807-08 (2003). 

IV.

“Where we conclude that a challenged regulatory 

provision does not exceed [the statute’s] limits and otherwise 

satisfies the requirements of the APA, we will uphold the 

provision and preserve the right of complainants to bring asapplied challenges against any alleged unlawful applications.” 

Duncan, 681 F.3d at 442. As explained below, that is the case 

here. 

A.

EPSA instructs us to confront Petitioners’ exceedingjurisdiction challenge in three parts.4

 First, we ask whether the 

challenged practice at issue in the Orders – prohibition of Stateimposed participation bans – “directly affect[s] wholesale 

rates.” 136 S. Ct. at 773. Second, we look to whether the 

Commission has regulated state-regulated facilities,5see id.,

4

“FERC’s interpretations of the jurisdictional provisions of the 

Federal Power Act . . . enjoy Chevron deference.” NARUC v. 

FERC, 475 F.3d 1277, 1279 (D.C. Cir. 2007). Here though, we need 

not rely on that deference since FERC’s authority under the Act is 

unambiguous. See EPSA, 136 S. Ct. at 773 n.5.

5 Section 824(b)(1) preserved States’ jurisdiction in three categories: 

(1) within-state wholesale sales (i.e., sales for resale), (2) retail sales 

of electricity (i.e., sales directly to end users), and (3) facilities used 

in local distribution, electric generation, only for the transmission of 

electric energy in intrastate commerce, or for the transmission of 

electric energy consumed wholly by the transmitter. 16 U.S.C. 

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and, lastly, we ensure that our determinations do not “conflict 

with the Act’s core purposes” of “curb[ing] prices and 

enhanc[ing] reliability in the wholesale electricity market.” Id.

We swiftly conclude that FERC’s prohibition of stateimposed participation bans directly affects wholesale rates. 

FERC bears the responsibility of regulating the wholesale 

market, which encompasses “both wholesale rates and the 

panoply of rules and practices affecting them.” EPSA, 136 S. 

§ 824(b)(1). EPSA involved the States’ authority with respect to the 

second category, but here, Petitioners seek to vindicate their 

authority with respect to the third category. 

State authority over that third category is limited when the Act 

“specifically provide[s]” otherwise, 16 U.S.C. § 824(b)(1)—a

limitation that did not apply to the retail sales at issue in EPSA. See 

Transmission Access, 225 F.3d at 696 (noting the FPA’s multiple 

grants of jurisdictional authority). FERC does not rely on that 

limitation here. Instead, it seemingly agrees with Petitioners that the 

relevant question is whether its order “directly regulates local 

distribution facilities,” but argues that it has not done so. FERC Br. 

36. We accept that premise arguendo because we agree that FERC 

has not regulated local distribution facilities. But we note that this 

court has held that FERC may regulate electric generating 

facilities so long as it is addressing a practice affecting wholesale 

rates. See La. Pub. Serv. Comm’n v. FERC, 522 F.3d 378, 390 (D.C. 

Cir. 2008). And we further note that states have jurisdiction over 

electric-generating facilities subject to the same excepting clause that 

applies to the local distribution facilities at issue here.

However, as just said, Petitioners would fall short even if the 

FPA had barred FERC from ever regulating local distribution 

facilities. Thus, for purposes of this opinion, we treat “retail sales,” 

“local distribution systems,” and “behind the meter” interchangeably 

as all referring to matters over which States have jurisdiction and 

proceed on the assumption, arguendo, that FERC may not regulate 

local distribution facilities.

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Ct. at 773. Order No. 841 solely targets the manner in which 

an ESR may participate in wholesale markets. This action is

intentionally designed to increase wholesale competition,

thereby reducing wholesale rates. Keeping the gates open to 

all types of ESRs – regardless of their interconnection points in 

the electric energy systems – ensures that technological 

advances in energy storage are fully realized in the 

marketplace, and efficient energy storage leads to greater 

competition, thereby reducing wholesale rates. Even NARUC 

acknowledges that local ESR participation in federal wholesale 

markets could have benefits. If “directly affecting” wholesale 

rates were a target, this program hits the bullseye. 

Petitioners focus their energy on the second test: whether 

Order No. 841 unlawfully regulates matters left to the States. 

See EPSA, 136 S. Ct. at 775. Petitioners argue that by 

prohibiting States from blocking the gates to the federal

markets, FERC is directly regulating access to those gates, a 

matter left to the States by statute. See 16 U.S.C. § 824(b)(1). 

But FERC is not regulating matters of access. There is little

doubt that favorable participation models will lure local ESRs 

to the federal marketplace, which will require use of States’ 

distribution systems, but that is the type of permissible effect 

of direct regulation of federal wholesale sales that the FPA

allows. See EPSA, 136 S. Ct. at 776 (effects on retail rates of 

actions respecting wholesale transactions are “of no legal 

consequence”). Nothing in Order No. 841 directly regulates 

those distribution systems. Accord NARUC v. FERC, 475 F.3d 

1277, 1281 (D.C. Cir. 2007) (“[A]ssertion of jurisdiction over 

specified transactions, even though affecting the conduct of the 

owner(s) with respect to its facilities, is not per se an exercise 

of jurisdiction over the facility.”). States remain equipped with 

every tool they possessed prior to Order No. 841 to manage 

their facilities and systems. 

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Petitioners argue that one tool is missing: the ability to 

close their facilities to local ESRs seeking to transport electric 

energy to the wholesale markets. After all, States have the 

authority to manage and oversee their distribution systems. But 

because FERC has the exclusive authority to determine who 

may participate in the wholesale markets, the Supremacy 

Clause – not Order No. 841 – requires that States not interfere.

See Miss. Power & Light Co. v. Miss. ex rel. Moore, 487 U.S. 

354, 374 (1988). The Supremacy Clause renders federal law 

the “supreme Law of the Land,” U.S. CONST. art. VI, and 

Congress may “pre-empt, i.e., invalidate, a state law through 

federal legislation,” Oneok, Inc. v. Learjet, Inc., 575 U.S. 373, 

376 (2015). In field preemption, “Congress may have intended 

‘to foreclose any state regulation in the area,’ irrespective of 

whether state law is consistent or inconsistent with ‘federal 

standards.’” Id. at 377 (quoting Arizona v. United States, 567 

U.S. 387, 401 (2012)). “In such situations, Congress has 

forbidden the State to take action in the field that the federal 

statute pre-empts.” Id. Here, FERC’s statement in Order No. 

841-A that States may not block RTO/ISO market participation 

“through conditions on the receipt of retail service,” Order No. 

841-A ¶ 41, or impose any “condition[] aimed directly at the 

RTO/ISO markets, even if contained in the terms of retail 

service,” id., is simply a restatement of the well-established 

principles of federal preemption. See Oneok, Inc., 575 U.S. at

386 (explaining that preemption depends on “the target at 

which the state law aims in determining whether that law is preempted”). 

While the FPA creates two separate zones of jurisdiction, 

the Supremacy Clause creates uneven playing fields. N. Nat. 

Gas Co. v. State Corp. Comm’n of Kan., 372 U.S. 84, 93 (1963)

(“Not the federal but the state regulation must be subordinated, 

when Congress has so plainly occupied the regulatory field.”); 

see Nw. Cent. Pipeline Corp. v. State Corp. Comm’n of Kan., 

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489 U.S. 493, 515-16 (1989) (“State regulation . . . may be preempted as conflicting within FERC’s authority over interstate 

transportation and rates . . . if a state regulation’s impact on 

matters within federal control is not an incident of efforts to 

achieve a proper state purpose.”). Hence, NARUC’s argument 

that a local ESR does not participate in the federal wholesale 

market (and thus cannot fall with FERC’s authority) until after 

it navigates through State-regulated facilities fails. Any State 

effort that aims directly at destroying FERC’s jurisdiction by 

“necessarily deal[ing] with matters which directly affect the 

ability of the [Commission] to regulate comprehensively and 

effectively” over that which it has exclusive jurisdiction 

“invalidly invade[s] the federal agency’s exclusive domain.”

N. Nat. Gas Co., 372 U.S. at 91-92. While the Act’s 

preemptive scope should be construed “narrowly in light of 

Congress’ intent – manifested in [§ 201](b) of the Act – to 

preserve for the State the authority to regulate [non-federal 

jurisdictions],” Oneok, Inc., 575 U.S. at 383-84, 

“[n]evertheless, [ ]pre-emption . . . is to be applied,” Nw. Cent.

Pipeline Corp., 489 U.S. at 515 n.12. 

Thus, Order No. 841 does not “usurp[] state power,”

6

EPSA, 136 S. Ct. at 777, nor does it impose a new “reasonably 

related” test that re-draws the jurisdictional divide between 

FERC and the States. Local Utility Pet’rs’ Opening Br. at 31. 

6 NARUC’s commandeering argument fails for the same reasons. As 

explained, FERC is not requiring States to guarantee access to States’ 

distribution facilities in order to reach wholesale markets, so it is not 

“command[ing]” States “to administer or enforce a federal regulatory 

program.” See Murphy v. National Collegiate Athletic Ass’n, 138 S. 

Ct. 1461, 14777 (2018); id. at 1475 (“The anticommandeering 

doctrine . . . is simply the expression of a fundamental structural 

decision incorporated into the Constitution, i.e., the decision to 

withhold from Congress the power to issue orders directly to the 

States.”).

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States continue to operate and manage their facilities with the 

same authority they possessed prior to Order No. 841. See 

EPSA, 136 S. Ct. at 777 (noting no interference with state 

authority because “States continue to make or approve all retail 

rates, and in doing so may insulate them from price fluctuations 

in the wholesale market”); Conn. Dep’t of Pub. Util. Control v. 

FERC, 569 F.3d 477, 481-82 (D.C. Cir. 2009) (where 

economic impact of FERC regulation would likely force States 

to construct new generation facilities, such state response was 

not a “direct regulation” but the product of a state’s response to 

changed incentives). States retain their authority to prohibit 

local ESRs from participating in the interstate and intrastate 

markets simultaneously, meaning States can force local ESRs 

to choose which market they wish to participate in. States 

retain their authority to impose safety and reliability 

requirements without interference from FERC, and ESRs must 

still obtain all requisite permits, agreements, and other 

documentation necessary to participate in federal wholesale 

markets, all of which may lawfully hinder FERC’s goal of 

making the federal markets more friendly to local ESRs. Any 

such hinderance is of no concern because FERC’s “vision of 

reasonableness and justice,” EPSA, 136 S. Ct. at 774, cannot 

override the statutory limitations of FERC’s jurisdiction, “no 

matter how direct, or dramatic, [that limitation’s] impact on 

wholesale rates,” id. at 775. Supreme Court “cases have 

consistently recognized a significant distinction, which bears 

directly upon the constitutional consequences, between” a 

State’s regulations “aimed directly” at matters in FERC’s 

jurisdiction, “and those aimed at” fulfilling a State’s own 

jurisdictional obligations. N. Nat. Gas Co., 372 U.S. at 94. 

“The former cannot be sustained when they threaten . . . the 

achievement of the comprehensive scheme of federal 

regulation.” Id. 

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But the Court need not fret about hypothetical state 

regulations now – nor need it resolve every hypothetical 

presented in Petitioners’ briefs. A facial challenge prevails 

where “no set of circumstances exists under which the [Orders] 

would be valid.” Duncan, 681 F.3d at 442. Petitioners fail to 

meet this standard, but States will be free to challenge the 

Orders as applied to their own state regulations or imposed 

conditions. Id. Petitioners are likely correct that litigation will 

follow as States try to navigate this line, but such is the nature 

of facial challenges. 

Lastly, because we do not conclude that FERC has 

perpetuated federal policy goals to the detriment of the 

statutory authority granted to the States, our determination is 

consistent with the FPA’s purpose of maintaining the 

respective zones of jurisdiction while ensuring that FERC can 

carry out its duty of ensuring just and reasonable federal 

wholesale rates. EPSA, 136 S. Ct. at 781. 

Because the challenged Orders do nothing more than 

regulate matters concerning federal transactions – and reiterate

ordinary principles of federal preemption – they do not facially 

exceed FERC’s jurisdiction under the Act. Our decision today 

does not foreclose judicial review should conflict arise between 

a particular state law or policy and FERC’s authority to 

regulate the participation of ESRs in the federal markets.

B.

The Court must set aside the Orders if they are “arbitrary, 

capricious, an abuse of discretion, or otherwise not in 

accordance with law.” 5 U.S.C. § 706(2)(A). Local Utility 

Petitioners – joined by Transmission Access Study Group, 

Intervenor on behalf of Petitioners, (“Transmission Access”) –

argue that even if FERC has the authority to prevent States 

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from broadly prohibiting local ESR participation in federal 

markets, its decision to exercise that authority in Order No. 841 

was arbitrary and capricious. We disagree, concluding that 

FERC’s decision to reject a state opt-out was adequately 

explained. 

“[T]he court must uphold a rule if the agency has examined 

the relevant considerations and articulated a satisfactory 

explanation for its action, including a rational connection 

between the facts found and the choice made.” EPSA, 136 S. 

Ct. at 782 (internal quotation marks and brackets omitted). 

This narrow scope of review does not question whether the

administrative action was the best regulatory decision possible,

“or even whether it is better than the alternatives,” because it is 

not the role of a court to substitute its own judgment for that of 

the agency. Id. 

Local Utility Petitioners rely heavily on the existence of a 

State opt-out in the programs reviewed in EPSA. There, the 

FERC orders at issue allowed States to “decide the eligibility 

of retail customers” in demand response programs. Wholesale 

Competition in Regions with Organized Electric Markets, 

Order No. 719-A ¶ 50, 128 FERC ¶ 61,059, FERC Stats. & 

Regs. ¶ 31,292, on reh’g, Order No. 719-B, 129 FERC ¶ 61,252 

(2009); EPSA, 136 S. Ct. at 772 (explaining that the order 

challenged there “continue[d] Order No. 719’s policy of 

allowing any state regulatory body to prohibit customers in its 

retail market from taking part in wholesale demand response 

programs”). In a nutshell, the demand response program 

enabled wholesale markets to compensate consumers for not 

using electric power at peak times, as a means of reducing 

pressure on the grid and lowering wholesale rates. See EPSA, 

136 S. Ct. at 769-71; 18 C.F.R. § 35.28(b)(4) (defining 

“demand response” as “a reduction in the consumption of 

electric energy by customers from their expected consumption 

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in response to an increase in the price of electric energy or to 

incentive payments designed to induce lower consumption of 

electric energy”). The Supreme Court described the opt-out 

feature as “cooperative federalism,” EPSA, 136 S. Ct. at 780, 

evidencing FERC’s “recognition of the linkage between 

wholesale and retail markets and the States’ role in overseeing 

retail sales,” id. at 779. That said, Local Utility Petitioners 

correctly acknowledge that EPSA did not condition its holdings 

on the existence of an opt-out. Even if EPSA serves as an 

endorsement of different programs in the future, not even the 

Supreme Court can “substitute [its] own judgment for that of 

the Commission.” 136 S. Ct. at 782.

More importantly, FERC’s departure from such a policy 

in Order No. 841 is neither unexplained nor unsupported. The 

Commission was acutely aware of its opt-out in Order No. 719.

See Order No. 841-A ¶¶ 51-52 (distinguishing ESR 

participation in wholesale sales from demand response 

resources participating in wholesale bids). The Commission

specifically considered the benefits of enabling broad ESR

participation to promoting just and reasonable wholesale rates. 

Order No. 841 ¶¶ 2, 19, 29. For example, the Commission 

explained that promoting more participation of ESRs in 

wholesale markets increases competition, likely causing prices 

to lower, and more diversity in the types of ESRs encourages 

participation models that will be untethered to specific storage 

technologies. Id. Along the same lines, a federal market 

unfriendly to certain sizes, capacities, and system operations 

inhibits future developers from designing such ESRs. Id. ¶ 12. 

Importantly, Local Utility Petitioners do not question those 

benefits. 

Local Utility Petitioners and Transmission Access also 

take issue with FERC’s failure to address States’ existing 

policies dealing with ESRs and the increased need for State 

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oversight since ESRs raise additional concerns about a 

distribution system’s safety and reliability with energy flowing 

in two directions. But FERC did address concerns that States 

may bear additional administrative burdens, and it also noted 

that States would remain unimpeded in their ability to manage 

their utilities, “allocat[ing] any costs that they incur in 

operating and maintaining their respective power systems.” 

Order No. 841-A ¶ 45; see Order No. 841 ¶ 36; see also Order 

No. 841-A ¶ 42. FERC simply decided that such negative 

effects were outweighed by the benefits of the program. Order 

No. 841-A ¶ 45. Local Utility Petitioners may disagree with 

that calculus, but FERC’s decision is not arbitrary and 

capricious. “This is the kind of reasonable agency prediction 

about the future impact of its own regulatory policies to which 

we ordinarily defer.” La. Energy & Power Auth. v. FERC, 141 

F.3d 364, 370 (D.C. Cir. 1998). 

V. 

For the reasons stated above, Petitioners fail to show that 

Order Nos. 841 and 841-A run afoul of the Federal Power Act’s 

jurisdictional bifurcation or that they are otherwise arbitrary 

and capricious. We therefore deny the petitions in Nos. 19-

1142 and 19-1147. 

So ordered.

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