United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 2006 Decided January 12, 2007 

No. 04-1148 

NATIONAL ASSOCIATION OF REGULATORY UTILITY 

COMMISSIONERS, ET AL.,

PETITIONERS

V. 

FEDERAL ENERGY REGULATORY COMMISSION, 

RESPONDENT

TENASKA, INC., ET AL., 

INTERVENORS

Consolidated with 

04-1149, 04-1152, 05-1050, 05-1292 

On Petitions for Review of Orders of the 

Federal Energy Regulatory Commission 

Laurence G. Chaset argued the cause for Governmental 

Petitioners. With him on the briefs were James Bradford 

Ramsay, Thomas D. Samford, IV, Arocles Aguilar, Aubrey 

Williams Turner, Jr., Gisele Lunsford Rankin, Florence P. 

Belser, and Robert D. Cedarbaum. 
2

Andrew W. Tunnell argued the cause for Utility 

Petitioners. With him on the brief were S. Chris Still, Kevin 

A. McNamee, Neil H. Butterklee, John D. McGrane, Heath K. 

Knakmuhs, and Antoine P. Cobb. 

Lona T. Perry, Attorney, Federal Energy Regulatory 

Commission, argued the cause for respondent. With her on 

the brief were Robert H. Solomon, Solicitor, and Samuel 

Soopper, Attorney. 

Ashley C. Parrish argued the cause for intervenors 

Tenaska, Inc., et al. With her on the briefs were Neil L. Levy, 

Jennifer L. Key, Glen L. Ortman, Harvey L. Reiter, and 

Jonathan D. Schneider. Gregory O. Olaniran entered an 

appearance. 

Before: SENTELLE, Circuit Judge, and EDWARDS and

WILLIAMS, Senior Circuit Judges. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

Opinion dissenting in part filed by Circuit Judge

SENTELLE. 

WILLIAMS, Senior Circuit Judge: In 1996 the Federal 

Energy Regulatory Commission issued Order No. 888 in the 

hopes of fostering competition in the electric generating 

industry. Such competition clearly depended on generators’ 

having adequate means of getting their power to market. 

FERC’s solution in Order No. 888 was to require transmission 

providers, which typically have a natural monopoly, to give 

generators equal access to transmission facilities. The 

Commission implemented the requirement in part by 

mandating the filing of suitable tariffs. See Transmission 

Access Policy Study Group v. FERC, 225 F.3d 667, 682–83 
3

(D.C. Cir. 2000) (“TAPS”). We affirmed Order No. 888 in 

TAPS. 

In the period directly after issuing Order No. 888, FERC 

had monitored one element of the process—the 

interconnection agreements between operators of generators 

and transmission facilities—on a case-by-case basis. Finding 

that approach “inadequate” and “inefficient,” FERC issued 

Order No. 2003 and three successive rehearing orders. 

Standardization of Generator Interconnection Agreements 

and Procedures, Order No. 2003, 104 F.E.R.C. ¶ 61,103 at 

30,430 P 10 (2003), order on reh’g, Order No. 2003-A, 106 

F.E.R.C. ¶ 61,220 (2004), order on reh’g, Order No. 2003-B, 

109 F.E.R.C. ¶ 61,287 (2004), order on reh’g, Order No. 

2003-C, 111 F.E.R.C. ¶ 61,401 (2005). In the interests of 

achieving transparency and preventing transmission facility 

owners from favoring affiliated generators over independents 

in interconnection, the orders require all transmission facilities 

to adopt a standard agreement for interconnecting with 

generators larger than 20 megawatts. 

Here we review claims advanced by two sets of 

petitioners (the two sets are generally aligned with each other 

in their positions): four utilities (“Utility Petitioners”) and six 

state regulatory agencies (together with an association of such 

agencies, the National Association of Regulatory Utility 

Commissioners) (“Governmental Petitioners”). They 

challenge Order No. 2003 and its sequels on the grounds that 

FERC exceeded its jurisdiction, unlawfully commandeered 

states, departed from its own precedent without explanation, 

and made policy decisions that are arbitrary and capricious. 

We reject all of these claims and affirm the orders. 
4

* * * 

Petitioners raise a succession of claims that FERC’s 

orders usurp jurisdiction not provided by Congress. FERC’s 

interpretations of the jurisdictional provisions of the Federal 

Power Act (the “Act”) enjoy Chevron deference. Detroit 

Edison Co. v. FERC, 334 F.3d 48, 53 (D.C. Cir. 2003) (citing 

TAPS, 225 F.3d at 694). 

Section 201(b)(1) of the Act makes the statute applicable 

to “the transmission of electric energy in interstate commerce 

and to the sale of electric energy at wholesale in interstate 

commerce” and gives FERC jurisdiction not only over such 

transmission and sales but also over “all facilities for such 

transmission or sale of electric energy.” 16 U.S.C. 

§ 824(b)(1). At the same time the Act precludes FERC 

“jurisdiction . . . over facilities used in local distribution or 

only for the transmission of electric energy in intrastate 

commerce.” Id. Order No. 2003 asserts jurisdiction over the 

terms of interconnection between generators and transmission 

providers, even where the transmission facility also engages in 

local distribution, but only insofar as the interconnections are 

“for the purpose of making sales of electric energy for resale 

in interstate commerce.” Order No. 2003 at 30,545–46 P 804. 

Utility Petitioners claim that this represents an unlawful 

exercise of jurisdiction over dual-use facilities—ones that 

engage in both transmission and local distribution. 

Petitioners believe that our opinion in Detroit Edison 

controls. There we rejected FERC’s attempt to assert 

jurisdiction over unbundled retail service, although such 

service involved neither jurisdictional sales nor jurisdictional 

transmission. Sales under FERC-jurisdictional tariffs would 

have enabled the shipper to escape stranded cost charges 

imposed under state-approved tariffs. 334 F.3d at 52. 

FERC’s purported jurisdictional hook was that the power was 
5

being shipped over dual-use facilities that provided both retail 

and wholesale distribution services. Id. at 52, 54. We were 

unconvinced by this theory for asserting jurisdiction over nonjurisdictional transactions. 

Here the issue is the inverse of Detroit Edison; Order No. 

2003 applies to jurisdictional transactions only. FERC 

determined that the provisions of Order No. 2003 should 

apply “to interconnections to the facilities of a public utility’s 

Transmission System that, at the time the interconnection is 

requested, may be used either to transmit electric energy in 

interstate commerce or to sell electric energy at wholesale in 

interstate commerce.” Order No. 2003-C at 31,656 P 51. 

“Interconnections,” though seemingly not defined explicitly in 

the orders, clearly are not “facilities,” as that would make the 

term “Interconnection Facilities,” as used in the standardized 

agreements, a redundancy. See, e.g., Order No. 2003 at 

30,577. In fact interconnections appear to be relationships 

between parties with respect to electricity flowing over 

facilities, and the orders here by their terms control the 

agreements governing those relationships. See, e.g., 

“Standard Large Generator Interconnection Agreement 

(LGIA),” id. at 30,616–67. By establishing standard 

agreements FERC has exercised its jurisdiction over the terms

of those relationships. Cf. TAPS, 225 F.3d at 696 (“FPA 

§ 201 makes clear that all aspects of wholesale sales are 

subject to federal regulation, regardless of the facilities used.” 

(emphasis added)). 

In their reply briefs petitioners note that the orders 

regulate certain facets of the engineering and construction of 

facilities needed for the relevant transmissions. Utility 

Petitioners’ Reply Br. at 4; Governmental Petitioners’ Reply 

Br. at 5–6 & n.9. But petitioners identify no specific aspect of 

the regulations that they claim is untethered to the 

Commission’s authority over interstate transmissions and 
6

wholesale sales. As FERC’s authority generally rests on the 

public interest in constraining exercises of market power, see 

Associated Gas Distributors v. FERC, 824 F.2d 981, 1003 

(D.C. Cir. 1987), whether in the utility’s rates or other service 

terms, and as a common test for the lawfulness of rates is their 

connection to the reasonably-incurred costs of providing the 

regulated service, National Fuel Gas Supply Corp. v. FERC, 

900 F.2d 340 (D.C. Cir. 1990), it is hard to see how the statute 

could leave FERC weaponless against conduct that might 

encourage or cloak the running up of unreasonable costs. The 

Commission’s indisputable authority to disallow recovery of 

costs imprudently incurred by jurisdictional firms may, of 

course, impinge as a practical matter on the behavior of nonjurisdictional ones. So far as appears, petitioners in this facial 

attack have identified no impingement that exceeds what may 

be encompassed in such conventional exercises of 

jurisdiction. 

Utility Petitioners also dispute FERC’s assertion of 

jurisdiction over facilities jointly owned by private firms and 

states. This presents questions analogous to those raised by 

the transmission-and-distribution facilities just discussed, 

though here the divide is between private and public 

ownership rather than between transmission and distribution. 

Section § 201(f) of the Act provides that “[n]o provision in 

this subchapter shall apply to, or be deemed to include, the 

United States, a State or any political subdivision of a State.” 

16 U.S.C. § 824(f). (They are brought back in with respect to 

particular sections not relevant here. See §3(22) of the Act, 

16 U.S.C. § 796(22); §§ 210–213, 16 U.S.C. §§ 824i–824l; 

Bonneville Power Administration v. FERC, 422 F.3d 908, 916 

(9th Cir. 2005).) Therefore, according to petitioners, FERC 

may not regulate jointly-owned facilities. Although Order 

No. 2003 explicitly states that it applies only “to 

Interconnection Service provided by the public utility on its 

portion of a jointly owned facility,” Order No. 2003 at 30,546 
7

P 807, petitioners claim that FERC’s purported distinction is 

not possible. In their view, an interconnection affects an 

entire facility, not simply the public utility’s portion, and 

FERC’s purported exercise of authority over the service 

therefore violates § 201(f). The argument fails for reasons 

similar to those discussed in the context of FERC’s authority 

to regulate jurisdictional transactions occurring over nonjurisdictional facilities. 

Any proper construction of § 201 must give effect to both 

FERC’s jurisdiction over certain transactions occurring over 

public utilities and to § 201(f)’s exclusion of state facilities. 

As FERC notes in its brief, jurisdictional utilities should not 

be able, without linguistic support from Congress, to escape 

regulation “simply by partnering with non-jurisdictional 

utilities.” Respondent’s Br. at 32. FERC navigated a similar 

problem in Order No. 888, which required equal access to 

transmission services. There the Commission stated clearly 

that it had authority to regulate a public utility, 

notwithstanding incidental effects on nonjurisdictional 

entities: 

The fact that a public utility may jointly own, with a nonjurisdictional entity, transmission facilities through which 

it engages in sales for resale and/or transmission of 

electric energy in interstate commerce does not alter the 

Commission’s authority to regulate that public utility. . . . 

The fact that . . . an order may affect a non-jurisdictional 

joint owner does not undermine the validity of the 

Commission’s order. 

Order No. 888-A, FERC Stats. & Regs. ¶ 61,182 at 30,219, 62 

Fed. Reg. 12,274, 12,300/2 (Mar. 4, 1997). FERC relied on 

the same logic in Order No. 2003. See Order No. 2003 at 

30,546 P 807. Utility Petitioners accept the validity of Order 

No. 888 as well as other cases that they view as 
8

distinguishable from the present situation. See, e.g., MidContinent Area Power Pool, 89 F.E.R.C. ¶ 61,135 at 61,387–

88 (1999); Bonneville Power, 422 F.3d at 925. 

According to petitioners, however, Order No. 888 

affected the non-jurisdictional entities only in the sense of 

invalidating contractual provisions between jurisdictional and 

non-jurisdictional co-owners, whereas Order No. 2003 

“addresses the request for and construction of facilities . . . by 

a non-jurisdictional co-owner.” Utility Petitioners’ Reply Br. 

at 5–6. The supposed distinction is of no account, however. 

As discussed above, assertion 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. The contract modifications 

mandated in Order No. 888, forcing the non-jurisdictional 

owner to permit certain transactions to occur over the jointly 

owned facility, obviously affected that owner’s ownership 

rights in, and conduct with respect to, the facility; the 

modifications removed a hitherto valid veto power over the 

use in question. To the extent that Order No. 2003 conditions 

a jurisdictional utility’s participation in the transmission and 

interconnection markets on that utility’s securing physical 

changes in the facilities, and those changes bear a close 

enough relation to FERC’s exercise of jurisdiction over 

jurisdictional transactions (petitioners pose no challenge to the 

adequacy of that relation), the Order effects no legally 

material extension of the authority exercised in Order No. 

888. 

The Governmental Petitioners challenge FERC’s 

articulation of its assertion of jurisdiction over 

interconnections with dual-use facilities (ones for 

transmission and local distribution)—namely, FERC’s claim 

of authority where such facilities are “used to transmit electric 

energy in interstate commerce on behalf of a wholesale 
9

purchaser pursuant to a Commission-filed OATT [Open 

Access Transmission Tariff].” Order No. 2003 at 30,545–46 

P 804. See also Order No. 2003-A at 31,071–72 P 710. 

Governmental Petitioners claim that this involves 

jurisdictional “boot-strapping.” They cite our opinion in 

Columbia Gas Transmission Corp. v. FERC, 404 F.3d 459 

(D.C. Cir. 2005), where FERC had asserted jurisdiction based 

solely on a voluntarily filed tariff “even if FERC would not 

otherwise have jurisdiction.” Id. at 461. Here we have the 

exact opposite of boot-strapping. FERC is exercising 

jurisdiction only over “interconnections to a ‘distribution’ 

facility when the facility is included in a public utility’s 

Commission-filed OATT and the interconnection is for the 

purpose of facilitating a jurisdictional wholesale sale of 

electric energy.” Order No. 2003-A at 31,075 P 730 

(emphasis added). 

Governmental Petitioners also object that FERC’s 

approach creates uncertainty by making jurisdiction turn on 

(among other things) whether the facility is covered by an 

OATT. FERC acknowledged the potentiality for uncertainty, 

but reasoned that most cases would present no controversy 

and that, if a dispute should arise, it would depend in the first 

instance on the transmission provider to make the relevant 

information available to potential interconnecting customers. 

Order No. 2003-A at 31,072 P 712. On the record before us, 

we see no grounds for upsetting the Commission’s judgment. 

Closely related to the jurisdictional claims is the 

Governmental Petitioners’ assertion that FERC erred by not 

applying its seven-factor test, which we approved in TAPS, 

225 F.3d at 696, to determine whether a facility is an exempt 

local distribution facility or a covered transmission facility. 

But here, as often mentioned above, at least with regard to the 

exercises of power disputed before us, FERC is exerting 

jurisdiction over transactions, based on the transactions’ 
10

satisfaction of the Act’s jurisdictional criteria. It thus has had 

no occasion to decide whether a facility as such should be 

classified as jurisdictional or not. 

* * * 

In its proposal leading to Order No. 2003 FERC had 

contemplated requiring transmission providers to use 

reasonable efforts, including available “eminent domain 

authority, if necessary, to facilitate the interconnection” of 

generators. See Order No. 2003 at 30,483 P 384. Responding 

to comments suggesting that the requirement would unduly 

burden transmission firms, id. at 30,484 P 391, FERC reduced 

this to a provision forbidding such firms from discriminating 

in the exercise of eminent domain powers to the detriment of 

independent generators and to the advantage of affiliates. See, 

e.g., Order No. 2003-A at 31,003 P 298. Utility Petitioners 

object that these provisions of Order No. 2003 and its sequels 

impermissibly “commandeer” states’ eminent domain 

authority, contrary to the Supreme Court’s holdings in New 

York v. United States, 505 U.S. 144 (1992), and Printz v. 

United States, 521 U.S. 898 (1997). Whether FERC has 

commandeered states is a question of law that we review de 

novo. 

The orders here are a far cry from what the Supreme 

Court found objectionable in New York and Printz. In New 

York, the Court invalidated a provision of the Low-Level 

Radioactive Waste Policy Amendments of 1985 that gave 

states a Hobson’s choice: either take title to low-level 

radioactive waste generated by third parties or regulate the 

waste pursuant to Congress’s direction. Congress didn’t have 

authority to impose either option on states directly and thus 

could not force states to choose one or the other. The Court 

emphasized that Congress may not “commandeer” states by 
11

compelling them either to create or administer a federal 

regulatory scheme. 505 U.S. at 174–77. In Printz the Court 

found that New York’s anti-commandeering principle 

precluded a provision of the Brady Handgun Violence 

Prevention Act requiring local law enforcement officers to 

help conduct background checks on individuals seeking to 

purchase a firearm. 521 U.S. at 933. 

We recognize that a state’s authority to exercise the 

eminent domain power, and to license public utilities to do so, 

is an important state power. But FERC has done nothing 

more than impose a non-discrimination provision on public 

utilities. The orders explicitly leave state law untouched, 

specifying that any exercise of eminent domain by a public 

utility pursuant to the orders’ non-discrimination mandate be 

“consistent with state law.” Order No. 2003-A at 31,144, 

LGIA § 5.13; see also id. at 31,004 P 300. Thus the states 

remain completely free to continue licensing public utilities to 

exercise eminent domain, or to discontinue that practice. To 

be sure, if hitherto a utility would not have exercised eminent 

domain to enable interconnection with an independent 

generator, the orders, conditionally, compel the utility either 

to broaden its use of the state-provided authority for the 

benefit of independents, or to drop the use for its own and its 

affiliates’ power. But the modifier conditionally is critical. 

Nothing in the federal rule compels either continued state 

retention of the license, or public utilities’ continued 

employment of eminent domain. The intrusion on state power 

is surely no greater than (many would say dramatically less 

than) that of a federal command that, if a state hires 

employees for the performance of traditional governmental 

functions, it must pay them no less than a federally 

determined wage. See Garcia v. San Antonio Metropolitan 

Transit Authority, 469 U.S. 528 (1985). Moreover, we 

believe that our dissenting colleague’s focus on the “plain 

statement” requirement that applies to purported federal 
12

creation of state obligations is misplaced; the orders here 

leave state law completely undisturbed and bind only 

utilities—not state officials. 

Related to Utility Petitioners’ “commandeering” claim is 

their assertion that Order No. 2003-A involves an unlawful 

taking. They concede, as they must, that the Order explicitly 

requires that any uses of eminent domain by transmission 

providers be at the expense of the benefiting generator. Order 

No. 2003-A at 31,003 P 298. But the Utility Petitioners claim 

that exercising eminent domain power on behalf of 

independent generators could undermine transmission 

providers’ “good will” in their relation to landowners. 

Assuming that that is so, we note that petitioners make no 

claim that the injury to such good will is any more severe than 

the one inflicted by uses of eminent domain for 

interconnection to affiliated generators. Anti-discrimination 

rules commonly require the incurrence of costs by the 

obligated parties; their very imposition presupposes that some 

such parties would, in pursuit of their self-interest, violate the 

anti-discrimination norm. We cannot see that the potential 

loss of good will rises above the sort of costs commonly 

inflicted by such mandates. 

* * * 

The remaining significant challenge, brought by both sets 

of petitioners, is to the so-called “At or Beyond” rule. The 

rule is intended to guide assignment of costs as between a 

transmission facility and an interconnecting generator. Under 

the rule, “the Interconnection Customer [is] solely responsible 

for the costs of Interconnection Facilities, which are defined 

as all facilities and equipment between the Generating Facility 

and the Point of Interconnection with the Transmission 

System. Network Upgrades, which are defined as all facilities 
13

and equipment constructed at or beyond the Point of 

Interconnection for the purpose of accommodating the new 

Generating Facility,” are (ultimately) the responsibility of the 

“Transmission Provider.” Order No. 2003 at 30,518–19 P 676 

(emphasis added). 

Petitioners claim that the “At or Beyond” rule departs 

from the Commission’s own precedents, is based on factual 

conclusions unsupported by substantial evidence, and is 

otherwise arbitrary or capricious. In our review we defer to 

an agency’s reasonable application of its own precedents and 

uphold factual conclusions supported by substantial evidence. 

See Williams Gas Processing – Gulf Coast Co., L.P. v. FERC, 

373 F.3d 1335, 1341 (D.C. Cir. 2004). We reject all of these 

assertions. 

In their claim of departure from precedent, petitioners 

point to our decision in Entergy Services, Inc. v. FERC, 391 

F.3d 1240 (D.C. Cir. 2004). There we considered whether 

FERC’s use of the “At or Beyond” rule in the decision under 

review represented a departure from an earlier FERC decision, 

Consumers Energy Co., 95 F.E.R.C. ¶ 61,233 (2001), in 

which FERC had used a “From” test to differentiate between 

Network Upgrades and Interconnection Facilities, assigning 

the transmission provider only the costs for “facilities from the 

point where the generator connects to the grid,” id. at 61,804 

(emphasis added). In Entergy we explicitly observed that the 

two tests might be fully consistent, see Entergy, 391 F.3d at 

1249, 1251, but we thought that the difference in language 

was potentially significant and that FERC had failed to 

adequately explain its precedents, see id. at 1251. 

In its order on remand from Entergy, Nevada Power Co., 

113 F.E.R.C. ¶ 61,007 (2005), the Commission explained both 

the relation between the two labels and prior anomalies in its 

rulings. In essence, it said that “From” was a vague term and 
14

that “At or Beyond” was simply “clearer terminology” that 

offered “a more precise way” of explaining FERC precedent. 

Id. at 61,013 P 12. And, acknowledging some past anomalies 

(principally in Consumers Energy), in which it had assigned 

to the interconnecting generator the cost of some facilities at 

the actual point of interconnection, it explained that “the issue 

was not raised, and the Commission did not discuss it or rule 

on it.” Id. at 61,013 P 13; see also id. at 61,014 PP 14–15. 

We note that since then the Commission has continued to 

adhere to the “At or Beyond” approach. See Duke Energy 

Hinds, LLC, 117 F.E.R.C. ¶ 61,210 at *5 P 23 (2006). In 

short, the “At or Beyond” rule can no longer be considered an 

unexplained departure from FERC precedent. 

Petitioners also contend that the “At or Beyond” rule 

violates the basic “cost causation” principle, under which 

costs are to be allocated to those who cause the costs to be 

incurred and reap the resulting benefits. But FERC has long 

taken the view that customer “but-for” causation isn’t 

dispositive of this issue. “[E]ven if a customer can be said to 

have caused the addition of a grid facility, the addition 

represents a system expansion used by and benefitting all

users due to the integrated nature of the grid.” Public Service 

Co. of Colorado, 62 F.E.R.C. ¶ 61,013 at 61,061 (1993). 

(Indeed, for purposes of marginal cost pricing, all customers 

cause the incurrence of the costs associated with coincident 

peak load, whether by adding or merely continuing their 

usage. Town of Norwood, Mass. v. FERC, 962 F.2d 20, 24 

n.1 (D.C. Cir. 1992).) We have endorsed the approach of 

“assign[ing] the costs of system-wide benefits to all customers 

on an integrated transmission grid.” Western Massachusetts 

Electric Co. v. FERC, 165 F.3d 922, 927 (D.C. Cir. 1999). 

Utility Petitioners take issue, however, with the empirical 

conclusion that Network Upgrades benefit the entire network. 

They point to an affidavit by James E. Howell, Jr., an 
15

administrator with Southern Company Services, who claimed 

that the addition of unnecessary new facilities causes 

interruptions with power lines and decreases the network’s 

reliability. Utility Petitioners object that because FERC did 

not address the Howell Affidavit directly, the Commission’s 

factual conclusions are unsupported by substantial evidence. 

The doctrine obliging agencies to address significant 

comments leaves them free to ignore insignificant ones. See 

Troy Corp. v. Browner, 120 F.3d 277, 289 (D.C. Cir. 1997). 

The evidence to which the petitioners point is one conclusory 

paragraph that offers no specific basis for undermining the 

Commission’s long-held understanding that Network 

Upgrades provide system-wide benefits. FERC said as much 

in Order No. 2003-B, referring to the contents of the Howell 

Affidavit as “unsupported hypothetical generalizations.” 

Order No. 2003-B at 31,292 P 56. Though the modifier 

“hypothetical” is inaccurate (the paragraph asserts flat out, for 

example, that “installation of a new substation . . . results in 

the affected transmission line being less reliable”), Howell’s 

generalizations are indeed unsupported, and thus insufficient

(on their own) to draw in question the factual premises 

underlying the Commission’s cost assignment practice. 

Both sets of petitioners argue that the “At or Beyond” 

rule is inconsistent with FERC’s obligation to ensure efficient 

siting of facilities pursuant to § 212 of the Act, 16 U.S.C. 

§ 824k, added by the Energy Policy Act of 1992. In pursuit of 

this claim Governmental Petitioners misquote § 212(a) as 

saying that the rates and terms in question must “promote the 

economically efficient siting of transmission and generation of 

electricity.” Governmental Petitioners’ Br. at 35 (emphasis 

added). The word “siting” in fact appears nowhere in the 

relevant section. In reality the statute requires that rates 

“promote the economically efficient transmission and 

generation of electricity.” 16 U.S.C. § 824k(a). No matter; 

FERC has understandably identified efficient siting as one of 
16

its goals in administering the statute. Pricing Policy for 

Transmission Services; Policy Statement, 59 Fed. Reg. 

55,031, 55,035 (Oct. 26, 1994). 

Petitioners’ argument is essentially that assignment to the 

transmission owner of the costs of facilities located at or 

beyond the point of interconnection creates an improper 

incentive. This is in essence a variation on petitioners’ 

argument that the “At or Beyond” rule violates cost causation 

principles. Recall that the rule sticks generator owners with 

the entire cost of the link between the generator and the 

transmission facility; that, presumably, is the cost most 

affected by siting choices. Siting also will affect the 

economic viability of the interconnection upgrades. Order 

2003-B at 31,288 PP 32, 33. As to these, the orders require 

the generator to supply the upfront financing; more important, 

they call for a rate structure that imposes on the generator 

most or all of the risk of non-recovery. Order No. 2003-A at 

31,054 P 613. We see no substantial basis for petitioners’ 

siting incentive theory. 

* * * 

Petitioners’ remaining objections concern the effectuation 

of the larger policies we’ve already discussed. These are 

questions of agency policy that we would overturn only if the 

Commission’s decisions were arbitrary or capricious. 5 

U.S.C. § 706(2)(A). Having carefully considered petitioners’ 

arguments and FERC’s explanations of its policies in the 

orders under review, we see no basis for any such finding. 

The issues do not merit discussion in a published opinion. 
17

* * * 

For the foregoing reasons, we uphold Orders No. 2003, 

2003-A, 2003-B, and 2003-C against all objections raised by 

petitioners. 

So ordered.
SENTELLE, Circuit Judge, dissenting in part: I concur in

most of the majority’s opinion, but I cannot join that part of the

opinion that upholds the eminent domain provisions of Order

No. 2003. See Maj. Op. 10-12. FERC is a “creature of statute,”

and the agency has “only those authorities conferred upon it by

Congress.” Cal. Indep. Sys. Operator Corp. v. FERC, 372 F.3d

395, 398 (D.C. Cir. 2004) (internal quotation marks omitted).

“[A]n agency literally has no power to act . . . unless and until

Congress confers power upon it.” Id. (quoting La. Pub. Serv.

Comm’n v. FCC, 476 U.S. 355, 374 (1986)). I do not believe

that Congress has authorized FERC to regulate the use of stategranted eminent domain power, and thus I respectfully dissent

from that portion of the majority’s opinion.

* * *

Under FERC’s new Standard Large Generator

Interconnection Agreement, transmission providers are required

to take certain steps to help generators obtain necessary land for

interconnection facilities. Transmission providers “shall at

Interconnection Customer’s expense use efforts, similar in

nature and extent to those that it typically undertakes on its own

behalf or on behalf of its Affiliates, including use of its eminent

domain authority.” Order No. 2003-A, 69 Fed. Reg. 15,932,

15,953-54, 16,033 (2004). In other words, to the extent that

transmission providers use eminent domain to interconnect with

their own generation facilities, they must now use eminent

domain on behalf of unaffiliated generators as well. The issue

before us is whether FERC has statutory authority to regulate

transmission providers’ use of state-granted eminent domain

power, and – if FERC does have such authority – whether the

provisions of Order No. 2003 that address eminent domain are

constitutional.
2

Courts may not presume that Congress has intended to

regulate the “substantial sovereign powers” of states unless the

federal statute in question is unmistakably clear. The Supreme

Court has held that “if Congress intends to alter the usual

constitutional balance between the States and the Federal

Government, it must make its intention to do so unmistakably

clear in the language of the statute.” Gregory v. Ashcroft, 501

U.S. 452, 460-61 (1991) (quoting Atascadero State Hosp. v.

Scanlon, 473 U.S. 234, 242 (1985)) (internal quotation marks

omitted). “This plain statement rule is nothing more than an

acknowledgment that the States retain substantial sovereign

powers under our constitutional scheme, powers with which

Congress does not readily interfere.” Gregory, 501 U.S. at 461.

Courts have applied this clear statement rule in a variety of cases

involving federal regulation of the “substantial sovereign

powers” of the states. See, e.g., Raygor v. Regents of Univ. of

Minn., 534 U.S. 533, 543-44 (2002) (whether the federal

supplemental jurisdiction statute tolls the statutes of limitation

for state law claims in state court); Kimel v. Fla. Bd. of Regents,

528 U.S. 62, 73-74 (2000) (whether a federal statute abrogates

state sovereign immunity); Gregory, 501 U.S. at 461-67

(whether the federal Age Discrimination in Employment Act

applies to state judges); Will v. Mich. Dep’t of State Police, 491

U.S. 58, 65 (1989) (whether states are “persons” that may be

sued under 42 U.S.C. § 1983); Rice v. Santa Fe Elevator Corp.,

331 U.S. 218, 230 (1947) (whether a federal statute preempts

state law); Am. Bar Ass’n v. FTC, 430 F.3d 457, 471-72 (D.C.

Cir. 2005) (whether a federal statute should be interpreted to

regulate the practice of law, which has long been regulated at the

state level).

I believe that eminent domain is easily classified as a

“substantial sovereign power” of the states, and thus the clear

statement rule applies to federal regulation of this power.

Courts have long recognized that eminent domain is at the very
3

core of state sovereignty. As the Supreme Court has stated:

The power of eminent domain is an attribute of sovereignty,

and inheres in every independent state. . . . The taking of

private property for public use upon just compensation is so

often necessary for the proper performance of governmental

functions that the power is deemed to be essential to the life

of the state. It cannot be surrendered, and if attempted to be

contracted away, it may be resumed at will.

Georgia v. City of Chattanooga, 264 U.S. 472, 480 (1924). See

also Jackson v. Metro. Edison Co., 419 U.S. 345, 353 (1974)

(noting that eminent domain “is traditionally associated with

[state] sovereignty”). Courts have also emphasized that even if

eminent domain authority has been delegated to a public utility

or a privately-owned corporation, it is still the state that is acting

whenever the eminent domain power is used:

The right of eminent domain is an attribute of sovereignty.

. . . It is none the less a public right, because the state

sometimes consents that it may be exercised by a quasi

public corporation, like a common carrier. Such license or

permission is granted because its exertion in that form is

thought to be for the public interest. . . . It permits them to

proceed in their own names, but really on behalf of the state

. . . .

Louisville & N.R. Co. v. W. Union Tel. Co., 268 F. 4, 8 (6th Cir.

1920). See also Baldwin v. Appalachian Power Co., 556 F.2d

241 (4th Cir. 1977) (“By exercising the delegated power of

eminent domain, a public service corporation acts as an agent of

the state . . .”); Louisiana v. Chambers Inv. Co., 595 So.2d 598,

601 (La. 1992) (“[Eminent domain] always involves the taking

or damaging of property interests by the state or some alter ego

of the state, such as a public utility, that has been delegated the
4

power to condemn.”); Wissler v. Yadkin River Power Co., 74

S.E. 460, 460 (N.C. 1912) (“This power of eminent domain is

conferred upon corporations affected with public use, not so

much for the benefit of the corporations themselves, but for the

use and benefit of the people at large.”). Thus, eminent domain

is properly categorized as a “substantial sovereign power” of the

states, even when that power has been delegated to a public

utility. Accordingly, we should not presume that Congress

intended to regulate the use of state eminent domain authority

unless the federal statute in question is “unmistakably clear.”

Turning to the instant case, Order No. 2003 will require

transmission providers either to forego the use of their stategranted eminent domain power altogether, or to use this power

to condemn property on behalf of unaffiliated generators. These

provisions of Order No. 2003 cannot possibly be lawful unless

Congress has “unmistakably” authorized FERC to regulate the

use of state-granted eminent domain power. FERC has not

identified – and I have not found – any such clear statement of

congressional intent in the relevant statutes. The federal statutes

pertaining to the “regulation and development of power” are

codified in title 16 of the U.S. Code. See 16 U.S.C. §§ 791-839.

Noticeably absent from these sections of the Code is any

provision granting FERC authority to dictate the manner in

which state eminent domain power may be used.

Congress’s treatment of eminent domain in other provisions

of the energy statutes confirms that we should not infer from

FERC’s general grant of jurisdiction that the agency also has the

power to regulate state eminent domain. When Congress

addresses issues involving eminent domain, it tends to do so in

a clear, detailed, and specific manner. See 16 U.S.C. § 824a4(a) (granting the Secretary of Energy limited authority to use

eminent domain to acquire rights-of-way “through North

Dakota, South Dakota, and Nebraska for transmission facilities
5

for the seasonal diversity exchange of electric power to and from

Canada”); id. § 824p(e) (granting eminent domain authority to

certain licensees to build transmission facilities in “national

interest electric transmission corridor[s]”); id. § 814 (granting

eminent domain authority to certain licensees to acquire land

“necessary to the construction, maintenance, or operation of any

dam, reservoir, diversion structure, or the works appurtenant

thereto”); id. § 831c(h)-(i) (authorizing the TVA to use eminent

domain to “acquire real estate for the construction of dams,

reservoirs, transmission lines, power houses, and other

structures, and navigation projects at any point along the

Tennessee River”). Although these provisions address federal

eminent domain authority – rather than FERC’s power to

regulate state eminent domain – they nonetheless show the

specificity that Congress uses when it addresses eminent

domain. These provisions reinforce my conclusion that FERC’s

jurisdiction over interstate transmission and wholesale sales of

electric energy does not include – sub silentio – the authority to

regulate state eminent domain.

* * *

Under well-established principles of statutory interpretation,

courts should not presume that Congress has intruded upon a

core area of state sovereignty unless the relevant federal statute

is clear and unambiguous. Here, FERC has not identified any

federal statute that clearly authorizes the Commission to

regulate the use of state eminent domain power. Thus, I would

hold that the provisions of Order No. 2003 that impose

restrictions on transmission providers’ use of state-granted

eminent domain power are beyond the scope of FERC’s

statutory authority. Because I would resolve this issue on

statutory grounds, I do not need to address the constitutional

issue of “commandeering.” Of course, in the future, Congress

might pass a statute that specifically authorizes FERC to
6

regulate how transmission providers use their eminent domain

power. Such a statute may raise constitutional issues under New

York v. United States, 505 U.S. 144 (1992), and Printz v. United

States, 521 U.S. 898 (1997), but those issues are not before us

at this time.

For the aforementioned reasons, I respectfully dissent from

the portions of the majority opinion that address the eminent

domain provisions of Order No. 2003. I join the remainder of

the majority’s opinion.