United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 7, 2014 Decided April 14, 2015

No. 12-1382

PUBLIC SERVICE ELECTRIC AND GAS COMPANY, ET AL.,

PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

JERSEY CENTRAL POWER & LIGHT COMPANY, ET AL.,

INTERVENORS

On Petition for Review of Orders of the 

Federal Energy Regulatory Commission

John Lee Shepherd Jr. argued the cause for petitioners. 

With him on the briefs were Jodi L. Moskowitz, Gary E. Guy, 

John Longstreth, Donald A. Kaplan, and William M. Keyser.

Randall B. Palmer, Kenneth G. Jaffe, and Michael E. 

Ward were on the reply brief for intervenors Jersey Central 

Power & Light Company, et al. in support of petitioners. 
2

Lona T. Perry, Senior Attorney, Federal Energy 

Regulatory Commission, argued the cause for respondent. 

With her on the brief were David L. Morenoff, Acting General 

Counsel, and Robert H. Solomon, Solicitor.

Before: SRINIVASAN, Circuit Judge, and SENTELLE and 

RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

SENTELLE.

SENTELLE, Senior Circuit Judge: Petitioners are fourteen 

electrical transmission companies operating as members of 

the regional transmission organization PJM Interconnection,

LLC. As incumbent members of the organization, petitioners 

contend that PJM’s governing agreements afford them a right 

of first refusal for proposed transmission facility expansions 

or upgrades within their zones. The Federal Energy 

Regulatory Commission (“FERC”) held that no such right of 

first refusal exists and that PJM may designate third-party 

developers to construct transmission facilities within 

incumbent members’ zones. The incumbent transmission 

owners petition for review, arguing that the Commission lacks 

jurisdiction over transmission facility development and that 

the Commission’s interpretation of PJM’s governing 

agreements is arbitrary, capricious, or otherwise not in 

accordance with law under the Administrative Procedure Act, 

5 U.S.C. § 706(2).

We held this case in abeyance pending the decision in 

South Carolina Public Service Authority v. FERC, 762 F.3d 

41 (D.C. Cir. 2014). Now that there is a final decision in that 

case, we remove this case from abeyance. After reviewing 

the original and supplemental briefing, and with the benefit of 

oral argument, we dismiss the petition for review because 
3

Article III of the Constitution does not permit us to issue an 

advisory opinion.

I.

Petitioners are members of PJM Interconnection, LLC, a 

regional transmission organization “to which transmission 

providers . . . transfer operational control of their facilities for 

the purpose of efficient coordination.” Morgan Stanley 

Capital Grp. Inc. v. Pub. Util. Dist. No. 1 of Snohomish Cnty., 

Wash., 554 U.S. 527, 536 (2008). Regional transmission 

organizations like PJM combine multiple utility power grids 

into a single transmission system to “reduce technical 

inefficiencies caused when different utilities operate different 

portions of the grid independently.” Id. Formed in 1927, 

PJM is the oldest and largest regional transmission 

organization. Atlantic City Elec. Co. v. FERC, 295 F.3d 1, 5 

(D.C. Cir. 2002). Today, PJM coordinates the movement of 

wholesale electricity in thirteen mid-Atlantic states and the 

District of Columbia. Maryland Pub. Serv. Comm’n v. FERC, 

632 F.3d 1283, 1284 (D.C. Cir. 2011) (per curiam). 

“Among its duties, PJM is responsible for preventing 

interruptions to the delivery of electricity . . . by ensuring that 

its system has sufficient generating capacity.” Id. PJM 

fulfills this duty in part by upgrading and enhancing its 

system in accordance with procedures set forth in its 

governing agreements, which include: the Regional 

Transmission Expansion Plan in PJM’s Operating Agreement, 

the Consolidated Transmission Owners Agreement (“Owners 

Agreement”), and the PJM Open Access Transmission Tariff 

(“Tariff”). 

Petitioners seek review of four FERC orders from two 

proceedings. In both proceedings, non-incumbent developers 
4

argued that no right of first refusal existed within PJM’s 

governing agreements for incumbent transmission owners.

A.

The first proceeding arose on a petition to the 

Commission by Primary Power, LLC, a non-incumbent 

developer hoping to build the Grid Plus project, a proposed 

expansion project comprised of four installations within the 

PJM system. Primary Power sought FERC’s assurance that if 

it were selected for the project, it would be eligible to employ 

cost-based rate recovery in the operation of the project. 

Incumbent members of PJM, petitioners before us, opposed 

the petition, arguing that Section 1.5.6 of the Regional

Transmission Expansion Plan created a right of first refusal 

which would be violated by the grant of rights to the 

newcomer. Section 1.5.6(f) states, in pertinent part:

For each enhancement or expansion that is included in 

the recommended plan, the plan shall consider [a 

number of selection factors] . . . and designate one or 

more Transmission Owners or other entities to 

construct, own and, unless otherwise provided, finance 

the recommended transmission enhancement or 

expansion. To the extent that one or more 

Transmission Owners are designated to construct, own 

and/or finance a recommended transmission 

enhancement or expansion, the recommended plan 

shall designate the Transmission Owner that owns 

transmission facilities located in the Zone where the 

particular enhancement or expansion is to be located. 

FERC rejected the incumbent transmission owners’ 

arguments in Primary Power, LLC, 131 FERC ¶ 61,015 
5

(2010) (order on petition for declaratory order). Interpreting 

PJM’s Operating Agreement, FERC explained that Sections 

1.5.7(c)(iii) and 1.5.6(f) of the Agreement allowed nonincumbent developers to compete for and construct projects 

under the expansion protocol. Id. PP 62-65. FERC held that 

“the PJM Tariff permits, but does not require, PJM to 

designate Primary Power, an entity other than an incumbent 

transmission owner, as the entity to build Grid Plus.” Id.

P 62. FERC concluded that Section 1.5.6(f) did not create a 

right of first refusal for incumbent transmission owners 

because the “shall designate” clause requiring PJM to assign 

projects to transmission owners who own facilities in the zone 

where the project is located only “applies by its own terms ‘to 

the extent that one or more Transmission Owners are 

designated.’” Id. P 65 (quoting Operating Agreement 

§ 1.5.6(f)). The “shall designate” clause, FERC further 

explained, does not apply when PJM designates nonincumbent “other entities” to construct the project. Id. P 64. 

Addressing the recovery of development costs, FERC 

acknowledged that merchant transmission facilities are not 

eligible for cost-based rates under the PJM Tariff. Id. P 68. 

But if PJM includes the Grid Plus project in its expansion 

plan, FERC explained that Primary Power “would be eligible 

to seek cost-based rate recovery as would any other 

transmission owner.” Id. P 70. In other words, FERC noted 

that the “PJM’s Tariff contains no prohibition on a nonincumbent party becoming a transmission owner to receive 

cost-based rates.” Id.

Incumbent transmission owners timely sought rehearing. 

Among other things, they argued that FERC ignored their 

exclusive right to build and operate all non-merchant projects 

in their own zones, and FERC misinterpreted the “other 

entity” language from Section 1.5.6(f) of the PJM Operating 

Agreement. Incumbent transmission owners also suggested 
6

that FERC exceeded its statutory authority when it required 

them to give up rights that they did not cede to PJM. 

FERC denied the rehearing request and affirmed its 

previous order. Primary Power, LLC, 140 FERC ¶ 61,052 

(2012) (order denying rehearing). Although the language 

from the expansion protocol is ambiguous, FERC reiterated 

that it neither established a right of first refusal for incumbent 

transmission owners nor precluded a non-incumbent 

developer from recovering cost-based rates if selected for a 

project under PJM’s expansion plan. Id. P 35. In light of 

PJM’s obligation to operate in a non-discriminatory manner, 

FERC interpreted PJM’s expansion protocol as “provid[ing] 

an opportunity for a wide variety of participants and different 

business models.” Id. FERC stressed that, while incumbent 

transmission owners may participate in the process, PJM’s 

protocol neither guaranteed incumbent owners the right to 

construct projects in their zones nor required them to 

undertake such construction. Id. 

B.

In the second proceeding under review, non-incumbent 

developer Central Transmission, LLC, filed a complaint 

pursuant to Section 206 of the Federal Power Act (“FPA”), 

alleging that the PJM Tariff is unjust and unreasonable 

because it prevents Central Transmission from constructing a 

proposed transmission project and receiving cost-based rate 

recovery for it. Incumbent transmission owners protested, 

arguing that the complaint should be dismissed because 

Central Transmission did not satisfy the burden of proof 

under Section 206. The right of first refusal, incumbent 

owners explained, did not create a barrier to entry because 

non-incumbent developers like Central Transmission were 

free to build PJM expansion projects as merchant developers. 
7

FERC dismissed the complaint, concluding that the 

Section 206 proceeding was unnecessary. See Central 

Transmission, LLC v. PJM Interconnection, LLC, 131 FERC 

¶ 61,243 (2010) (order on complaint). Applying its decision 

in Primary Power, 131 FERC ¶ 61,015 (2010), FERC 

explained that PJM’s governing agreements allowed nonincumbent parties like Central Transmission to become 

transmission owners eligible for cost-based rates. Central 

Transmission, LLC, 131 FERC ¶ 61,243, P 46. Consequently, 

FERC saw no need to revise the PJM Tariff or Operating 

Agreement. Id. P 48. 

Petitioner Public Service Electric and Gas Company 

(“PSEG”) timely sought rehearing. Taking no issue with the 

ultimate result (dismissal of the complaint), PSEG instead 

objected to the Commission’s reliance on the Primary Power

order. The Central Transmission and Primary Power orders, 

PSEG argued, ignored incumbent transmission owners’ 

exclusive right to build projects in their own zones. 

According to PSEG, the Commission’s reading of PJM’s 

governing agreements was simply wrong. 

The Commission denied PSEG’s rehearing request on the 

same day that it denied rehearing in Primary Power. See 

Central Transmission, LLC v. PJM Interconnection, LLC, 140 

FERC ¶ 61,053 (2012) (order on rehearing). Consistent with 

its Primary Power order, the Commission reiterated that 

PJM’s expansion protocol does not grant incumbent 

transmission owners a right of first refusal that would prevent 

non-incumbent transmission developers from building an 

economic project. Id. P 17. 

C.

As noted above, we held this case in abeyance pending 

the decision in South Carolina Public Service Authority v. 

FERC because we hoped to “benefit from resolution of the 
8

question of FERC’s authority to prohibit a regional

transmission organization’s tariff from including a right of 

first refusal for incumbent transmission owners to build and 

operate transmission facilities.” Pub. Serv. Elec. & Gas Co., 

et al. v. FERC, No. 12-1382 (D.C. Cir. Jan. 15, 2014) (order 

holding case in abeyance). In South Carolina Public Service 

Authority v. FERC, petitioners challenged the Commission’s 

authority to adopt Order No. 1000, which required 

transmission providers to remove from their “jurisdictional 

tariffs and agreements any provisions that establish a federal 

right of first refusal for an incumbent transmission developer 

to construct new regional transmission facilities included in a 

regional transmission plan.” Transmission Planning and Cost 

Allocation by Transmission Owning and Operating Public 

Utilities, Order 1000, 76 Fed. Reg. 49,842, 49,846 (Aug. 11, 

2011). 

The South Carolina petitioners argued that Section 206 

of the FPA prevented FERC from removing rights of first 

refusal under Order No. 1000 because the rights of first 

refusal were too attenuated from a “practice” “affecting . . . 

rate[s].” S.C. Pub. Serv. Auth., 762 F.3d at 84. This Court 

applied the familiar two-step framework of Chevron U.S.A. 

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 

(1984), rejected petitioners’ argument, and held “that the 

removal mandate is a legitimate exercise of the Commission’s 

authority.” S.C. Pub. Serv. Auth., 762 F.3d at 72. 

While this petition was pending, FERC directed PJM to 

comply with Order No. 1000 and remove or revise “any 

provision that could be read as supplying a federal right of 

first refusal for any type of transmission project that is 

selected in the regional transmission plan for purposes of cost 

allocation.” PJM Interconnection, LLC, 142 FERC ¶ 61,214, 

P 222. PJM complied, and, as of the January 1, 2014 

effective date, PJM’s governing agreements no longer contain 
9

language that could be read to create a right of first refusal for 

incumbent transmission owners. PJM Interconnection, LLC, 

147 FERC ¶ 61,128, P 29. Because we are now left 

interpreting superseded language from PJM’s governing 

agreements, FERC contends that this case no longer presents 

a live controversy and any decision at this time would 

constitute an impermissible advisory opinion. Resp’t Supp’l

Br. 12 (citing Princeton Univ. v. Schmid, 455 U.S. 100, 103 

(1982)). For the reasons explained below, we agree. 

II.

“‘[T]he oldest and most consistent thread in the federal 

law of justiciability is that the federal courts will not give 

advisory opinions.’” Flast v. Cohen, 392 U.S. 83, 96 (1968) 

(quoting C. Wright, Federal Courts 34 (1963)). To satisfy the 

firmly established Article III case or controversy requirement, 

“there must be a live controversy at the time” we review the 

case. Sosna v. Iowa, 419 U.S. 393, 402 (1975). It is not 

enough that there may have been a live controversy when the 

petitioners first filed their appeal. See Burke v. Barnes, 479 

U.S. 361, 363 (1987); Chamber of Commerce v. EPA, 642 

F.3d 192, 199 (D.C. Cir. 2011). 

Petitioners concede that their jurisdictional argument fails 

under South Carolina Public Service Authority v. FERC, yet 

suggest that there is still a live controversy because nothing 

from that case impacted petitioners’ argument that FERC’s 

interpretation of PJM’s governing agreements was arbitrary 

and capricious. Pet’rs Supp’l Br. 4–5. If we do not address 

the merits of their argument, petitioners explain, any future 

challenge to the Central Transmission and Primary Power

orders will amount to an impermissible collateral attack on 

those orders. Pet’rs Reply Br. 17 (citing Pacific Gas & Elec. 

Co. v. FERC, 533 F.3d 820, 825 (D.C. Cir. 2008); Wisc. 

Public Power, Inc. v. FERC, 493 F3d 239, 265-66 (D.C. Cir. 

2007)). While petitioners are no doubt correct that our 
10

decision today ends any direct review of the FERC decisions 

before us, that does not inherently preclude this court from 

answering similar questions should they arise in the future in 

a live controversy.

Indeed, petitioners are involved in ongoing litigation 

challenging FERC’s compliance orders that required them to 

remove any provision that could be read as supplying a right 

of first refusal from PJM’s governing agreements. See

American Transmission Systems, Inc., et al. v. FERC, Nos. 

14-1085 & 14-1136 (D.C. Cir. filed May 27, 2014). That case 

involves the interpretation of the same language from the 

now-superseded agreements at issue in this case. See PJM 

Interconnection, LLC, 142 FERC ¶ 61,214, PP 221-24; PJM 

Interconnection, LLC, 147 FERC ¶ 61,128, PP 94-103. 

Petitioners explain: “The chief question presented in that case 

is whether FERC violated the Mobile-Sierra doctrine by 

directing PJM and the PJM Transmission Owners (including 

the Petitioners in this case) to remove or change the same 

provisions of PJM’s governing agreements and PJM Tariff 

whose meaning is disputed in this petition for review.” Pet’rs 

Supp’l Br. 5. 

The Mobile-Sierra doctrine requires FERC to presume 

“that a rate set by a freely negotiated wholesale-energy 

contract meets the just and reasonable requirement” from the 

FPA, 16 U.S.C. § 824d(a). NRG Power Marketing, LLC v. 

Maine Pub. Util. Comm’n, 558 U.S. 165, 167 (2010) (internal 

quotation marks omitted). When it clarified the impact of 

Order No. 1000, FERC explained that it would not require 

“transmission providers to eliminate a federal right of first 

refusal before the Commission makes a determination 

regarding whether an agreement is protected by a MobileSierra provision.” Transmission Planning and Cost 

Allocation, 77 Fed. Reg. 32,184, 32,245 (May 31, 2012). In 

South Carolina Public Service Authority v. FERC, this Court 
11

deferred consideration of “whether or how Mobile-Sierra will 

ultimately apply to particular contracts” because the effects of 

the order had not been felt by the parties. 762 F.3d at 81 

(citing Associated Gas Distribs. v. FERC, 824 F.2d 981, 1007 

(D.C. Cir. 1987)). 

Unlike the petitioners in South Carolina, petitioners in 

this case have felt the effects of the order because FERC 

concluded that the disputed provisions from PJM’s governing 

agreements were “not in compliance with Order No. 1000’s 

requirement to eliminate any federal right of first refusal” and 

directed PJM to remove the provisions in its compliance 

order. PJM Interconnection, LLC, 142 FERC ¶ 61,214, 

P 221. FERC’s interpretation of PJM’s governing agreements 

as they existed before January 1, 2014 only presents a live 

controversy to the extent that it is coupled with, and thus 

impacts, petitioners’ ongoing Mobile-Sierra challenge. But 

petitioners’ Mobile-Sierra challenge is not directly before 

us—instead, it is present in American Transmission Systems, 

Inc., et al. v. FERC. Consequently, we conclude that the issue 

before us (the proper interpretation of the superseded 

language from PJM’s governing agreements) does not present 

a live controversy. 

* * * 

With no live controversy between adverse parties, we 

conclude that any decision issued at this time would constitute 

an impermissible advisory opinion. We must therefore 

dismiss incumbent transmission owners’ petition for review.

So ordered.