PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 21

- 3068, 21

- 3205 & 21

- 3243

____________

PJM POWER PROVIDERS GROUP,

Petitioner in No. 21

- 3068

v.

FEDERAL ENERGY REGULA TOR Y COMMISSION

___________________________

ELECTRICAL POWER SUPPLY ASSOCIATION,

Petitioner in No. 21

- 3205

v.

FEDERAL ENERGY REGULATORY COMMISSION

___________________________2 PENNSYLVANIA PUBLIC UTILITY COMMISSION;

PUBLIC UTILITIES COMMIS S ION OF OHIO,

Petitioner in No. 21

- 3243

v.

FEDERAL ENERGY REGULATORY COMMISSION

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

- 2582

- 000 )

Argued on January 10, 2023

Before: JORDAN, PHIPPS and ROTH, Circuit Judges

(Opinion filed: Dece mber 1, 2023)

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 Group3 Paul W. Hughes McDermott Will & Emery 500 N Capitol Street, NW Washington, DC 20001

Counsel for Petition er Electric Power Supply

Association

Kriss E. Brown (ARGUED)

Christian A. McDewell Pennsylvania Public Utility Commission Commonwealth Keys t one 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 Ohio4 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

Consumer Counsel State of Ohio OCC

Jared B

. Fish (ARGUED) Federal Energy Regulatory Commission

88 8 First Street NE

W ashington, 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 Club5 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 & Blo ck 1099 New York Avenue, NW

Suite 900 Washington, DC 20001

Counsel for Intervenor Respondents Constellation Energy Corp and Constellation Energy Generation LLC6 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

Couns el 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 Coalition7 Ryan J. Collins Paul M. Flynn Wright & Talisman 1200 G Street, NW

Suite 600 Washington, DC 20005

Counsel for Intervenor respondent PJM

Interconnection LLC

Car o line 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

13 th Floor Oakland, CA 94612

Counsel for Intervenor Respondent Sierra Club8 Sarah A. Hunger Office of Attorney General of Illinois

100 West R andolph Street

12 th Floor Chicago, IL 60601

Counsel for Intervenor Respondents Illinois

Commerce Commission and Peopl e 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 Association9 Daniel E. Frank Allison Speaker

Eversheds Sutherland 700 Sixth Street, NW

Suit e 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.10 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 U niv ersity School

of Law11 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

Offic e 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 E verett Street

Suite 4119 Cambridge, MA 02138

Counsel for Amicus Respondent Electricity Regulation Scholars12 O P I N I ON

ROTH

, Circuit Judge :

Th is 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 auction s. The focal point of the dispute is a tariff filed b y 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 Provide rs Group (P3) and Electric Power Supply Association (EPSA) (collectively, Generators), two nonprofit associations representing energy

generators

, filed s eparate petitions

. Pennsylvania Public Utility Commission and Public Utilities Commission of Ohio (State Entities) jointly filed the third

. 3

1 16 U.S.C. § 824d(g).

2 Id. §§ 791 et seq.

3 More than two dozen intervenors and amici also filed briefs. Intervenor Petitioners include: Monitoring Analytics LLC and

the Ohio Office of the Consumers Counsel. Amicus for Petitioners is the Pennsylvania Senate Republican Caucus. Intervenor Respondents include: Union of Concerned Scientists, Delaware Division of the Public Advocate,13 The Petitioners, Federal Energy Regulatory Commission ( FERC ), and n umerous 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 i n § 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

Maryland Office of Peoples Counsel, Maryland Public Service Commission, New Jersey Board of Public Utilities, New Jersey Division of Rate Counsel, Natural Resources Defense Council, Natural Rural Electric Cooperative, Office of Peoples Counsel for the District of Columbia, PJM Industrial Customer Coalition, PJM Interconnection LLC, Sierra Club, Illinois Commerce Commission, People of the State of Illinois, Buckeye Power Inc., Old Dominion Electric Cooperative, East Kentucky Power Cooperative Inc., Advanced Energy Economy, American Municipal Power Inc., American Public Power Association, PSEG, PSEG Power LLC, PSEG E R&T, Constellation Energy Corp, Constellation Energy Generation LLC, and Exelon Generation Co LLC. Amici on behalf of FERC include: the Institute for Policy Integrity at New York University School of Law, the District of Columbia, the State of Delaware, the State of Maryland, and Electricity Regulation

Scholars.

4 5 U.S.C. §§ 551 et seq.14 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 the ir claims.

A. The Federal Power Act and Judicial Review

FERC is the independent agency t o 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

5 New Jersey Bd. of Pub. Utils. v. FERC , 744 F.3d 74, 79 (3d Cir. 2014) (quoting 16 U.S.C. § 824d ) (hereinafter NJBPU )

. 6 NJBPU , 744 F.3d at 8 0 (quotations omitted) (quoting § 824(b)(1) ) ; FERC v. Elec. Power Supply Ass’n , 577 U.S. 260, 264 (2016) (noting that the FPA “authorizes [FERC] to regulate ‘the sale of electric energy at wholesale in interstate commerce,’” but “leaves to the States alone, the regulation of ‘any other sale’ ... of electricity”)

.15 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 Togethe r, 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 provid es 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

7 Pub. Citizen, Inc. v. FERC , 839 F.3d 1165, 1167 (D.C. Cir. 2016).

8 Atl. City Elec. Co. v. FERC , 295 F.3d 1, 10 (D.C. Cir. 2002) (alteration in original) (quoting United Gas Pipe Line Co. v. Mobile Gas Serv. Corp.

, 350 U.S. 332, 341 (1956) )

. 9 NJBPU , 744 F.3d at 94; see 16 U.S.C. § 824 d (d).

10 NJBPU , 744 F.3d at 94 (citing Atl. City Elec. Co.

, 295 F.3d

at

9– 10 ); see 16 U.S.C. § 824d(a)

- (d).

11 NJBPU , 744 F.3d at 94 (quoting Atl. City Elec. Co.

, 295 F.3d

at

9– 10 ).

12 16 U.S.C. § 824e (a)

. 13 Atl. City Elec. Co. , 295 F.3d at 10

.16 Our jurisdiction to review FERC orders arises under the

FPA and Ad ministrative Procedure Act

. 14 Specifically, the

FPA provides that a party aggrieved by a FERC order must first

seek rehearing by the Commission

, which may grant or deny rehearing, abrogate or modify its order without rehearing, or constructively deny rehearing by failing to act within thirty days

. 15 Within sixty days of the Commission’s order on the application for rehearing, an aggrieved party may seek review

of “order [s] issued by the Commission” in the court s of appeals. 16 The FPA provides that we “ shall have jurisdiction, which upon the filing of the record with it shall be exclusive, to affirm, modify, or set aside such order in whole or in part. ” 17 Finally, the FPA makes clear that, absent orders to the contrary, neither the filing of an application for rehearing before the

Commission nor the start of proceedings before the court of appeals shall “operate as a stay of the Commission’s order.” 18

The question of what constitutes a reviewable Commission order is central to this dispute. FERC’s enabling

statute establishes that “[a]ctions of the Commission shall be determined by a majority vote of the members present.” 19

While FERC comprises five commissioners, a quorum requires

14 See 16 U.S.C. § 825 l (b); 5 U.S.C. § 70 2 ( waiving sovereign immunity for claims for relief “other than money damages”);

28 U.S.C. § 1331.

15 16 U.S.C. § 825 l (a).

16 Id. § 825 l (b)

17 Id . ( “ The finding of the Commission as to the facts, if supported by substantial evidence, shall be conclusive. ”).

18 Id. § 825 l (c).

19 42 U.S.C. § 7171(e).17 just three, making it possible for four commissioners to

deadlock two

- to

- two. 20 In Public Citi zen , Inc. v. FERC , the Court of Appeals for the D.C. Circuit considered whether judicial review was available for a § 205 rate filing that took effect after the four sitting Commissioners deadlocked and failed to act within sixty days

. 21 The court determined that it lacked jurisdiction

. 22 With regard to the FPA

, the court held

that the secretarial notice issued by the Commission to “describ[e] the effects of the deadlock are not reviewable

orders” 23 because “FERC did not engage in collective,

institutional action when it deadlocked.” 24 T he court held that

it also lacked jurisdiction under the APA because that statute only makes inaction reviewable “ where the agency fails to take

a ‘ discrete ’ action it is legally required to take ,” 25 and the FPA does not “compel” FERC to act on a § 205 filing. 26 Accordingly , the court held that it lacked jurisdiction to review

FERC inaction resulting in an order by operation of law. The

court concluded that “ [a] ny unfairness associated with this outcome inheres in the very text of the FPA. Accordingly, it lies with Congress, not this Court, to provide the remedy.” 27

20 Id. § 7171(b)(1), (e).

21 839 F.3d at 1170.

22 Id.

23 Id. at 1172.

24 Id . at 1170

. 25 Id . at 1172 (quoting Norton v. S. Utah Wilderness All.

, 542

U.S. 55, 62

– 63 (2004))

. 26 Id . at 1174 ( explaining that the FPA does “ not compel FERC to either set the disputed rates for hearing or affirmatively disapprove any unjust or unreasonable rates through the Section 205 process”).

27 Id.18 Congress did so in 201 8 . Rather than compelling FERC to act on a § 205 filing, Congress added a provision to clarify how agency inaction should be construed to permit judicial

review. The new provision, § 205(g ), 28 stated that if FERC “permits the 60

- day period

. . . to expire without issuing an order accepting or denying the change because the Commissioners are divided two against two as to the lawfulness of the change . . . or if the Commission lacks a

quorum ” the n: (A) t he failure to issue an order accepting or denying the change by the Commission shall be considered to be an order issued by the Commission accepting the change for purposes of section 825 l (a) of this title [FPA § 313(a)] ; and

(B) each Commissioner shall add to the record

of the Commission a written statement explaining the views of the Commissioner with respect to the change. 29

Section 205(g) further established that if “a person seeks a rehearing . . . and the Commission fails to act on the merits of the rehearing request” within 30 days because the deadlock continues, “such person may appeal under section 825 l (b) [FPA § 313(b)] .” 30

28 16 U.S.C. § 824d(g)

. 29 Id. (emphasis added).

30 Id. § 824d(g)(2).19 B. Factual and Procedural Context

“Since the FPA ’ s passage, electricity has increasingly become a competitive interstate business, and FERC ’ s role has evolved accordingly.” 31 Today, “ [i] ndependent power plants now abound, and almost all electricity flows not through ‘ the local power networks of the past, ’ but instead through an

interconnected ‘ grid ’ of near

- nationwide scope. ” 32 To ensure

the reliable transmission of electricity from independent generators to “load serving entities” (LSEs)

— the organizations that deliver electricity to retail consumers

— FERC has empowered nonprofit entities, inclu ding Regional Transmission Organizations (RTOs) , to manag e segments of

the grid. 33 RTOs constitute “public utilities” under the FPA

, subject to FERC’s regulation. 34

Intervenor PJM is one such RTO, managing a system that serves approximately fifty million consumers in thirteen

mid

- Atlantic and Midwestern states and the District of

Columbia. 35 L ike other RTOs, PJM fulfills important

functions that include ensuring the grid maintains sufficient electrical supply to meet demand during peak periods. 36 To accomplish this, PJM manages a capacity market that

31 Elec. Power Supply Ass’n , 577 U.S. at 26 7

. 32 Id. (quoting New York v. FERC , 535 U.S. 1, 7 (2002))

. 33 Hughes v. Talen Energy Mktg., LLC , 578 U.S. 150, 155 (2016)

. 34 NJBPU , 744 F.3d at 82.

35 PJM Br. 3; see Hughes , 578 U.S. at 155.

36 NJBPU , 744 F.3d at 8 2.20 essentially “pay [s] participants for a promise to produce electricity when called by PJM to do so .” 37

In 2006, the Commission found the existing capacity market was unjust and unreasonable because it maintain ed

in sufficient capacity to keep the system reliab le

. 38 To remedy this, FERC issued an order accepting a negotiated settlement among power providers, utility companies, and state and local

authorities , which provided for the adoption of the Reliability Pricing Model

. 39 This model works essentially as follows: PJM predicts electricity demand three years ahead of time

, and assigns a share of that demand to each participating LSE . Owners of capacity to produce electricity in three years’ time bid to sell that capacity to PJM at propo sed rates. PJM accepts bids, beginning with the lowest proposed rate, until it has purchased enough capacity to satisfy projected demand. . . . [A]ll accepted capacity sellers receive the highest accepted rate, which is called the “clearing price.” LSEs

37 PJM Br. 4 ( citing NJBPU , 744 F.3d at 82 (explaining that the capacity market ensures that “there are enough . . . generators connected to the transmission grid for the system to function at peak load.”) )

. 38 See P JM Interconnection, L.L.C. , 135 FERC ¶ 61,022 (2011) (herein after 2011 Order) at ¶ 4

. 39 NJBPU , 744 F.3d at 79; s ee PJM Interconnection, L.L.C.

, 117 FERC ¶ 61,331 (hereinafter 2006 Settlement Order)

.21 then must purchase from PJM, at the clearing price, enough electricity to satisfy their PJM

assigned share of overall projected

demand. 40

Besides allowing LSEs to satisfy their obligation s to provide a share of projected demand

, this forward

- looking capacity auction serves another purpose, at least in theory :

s end ing market signals to suppliers to incentivize resource development

. 41 “ A high clearing price in the capacity auction encourages new generators to enter the market, increasing supply and thereby lowering the [future] clearing price . . . [while ] a low clearing price discourages new entry and encourages retirement of existing h igh

- cost generators.” 42

B ecause some participants both buy and sell capacity in

the auction, the auctions are theoretically vulnerable to manipulation by exercise of monopsony power

. 43 That is, net

buyers

— those who buy more capacity than they sell

— could artificially depress prices by selling capacity below its true cost, skewing the market signals produced by the auction. 44

40 Hughes , 578 U.S. at 155

– 56 ; see PPL Energyplus, LLC v. Solomon , 766 F.3d 241, 251 (3d Cir. 2014) ; NJBPU , 744 F.3d

at 83

– 84. Technically, PJM operates multiple capacity

auctions. The one at issue in this appeal, and described here,

is the Base Residual A u ction.

41 Hughes , 578 U.S. at 155

– 56; see NJBPU , 744 F.3d at 84.

42 Hughes , 578 U.S. at 155

– 56; see NJBPU , 744 F.3d at 84.

43 NJBPU , 744 F.3d at 85.

44 See FERC Br. 14

– 15; PJM Br. 6; NJBPU , 744 F.3d at 88

– 89.22 “[T] o address the concern that some market participants might have an incentive to depress market clearing prices by offering supply at less than a competitive level,” the 2006 Settlement Order approved the implementation of the Minimum Offer

Price Rule (MOPR ). 45

The MOPR established in the 2006 Settlement Order (2006 MOPR) was designed to detect bids suppressed through

monopsony power. An offer that failed a multilevel screening

process would be “mitigated,” or administratively raised to a competitive level. 46 The 2006 MOPR applied only to new market entrants, excluding n uclear, coal, and hydroel ectric

resources as well as state

- mandated resources. 47 In approving this mechanism, FERC concluded that the MOPR w as a

“ reasonable method of assuring that net buyers do not exercise monopsony power by seeking to lower prices through self supply.” 48 More over, FERC determined that the MOPR’s exception for “reliability projects built under state mandate is

reasonable because it enables states to meet their responsibilities to ensure local reliability.” 49

Within a few years, consistent with that responsibility, New Jersey and Maryland launch ed initiatives t o develop new generation resources to address reliability and capacity

45 2011 Order at ¶ 6 (citing 2006 Settlement Order at ¶ 103 )

. 46 NJBPU , 744 F.3d at 85.

47 Id. at 86 ( explaining that state

- mandated resources consisted of “any planned resource being developed in response to a state regulatory or legislative mandate to resolve a projected capacity shortfall”).

48 2006 Settlement Order at ¶ 104 ; s ee NJBPU , 744 F.3d at 85.

49 2006 Settlement Order at ¶ 104

.23 concerns in their states. 50 B oth initiatives r equire d new generation resources to sell capacity in the PJM markets, and

both intended to offer the capacity a price below cost to ensure

the new resources would clear. 51

P3 , who is also one of the Petitioners in this action, responded by fil ing a § 206 complaint with FERC , calling for

an end to the state

- mandated resources exception in addition to

other modifications

. 52 PJM then filed a revised tariff p ursuant

to § 205, which FERC approved in 2011 with some alterations (2011 Order)

. T he 2011 MOPR eliminated the state

- mandated resources exemption , “declin [ing] to accord states an opportunity to justify their initiatives on policy grounds, instead . . . requiring them to submit cost

- based offers like other entrants or suffer the consequences of mitig ation.” 53 At the same time, the new MOPR added exemptions for wind and solar resources, with the result that after 2011, only natural gas facilities were subject to mitigation

. 54

Several parties petitioned this Court for review of the 2011 Orders, which we denied in 2014

. 55 With respect to

50 NJBPU , 744 F.3d at 87.

51 Id

. 52 Id

. 53 I d. at 91 (“ FERC . . . conclud[ed] that the exemption needed to be eliminated due to ‘mounting evidence of risk from what was previously only a theoretical weakness in the MOPR rules,’ namely, that state

- subsidized resources would suppress auction prices.”).

54 Id . at 106.

55 Id. at 112. During the pendency of this Court’s decision in

NJBPU

, aspects of the 2011 tariff not relevant to the instant24 FERC’s elimination of the state

- mandated resources exemption on the grounds that they would suppress auction prices, we observed that while “i t could easily be argued that this danger was foreseeable in 2006 when the MOPR was first approved

, FERC has adequately advanced a rationale for its

about

- face . . .

. As such, it cannot be said that FERC acted

without substantial evidence.” 56

I n 2016

, power suppliers filed a § 206 complaint with

FERC

, challenging the MOPR’s exclusive application to new

market entrants. The y argued that such a limitation was unjust

an d un reasonable because it “allowed below

- cost offers from existing resources under newly

- enacted state subsidy programs to unjustly displace non

- subsidized resources.” 57 A three

- year process culminated with FERC’s two

- to

- one vote i n December 2019, ordering PJM to extend the MOPR to mitigate offers

from “both new and existing resources” and any resource either receiving or eligible to receive a state subsidy (2019 MOPR)

. 58 The goal, FERC said, of this dramatic expansion was to “protec t PJM’s capacity market from the price

- suppressive effects of resources receiving out

- of

- market support by ensuring that such resources are not able to offer below a competitive price.” 59 The sole opposing Commissioner issued a dissent, arguing, among othe r things, that while “ the MOPR once targeted efforts to exercise market power on behalf of

matter were amended in a compromise approved by FERC

order in 2013. See i d. at 93

– 94.

56 Id. at 102.

57 P 3 Br. 1 5; see Calpine Corp. v. PJM Interconnection, L.L.C.

, 169 FERC ¶ 61,239 (here in after 2019 Order).

58 2019 Order at ¶ ¶ 1

– 2, 5 ; see EPSA Br. 8; FERC Br. 18

– 19.

59 2019 Order ¶ 5.25 load and directly reduce the capacity market price, it now targets state resource decisionmaking, and particularly state efforts to address the externalities of electricity generation.” 60

Th e 2019 MOPR prompted swift opposition

. 61 Dozens of parties sought to overturn the 2019 MOPR , including

“ consumer advocate groups, state public utility agencies, electric cooperatives [ and ] generators, clean energy organizations, and environmental groups. ” 62 These appeals

were consolidated in the Seventh Circuit and remain in abeyance pending this action

. 63

O n July 30, 2021, PJM made a nother § 205 filing

, setting forth a revised MOPR ( 2021 MOPR) to replace the expansive one it set forth in 2019. PJM acknowledged that

, over the previous three years, state investments in renewable

and nuclear resources had proliferated, in part because of

states’ unabated and legitimate interest in “address[ing]

e xternalities that are not accounted for in PJM’s wholesale

markets.” 64 By “pricing out resources from the capacity

market” and fail ing to account for those resources when committing capacity, PJM stated, the 2019 MOPR was distorting market signals by “inc entiv[ i zing] resources to be

built that are not needed to maintain reliability ” in light of those

investments. 65 Moreover, the 2019 MOPR was incenting

60 2019 Order (Glick, dissenting)

, ¶ 16

. 61 FERC Br. 20

. 62 FERC Br. 20

. 63 FERC Br. 20

– 21; see Ill. Commerce Comm’n v. FERC , Nos.

20

- 1645, et al . (7th Cir.).

64 JA017 8.

65 JA01 78, 1 81.26 market participants to exit the capacity market to “meet their policy and business objectives

, ” 66 a shift that threatened to “exacerbate[]the very price suppression issue [that the 2019 MOPR] seeks to mitigate.” 67 The result for consumers, PJM concluded, would be th at those in states providing subsidies would “p ay [] twice, i.e., for both the excluded re sources and the resource committed through the auction because the

excluded resource did not clear ” while those in other states

would see “ a capacity cost increase, when . . . the auction commits a resource that had a higher S ell O ffer than the

excluded r esource’s original offer.” 68 PJM concluded:

[W]hile state policies favoring certain generation resource s may ultimately cause a reduction in capacity clearing prices, such an outcome “should not be interpreted as a harmful secondary impact of one state’s policies on other states. Rather, the reduction in prices is a natural consequence of the PJM market appropriately reflecting state policies and consumer preferences for certain types of resources. Such state subsidies only lower total

costs for consumers in other states. ” 69

PJM explained th at the 2021 MOPR would re turn to “ its original purpose by focusing on prohibiting and mitigating the exercise of buyer

- side market power

. ” 70 The 2021 “focused” MOPR would “generally accommodate both state policies

66 JA0182.

67 JA0185.

68 JA0179

– 80.

69 JA0180

. 70 JA0171.27 regarding generation resource mix and the lon g- standing

business mo dels of public power entities,” 71 while nonetheless barring state action

, such as those that New Jersey and Maryland had pursued in 2011

, that would “directly interfere

with the auction clearing outcomes.” 72 To this end, the 2021

MOPR would mitigate offers i n just two situations: “(1) where a capacity resource has the ability and incentive to exercise buyer

- side market power, and (2) where a capacity resource receives state subsidies under a state program that is likely preempted by the Feder al Power Act.” 73

When the 2021 MOPR was filed, FERC had four sitting

commissioners. The commissioners deadlocked two

- to

- two on the new tariff, failing to issue an order accepting or denying the change within sixty days. On September 29, 2021, the

Commission issued a secretarial notice stating that the new

2021 MOPR was in effect by operation of law. Consistent with § 205(g)(1)(B), two commissioners (including the chair) filed

a J oint St atement articulating their reasons for supporting the

new tariff, while the other commissioners filed separate statements explaining their opposition.

All rehearing requests were denied without an order on November 29, 2021

. This petit ion followed.

II. Standing

An organization suing on its members’ behalf must

e stablish associational standing, demonstrating that “(1) at

71 JA0194

. 72 JA0190.

73 JA0173; see FERC Br. 22 ; PJM Br. 23

.28 least one of its members would have standing to sue in his or her own right; (2) ‘the interests it seeks to protect are germane to the organization’s purpose’; and (3) ‘neither the claim

asserted nor the relief requested requires the participation of [its] individual members. ’” 74 To meet the first element of associational standing, the organization must establish the

three familiar components that form “the irreducible constitutional minimum of standing”: injury

- in

- fact, causation, and redressability. 75

The Petitioners have m et their burden. FERC observes that the Generators do not articulate any injuries in their opening briefs. 76 Nevertheless, the Joint Appendix incorporates records from the Generators’ protest before FERC

that demonstrate that their members suffered economic losses

as a result of the 2021 MOPR. An affidavit attached to P3’s reply brief elaborates on these harms. 77 We find that the

74 See Sierra Club v. FERC , 827 F.3d 59, 65 (D.C. Cir. 2016); see also Belmont Mun. Light Dep’t v. FERC , 38 F.4th 173, 185 (D.C. Cir. 2022 ) (“ Where there are multiple plaintiffs who assert overlapping arguments, at least one petitioner must have standing to seek each form of relief requested in the petitions for review.” (citing Nat’l Ass’n of Regul. Util. Commi ssioners

v. FERC

, 964 F.3d 1177, 1184 (D.C. Cir. 2020) )).

75 Lujan v. Defs. of Wildlife

, 504 U.S. 555, 560 (1992) ; see Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc.

, 528 U.S. 167, 180

– 81 (2000); Kansas Corp. Comm’n v. FERC

, 881 F.3d 924, 929 (D.C. Cir. 2018) (quoting Sierra Club v. EPA

, 292 F.3d 895, 899

– 900 (D.C. Cir. 2002) (citations omitted) ).

76 FERC Br. 35.

77 P3 Reply Br. 3, Attachment A (Decl. Glen Thomas).29 Generators have met their burden to articulate a concrete and particularized injury, and that the cause of their injuries is traceable to FERC’s approval, by operation of law, of the 2021

MOPR. 78 We also hold that the State Entities have met their burden to establish a cognizable injury, having demonstrated

that they “represent the interests of the states in protecting their

ci tizens and electric ratepayers in the traditional government field of utility regulation.” 79 FERC also argues that the Petitioners failed to establish that their purported injuries are redressable in this action. Specifically, FERC argues that even if we were to vacate the order by operation of law that allowed the 2021 MOPR to go into effect, the 2021 MOPR would remain in effect until a new tariff could be established upon remand. 80 We disagree. Contrary to FERC’s assertion, “[v]acating or rescinding invalidly promulgated regulations has the effect of reinstating prior regulations.” 81 While these potentially “disruptive

78 See Belmont Mun. Light Dep’t

, 38 F.4th at 185.

79 Id. at 186 (citing Maryland People’s Counsel v. FERC

, 760

F.2d 318, 321 (D.C. Cir. 1985) ) ; see State Entities Reply Br.

5– 6.

80 FERC Br. 39.

81 Abington Mem’l Hosp. v. Heckler, 750 F.2d 242, 244 (3d

Cir. 1984) ; Prometheus Radio Project v. F.C.C. ( Prometheus

I

) , 652 F.3d 431, 453 n.25 (3d Cir. 2011) (“Because we vacate

the NBCO rule in the 2008 Order , the rule in existence prior to that order will remain in effect until the FCC promulgates new

cross

- ownership regulations.”); see Council Tree Commc’ns,

Inc. v. F.C.C. , 619 F.3d 235, 258 (3d Cir. 2010) (“vacating [an FCC] rule will mean that” the prior rule “will once again” govern the regulated activity) ; Paulsen v. Daniels, 413 F.3d 999, 1008 (9t h Cir. 2005) (“The effect of invalidating an30 consequenc es ” 82 may militate toward less drastic solutions, 83 such a remedy is nonetheless within the scope of our statutory authority.

III. Standard of Review

At the threshold, the parties dispute the applicable

standard and scope of judicial review upon a petition proceeding under § 205(g).

agency rule is to reinstate the rule previously in force.”); Action

on Smoking and Health v. CAB, 713 F.2d 795, 797 (D.C. Cir. 1983) (per curiam) (“To ‘vacate,’ as the parties should well know, means ‘to annul; to cancel or rescind; to declare, to make, or to render, void; to defeat; to deprive of force; to make of no authority or validity; to set aside.’ . . . . [T]he judgment of this court had the effect of reinstating the rules previously in force.”).

82 Amere n Servs. Co. v. FERC , 880 F.3d 571, 584 (D.C. Cir. 2018) (quoting Black Oak Energy, LLC v. FERC

, 725 F.3d 230, 244 (D.C. Cir. 2013) ); s ee Prometheus Radio Project v.

Fed. Commc’ns Comm’n ( Prometheus II ), 824 F.3d 33, 52 (3d Cir. 2016).

83 See, e.g., Black Oak Energy , 725 F.3d at 2 44 (“Although we remand, we do so without vacating . . . [after performing the disruption analysis] we deem it better to preserve the status quo as FERC reconsiders”); Ameren Servs. Co. , 880 F.3d at 584 (vacating because “we are troubled by the prospect of allowing the orders to continue”); see Belmont Mun. Light Dep’t v. FERC , 38 F.4th 173, 187

– 88 (D.C. Cir. 2022) (determining that a FERC order is severable and vacating only one component).31 We review FERC orders under § 313(b) of the FPA and § 10(e) of the APA

. 84 The FPA directs that FERC’s factual findings, “if supported by substantial evidence, shall be

conclusive.” 85 Substantial evidence exists where the administrative record contains “more than a scintilla, but . . . something less than a preponderance of the evidence.” 86 Under the APA, we must “hold unlawful and set aside ” agency action that is deficient for reasons including that it is “ arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law

, ” or “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right. ” 87 In short, we affirm FERC orders as long as the administrative record

shows the Commission “examined the relevant data and

84 16 U.S.C. § 825 l (b) ; 5 U.S.C. § 706(2).

85 16 U.S.C. § 825 l (b)

. 86 NJBPU , 744 F. 3d at 94 (quoting La. PSC v. FERC

, 522 F.3d 378, 395 (D.C. Cir. 2008) ); accord Mars Home for Youth v. NLRB

, 666 F.3d 850, 853 (3d Cir. 2011) (“Substantial

evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” (citation s and quotation s omitted)). See

also NJBPU , 744 F.3d at 94 (“The question we must answer ... is not whether record evidence supports [petitioner]’s version of events, but whether it supports FERC’s.” ( quoting Fla. Mun.

Power Agency v. FERC, 315 F.3d 362, 368 (D.C. Cir. 2003 ))).

87 5 U.S.C. § 706(2) ; see Cit y of Newark v. FERC

, 763 F.2d 533, 545 (3d Cir. 1985) ( court must determine “whether a rational basis exists for [FERC’s] conclusion, whether there has been an abuse of discretion, or . . . whether the Commission’s order is arbitrary or capricious or not in accordance with the purpose of the [FPA].” ).32 articulated a rational connection between the facts found and

the choice made.” 88 FERC urges, and we agree, that § 205(g) did not alter

these familiar standards. 89 Rather, the provision clarified the universe of action subject to our review. Prior to its enactment, the plain text of the FPA did not convey Congress’s intent to

allow our review of rate filing s enacted by operation of law pursuant to § 205(d). Congress addressed this deficiency with § 205(g), which unambiguously instructed that we construe
FERC’s inaction as an affirmative order “ for the purposes of § [313] (a). ” 90 Notably, Congress here referred to the very provision setting forth a party’s right to seek the Commission’s rehearing of an order by majority vote

, which in turn provides

t he basis for judicial review. 91 Indeed, § 205(g) specifies that

88 NJBPU , 744 F.3d at 94 (quoting Sacramento Mun. Util. Dist.

v. FERC

, 616 F.3d 520, 528 (D.C. Cir. 2010) ); see also Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist. No. 1 of

Snohomish Cnty.

, 554 U.S. 527, 532 (2008) (“The statutory requirement that rates be ‘just and reasonable’ is obviously incapable of precise judicial definition, and we afford great deference to the Commission in its rate decisions.”); N. Penn.

Gas Co. v. FERC

, 707 F.2d 763, 766 (3d Cir. 1983) (FERC’s exercise of its expertise carries “a p resumption of validity”).

89 See FERC Br. 34

– 35, 49. While we generally defer to an agency’s reasonable interpretation of ambiguity in a statute it

administers “through application of its expertise ,” no deference doctrine controls the scope of a court’s jurisdiction

. See Allegheny Def. Project v. FERC , 964 F.3d 1, 11 (D.C. Cir. 2020).

90 § 205(g) (e mphasis added ) ; see 16 U.S.C. § 825 l (a).

91 See 16 U.S.C. § 825 l (b) (“ Any party to a proceeding under this chapter aggrieved by an order issued by the Commission33 if the “Commission fails to act on the merits of the rehearing request” within 30 days because the deadlock continues, “such person may appeal under § [313] (b).” 92 Thus, by reference

, the

standard of review set forth in the FPA 93 appl ies to FERC orders issued by operation of law pursuant to § 205(d)

. 94

We reject the State Entities ’ argu ment that we must review “on a de novo basis, whether the tariff change is just and reasonable as a predicate to deciding whether [FERC’s] discretion to approve was properly exercised.” 95 This reading

contradicts the well

- settled administrative law principle, reflected in both the FPA and APA, that “‘a court is not to substitute its judgment for that of the agency.’” 96 Moreover, the sole authority cited by the State Entities to support i ts reading concerns an inapposite statute (the Indian Gaming Regulatory Act or IGRA), which at least one sister court has rejected as an appropriate analog for the FPA because the

IGRA requires agency action while the FPA gives the agency

discretion to act

. 97

in such proceeding may obtain a review of such order in the United States court of appeals . . . .”).

92 Id

. § 824d(g)(2) ; see id

. § 825 l (b).

93 See id. § 825 l (b).

94 § 205(g).

95 State Entities Br. 21

– 22 (citing Amador County, Cal. v.

Salazar , 640 F.3d 373, 375 (D.C. Cir. 2011)).

96 Motor Veh. Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto.

Ins. Co. , 463 U.S. 29, 43 (1983).

97 Compare State Entities Br. 22, with Public Citizen , 839 F.3d at 1173 (“Section 205(a)’s statement concerning the unlawfulness of unjust and unreasonable rates does not rise to an inexorable command like that found in IGRA”).34 To carry out Congress’s directive to construe FERC inaction as an affirmative order, we must next determine what

constitutes evidence of the agency’s reasoning for the purposes of § 205(g)

. 98 The Generators insist that nothing does , arguing

that a deadlocked Commission can produce “no institutional findings of fact or conclusions of law to which this Court might

defer.” 99 While they acknowledge Congress’s mandate in § 205(g)(1)(B) that the members of a deadlocked Commission

must enter their reasoning into the record, t hey argue that these statements are unattributable to the agency and are intended only to “facilitate compromises” and promote transparency and good government. 100 Because any order arising by operation of law would, by the Generator s’ logic, lack any agency

r ationale , the y conclude that any petition for rehearing pursuant to § 205(g) must “inevitably” 101 lead us to find such an order arbitrary and capricious. 102

98 See Sprint Nextel Corp. v. F.C.C.

, 508 F.3d 1129, 1132 (D.C. Cir. 2007) (“ When the Commission failed to [act] within the statutory period, Congress’s decision

— not the agency’s

— took effect.”).

99 P3 Br. 29, 34

– 36 (“[a]ctions of the Commission shall be determined by a majority vote of the members present” (citing 42 U.S.C. § 7171(e) ) ; accord EPSA Br. 18, 21, 23 ; State

Entities Br. 29

– 30 (citing Public Citizen , 839 F.3d at 1169).

100 P3 Br. 36

– 37 ; see EPSA Br. 18, 23, 27 (quoting F .C.C. v. Prometheus Radio Project ( Prometheus III ) , 141 S. Ct. 1150, 1158 (2021)); see State Entities Br. 29.

101 EPSA Br. 19

– 20; P3 Br. 33 –35

. 102 The Generators also wrongly contend that because orders by operation of law are necessarily arbitrary and capricious, they must be set aside. See P3 Br. 29, 35 (“[J]udicial review of35 The Generators’ argument is inconsistent with our responsibility to avoid interpreting statutory provisions in ways

that “render statutory language a nullity and leave entire operative clauses with ‘no job to do.’” 103 Congress established in § 205(d), and underscored in § 205(g), that a tariff may change by operation of law

, 104 consistent with the principle that

deadlocked FERC proceedings would inevitably end in

vacatur.” (emphasis added) ); EPSA Br. 15 n. 3 (incorporating by reference P3 ’ s arguments concerning vacatur); EPSA Br. 16, 25, 43. But vacatur is never a foregone conclusion. First, the plain text of the FPA authorizes us not only to vacate, but also to modify an improper order. 16 U.S.C. § 825 l (b)

. Second, to determine the appropriateness of vacatur, we

conduct a fact

- sensitive analysis accounting for “ the gravity of the orders’ flaws, and the ‘disruptive consequences’ that may

result.” Ameren Servs. Co. , 880 F.3d at 584 ( quoting Black

Oak Energy

, LLC

, 725 F.3d at 244 ; see Prometheus II , 824

F.3d at 52 ; Belmont Mun. Light Dep’t , 38 F.4th at 187

– 88 (determining that a FERC order is severable and vacating only one component). We further observe that while vacatur is the Generators’ preferred remedy here, to adopt their theory globally risks hamper ing the claims of future litigants seeking

redr ess by modification, and not vacatur. Accordingly, we reject the Generators’ reading.

103 Allegheny , 964 F.3d at 15 (quoting Doe v. Chao , 540 U.S. 614, 623 (2004)).

104 § 824d(d) (“ N o change shall be made by any public utility in any such rate

, . . . rule, regulation, or contract relating thereto, except after sixty days’ notice to the Commission and to the public.” (emphasis added)); § 824d(g) (“With respect to a change described in subsection (d), if the Commission permits the 60

- day period es tablished therein to expire without36 the “power to initiate rate changes rests with the utility and cannot be appropriated by FERC in the absence of a finding that the existing rate was unlawful.” 105 T he Generators’ theory

would flip § 205(d) ’s protective intent on its head, enabling any aggrieved party t o invalidate a ny rate change by operation of

law simply by virtue of requesting judicial review

— a process the Generators’ theory reduces to a mechanical ex ercis e with only one possible outcome

. This cannot be right. If Congress’s

purpose w ere indeed to strip utilities of the protections afforded by § 205(d), or to otherwise invalidate orders by operation of law, it would have amended that portion of the statute accordingly, not create d a cumbersome workaround via § 205(g).

Moreover, t he G enerators’ reading would sap § 205(g)(1)(B) of purpose. It is a “ fundamental canon

of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.” 106 Here, § 205(g)(1)(B) appears as part of an enumerated list of provisions concerning aggrieved parties’ right to seek rehearing and judicial review of a change arising from agency inaction. It makes little sense to argue, as P3 does, that Congress’s purpose in requiring the Commissioners to add statements explaining their reasoning to the administrative record could have been to “facilitate compromises” and

issuing an order accepting or denying the change . . . the failure . . . shall be considered to be an order issued by the Commission accepting the change for purposes of” judicial review (emphasis added) ).

105 Atl. City Elec. Co. , 295 F.3d at 10.

106 King v. Burwell , 576 U.S. 473, 492 (2015) (quoting Util. Air Reg. Grp. V. EPA. , 573 U.S. 302, 320 (2014) ).37 promote transparency and good government only

. 107 T he right to judicial review accrue s after a party has been aggrieved by

a change, and therefore after the time for compromise has passed. 108 We agree with FERC that Congress intended “the Commissioners’ statements [ to] play an integral role in the

Court’s r eview .” 109 Here, the statements of the deadlocked Commissioners do more than record each person’s individual rationale for affirming or rejecting the rate filing. Collectively, they illuminate the agency’s reasons for inaction, which Congress has instructed us to construe as an affirmative

order. 110 B ecause FERC must accept a § 205 rate filing absent “a finding that the existing rate was unlawful,” 111 our thorough

consideration of the entire record must ensure that the

107 P3 Br. 37.

108 Notably, in neither of § 205(g)’s two enumerated clauses did Congress qualify “change” with any adjective (e.g., “proposed” or “potential”) to indicate that such change was pending, and not already in effect. Rather, the text plainly refers to the change in tariff effected by the agency’s inaction, pursuant to § 205(d).

109 FERC Br. 4.

110 P3 repeatedly asks us to vacate the September 29, 2021 Notice, treating that document as if it were a FERC order. P3 confuses the nature of that instrument, which does n ot itself

constitute reviewable FERC action but rather memorialized the results, already in effect, of the Commission’s inaction.

111 Atl. City Elec. Co. , 295 F.3d at 10 ; see Public Citizen , 839 F.3d at 1174 (noting the FPA does “not compel FERC to either set the disputed rates for hearing or affirmatively disapprove any unjust or unreasonable rates through the Section 205 process.”).38 Commissioners who did not find the 2021 MOPR unlawful engaged in “decisionmaking [that was] reasoned, principled, and based upon the record.” 112 While unusual, such a reading has precedent. In the Federal Election Commission Act, Congress similarly incorporated language making clear that a party aggrieved “by a failure of the Commission to act” may seek administrative appeal and judicial review. 113 As the D.C. Circuit Court of Appeals explained in Public Citizen , when the Federal Election

Commission deadlocks over whether to exercise its discretion to act, “[t]o make judicial review a meaningful exercise,’ [the court must] treat the statements of the Commissioners voti ng to dismiss the complaint as the administrative record.” 114 The

court in Public Citizen declined to follow this approach because, at the time, the FPA did not contain “a similar congressional indication” about how to construe agency
deadlock. 115 With § 2 05(g), Congress filled that gap

. 116

112 W. Res., Inc. v. FERC , 9 F.3d 1568, 1572 (D.C. Cir. 1993) (quoting Columbia Gas T ransmission Corp. v. FERC

, 628

F.2d 578

, 593 (D.C. Cir. 1979) ) ; see Fed. Election Comm’n v. Nat’l Republican Senatorial Comm. , 966 F.2d 1471, 1476 (D.C. Cir. 1992) (these commissioners “constitute a controlling group for purposes of the decision[ and] their rationale necessarily states the agency’s reasons for acting as it did.”).

113 52 U.S.C. § 30109(a)(8)(A).

114 Public Citizen , 839 F.3d at 1170 (citing Fed. Election

Comm’n

, 966 F.2d at 1476 ); see Com mon Cause v. Fed.

Election Comm ’ n. , 842 F.2d 436, 450 (D.C. Cir. 1988).

115 Public Citizen , 839 F.3d at 1171.

116 For this reason, P3 errs by relying on Public Citizen

, which turned on the absence of such an indication, for the proposition39 We disagree that § 205(g) contradicts the Commission’s enabling statute as codified at 42 U.S.C. § 7171(e), which states that “[a]ctions of the Commission shall be determined by a majority vote of the members present.” 117 Section 205(g) concerns only how agency inaction should be construed for the limited purposes of rehearing and review but does not illuminate what constitutes agency acti on per se. 118 Even if § 205(g) did contradict § 7171(e), traditional rules of statutory interpretation counsel that “[s]pecific terms prevail over the general in the same or another statute which otherwise might be controlling.” 119 Here, Congress identifie d narrow circumstances under which to construe inaction, in a particular way, for a specific purpose. 120

that FERC inaction cannot be construed as action for the purposes of judicial review.

117 P3 Br. 29, 34

– 36 (citing 42 U.S.C. § 7171(e) (“[a]ctions of the Commission shall be determined by a majority vote of the members present”) ; accord EPSA Br. 18, 21, 23 ; State Entities

Br. 29

– 30 (citing Public Citizen , 839 F.3d at 1169).

118 See 42 U.S.C. §7171(e).

119 Superior Oil Co. v. Andrus , 656 F.2d 33 , 36 (3d Cir. 1981)) (quoting Fourco Glass Co. v. Transmirra Corp.

, 353 U.S. 222,

228

– 29 (1957))

. 120 We have no “grave constitutional concern” that a single

Commissioner’ s views could stand for all when a rate filing

takes effect because the Commission has deadlocked. EPSA Br. 27. Under the terms of the statute, this circumstance would always result in two Commissioners’ views controlling

— the same number that would constitute an unobjectionable majority among a quorum of three Commissioners. Nevertheless, we do not decide today whether a constitutional40 For the foregoing reasons, we hold first that where a quorum of FERC Commissioners deadlocks two

- to

- two on a § 205 rate filing, our review of the res ulting order must adhere to

the same standard that would govern our review of an order approved by a FERC majority. 121 Second, we hold that our review properly encompass es the entire record, including the

four Commissioners ’ § 205(g)(1)(B) statement s

.

IV. Merits

We now reach the substance of the parties’ dispute.

C onstruing the agency’s deadlocked vote on the 2021 MOPR as an affirmative order consistent with § 205(g), and considering the Commissioners’ recorded statements, we
conclude that the rationale set forth in the Joint Statement for approving the 2021 MOPR was neither arbitrary nor capricious and was supported by substantial evidence in the record. We are not persuaded otherwise by the arguments set forth in the

other C ommissioners’ statements. Accordingly, we will deny the Generators’ petitions on the merits. 122

concern might arise when a rate filing goes into effect in the absence of a quorum, in which case the “views of a single

C ommissioner [could] . . . gain the force of law.” EPSA Br. 27, 28 (citing Seila Law LLC v. Consumer Fin. Prot. Bureau

, 140 S. Ct. 2183, 2201 (2020)).

121 NJBPU , 744 F.3d at 94 ( citing Sacramento Mun. Util.

Dist.

, 616 F.3d at 528 ).

122 P3 suggests that FERC’s order by operation of law pursuant to § 205 was facially improper because it overturned a tariff ordered by FERC under § 206, professing to be “ unaware of any authority that permits a public utility to change rates41 In reviewing FERC’s orders, we consider only “whether a rational basis exists for a conclusion, whether there has been an abuse of discretion, or . . . whether the Commission ’ s order is arbitrary or capricious or not in accordance with the purpose of the [FPA].” 123 “[B]ecause issues of rate design . . . involve policy judgments that lie at the core of the regulatory mission, our review of whether a particular rate design is just and

imposed on that utility by FERC under FPA section 206.” P3 Br. 31, 33 (“[T]he Notice must be vacated because it disregards the text and structure of the FPA by elevating a mere filing under section 205 above FERC orders under section 206.”).

T he State Entities similarly suggest the existence of a “higher Section 206 standard,” State Entities Br. 28, insisting that as a per se matter, “FERC cannot overturn its prior precedent through inaction,” State Entities Br. 28. Both parties are

incorrect. It is well

- settled that “[n]othing in section 206 sanctions denying petitioners their right to unilaterally file rate and term changes.” Atl. City Elec. Co. , 295 F.3d at 10 (collecting cases). Indeed, “courts have repeatedly held that FERC has no power to force public utilities to file parti cular rates unless it first finds the existing filed rates unlawful . . .

. Nor may FERC prohibit public utilities from filing changes in

the first instance.” Id . As intervenors for the respondent note

, P3’s interpretation would erode the careful balance that Congress has achieved in the statu t e by “gradually eliminat[ing] the utility’s rights under Section 205 . . . to set the rates it will charge prospective customers, and change them at will, subject to review by the Commission.” Respondent

Intervenors Br. 29 (quoting Atl. City Elec. Co. , 295 F.3d at 10) (cleaned up). Accordingly, we reject P3’s suggestion that a § 205 filing cannot displace a tariff set by § 206.

123 Cit y of Newark

, 763 F.2d at 545

.42 reasonable is highly deferential.” 124 The MOPR dispute concerns precisely such a judgment: How best to protect the integrity of the capacity market

, in view of the diverse and legitimate interests of its myriad stakeholders and the innumerable factors that influence price. FERC has approved various approaches to this

conundrum since 2006. W e have previously observed that “FERC is permitted to weigh the danger of price suppression against the counter

- danger of over

- mitigation, and determine

where it wishes to strike the balance.” 125 Here, t he 2021

MOPR reflect ed a shift away from the regime embraced in the 2019 MOPR, at least arguably toward the purpose of “address[ing] the concern that some market participants might have an incentive to depress market clearing prices by offering supply at less than a competitive level.” 126

Such shifts are permissible

. An a gency may alter its “view of what is in the public interest .” 127 The fact that contrary agency precedent exists “gives us no more power than usual to question the Commission’s substantive

determinations.” 128 T he agency need not establish that “the

124 Md. Pub. Serv. Comm’n v. FERC

, 632 F.3d 1283, 1286 (D.C. Cir. 2011)

. 125 NJBPU , 744 F.3d at 109

. 126 2011 Order at ¶ 6 (citing 2006 Settlement Order at ¶ 103 ).

127 Motor Vehicle Mfrs. Ass’n of United States, Inc. v. State

Farm Mut. Auto. Ins. Co.

, 463 U.S. 29, 57 (1983) (quoting Greater Bos. Television Corp. v. F.C.C.

, 444 F.2d 841, 852 (D.C. Cir. 1970) ) ; see NJPBU , 744 F.3d at 100.

128 NJPBU , 744 F.3d at 100 (quoting Nat’l Cable &

Telecomms. Ass’n v. F.C.C.

, 567 F.3d 659, 669 (D.C. Cir.

2009 )); s ee also Elec. Consumers Res. Council v. FERC

, 40743 reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the

agency believes it to be bette r.” 129

We hold that FERC met these criteria in constructively approving the 2021 MOPR

. The eighty

- six

- page Joint Statement acknowledged that the 2021 MOPR reflects a change in policy and identif ied reasons for finding the change just and reasonable. 130 Specifically, the authoring

F.3d 1232, 1239 (D.C. Cir. 2005) ( stating that a court’s deference to FERC on complex rate market design “is based on the understanding that the Commission will monitor its experiment and review it accordingly”).

129 F.C.C. v. Fox Television Stations, Inc. , 556 U.S. 502, 515 (2009).

130 The two commissioners who concluded t he 2021 MOPR was not just and reasonable issued separate statements articulating their views. While non

- identical, the

commission e rs reached the same core conclusi on: The 2021 MOPR did not meet the just and reasonable standard because

it was anti

- competitive. See JA012 9 (Christie Statement) (“[T] he PJM MOPR Proposal, now in effe c t by operation of law, forfeits any remaining credibility to the claim that the PJM

ca pacity market is based on actual competition or is run for the benefit of consumers”); JA0169 (Danly Statement) (“PJM’s proposal eliminating all mitigation of the price

- suppressive effects of state subsidies is irredeemably inconsistent with FPA section 205’s requirement that proposed rates must be just and reasonable.”). As discussed herein, these policy concerns are

addressed in the Joint Statement

, along with the authoring commissioners’ reasons for not adopting them, reasons which44 Commissioners asserted that a more narrowly targeted MOPR would benefit “investors and consumers alike” by “more accurately reflect[in g ] the facts and realities on the ground,” 131 while “provid [ ing ] a sufficient opportunity for resources to

re cover their costs.” 132 The Joint Statement noted that its policy might result in lower prices on the capacity market than

under the expanded 2019 MOPR but concluded that such a result is “just and reasonable because the market will reflect supply and demand fundamentals ,” 133 which include state policies alongside federal policies, “ [s] iting policies, tax rules, and labor regulations,” among others. 134 According to the

Joint Statement

, the 2019 MOPR allowed for an “artificially inflated price [that] will falsely signal that new entry is needed

or that e x isting resources should forestall retirement,” with potentially “detrimental effects on PJM’s energy and ancillary

services market s .” 135

T he Joint Statement identified specific changed circumstances to support these conclusions, including a proliferation of state policies to shape the resource mix that had occurred over the prior three years , largely to “address externalities that are neither accounted for nor compensated in

are neither arbitrary n or capricious and are based on substantial

evidence in the record. Because it may not, our conclusion in this regard does not derive from our own policy preferences. Rather, it accepts and reflects our role here as circumscribed by statute and precedent.

131 JA0060 ¶ 44

. 132 JA0060 ¶ 45

. 133 JA0067 ¶ 55.

134 JA0068 ¶¶ 56, 57.

135 JA0067 ¶ 54.45 PJM’s wholesale markets.” 136 The Joint Statement noted that “[s]tates are playing a more active role in shaping the resource

mix

— including both entry and exit

— than they w ere at the time the Commission issued previous orders addressing the scope and purpose of PJM’s MOPR.” 137 P olicies passed since 2018 alone could together “ support the entry of more than 44,000 MW of capacity into PJM’s capacity market over the next” fifteen years , the Joint Statement noted

. 138 The authoring Commissioners observed that failing to account for the contributions of these resources to capacit y could cost

consumers a total of $3.4 billion by 2030

. 139

The Joint Statement also analyzed the r esults of the first

base residual auction held under the 2019 MOPR

. The authoring Commissioners noted that a generating station benefitting from one state’s zero

- emission credit failed to cl e ar, and that “capacity prices likely increased by over $10/MW

day, or an additional $90 million in the ComEd zone, as a

result”

— harms that “can be expected to increase significantly as states continue to support resources that will not benefit

from the [2019] MOPR’s” e xclusions. 140 The Joint Statement also point ed to evidence that “several states have considered

136 JA0057 ¶ 36.

137 JA0070 ¶ 59.

138 JA0084 ¶ 80.

139 JA0064 ¶ 50. See Constellation Energy Commodities Grp.,

Inc. v. FERC

, 457 F.3d 14, 24 (D.C. Cir. 2006) (“ [I]t is within the scope of the agency’s expertise to make . . . a prediction about the market it regulates, and a reasonable prediction deserves our deference notwithstanding that there might also

be another reasonable view.” ) (cleaned up)

. 140 JA0066 ¶ 52.46 abandoning the capacity market altogether rather than have the resources needed to meet their public policy goals be subjected to mitigation,” an outcome that would threaten the purpose and

structure of the market itself. 141

Petitioner E PSA contends that the Joint Statement failed

to address the validity of any potential reliance interests

, arguing the “parties demonstrated that investors have sunk

many billions of dollars into constructing new power plants and maintaining existing ones, all in reliance on the existence of PJM market mechanisms that ensure a competitive marketplace, rather than a marketplace skewed by the participation of un

- economic reso urces.” 142 But a n agency not “writing on a blank slate” is required only to “ assess whether there were reliance interests, determine whether they were significant, and weigh any such interests against competing policy concerns. ” 143 Here, t h e Commissioners considered “arguments that the Expanded [2019] MOPR must be preserved because investors relied on it” but determined these

did not “tilt the balance” against their articulated policy

concerns , in light of the fact that the 2019 MOPR had been in place for a relatively short period during which it was “well

publicized” that “PJM was exploring the possibility of replacing the Expanded MOPR .” 144 As we concluded in 2014, responding to si milar arguments, “ we are not unsympathetic to [investor ’ s] arguments that they reasonably relied” on the

terms of the prior MOPR, but nevertheless “find no fault with

141 JA0070 ¶ 58.

142 EPSA Br. 3 0

. 143 Dep’t of Homeland Sec. v. Regents of the Univ. of California , 140 S. Ct. 1891, 1915 (2020).

144 JA0071 ¶ 61

.47 FERC’s ability to, and reasons for” constructively approving

the new one. 145

P3 challenges various technical provisions of the 2021

MOPR , devised by PJM to accomplish its twin policy objectives of mitigating offers resulting from the exercise of buy

- side market power and conditioned state support. From these objections, 146 P3 concludes that because PJM’s proposed

mechanism fail s to ensure adequately that “neither buyer nor seller have market power, ‘the prevailing price in the marketplace cannot be the final measure of “just and reasonable” rates mandated by the Act.’” 147

145 NJBPU

, 744 F.3d at 100.

146 P3 generally alleg es that both prongs are “unjust, unreasonable, and unduly discriminatory,” without articulating precisely how. With respect to the Buyer Side Market Power and Conditioned State Support provisions, including that (1) PJM’s proposed self

- certification process is insufficiently robust, (2) that its requirement that sellers self

- certify their intent is “easily evaded” and runs counter to prior policy approved by FERC; (3) the tests required upon review by the PJM and/or Independent Market Monitor are evadable and rely on concepts rejected, with FERC approval, in earlier MOPRs; and (4) the test is insufficiently transparent and affords too much discretion to PJM and the Independent Market Monitor.

See P3 Br. 51

– 54. With respect to the provisions related to

Condi tioned State Support, P3 argues that these are “riddled with practical defects,” improperly exempts existing policies,

and only mitigates state actions are already unlawful under the Supreme Court’s decision in Hughes v. Talen Energy Mktg,

LLC

, 578 U.S. 150 (2016)

. P3 Br. 49

– 50.

147 P3 Br. 47 (quoting FPC v. Texaco Inc. , 417 U.S. 380, 39748 We disagree. “ The statutory requirement that rates be

‘ jus t and reasonable ’ is obviously incapable of precise judicial definition, ” 148 and “FERC’s authority to determine whether wholesale rates are ‘just and reasonable’ is exclusive.” 149 W e “properly defer[] to policy determinations invoking the Commission’s expertise in evaluating complex market

conditions.” 150 Although “courts have never given regulators carte blanche,” 151 our review is “limited to ensuring that the Commission has made a principled and reasoned decision supported by the evidenti ary record.” 152 Here, the Joint

Statement responds to both the technical and policy criti cisms

levelled by P3 , concluding that the mechanisms proposed by

PJM were sufficient to mitigate anti

- competitive offers while “appropriately balanc[ing] the risk of under

- and over

-

(1974)) ; s ee P3 Br. 47

– 48 ( stating that the new rules “ do virtually nothing to prevent the exercise of state

- sponsored market power. Instead, they establish an opaque and toothless process of exclusions and exceptions that ‘is even worse than having no MOPR at all.’”) (quoting Comm’r Christie Statement, JA0125

– 26 ¶ 3).

148 Morgan Stanley Cap. Grp. Inc. v. Pub. Util. Dist. No. 1 of

Snohomish Cnty., Wash. , 554 U.S. 527, 5 32 (2008).

149 California ex rel. Lockyer v. FERC , 383 F.3d 1006, 1011 (9th Cir. 2004) (quoting Miss

. Power & Light Co. v. Mississippi

, 487 U.S. 354, 371 (1988) ).

150 Tenn. Gas Pipeline Co. v. FERC, 400 F.3d 23, 27 (D.C. Cir. 2005)

. 151 Emera Maine v. FERC , 854 F.3d 9, 22 (D.C. Cir. 2017) (quoting Elec. Consumers Res. Council v. FERC

, 747 F.2d 1511, 1514 (D.C. Cir. 1984)).

152 Id . (quoting S. Cal

. Edison Co. v. FERC , 717 F.3d 177, 181 (D.C. Cir. 2013)).49 mitigation.” 153 We cannot conclude on this record that the

Commission’s constructive acceptance of PJM’s § 205 filing as just and reasonable was arbitrary or capricious.

Finally, w e reject P3’s argument that the 2021 MOPR “unlawfully discriminates against competitive power suppliers,” as compared to state

- sponsored resources, by “reduc[ing] market prices below just and reasonable levels.” 154 As discussed above in depth, the Joint Statement set forth an adequate rationale for permitting PJM to implement a less expansive MOPR

. 155 Moreover, as FERC argues, the FPA

153 JA0096 ¶¶ 103, 105

– 06) ; s ee generally JA0100 ¶¶ 85

– 163.

154 P3 Br. 39.

155 Judge Roth also disagrees with the Generators’ contention that the 2021 MOPR is unlawfully discriminatory because it allows states to “‘impose [their] own policy choice on neighboring States’ or otherwise intrude upon the ‘autonomy of [other] States within their respective spheres.’” P3 Br. 42

– 43 (quoting BMW of N. Am. v. Gore , 517 U.S. 559, 571 (1996)) (quotations omitted); EPSA Br. 34

– 47. Rather, Judge Roth would conclude, consistent with New Jersey Board of Public

Utilities v. FERC , “ what FERC has actually done here is permit states to develop whatever capacity resources they wish, and to use those resources to any extent that they wish, while approving rules that prevent the state’s choices from adversely affecting wholesale capacity rates.” NJBPU , 744 F.3d at 98;

accord Hughes , 578 U.S. at 166 (“ Nothing in this opinion should be read to foreclose . . . States from encouraging production of new or clean generation through measures

‘ untethered to a generator’s wholesale market participation. ’ ”);

see Energy & Env’t Legal Inst. v. Epel , 793 F.3d 1169, 1173 (10th Cir. 2015) (rejecting a dormant Commerce Clause50 unambiguously authorizes the a gency to take state policies into account to the extent that such policies affect its statutorily prescribed area of focus: the justness and reasonableness of

wholesale rates.

V. Conclusion

For the forgoing reasons, we conclude that FERC’s constructive acceptance of the 2021 MOPR was neither arbitrary nor capricious and was supported by substantial

evidence in the record. We will accordingly deny the p etitions

for review

.

challenge to a state’s renewable energy mandate). Judge Roth particularly disapprove s of EPSA’s assertion, citing no relevant authority, that “FERC must therefore play the role of

federal referee for state intrusions into other States’ jurisdiction

, ” EPSA Br. 42

.