FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SOLAR ENERGY INDUSTRIES 

ASSOCIATION, 

Petitioner, 

NEWSUN ENERGY LLC; ONE 

ENERGY ENTERPRISES LLC, 

Petitioners-Intervenors, 

 v. 

FEDERAL ENERGY 

REGULATORY COMMISSION, 

Respondent, 

NATIONAL RURAL ELECTRIC 

COOPERATIVE ASSOCIATION 

[NRECA]; AMERICAN PUBLIC 

POWER ASSOCIATION; LARGE 

PUBLIC POWER COUNCIL; 

EDISON ELECTRIC INSTITUTE 

INC., 

Respondents-Intervenors, 

No. 20-72788 

FERC Nos.

RM19-15-000 

AD16-16-000 

OPINION
2 SEIA V. FERC

AMERICAN FOREST & PAPER 

ASSOCIATION, 

Intervenor.

MONTANA ENVIRONMENTAL 

INFORMATION CENTER; SIERRA 

CLUB; CENTER FOR BIOLOGICAL 

DIVERSITY; VOTE SOLAR; 

COMMUNITY RENEWABLE 

ENERGY ASSOCIATION; 

APPALACHIAN VOICES; 

ALABAMA CENTER FOR 

SUSTAINABLE ENERGY, d/b/a 

Energy Alabama; GEORGIA 

INTERFAITH POWER & LIGHT 

INC.; NORTH CAROLINA 

SUSTAINABLE ENERGY 

ASSOCIATION; UPSTATE 

FOREVER, 

Petitioners, 

ONE ENERGY ENTERPRISES LLC, 

Petitioner-Intervenor, 

 v. 

FEDERAL ENERGY 

REGULATORY COMMISSION, 

No. 20-73375 

FERC No.

RM19-15-000 
SEIA V. FERC 3

Respondent, 

NATIONAL RURAL ELECTRIC 

COOPERATIVE ASSOCIATION 

[NRECA]; EDISON ELECTRIC 

INSTITUTE INC.; AMERICAN 

PUBLIC POWER ASSOCIATION; 

LARGE PUBLIC POWER 

COUNCIL, 

Respondents-Intervenors, 

______________________________ 

AMERICAN FOREST & PAPER 

ASSOCIATION, 

Intervenor.

MONTANA ENVIRONMENTAL 

INFORMATION CENTER; SIERRA 

CLUB; CENTER FOR BIOLOGICAL 

DIVERSITY; VOTE SOLAR; 

COMMUNITY RENEWABLE 

ENERGY ASSOCIATION; 

APPALACHIAN VOICES; 

ALABAMA CENTER FOR 

SUSTAINABLE ENERGY, d/b/a 

Energy Alabama; GEORGIA 

INTERFAITH POWER & LIGHT 

INC.; NORTH CAROLINA 

SUSTAINABLE ENERGY 

ASSOCIATION; UPSTATE 

No. 21-70083 

FERC No.

RM19-15-001 
4 SEIA V. FERC

FOREVER, 

Petitioners, 

ONE ENERGY ENTERPRISES LLC, 

Petitioner-Intervenor, 

 v. 

FEDERAL ENERGY 

REGULATORY COMMISSION, 

Respondent, 

NATIONAL RURAL ELECTRIC 

COOPERATIVE ASSOCIATION 

[NRECA]; AMERICAN PUBLIC 

POWER ASSOCIATION; EDISON 

ELECTRIC INSTITUTE INC.; 

LARGE PUBLIC POWER 

COUNCIL, 

Respondents-Intervenors.

SOLAR ENERGY INDUSTRIES 

ASSOCIATION, 

Petitioner, 

ONE ENERGY ENTERPRISES LLC, 

No. 21-70113 

FERC Nos.

RM19-15-001 

AD16-16-001 
SEIA V. FERC 5

Petitioner-Intervenor, 

 v. 

FEDERAL ENERGY 

REGULATORY COMMISSION, 

Respondent, 

NATIONAL RURAL ELECTRIC 

COOPERATIVE ASSOCIATION 

[NRECA]; AMERICAN PUBLIC 

POWER ASSOCIATION; EDISON 

ELECTRIC INSTITUTE INC.; 

LARGE PUBLIC POWER 

COUNCIL, 

Respondents-Intervenors.

On Petition for Review of an Order of the

Federal Energy Regulatory Commission

Argued and Submitted March 8, 2022

Seattle, Washington

Filed September 5, 2023

Before: Jacqueline H. Nguyen, Eric D. Miller, and Patrick 

J. Bumatay, Circuit Judges.

Opinion by Judge Miller;

Concurrence by Judge Miller;

Partial Concurrence and Partial Dissent by Judge Bumatay
6 SEIA V. FERC

SUMMARY*

Federal Energy Regulatory Commission / 

Environmental Law 

The panel granted in part and denied in part a petition for 

review brought by the Solar Energy Industries Association 

and several environmental organizations challenging Orders 

872 and 872-A (collectively, “Order 872”), rules adopted by 

the Federal Energy Regulatory Commission (FERC) that 

alter which facilities qualify for benefits under the Public 

Utility Regulatory Policy Act (PURPA) and how those 

facilities are compensated. 

Congress enacted PURPA to encourage the development 

of a new class of independent, non-utility-owned energy 

producers known as “Qualifying Facilities,” or 

“QFs.” Order 872 makes it more difficult for a facility to 

qualify for treatment as a QF, and makes QF status less 

advantageous. 

The panel rejected petitioners’ argument that Order 872 

as a whole is inconsistent with PURPA’s directive that 

FERC “encourage” the development of QFs. Applying the 

two-step framework of Chevron U.S.A. Inc. v. NRDC, Inc., 

467 U.S. 837 (1984), the panel held that (1) PURPA on its 

face gives FERC broad discretion to evaluate which rules are 

necessary to encourage QFs and which are not, and (2) 

FERC’s interpretation was not unreasonable. 

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.
SEIA V. FERC 7

Next, the panel rejected petitioners’ challenges to four 

specific provisions of Order 872. First, the panel held that 

the modified Site Rule—which modified the rules for 

determining when facilities are deemed to be located at the 

same or separate sites—survives Chevron, is not arbitrary 

and capricious under the Administrative Procedure Act 

(APA), and is not unlawfully retroactive. Second, the panel 

held that the modified Fixed-Rate Rule—which modified the 

rates paid to QFs—survives Chevron and is not arbitrary or 

capricious under the APA. Third, the panel held that the 

provision allowing States to adopt a rebuttable presumption 

that, for utilities located within certain organized energy 

markets, the locational market price represents the 

purchasing utility’s avoided costs, is not arbitrary or 

capricious under the APA. Fourth, the panel held that the 

provision reducing the threshold that terminates an electric 

utility’s obligation to purchase from a QF if the QF has 

nondiscriminatory access to certain organized markets is not 

arbitrary or capricious under the APA.

Finally, the panel addressed the environmental 

organizations’ claim that FERC violated the National 

Environmental Policy Act (NEPA) by failing to prepare an 

environmental assessment (EA) before issuing Order 

872. The panel held that the environmental organizations 

had Article III standing because they adequately 

documented the concrete harms that Order 872 could cause 

their members, and had prudential standing because they 

demonstrated that the harms they fear fall within NEPA’s 

zone of interests.

On the merits, the panel held that FERC violated NEPA 

by failing to prepare, at minimum, an EA. First, the panel 

held that the more substantive elements of Order 872 fall 

outside NEPA’s categorical exclusion for rules that do not 
8 SEIA V. FERC

substantially change the effect of the rules being 

amended. Second, the panel rejected FERC’s argument that 

it was not required to prepare an EA because any potential 

environmental impacts from Order 872 are not reasonably 

foreseeable. The panel stated that it was not aware of any 

case approving an agency’s decision not to engage in any 

environmental analysis for rulemaking of the magnitude of 

Order 872, and held that the lack of reasonably foreseeable 

environmental impacts cannot relieve an agency of its 

obligation to prepare an EA.

The panel determined that the appropriate remedy for 

FERC’s NEPA violation was to remand to the agency 

without vacatur. Although FERC’s failure to prepare an EA 

is a serious violation, Order 872 does not suffer from 

fundamental flaws making it unlikely that FERC could adopt 

the same rule on remand, and the disruptive consequences of 

vacatur would be significant.

Concurring, Judge Miller, joined by Judge Nguyen, 

joined the court’s opinion in full and wrote separately to 

respond to Judge Bumatay’s discussion of Chevron in his 

concurrence and dissent.

Concurring in part and dissenting in part, Judge Bumatay 

concurred with denying the petition challenging the 

enactment of FERC’s revised rules, but would rely on the 

text of PURPA instead of on Chevron deference. With 

respect to the NEPA claim, he would hold that the 

environmental organizations lack standing because they 

have not alleged that they will suffer an environmental harm 

sufficient to confer NEPA standing.
SEIA V. FERC 9

COUNSEL

Fred A. Rowley, Jr (argued), Wilson Sonsini Goodrich & 

Rosati, Los Angeles, California; John B. Kenney, Wilson 

Sonsini Goodrich & Rosati PC, Washington, D.C.; Heather 

Curlee and Todd G. Glass, Wilson Sonsini Goodrich & 

Rosati PC, Seattle, Washington; for Petitioner Solar Energy 

Industries Association.

David C. Bender (argued), Earthjustice, Washington, D.C 

for Petitioners Montana Environmental Information Center, 

Sierra Club, Center for Biological Diversity, and Vote Solar.

Matthew W.S. Estes (argued), Senior Attorney; Susanna Y. 

Chu, Attorney; Joshua A. Kirstein, Attorney Advisor; 

Robert H. Solomon, Solicitor; Matthew Christiansen, 

General Counsel; Federal Energy Regulatory Commission, 

Washington, D.C.; for Respondent Federal Energy 

Regulatory Commission.

Jeremy C. Marwell (argued), Margaret E. Peloso, and James 

T. Dawson, Vinson & Elkins LLP, Washington, D.C.; Emily 

S. Fisher and Adam Benshoff, Edison Electric Institute, 

Washington, D.C.; for Respondents-Intervenor Edison 

Electric Institute.

Gregory M. Adams and Peter J. Richardson, Richardson 

Adams PLLC, Boise, Idaho, for Petitioner Community and 

Renewable Energy Association.

Lauren J. Bowen, Nicholas Jimenez, and Jillian Kysor, 

Southern Environmental Law Center, Chapel Hill, North 

Carolina, for Petitioners Appalachian Voices, Alabama 

Center for Sustainable Energy, Georgia Interfaith Power & 

Light, North Carolina Sustainable Energy Association, and 

Upstate Forever.
10 SEIA V. FERC

Marie P. Barlow and Max Yoklic, NewSun Energy LLC, 

Bend, Oregon, for Petitioner-Intervenor NewSun Energy 

LLC.

Elizabeth W. Whittle, Nixon Peabody LLP, Washington, 

D.C., for Petitioner-Intervenor One Energy Enterprises 

LLC.

Randolph L. Elliot, McCarter & English LLP, Washington, 

D.C., for Respondent-Intervenor, National Rural Electric 

Cooperative Association.

John E. McCaffrey III, Stinson LLP, Washington, D.C., for 

Respondent-Intervenor American Public Power Association.

Jonathan D. Schneider, Harvey Reiter, and Marie D. Zosa, 

Stinson LLP, Washington, D.C., for Respondent-Intervenor 

Large Public Power Counsel.

Robert A. Weishaar Jr., McNees Wallace & Nurick, 

Harrisburg, Pennsylvania, for Intervenor (def/res)-

Intervenor American Forest & Paper Association. 

Sarah N. Norcott, NorthWestern Corporation d/b/a 

NorthWestern Energy, Helena, Montana, for Amicus Curiae 

NorthWestern Corporation d/b/a NorthWestern Energy.

Andrew R. Varcoe and Stephanie A. Maloney, U.S. 

Chamber Litigation Center, Washington, D.C.; Elbert Lin, 

Hunton Andrews Kurth LLP, Richmond, Virginia; for 

Amicus Curiae Chamber of Commerce of the United States 

of America.
SEIA V. FERC 11

OPINION

MILLER, Circuit Judge:

This case involves rules adopted by the Federal Energy 

Regulatory Commission to implement the Public Utility 

Regulatory Policies Act of 1978 (PURPA), Pub. L. No. 95-

617, 92 Stat. 3117. Congress enacted PURPA to encourage 

the development of a new class of independent, non-utilityowned energy producers known as “Qualifying Facilities,” 

or “QFs.” PURPA tasks FERC with promulgating rules to 

implement the statute. In 2020, FERC revised its rules to 

alter which facilities qualify for PURPA’s benefits and how 

those facilities are compensated. The new rules make it more 

difficult to qualify for treatment as a QF, and they also make 

QF status less advantageous.

We are asked to decide whether FERC’s new rules are 

consistent with PURPA and satisfy the requirements of the 

Administrative Procedure Act. In resolving those questions, 

we address challenges to discrete components of the new 

rules as well as challenges to the lawfulness of the rules as a 

whole. We must also decide whether FERC violated the 

National Environmental Policy Act of 1969 (NEPA), Pub. 

L. No. 91-190, 83 Stat. 852 (1970), by failing to prepare an 

environmental assessment or environmental impact 

statement. We hold that FERC’s revised rules are consistent 

with both PURPA and the APA, but that FERC violated 

NEPA by failing to prepare, at minimum, an environmental 

assessment. In light of the extraordinary disruptive 

consequences that would accompany vacatur, we decline to 

vacate the rules. We grant the petition for review in part and 

remand without vacatur. 
12 SEIA V. FERC

I

A

In response to the energy crises of the 1970s, Congress 

enacted PURPA to promote energy conservation, improve 

energy efficiency, lower consumer costs, and decrease 

reliance on foreign oil. See FERC v. Mississippi, 456 U.S. 

742, 745–46, 756–57 (1982); Independent Energy 

Producers Ass’n, Inc. v. California Pub. Utils. Comm’n, 36 

F.3d 848, 850 (9th Cir. 1994). In enacting PURPA, 

“Congress sought to eliminate two significant barriers to the 

development of alternative energy sources: (1) the 

reluctance of traditional electric utilities to purchase power 

from and sell power to non-traditional facilities, and (2) the 

financial burdens imposed upon alternative energy sources 

by state and federal utility authorities.” Independent Energy 

Producers Ass’n, 36 F.3d at 850. 

PURPA directs FERC to “prescribe, and from time to 

time thereafter revise, such rules as it determines necessary 

to encourage” the development of Qualifying Facilities. 16 

U.S.C. § 824a-3(a). There are two types of QFs. First, a 

“small power production facility” uses an alternative energy 

source—often a renewable source like solar or wind—to 

produce electricity. 16 U.S.C. § 796(17). As its name 

suggests, such a facility must be “small”: It cannot have a 

power production capacity that, “together with any other 

facilities located at the same site (as determined by the 

Commission),” exceeds 80 megawatts. Id. § 796(17)(A)(ii). 

Second, a “cogeneration facility” typically uses traditional 

fossil fuels to produce both electric energy and a useful form 

of thermal energy (like steam) in a manner that is more 

efficient than producing each kind of energy separately. Id.
SEIA V. FERC 13

§ 796(18); 18 C.F.R. § 292.205; S. Rep. No. 95-442, at 21 

(1977). 

PURPA provides QFs with certain benefits. Of particular 

relevance here, PURPA imposes a mandatory-purchase 

obligation on electric utilities, which must purchase 

electricity from QFs at rates established by FERC. 16 U.S.C. 

§ 824a-3(a)(2), (b). Those rates must be “just and reasonable 

to the electric consumers,” must be “in the public interest,” 

and may not “discriminate against” QFs. Id. § 824a-3(b). 

PURPA also sets an upper bound on rates: No rule “shall 

provide for a rate which exceeds the incremental cost to the 

electric utility of alternative electric energy.” Id. A utility’s 

“incremental cost”—commonly referred to as its “avoided 

cost”—is defined as “the cost to the electric utility of the 

electric energy which, but for the purchase from [a QF], such 

utility would generate or purchase from another source.” Id.

§ 824a-3(d); see also American Paper Inst., Inc. v. American 

Elec. Power Serv. Corp., 461 U.S. 402, 406 (1983).

While PURPA tasks FERC with the development of 

national rules and standards, States play a prominent role in 

PURPA’s regulatory structure. Under PURPA, state 

regulatory authorities are primarily responsible for 

implementing FERC’s rules. 16 U.S.C. § 824a-3(f)(1). For 

example, while FERC establishes, in broad terms, the rate to 

be used in the mandatory transactions described above, 

States are responsible for calculating and applying that rate 

for individual utilities and QFs.

Some utilities are not subject to a state regulatory 

authority, and PURPA requires those “nonregulated electric 

utilit[ies]” to implement and apply FERC’s rules in the same 

manner as States. 16 U.S.C. § 824a-3(f)(2). For our 
14 SEIA V. FERC

purposes, the distinction does not matter, so we refer to 

States and nonregulated utilities collectively as “States.”

B

In 1980, in accordance with its statutory mandate to 

promulgate rules implementing PURPA, see 16 U.S.C. 

§ 824a-3(a), FERC issued Orders 69 and 70 (collectively, 

the 1980 Orders or 1980 Rules). Small Power Production 

and Cogeneration Facilities; Regulations Implementing 

Section 210 of the Public Utility Regulatory Policies Act of 

1978, Order 69, 45 Fed. Reg. 12,214 (Feb. 25, 1980); Small 

Power Production and Cogeneration Facilities—Qualifying 

Status, Order 70, 45 Fed. Reg. 17,959 (Mar. 20, 1980).

The 1980 Orders clarified which facilities qualify as 

“small power production facilit[ies],” which, together with 

“any other facilities located at the same site (as determined 

by the Commission),” may not have a power production 

capacity of more than 80 megawatts. 16 U.S.C. 

§ 796(17)(A). To determine whether two facilities were 

“located at the same site,” FERC developed a one-mile rule. 

If two facilities were “located within one mile of each other,” 

“use[d] the same energy resource,” and were “owned by the 

same person,” they were considered to be “located at the 

same site.” Order 70, 45 Fed. Reg. at 17,965. And if two 

facilities were located at the same site, their power outputs 

had to be added together for purposes of the 80-megawatt 

size cap. Id. By contrast, facilities located more than one 

mile apart were considered separate sites, and thus did not 

need to add together their power capacities. We refer to this 

as the “1980 Site Rule.”

The 1980 Orders also established the rate that a utility 

would pay a QF when purchasing energy under its 

mandatory-purchase obligation. See 16 U.S.C. § 824a-3(b). 
SEIA V. FERC 15

FERC set the rate for sales by QFs equal to the purchasing 

utility’s full avoided costs—the maximum rate permitted by 

PURPA. Order 69, 45 Fed. Reg. at 12,222–23; American 

Paper, 461 U.S. at 406–07. FERC explained that a rate based 

on a utility’s full avoided costs was appropriate to provide 

adequate incentives for the development of QFs, and that any 

lower rate would not provide significant savings for the 

utilities’ ratepayers. See American Paper, 461 U.S. at 406–

07, 412–18 (upholding FERC’s avoided-cost rule); Order 

69, 45 Fed. Reg. at 12,222–23. 

The 1980 Orders offered QFs the choice of two ratecalculation methods. See Winding Creek Solar LLC v. 

Peterman, 932 F.3d 861, 863 (9th Cir. 2019). First, a QF 

could elect to sell its energy at a rate calculated at the time 

the energy was delivered (often referred to as the “asavailable” rate). Order 69, 45 Fed. Reg. at 12,224. Second, a 

QF could elect to sell its energy using a rate based on the 

utility’s avoided costs calculated and fixed at the time the 

contractual obligation was incurred (commonly referred to 

as the “Fixed-Rate Rule”). Id. Under the Fixed-Rate Rule, a 

QF could receive a fixed rate for both the utility’s energy 

costs (the variable costs associated with the production of 

energy, such as the cost of fuel) as well as the utility’s 

capacity costs (the “costs associated with providing the 

capacity to deliver energy,” consisting “primarily of the 

capital costs of facilities”). Order 69, 45 Fed. Reg. at 12,216.

In 2005, Congress enacted the Energy Policy Act of 

2005, Pub. L. No. 109-58, 119 Stat. 594. In the Energy 

Policy Act, “Congress acknowledged that QFs no longer 

faced the same barriers that prompted PURPA.” 

Californians for Renewable Energy v. California Pub. Utils. 

Comm’n, 922 F.3d 929, 933 (9th Cir. 2019). It therefore 

amended PURPA by limiting the scope of PURPA’s 
16 SEIA V. FERC

mandatory-purchase requirement. Under the amended 

statute, a utility is not required to purchase energy from a 

given QF if the Commission finds that the QF has 

“nondiscriminatory access” to one of several specified 

energy markets. 16 U.S.C. § 824a-3(m)(1). Those markets 

generally correspond to the markets operated by regional 

transmission organizations and independent system 

operators (known as “regional markets” or “organized 

markets”). 

To implement this new statutory language, FERC issued 

Order 688. New PURPA Section 210(m) Regulations 

Available to Small Power Production and Cogeneration 

Facilities, Order 688, 71 Fed. Reg. 64,342 (Nov. 1, 2006); 

New PURPA Section 210(m) Regulations Applicable to 

Small Power Production and Cogeneration Facilities, Order 

688-A, 72 Fed. Reg. 35,872 (June 29, 2007). Order 688 

established a rebuttable presumption that “small” 

facilities—defined as those with a power capacity less than 

or equal to 20 megawatts—lack non-discriminatory market 

access, whereas “large” facilities with a capacity exceeding 

20 megawatts have adequate market access. Order 688, 71 

Fed. Reg. at 64,343–44, 64,352–54. The Commission 

acknowledged that no single threshold would perfectly 

distinguish between those facilities with nondiscriminatory 

access to markets and those without such access, but it 

determined that a 20-megawatt threshold would be 

“reasonable and administratively workable.” Id. at 64,352–

53; see also American Forest & Paper Ass’n v. FERC, 550 

F.3d 1179, 1183 (D.C. Cir. 2008) (upholding Order 688’s 

interpretation of the 2005 statutory amendment).
SEIA V. FERC 17

C

In 2016, FERC began to consider revising the PURPA 

regulations. In 2019, after holding a technical conference 

and soliciting public comments, it issued a notice of 

proposed rulemaking. Qualifying Facility Rates and 

Requirements; Implementation Issues Under the Public 

Utility Regulatory Policies Act of 1978, 84 Fed. Reg. 53,246 

(proposed Oct. 4, 2019) (2019 NPRM). The next year, a 

divided Commission issued Order 872. Qualifying Facility 

Rates and Requirements Implementation Issues Under the 

Public Utility Regulatory Policies Act of 1978, Order 872, 

85 Fed. Reg. 54,638 (Sept. 2, 2020). In response to requests 

for rehearing, the Commission issued Order 872-A, largely 

reaffirming the conclusions and reasoning of Order 872. 

Qualifying Facility Rates and Requirements Implementation 

Issues Under the Public Utility Regulatory Policies Act of 

1978, Order 872-A, 85 Fed. Reg. 86,656 (Dec. 30, 2020)

(We refer to both orders collectively as “Order 872”). ThenCommissioner Glick dissented in part, arguing that the 

revised PURPA rules “gutted” PURPA and defied 

Congress’s intent to encourage QFs. Order 872-A, 85 Fed. 

Reg. at 86,750 (Glick, Cmm’r, dissenting in part).

FERC explained that revision of its PURPA regulations 

was appropriate considering the dramatic changes that have 

reshaped the energy industry since the Commission first 

issued its regulations in 1980. Order 872, 85 Fed. Reg. at 

54,647–48. For example, FERC found that technological 

advances and the declining cost of facility development have 

transformed the once-nascent renewable-energy sector into 

a mature and growing industry. Id. The Commission also 

observed that energy markets have become more 

competitive and efficient, driven by the creation of new 

market structures and the rise of competitive independent 
18 SEIA V. FERC

power facilities. Id. at 54,648; see also FERC v. Electric 

Power Supply Ass’n, 577 U.S. 260, 267 (2016) (observing 

that market conditions have changed dramatically in the past 

several decades, moving from a market dominated by local, 

vertically integrated monopolies to a market where 

“[i]ndependent power plants . . . abound” and energy flows 

“through an interconnected ‘grid’ of near-nationwide scope” 

(quoting New York v. FERC, 535 U.S. 1, 7 (2002))). In light 

of those changes, the Commission concluded that the revised 

regulations would better comply with PURPA’s statutory 

requirements. Order 872, 85 Fed. Reg. at 54,643. And so, 

consistent with PURPA’s requirement that FERC revise its 

regulations “from time to time,” 16 U.S.C. § 824a-3(a), the 

Commission amended its PURPA regulations. Order 872, 85 

Fed. Reg. at 54,648.

Order 872 makes several significant changes to the 

PURPA regulations, four of which are relevant here. 

First, Order 872 modifies the 1980 Site Rule. Order 872 

does not change the rule for affiliated facilities located 

within one mile of each other: As before, there is an 

irrebuttable presumption that affiliated facilities that are 

within one mile of each other and that use the same energy 

resource are “located at the same site.” 18 C.F.R. 

§ 292.204(a)(2)(i)(A); Order 872, 85 Fed. Reg. at 54,696. 

But Order 872 modifies the rule for facilities located more 

than one mile apart. Under the new site rule, there is an 

irrebuttable presumption of separateness only when 

affiliated facilities using the same energy resource are 

located ten miles or more apart. 18 C.F.R. 

§ 292.204(a)(2)(i)(B); Order 872, 85 Fed. Reg. at 54,696. 

When affiliated facilities using the same energy resource are 

located more than one mile but less than ten miles apart, 

there is a rebuttable presumption that those facilities are 
SEIA V. FERC 19

located at separate sites. 18 C.F.R. § 292.204(a)(2)(i)(C); 

Order 872, 85 Fed. Reg. at 54,696. The Commission 

summarized its new rule as follows: Under the new rule, 

“electric utilities, state regulatory authorities, and other 

interested parties” may now demonstrate that “affiliated 

small power production facilities that use the same energy 

resource and are more than one mile apart and less than 10 

miles apart actually are at the same site (with distances one 

mile or less apart still irrebuttably at the same site and 

distances 10 miles or more apart irrebuttably at separate

sites).” Order 872, 85 Fed. Reg. at 54,696.

The rule sets out a non-exhaustive list of factors that may 

be used to rebut the presumption of separateness, such as 

whether the facilities share common physical characteristics, 

common ownership and control, and shared contracts. Order 

872, 85 Fed. Reg. at 54,701. The new site rule applies to all 

QFs that seek certification or recertification on or after 

December 31, 2020, 18 C.F.R. § 292.204(a)(2), but an 

existing QF’s recertification is not subject to protest unless 

the QF undergoes “substantive changes,” Order 872, 85 Fed. 

Reg. at 54,706–07. We refer to the new site requirements as 

the “2020 Site Rule.”

Second, Order 872 modifies the Fixed-Rate Rule 

applicable to power-sales contracts between QFs and electric

utilities. Under the 1980 Rules, a QF was entitled to receive 

a rate equal to the electric utility’s full avoided costs, and it 

could choose to receive either an as-available rate calculated 

at the time of delivery, or a rate calculated and fixed at the 

time that a contractual obligation was incurred. See Winding 

Creek Solar, 932 F.3d at 863. Order 872 retains the 

requirement that QFs receive a rate equal to the utility’s full 

avoided costs. Order 872, 85 Fed. Reg. at 54,650. But Order 

872 grants States the option, if they deem it appropriate, to 
20 SEIA V. FERC

eliminate the Fixed-Rate Rule and instead require that the 

avoided energy cost portion of a QF’s contract vary based on 

the as-available rate calculated at the time of delivery. 18 

C.F.R. § 292.304(d)(2); Order 872, 85 Fed. Reg. at 54,648. 

Order 872 still requires that QFs be given the option to 

receive avoided capacity costs at fixed rates. Id. These 

capacity rates compensate a QF for the fact that its existence 

spares the utility certain fixed costs, such as the cost of 

building and financing generating plants of its own. Id. at 

54,645–46, 54,655–56.

Third, Order 872 provides States additional flexibility to 

use various market prices when calculating a utility’s 

avoided costs. As relevant here, Order 872 allows States to 

adopt a rebuttable presumption that, for utilities located 

within certain organized energy markets, the “locational 

marginal price,” or “LMP,” reflects the purchasing utility’s 

avoided costs. See 18 C.F.R. § 292.304(b)(6). Within those 

organized energy markets, LMP represents “the least-cost of 

meeting an incremental megawatt-hour of demand at each 

location on the grid, and thus prices vary based on location 

and time.” Sacramento Mun. Util. Dist. v. FERC, 616 F.3d 

520, 524 (D.C. Cir. 2010) (per curiam); see also Electric 

Power Supply Ass’n, 577 U.S. at 268–69 (explaining how 

LMP is calculated). The Commission concluded that LMP 

“reflect[s] the true marginal cost of production of energy, 

taking into account all physical system constraints,” and that 

LMP “accurately represents the purchasing electric utility’s 

avoided energy cost at the time the energy is delivered.” 

Order 872, 85 Fed. Reg. at 54,660–61. But the Commission 

also recognized that LMP may sometimes deviate from 

actual avoided costs. Order 872 therefore rejects the 

categorical rule that the Commission had considered in the 

notice of proposed rulemaking—which would have allowed 
SEIA V. FERC 21

States to use LMP as a per se appropriate measure of avoided 

costs—and instead allows States to adopt a rebuttable 

presumption that LMP reflects a utility’s avoided costs. Id. 

at 54,659. 

Fourth, Order 872 revises the provision of Order 688 that 

terminates an electric utility’s obligation to purchase from a 

QF if the QF has nondiscriminatory access to certain 

organized markets. 16 U.S.C. § 824a-3(m). Order 688 

established a rebuttable presumption that QFs with a net 

power capacity of less than or equal to 20 megawatts do not 

have adequate, nondiscriminatory access to markets. In the 

2019 notice of proposed rulemaking, the Commission 

considered reducing that threshold to one megawatt, but it 

decided not to do so, noting that commenters had 

demonstrated that market-access barriers are “more acute for 

smaller QFs at or near the 1 MW threshold.” Order 872, 85 

Fed. Reg. at 54,716. Instead, the Commission reduced the 

threshold to five megawatts. 18 C.F.R. § 292.309(d)(2); 

Order 872, 85 Fed. Reg. at 54,715. Under the new rule, 

“small power production facilities with a net power 

production capacity at or below 5 MW will be presumed not 

to have nondiscriminatory access to markets, and, 

conversely, small power production facilities with a net 

power production capacity over 5 MW will be presumed to 

have nondiscriminatory access to markets.” Order 872, 85 

Fed. Reg. at 54,715. 

FERC determined that it was not required to conduct an 

environmental analysis of Order 872 under NEPA. Order 

872, 85 Fed. Reg. at 54,725. It gave two justifications for its 

conclusion. First, FERC determined that Order 872 fell 

within a “categorical exclusion” to NEPA for rules that are 

“clarifying, corrective, or procedural” in nature. Id. at 54,727 

n.1090 (quoting 18 C.F.R. § 380.4(a)(2)(ii)). Second, FERC 
22 SEIA V. FERC

stated that any downstream environmental effects of Order

872 were too uncertain and speculative to trigger NEPA 

review. Id. at 54,727. For those reasons, FERC determined 

that neither an environmental assessment nor an 

environmental impact statement was required. 

D

The Solar Energy Industries Association (Solar 

Association) and a group of environmental organizations 

(Environmental Organizations) petition for review of Order 

872. Each party presents slightly different challenges, but for 

the sake of simplicity, we refer to them collectively as 

“petitioners” unless otherwise noted. FERC opposes the 

petitions for review, and a group of electric utilities and 

utility-related interest groups (Utility-Intervenors) have 

intervened in support of FERC.

A renewable facility developer, NewSun Energy, LLC, 

has also intervened in support of the petitioners. UtilityIntervenors urge us not to consider several arguments raised 

by NewSun. Utility-Intervenors correctly observe that we 

typically will not consider issues raised exclusively by an 

intervenor. See Washington Utils. & Transp. Comm’n v. 

FERC, 26 F.3d 935, 941–42 (9th Cir. 1994). But here, the 

issues raised in NewSun’s brief are, with just one exception, 

coextensive with those addressed by the petitioners. The 

exception is NewSun’s argument that it was arbitrary and 

capricious for FERC to decline to establish a minimum 

contract length for agreements between QFs and electric 

utilities. Because no petitioner raised that issue, we strike 

that portion of NewSun’s brief. See id.

We have jurisdiction to review the petitions under 16 

U.S.C. § 825l(b). Although that provision gives us 

jurisdiction to review final orders of the Commission, it 
SEIA V. FERC 23

prohibits us from considering any objection “unless such 

objection shall have been urged before the Commission in 

the application for rehearing.” Id. Both the Environmental 

Organizations and the Solar Association filed petitions for 

rehearing, and although Utility-Intervenors (but not FERC) 

question the sufficiency of those petitions, we conclude that 

the petitions adequately raised the challenges to Order 872 

that petitioners now advance. See Bangor Hydro-Elec. Co. 

v. FERC, 925 F.2d 465, 467 n.* (D.C. Cir. 1991) (per 

curiam).

II

Before addressing petitioners’ challenges to individual 

provisions of Order 872, we consider their argument that the 

order as a whole is inconsistent with PURPA’s directive that 

FERC “encourage” the development of QFs.

We review an agency’s interpretation of a statute under 

the framework of Chevron U.S.A. Inc. v. NRDC, Inc., 467 

U.S. 837 (1984); see Pacific Choice Seafood Co. v. Ross, 

976 F.3d 932, 940 (9th Cir. 2020). “[W]hen an agency is 

authorized by Congress to issue regulations and promulgates 

a regulation interpreting a statute it enforces, the 

interpretation receives deference if the statute is ambiguous 

and if the agency’s interpretation is reasonable.” Encino 

Motorcars, LLC v. Navarro, 579 U.S. 211, 220 (2016). 

Petitioners argue that Order 872 fails at step one of Chevron

because it is contrary to the unambiguous terms of PURPA 

and at step two because it reflects an unreasonable 

interpretation of the statute.

PURPA provides that FERC “shall prescribe, and from 

time to time thereafter revise, such rules as it determines 

necessary to encourage cogeneration and small power 

production.” 16 U.S.C. § 824a-3(a). According to 
24 SEIA V. FERC

petitioners, Order 872 “rescinded longstanding policies that 

had enabled the development of Qualifying Facilities,” 

replacing them with “new policies that were not designed to 

encourage the development of Qualifying Facilities.” 

Because Order 872 provides less support to QFs than the 

status quo under the 1980 Rules—“discouraging” them 

relative to that baseline—petitioners contend that Order 872 

violates the statute. 

The principal flaw in petitioners’ argument is that 

PURPA does not simply task FERC with prescribing rules 

“to encourage” QFs. Rather, it requires FERC to prescribe 

“such rules as it determines necessary to encourage” QFs, 

and it directs FERC to “from time to time thereafter revise” 

those rules. 16 U.S.C. § 824a-3(a) (emphasis added). On its 

face, the statute gives FERC broad discretion to evaluate 

which rules are necessary to encourage QFs and which are 

not. It also gives FERC discretion to reevaluate its rules and 

alter them in light of experience. The encouragement 

provision represents an “express delegation of authority to 

the agency to elucidate a specific provision of the statute by 

regulation.” Chevron, 467 U.S. at 843–44. It does not impose 

a ratchet under which every FERC rule must encourage QFs 

to a greater extent than the rule that came before it. 

Nor is FERC’s interpretation unreasonable under step 

two. FERC determined that the encouragement provision is 

satisfied so long as FERC’s regulations—viewed as a 

whole—continue to encourage QFs. Order 872, 85 Fed. Reg. 

at 54,650. In Order 872, FERC found that that is exactly 

what the regulations do. The Commission explained that 

Order 872 “may end up encouraging QF development 

differently from the current PURPA Regulations, but the 

Commission’s regulations continue to encourage QF 

development, as contemplated by PURPA.” Id. Most 
SEIA V. FERC 25

importantly, the revised PURPA regulations “continue to 

require that QF rates be set at full avoided costs, a provision 

the Supreme Court described as ‘provid[ing] the maximum 

incentive for the development of cogeneration and small 

power production.’” Id. (quoting American Paper, 461 U.S. 

at 418). FERC also observed that its new rules retain many 

elements of the 1980 Rules that provided support for QFs 

(such as the requirement that utilities provide 

interconnection) and that Order 872 supports QFs in new 

ways (by adding, for example, the competitive-solicitation 

rules that renewable resource developers, like the Solar 

Association, suggested). Id. at 54,644, 54,650–51. 

Of course, it is easy to imagine ways in which FERC 

could have provided even more encouragement to QFs. But 

PURPA does not require FERC to encourage QFs to the 

maximum extent possible, regardless of any countervailing 

interests. To the contrary, the statute makes clear that FERC 

must take into account at least some other considerations. To 

take just one example, PURPA prohibits FERC from setting 

a rate for power from QFs “which exceeds the incremental 

cost to the electric utility of alternative electric energy.” 16 

U.S.C. § 824a-3(b). The Commission’s exercise of 

discretion was not unreasonable simply because it balanced 

the need to encourage QFs against other competing interests.

III

We now turn to petitioners’ challenges to specific

provisions of Order 872. Petitioners challenge four 

components of the order: (1) the modified Site Rule, (2) the 

modified Fixed-Rate Rule, (3) the creation of the LMP 

rebuttable presumption, and (4) the revised market-access 

presumption. Petitioners argue that those components of 
26 SEIA V. FERC

Order 872 conflict with PURPA or are arbitrary and 

capricious, or both.

A

Under PURPA, a “small power production facility” (one 

of the two types of QFs) must have a power production 

capacity “which, together with any other facilities located at 

the same site (as determined by the Commission), is not 

greater than 80 megawatts.” 16 U.S.C. § 796(17)(A)(ii). The 

1980 Site Rule provided that facilities were “located at the 

same site” if they were within one mile of each other, “use[d] 

the same energy resource,” and were “owned by the same 

person.” Order 70, 45 Fed. Reg. at 17,965. Facilities that 

were more than one mile apart were deemed to be located at 

separate sites.

The 2020 Site Rule kept in place the rule for facilities 

within one mile of each other, but it adopted a new approach 

for facilities located more than one mile apart. Under the 

new rule, there is an irrebuttable presumption that facilities 

more than ten miles apart are located at separate sites, but 

only a rebuttable presumption that affiliated facilities that 

use the same energy resource and are located between one 

and ten miles apart are at separate sites. Order 872, 85 Fed. 

Reg. at 54,696. The presumption of separateness may be 

rebutted using a non-exhaustive list of factors, such as 

whether the facilities share common physical characteristics, 

common ownership and control, and shared contracts. Id. at 

54,701. The new rule makes it more likely that two facilities 

will be deemed to be at the same site, and, accordingly, that 

their production capacity will exceed the 80-megawatt 

threshold, making them ineligible for QF status. Petitioners 

advance several different challenges to the 2020 Site Rule, 

but we find none persuasive.
SEIA V. FERC 27

1

Petitioners argue that Order 872’s new definition of “at 

the same site” defies the plain meaning of the statutory text. 

In their view, the term “site” is clear and unambiguous: 

“Site” is a geographic term that refers to “[a] place or 

location; esp., a piece of property set aside for a specific 

use.” Black’s Law Dictionary 1667 (11th ed. 2019). The 

geographic nature of the term is reinforced, they say, by the 

prepositional phrase “located at.” Petitioners argue that by 

relying on non-geographic factors (such as shared physical 

characteristics and common ownership) to determine 

whether facilities between one and ten miles apart are 

located at the same site, the Commission adopted an 

unreasonable interpretation of the statute.

Petitioners’ argument under Chevron step one fails 

because Congress did not “directly address[] the precise 

question” of how the Commission should determine whether 

two facilities are located at the same site. Chevron, 467 U.S. 

at 843. To the contrary, Congress expressly delegated that 

task to FERC by requiring aggregation of power production 

capacity for facilities “located at the same site (as 

determined by the Commission).” 16 U.S.C. § 796(17)(A)(ii) 

(emphasis added). That language gives FERC broad 

discretion to define the meaning of the phrase “located at the 

same site.” See Lindeen v. SEC, 825 F.3d 646, 653 (D.C. Cir. 

2016) (“The explicit grant of definitional authority manifests 

that the Congress intended the [agency] to enjoy broad 

discretion.”). Accordingly, we move to step two to 

determine whether the agency employed that discretion to 

adopt a reasonable definition. 

Congress’s use of the word “site” does not prohibit 

FERC from considering factors other than location and 
28 SEIA V. FERC

physical proximity. See Rush Univ. Med. Ctr. v. Burwell, 

763 F.3d 754, 760 (7th Cir. 2014) (“When a statute 

specifically authorizes an agency to define a term, there is 

no need to consider whether the term is ambiguous and thus 

left to agency delegation.”). Although we agree that the word 

“site” typically carries some location-based connotation, 

ordinary usage of the word often takes account of nonlocational factors as well. For example, one would not 

normally refer to a zoo and a reservoir that are just over a 

mile apart as being located at the same site. But if one were 

referring to the Central Park Zoo and the Central Park 

Reservoir in New York City, it would be natural to describe 

them as located at a single site: Central Park. What 

constitutes a “site” depends on more than simply physical 

distance.

Because Congress did not unambiguously foreclose 

FERC’s interpretation, we must defer to that interpretation 

as long as it is reasonable. National Cable & Telecomms. 

Ass’n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005). 

Petitioners emphasize that the new rule disqualifies more 

facilities than the prior rule, but the approach reflected in the 

1980 Site Rule was not the only permissible interpretation of 

the statute. In any event, even the 1980 Site Rule took 

account of non-locational factors. Under the 1980 Site Rule, 

FERC considered not only physical proximity, but also 

whether the facilities were “owned by the same person” and 

“use[d] the same energy resource,” to determine whether 

two facilities within one mile of each other were located at 

the same site. Order 70, 45 Fed. Reg. at 17,965. The 2020 

Site Rule relies on similar non-locational factors to guide the 

Commission’s classification of facilities between one and 

ten miles apart. Although facilities located between one and 

ten miles apart are presumed to be separate, the presumption 
SEIA V. FERC 29

may be rebutted by showing, for example, that two facilities 

share common physical characteristics, common ownership 

and control, and shared contracts. Order 872, 85 Fed. Reg. 

at 54,701. That is a permissible exercise of the discretion that 

Congress granted the Commission.

2

Petitioners also challenge the 2020 Site Rule under the 

APA. We will set aside the agency’s action if it is “arbitrary, 

capricious, an abuse of discretion, or otherwise not in 

accordance with law.” 5 U.S.C. § 706(2)(A). For an agency’s 

decision to survive review, “the agency must examine the 

relevant data and articulate a satisfactory explanation for its 

action including a ‘rational connection between the facts 

found and the choice made.’” Motor Vehicle Mfrs. Ass’n of 

U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 

(1983) (quoting Burlington Truck Lines v. United States, 371 

U.S. 156, 168 (1962)). A “satisfactory explanation” need not 

be the best possible explanation. Whether or not we would 

have made the same choice as the agency, we must uphold 

the agency’s action so long as it is “reasonable and 

reasonably explained.” FCC v. Prometheus Radio Project, 

141 S. Ct. 1150, 1158 (2021). 

In Order 872, the Commission found “that some large 

facilities were disaggregating into smaller facilities and 

strategically spacing themselves slightly more than one mile 

apart in order to be able to qualify as separate small power 

production facilities.” Order 872-A, 85 Fed. Reg. at 86,690. 

The Commission determined that this practice of strategic 

disaggregation “contradict[ed] the spirit and purpose of 

PURPA” because it allowed large facilities to skirt PURPA’s 

80-megawatt size cap, and that the revised rule would help 

combat this practice. Id. at 86,691. FERC recognized that 
30 SEIA V. FERC

strategic circumvention of the prior site rule was not 

necessarily an everyday occurrence. Order 872, 85 Fed. Reg. 

at 54,697. But it provided specific examples of projects that, 

in its view, had improperly taken advantage of the 1980 Site 

Rule in order to avoid PURPA’s size limitation. Order 872-

A, 85 Fed. Reg. at 86,690. The revised rule addresses that 

problem. Because FERC’s decision to modify the Site Rule 

was “reasonable and reasonably explained,” it satisfies our 

“deferential” standard of review under the APA. Prometheus 

Radio Project, 141 S. Ct. at 1158. 

Petitioners argue that the rule is nevertheless arbitrary 

and capricious in three different ways. 

First, petitioners argue that the choice of a ten-mile 

threshold is arbitrary because FERC might just as well have 

promulgated a three-mile rule, a five-mile rule, or a 

seventeen-mile rule. In some sense of the word “arbitrary,” 

petitioners have a point: As FERC acknowledged when 

initially implementing its 1980 Site Rule, even the one-mile 

rule was “essentially arbitrary.” Windfarms, Ltd., 13 

F.E.R.C. ¶ 61,017, 61,032 (1980). But that does not make 

the rule arbitrary in the sense contemplated by the APA. 

The problem that FERC confronted is one that arises 

frequently in administrative rulemaking. In order to design a 

clear, manageable regulation, agencies often must select a 

single quantitative threshold from among a range of 

reasonable options. We have explained that when an agency 

“‘had to choose some number from a broad range’ and 

selected a ‘reasonable figure,’” its choice satisfies the 

arbitrary-and-capricious standard even if there are other 

reasonable values that the agency could have chosen. Pacific 

Choice Seafood Co., 976 F.3d at 943 (quoting San Luis & 

Delta-Mendota Water Auth. v. Jewell, 747 F.3d 581, 616 
SEIA V. FERC 31

(9th Cir. 2014)). A 55-mile-per-hour speed limit is not 

“arbitrary” just because 50 miles per hour, or 60 miles per 

hour, would work equally well. See Air N. Am. v. 

Department of Transp., 937 F.2d 1427, 1431–32 (9th Cir. 

1991) (“[W]hen the language and policy of a statute permit 

a range of alternative approaches to a particular problem, the 

courts must allow the agency charged with implementing the 

statute to choose the alternative that the agency prefers.”).

Here, FERC determined that a one-mile threshold 

allowed large facilities to skirt PURPA’s size limitation. To 

combat that practice, FERC needed to pick a greater 

threshold. As FERC recognized, “[t]en miles need not be the 

only possible choice under the statute in order for it to be 

considered reasonable.” Order 872-A, 85 Fed. Reg. at 

86,692. But FERC nevertheless concluded that a ten-mile 

cutoff is “qualitatively a large enough distance to serve as 

the inflection point beyond which it is safe to irrebuttably 

presume separate sites.” Id. We see no reason to conclude 

that its choice of a ten-mile threshold was arbitrary or 

capricious.

Second, petitioners argue that the revised site rule 

disregards FERC’s long-held preference for a bright-line 

rule. Whereas the 1980 Site Rule relied on a bright-line, onemile threshold, the new rule relies on a rebuttable 

presumption and case-by-case evaluation, which petitioners 

say represents an unjustified departure from FERC’s 

historical practice. 

That argument misunderstands an administrative 

agency’s authority to change policies over time. The APA 

does not require “regulatory agencies [to] establish rules of 

conduct to last forever,” and agencies may “adapt their rules 

and policies to the demands of changing circumstances.’”
32 SEIA V. FERC

State Farm, 463 U.S. at 43 (first quoting American Trucking 

Ass’ns v. Atchison, Topeka, & Santa Fe Ry. Co., 387 U.S. 

397, 416 (1967); and then quoting Permian Basin Area Rate 

Cases, 390 U.S. 747, 784 (1968)). An agency may change 

its position for any number of reasons, such as a change in 

factual circumstances or a shift in its policy priorities. See

Organized Vill. of Kake v. USDA, 795 F.3d 956, 968 (9th 

Cir. 2015) (en banc). And when an agency changes course, 

“it need not demonstrate to a court’s satisfaction that the 

reasons for the new policy are better than the reasons for the 

old one.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 

515 (2009). Rather, as long as the agency “display[s] 

awareness that it is changing position,” then “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 

better.” Id. (emphasis omitted).

Petitioners are correct that when it adopted the one-mile 

rule, FERC stated that a rebuttable presumption would be 

“burdensome and confusing.” Order 70, 45 Fed. Reg. at 

17,965. And FERC repeatedly rejected proposals to modify

the rule, explaining that “[c]onstruing the one-mile rule as 

merely a rebuttable presumption . . . and the litigation that 

would inevitably follow, would hardly be consistent” with 

the intent of Congress to encourage the development of QFs. 

Northern Laramie Range All., 139 F.E.R.C. ¶ 61,190, 62,316 

n.56 (2012). 

But FERC was not required to maintain that position 

forever. In Order 872, FERC provided “good reasons” for its 

decision to abandon the bright-line, one-mile rule. Fox, 556 

U.S. at 515. FERC recognized that the new site rule and 

related certification procedures could produce additional 

administrative burden and litigation risk for QFs. Order 872, 

85 Fed. Reg. at 54,706. Nevertheless, it reasonably 
SEIA V. FERC 33

concluded that the benefits of the new rule—ensuring that 

PURPA’s benefits flow only to small facilities, not to large 

facilities masquerading as small ones through strategic 

facility placement—outweighed those costs. Id. FERC 

determined that the revised site rule and its accompanying 

regulatory requirements struck “an appropriate balance 

between the need to address improper circumvention and the 

need to avoid unduly burdening small power production 

QFs.” Order 872-A, 85 Fed. Reg. at 86,701. 

That explanation satisfies the APA. Even though FERC 

had rejected this calculus when it opted to keep in place the 

previous bright-line rule, FERC was entitled to prioritize its 

concerns about improper aggregation over concerns about 

administrative uncertainty, even if doing so represented a 

departure from a long-held determination by the agency. See 

Organized Vill. of Kake, 795 F.3d at 968 (explaining that an 

agency may reprioritize some concerns over others it 

previously deemed more important, “even on precisely the 

same record”); State Farm, 463 U.S. at 57 (“An agency’s 

view of what is in the public interest may change, either with 

or without a change in circumstances.” (quoting Greater 

Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. 

Cir. 1970))); accord National Ass’n of Home Builders v. 

EPA, 682 F.3d 1032, 1038 (D.C. Cir. 2012). 

Third, petitioners argue that FERC failed to consider the 

reliance interests engendered by the prior rule. Since 1980, 

developers relied on the prior one-mile rule when deciding 

where to build a given facility—so long as the facility was 

more than one mile apart from another affiliated facility, 

developers could safely assume that the facilities would be 

deemed separate sites. But under the new site rule, there is 

no longer such a guarantee. And because the new rules apply 

to recertifications filed by existing facilities, an existing QF 
34 SEIA V. FERC

faces the risk that it will lose its eligibility for PURPA’s 

benefits if it is deemed to be at the same site as another 

facility. 

As we have explained, an agency is generally free to 

change policy without offering a more substantial 

explanation than would be required if it were writing on a 

blank slate. Sometimes, however, “a more detailed 

justification” is required. Fox, 556 U.S. at 515. In particular, 

when the prior policy “has engendered serious reliance 

interests,” then “[i]t would be arbitrary or capricious to 

ignore such matters.” Id.; accord Encino Motorcars, 579 

U.S. at 221–22. In that situation, a “reasoned explanation is 

needed” for disregarding the interests “engendered by the 

prior policy.” Fox, 556 U.S. at 515. An agency must “assess 

whether there were reliance interests” in the prior rule, 

determine whether those interests “were significant,” and 

weigh them “against competing policy concerns.” 

Department of Homeland Sec. v. Regents of the Univ. of 

Cal., 140 S. Ct. 1891, 1915 (2020). 

In Order 872, FERC acknowledged the reliance interests 

engendered by the 1980 Site Rule, recognizing that some 

parties had relied on the prior rule when developing QFs. 

See, e.g., Order 872-A, 85 Fed. Reg. at 86,698–99, 86,701–

03. But an agency “may determine, in the particular context 

before it, that other interests and policy concerns outweigh 

any reliance interests.” Regents of the Univ. of Cal., 140 S. 

Ct. at 1914; see Encino Motorcars, 579 U.S. at 226 

(Ginsburg, J., concurring) (“[R]eliance does not overwhelm 

good reasons for a policy change.”). FERC reasoned that 

preventing strategic circumvention of the site rule was more 

important than any reliance interests, particularly when 

many of the facilities that adversely relied on the old rule had 
SEIA V. FERC 35

engaged in the very disaggregation practices that FERC now 

seeks to prevent. Order 872-A, 85 Fed. Reg. at 86,702. 

Importantly, FERC not only recognized the existence of 

reliance interests but also took at least some measures to 

mitigate the harm to relying parties. FERC emphasized that 

“the new regulations do not apply to an existing facility 

unless and until it makes substantive changes.” Order 872-

A, 85 Fed. Reg. at 86,702. FERC reasoned that “[w]hen the 

existing QF makes a substantive change, it is no longer the 

same facility it was before,” justifying application of the new 

rule. Id. Order 872 provided examples of the kind of changes 

that the Commission considers substantive: If, for example, 

a facility’s power production capacity changes by at least 

one megawatt or five percent, or its ownership changes by at 

least ten percent, the new rules would apply. Order 872, 85 

Fed. Reg. at 54,706. By acknowledging the existence of 

reliance interests and incorporating measures to limit the 

harm to the relying parties, FERC satisfied the APA. 

3 

Finally, petitioners contend that the 2020 Site Rule is 

unlawfully retroactive. An administrative agency generally 

may not promulgate retroactive regulations “unless that 

power is conveyed by Congress in express terms.” Bowen v. 

Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). No 

party contends that FERC is authorized by statute to engage 

in retroactive rulemaking. The only question, then, is 

whether FERC’s new site rule is retroactive. 

A provision operates retroactively when it would “impair 

rights a party possessed when he acted, increase a party’s 

liability for past conduct, or impose new duties with respect 

to transactions already completed.” Landgraf v. USI Film 

Prods., 511 U.S. 244, 280 (1994); see Bahr v. Regan, 6 F.4th 
36 SEIA V. FERC

1059, 1072 (9th Cir. 2021) (applying the principles of 

Landgraf to the analysis of regulatory retroactivity);

National Mining Ass’n v. Department of Labor, 292 F.3d 

849, 859 (D.C. Cir. 2002) (same). The critical question is 

“whether the new provision attaches new legal consequences 

to events completed before its enactment.” Landgraf, 511 

U.S. at 270; see also Bowen, 488 U.S. at 219 (Scalia, J., 

concurring) (explaining that an administrative rule is 

impermissible when it “alter[s] the past legal consequences 

of past actions”).

The new site rule does not operate retroactively. It 

applies to new facilities seeking initial certification and to 

existing facilities seeking recertification, but only if that 

certification or recertification is sought after the rule’s 

effective date of December 31, 2020. 18 C.F.R. 

§ 292.204(a)(2)(B)–(C); Order 872, 85 Fed. Reg. at 54,649.

The rule applies to recertification of an existing QF only 

when there have been “substantive changes” to that facility, 

such as when a facility’s power production capacity changes 

by at least five percent, or its ownership changes by at least 

ten percent. Order 872, 85 Fed. Reg. at 54,706. In other 

words, so long as an already-certified facility does not 

undergo a substantive change, the old rule applies, and the 

new rule poses no threat to its qualifying status. 

Petitioners do not take issue with the rule’s application 

to initial certifications of new facilities. Instead, they focus 

on the application of the rule to recertifications of alreadyexisting facilities. They argue that the new rule is retroactive 

because it threatens to strip an already-qualified facility of 

its PURPA eligibility based on what they consider to be 

“minor” changes to the facility. But even if the triggering 

event requiring recertification is “minor,” a previously 

certified QF does not possess any sort of “vested rights” to 
SEIA V. FERC 37

PURPA eligibility in perpetuity. Landgraf, 511 U.S. at 269 

(quoting Society for the Propagation of the Gospel v. 

Wheeler, 22 F. Cas. 756, 767 (C.C.N.H. 1814) (No. 13,156)). 

Thus, even if a facility were to lose its PURPA eligibility in 

the future under the new site rule, the rule would not “impair 

rights a party possessed when [it] acted.” Id. at 280. Nor does 

the rule “attach[] new legal consequences to events 

completed before its enactment.” Id. at 270. Rather, it 

potentially creates new legal consequences—the loss of 

qualifying status—only for “events” that occur in the future: 

recertifications that take place after the rule’s effective date, 

and only if the facility undergoes a substantive change. 

At bottom, petitioners’ theory is that the rule is 

retroactive because QFs were built in reliance on the old site 

rule, and the new rule could result in the loss of qualifying 

status. But a rule is not retroactive merely because it “upsets 

expectations based in prior law” or “is applied in a case 

arising from conduct antedating the statute’s enactment.” 

Landgraf, 511 U.S. at 269. “Even uncontroversially 

prospective statutes” can do that. Id. at 269 n.24. For 

example, “a new property tax or zoning regulation may upset 

the reasonable expectations that prompted those affected to 

acquire property; a new law banning gambling harms the 

person who had begun to construct a casino before the law’s 

enactment or spent his life learning to count cards.” Id. The 

2020 Site Rule is not unlawfully retroactive under the APA. 

B

We now turn to petitioners’ challenges to Order 872’s 

revision of the Fixed-Rate Rule. 

PURPA requires that the rates paid to QFs (1) “shall be 

just and reasonable to the electric consumers of the electric 

utility,” (2) shall be “in the public interest,” and (3) “shall 
38 SEIA V. FERC

not discriminate against” QFs. 16 U.S.C. § 824a-3(b). Of 

particular relevance here, it also states that no rule “shall 

provide for a rate which exceeds the incremental cost to the 

electric utility of alternative electric energy.” Id. Under that 

provision, the rate paid to a QF may not exceed the cost to 

the utility “of the electric energy which, but for the purchase 

from [the QF], such utility would generate or purchase from 

another source.” Id. § 824a-3(d). 

In its 1980 Rules, FERC set the rate at the utility’s full 

avoided cost. Order 69, 45 Fed. Reg. at 12,222–23. The 1980 

Rules provided two methods for calculating avoided cost. 

QFs could choose a rate determined by the utility’s avoided 

cost calculated at the time of delivery, or, alternatively, a rate 

calculated and fixed based on an estimate of the utility’s 

avoided cost over the life of the contract. See Winding Creek 

Solar, 932 F.3d at 863. FERC recognized in 1980 that “a 

contract with avoided costs calculated at the time a [contract] 

is incurred could exceed the electric utility’s avoided costs 

at the time of delivery in the future, thereby seemingly 

violating PURPA’s requirement that QFs not be paid more 

than an electric utility’s avoided costs.” Order 872-A, 85 

Fed. Reg. at 86,664. Nevertheless, FERC determined that 

PURPA’s rate cap did not require a “minute-by-minute 

evaluation of costs which would be checked against rates 

established in long term contracts.” Order 69, 45 Fed. Reg. 

at 12,224. FERC explained that “in the long run, 

‘overestimations’ and ‘underestimations’ of avoided costs 

will balance out,” and that allowing rates to be fixed in longterm contracts was necessary to provide enough certainty to 

allow QFs to obtain financing. Id.

Order 872 modifies the Fixed-Rate Rule by allowing (but 

not requiring) States to eliminate fixed-contract energy rates. 

18 C.F.R. § 292.304(d)(2). The rules require that States 
SEIA V. FERC 39

maintain the right of QFs to elect fixed-contract capacity 

rates. Id. § 292.304(d)(1)(ii).

Petitioners argue that FERC unreasonably interpreted 

PURPA’s rate-related provisions and that the revised rule 

violates PURPA’s “non-discrimination” provision. They 

also argue that the new rule is arbitrary and capricious. We 

find neither theory persuasive.

1

Petitioners argue that FERC’s modification of the FixedRate Rule reflects a misreading of PURPA. Petitioners 

acknowledge, and FERC agrees, that Congress did not speak 

to the precise question of how “avoided costs” should be 

calculated, instead granting FERC broad discretion to set 

rates, subject to the statute’s avoided-cost limitation. See 16 

U.S.C. § 824a-3(b). And they correctly observe that PURPA 

does not require that avoided cost be measured by reference 

to short-run costs calculated at the time of delivery. The 

Commission did not suggest otherwise. To the contrary, it 

recognized that PURPA does not demand any particular 

avoided-cost calculation method; as the Commission 

observed, it “could have imposed a variable energy contract 

requirement when it promulgated the PURPA Regulations in 

1980 instead of requiring fixed energy contract rates.” Order 

872-A, 85 Fed. Reg. at 86,672. 

FERC’s position thus survives Chevron step one. Under 

Chevron step two, it is a reasonable interpretation of the 

statute. FERC determined that States should have the option 

to require measurement of avoided costs at the time of 

delivery because—in the Commission’s view—that 

approach better comports with the principles of PURPA’s 

avoided-cost provision: “[A] variable energy avoided cost 

approach is a more accurate way to ensure that payments to 
40 SEIA V. FERC

QFs equal, but do not exceed, avoided costs.” Order 872, 85 

Fed. Reg. at 54,672. FERC was entitled to “justify its policy 

choice by explaining why that policy ‘is more consistent 

with statutory language’ than alternative policies.” Encino 

Motorcars, 579 U.S. at 223 (quoting Long Island Care at 

Home, Ltd. v. Coke, 551 U.S. 158, 175 (2007)). 

Petitioners argue that the new rate rule violates PURPA’s 

requirement that rates “shall not discriminate against” QFs. 

16 U.S.C. § 824a-3(b)(2). They point out that QFs now must 

accept a variable, uncertain rate (at least in those States that 

choose to eliminate fixed rates), whereas utilities are 

guaranteed the long-term recovery of their costs and a return 

on investment, even when their costs exceed short-term

energy prices. Because QFs now face financial risks that 

utilities do not, petitioners believe that the new rule sets a 

rate that violates PURPA’s nondiscrimination requirement. 

PURPA’s nondiscrimination provision cannot support 

that interpretation. Under PURPA, the compensation regime 

for QFs is fundamentally different from that used for 

utilities. See American Paper, 461 U.S. at 414 (“Congress 

did not intend to impose traditional ratemaking concepts 

[used by utilities] on sales by qualifying facilities to 

utilities.”). The Supreme Court explained in American Paper

that “the full-avoided-cost rule plainly satisfies the 

nondiscrimination requirement.” Id. at 413; see Order 872, 

85 Fed. Reg. at 54,651 (“If the purchasing utility is paying 

the same rate to a QF for power that it otherwise would have 

paid for incremental power, by definition such a rate could 

not be discriminatory.”). Nothing in the Court’s analysis 

suggests that the nondiscrimination requirement demands 

fixed-rate, rather than variable-rate, assessment of avoided 

costs. After all, the statute requires that “rates . . . shall not 

discriminate” against QFs; it does not require that they be set 
SEIA V. FERC 41

in such a way as to offset any other disadvantages that QFs 

might face in the market. 16 U.S.C. § 824a-3(b)(2). Order 

872 requires that QFs receive a rate equal to full avoided 

costs, and that is sufficient to satisfy the nondiscrimination 

requirement.

2

Petitioners argue that the Fixed-Rate Rule is arbitrary 

and capricious for two reasons. First, they claim that FERC 

changed its interpretation of PURPA without “display[ing] 

awareness that it [was] changing position.” Fox, 556 U.S. at 

515. Second, they argue that FERC lacked data to support its 

conclusions and failed to recognize important elements of 

the problem.

The parties debate whether FERC has changed its 

interpretation of the statute to justify its rule change, but we 

need not resolve that debate because FERC expressly and 

unambiguously acknowledged that it was changing its policy

in partially eliminating the Fixed-Rate Rule. FERC stated 

that “because the Commission’s revision to the fixed energy 

rate requirement is based on changed circumstances since 

the issuance of the PURPA Regulations in 1980, we must 

provide ‘a reasoned explanation . . . for disregarding facts 

and circumstances that underlay or were engendered by the 

policy.’” Order 872-A, 85 Fed. Reg. at 86,672 (quoting Fox, 

556 U.S. at 516). That satisfies the concern in Fox Television

that agencies not “depart from a prior policy sub silentio or 

simply disregard rules that are still on the books.” 556 U.S.

at 515. 

FERC also explained why it was changing policy. FERC 

had initially justified the Fixed-Rate Rule on the theory that 

“in the long run, ‘overestimations’ and ‘underestimations’ of 

avoided costs will balance out.” Order 69, 45 Fed. Reg. at 
42 SEIA V. FERC

12,224. But in Order 872, it determined, based on new 

evidence, that “it is not necessarily the case that 

overestimations and underestimations of avoided energy 

costs will balance out.” Order 872, 85 Fed. Reg. at 54,677.

More specifically, it found that “[b]road price declines over 

time throughout the energy industry show that long-term 

fixed price QF contracts likely exceeded the avoided energy 

costs at the time of delivery for extended periods of time.” 

Order 872-A, 85 Fed. Reg. at 86,672. A finding of regular, 

routine overestimations not balanced out by 

underestimations would fully justify a change in policy.

Petitioners argue that there is no record evidence 

suggesting that the prior Fixed-Rate Rule actually resulted 

in contracts above market prices. They say that FERC 

analyzed only a relatively short period during which energy 

prices precipitously declined, calling into question the 

conclusion that over- and under-estimations will not balance 

out over time. Petitioners further argue that FERC relied on 

unreliable reports of over-cost contracts—often from utility 

companies themselves—without assessing the underlying 

data. 

But reliance on imperfect data is “not unusual in day-today agency decisionmaking,” and an agency does not err by 

making reasonable judgments “based on the evidence it 

had.” Prometheus Radio Project, 141 S. Ct. at 1160; see 

Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783 

F.3d 1301, 1308 (D.C. Cir. 2015) (recognizing that courts 

must “afford FERC ‘an extreme degree of deference’” when 

it makes judgments “within its technical expertise” (quoting 

Washington Gas Light Co. v. FERC, 532 F.3d 928, 930 

(D.C. Cir. 2008))). FERC reasonably relied on several 

comments suggesting that PURPA contracts exceed avoided 

costs somewhat often and by large margins. Order 872-A, 85 
SEIA V. FERC 43

Fed. Reg. at 86,668 n.147. Those comments were not 

facially unreliable, and even if the drop in prices represented 

an anomalous circumstance, the anomaly supports the 

Commission’s finding that, “at least in some circumstances, 

long-term fixed avoided cost energy rates have been well 

above the purchasing utility’s avoided costs for energy.” 

Order 872, 85 Fed. Reg. at 54,676. The Commission could 

reasonably conclude that the problem called for a remedy.

Petitioners object that FERC ignored concerns that state 

commissions—which are granted new flexibility under the 

new Fixed-Rate Rule—have previously violated the due

process rights of QFs in their implementation of PURPA 

regulations. FERC did not ignore the concern; it explained 

that the rule reflected “the expectation that the states will 

fulfill their legal obligation to implement the Commission’s 

PURPA Regulations as revised.” Order 872, 85 Fed. Reg. at 

54,647. To the extent that any State fails to do so, the 

Commission explained, Congress has provided a remedy in 

16 U.S.C. § 824a-3(h). Id. 

Petitioners also argue that FERC minimized concerns 

about the ability of QFs to secure financing without the 

certainty of a fixed rate, especially outside of organized 

markets. FERC acknowledged that “fixed rates are 

beneficial for obtaining financing for QF projects,” but it 

determined that its reforms would not “materially affect[] the 

ability of QFs to obtain financing.” Order 872, 85 Fed. Reg. 

at 54,670. That determination was not arbitrary and 

capricious.

First, FERC explained that because QFs are still entitled 

to a fixed capacity rate, it believed that the potential receipt

of some steady cashflows will typically be sufficient to 

encourage financing. As the Commission observed, “the 
44 SEIA V. FERC

variable energy rate/fixed capacity rate construct . . . is the 

standard rate structure used throughout the electric industry 

for power sales agreements that include the sale of capacity.” 

Order 872, 85 Fed. Reg. at 54,645. And it concluded that a 

“fixed capacity rate . . . should typically be sufficient to 

recover the QF’s financing costs and should therefore 

continue to facilitate QF financing.” Id.

Second, FERC relied on data that non-PURPA 

independent facilities have been successful—as 

demonstrated by an almost 700 percent increase in 

independent renewable generation between 2005 and 2018, 

most of it outside of PURPA—and received adequate 

financing without PURPA’s mandatory fixed rate. Order 

872, 85 Fed. Reg. at 54,682. From this, FERC concluded that 

QFs will similarly be able to obtain financing. FERC 

reasonably relied on non-PURPA data to make “a reasonable 

predictive judgment based on the evidence it had.” 

Prometheus, 141 S. Ct. at 1160.

More importantly, FERC determined that the benefits of 

its new approach—better compliance with the statutory 

requirement that rates not exceed avoided costs—exceed the 

harms that it may inflict on QFs. Order 872-A, 85 Fed. Reg. 

at 86,672–73; see Encino Motorcars, 579 U.S. at 223–24 

(“[A]n agency may justify its policy choice by explaining 

why that policy ‘is more consistent with statutory language’ 

than alternative policies.” (quoting Long Island Care, 551 

U.S. at 175)). Given the broad discretion that PURPA 

provides FERC in setting rates, that was a permissible 

judgment.

C

Order 872 permits (but does not require) States to adopt 

a rebuttable presumption that locational marginal price 
SEIA V. FERC 45

represents a utility’s avoided costs in certain organized 

markets. 18 C.F.R. § 292.304(b)(6). Petitioners contend that 

the LMP rebuttable presumption is arbitrary and capricious.

Relying on the two-part test articulated by the D.C. Circuit 

in Cablevision Sys. Corp. v. FCC, 649 F.3d 695 (D.C. Cir. 

2011), petitioners argue that the APA permits an agency to 

adopt an evidentiary presumption only if the presumption 

(1) is “rational,” and (2) “shift[s] the burden of production 

and not the burden of persuasion.” Id. at 716. Petitioners 

contend that the LMP presumption satisfies neither element 

of the Cablevision test. 

By its terms, the Cablevision test governs presumptions 

adopted by a federal agency to govern its own proceedings. 

But the LMP presumption does not govern proceedings 

before the Commission; it is a presumption that States may 

choose to apply (or not) in proceedings that they conduct. 

We have not previously held that Cablevision applies in that 

context. We need not explore that question further because 

the parties agree that Cablevision applies, so we will assume, 

without deciding, that they are correct. Under that test, 

petitioners’ argument fails because the LMP presumption is 

rational and does not impermissibly shift the burden of 

persuasion. 

First, the LMP presumption is rational. “[A]n evidentiary 

presumption is only permissible if there is a sound and 

rational connection between the proved and inferred facts, 

and when proof of one fact renders the existence of another 

fact so probable that it is sensible and timesaving to assume 

the truth of [the inferred] fact . . . until the adversary 

disproves it.” Cablevision, 649 F.3d at 716 (second

alteration in original) (quoting National Mining Ass’n v. 

Department of Interior, 177 F.3d 1, 6 (D.C. Cir. 1999)). In 

assessing that “rational connection,” we “defer to the 
46 SEIA V. FERC

agency’s judgment.” Id. (quoting National Mining Ass’n,

177 F.3d at 6). 

Petitioners argue that electric utilities purchasing from 

QFs may have avoided costs that exceed LMP. For example, 

utilities that obtain energy outside of the market auction—

whether from their own plants or through bilateral 

contracts—might incur costs that exceed LMP. As 

petitioners put it, LMP reflects a utility’s costs only “if the 

utility’s own generation is bid at its full cost of production 

and the utility’s marginal (most expensive) energy is 

purchased through the market.”

Granting the point that LMP does not always describe 

avoided costs, there is nevertheless a “sound and rational 

connection” between the LMP presumption and a utility’s 

avoided costs. Cablevision, 649 F.3d at 716. In an organized 

market, LMP reflects the marginal cost of providing an 

additional megawatt-hour of energy at a given time and 

location within the grid, as determined by competitive 

auctions. Order 872, 85 Fed. Reg. at 54,656; Federal Energy 

Regulatory Comm’n, Energy Primer 60 (Nov. 2015); 

Electric Power Supply Ass’n, 577 U.S. at 267–68. FERC 

explained that this price often provides a reasonable proxy 

for a utility’s avoided costs. LMP takes into account “all 

physical system constraints” and thus “reflect[s] the true 

marginal cost of production of energy.” Order 872, 85 Fed. 

Reg. at 54,660. For a utility that purchases its marginal 

energy through the market, then, LMP will, by definition, 

equal the utility’s avoided energy costs. And because LMP 

is location-specific, it more accurately measures a utility’s 

avoided energy costs than would a system-wide cost 

measure. Id. “Because LMP is likely to reflect the true 

marginal cost of energy in the vast majority of cases,” FERC 

said, “it is ‘so probable that it is sensible and timesaving to 
SEIA V. FERC 47

assume’ that LMP for a particular utility is an appropriate 

measure of the utility’s avoided costs for as-available 

energy.” Order 872-A, 85 Fed. Reg. at 86,666 (footnote 

omitted) (quoting National Mining Ass’n, 177 F.3d at 6).

FERC nevertheless recognized that LMP might “not 

always reflect a purchasing utility’s actual avoided energy 

costs.” Order 872, 85 Fed. Reg. at 54,659. For that reason, 

FERC built flexibility into the rule. FERC’s notice of 

proposed rulemaking had suggested adopting a per se rule, 

which would have allowed States to adopt LMP as a measure 

of avoided costs without providing QFs the opportunity to 

demonstrate why LMP is inappropriate in a particular case. 

2019 NPRM, 84 Fed. Reg. at 53,253. In response to 

comments, FERC abandoned that approach and instead 

adopted a rebuttable presumption. Order 872, 85 Fed. Reg. 

at 54,659. If a utility’s actual avoided costs exceed LMP for 

any of the reasons identified by petitioners, a QF can rebut 

the presumption; at the end of the day, the QF is still entitled 

to receive the utility’s full avoided costs. Moreover, no State 

is obligated to adopt the rebuttable presumption if it 

determines that LMP does not reflect actual avoided costs. 

This alleviates concerns about the accuracy of LMP in 

regional markets that are not sufficiently competitive.

Second, FERC did not impermissibly shift the burden of 

persuasion. See Cablevision, 649 F.3d at 716. After a State 

establishes a rate, that rate can be challenged before a state 

regulatory authority, and then before the Commission or in 

federal court. Order 872, 85 Fed. Reg. at 54,659–60; Pioneer 

Wind Park I, LLC, 145 F.E.R.C. ¶ 61,215, 62,169 (2013) 

(noting that if the QF objects to the State’s avoided-cost 

rates, “it should first pursue such concerns at the [state] 

Commission,” and then can file a petition before FERC or in 

federal court); 16 U.S.C. § 824a-3(g), (h)(2). But in those 
48 SEIA V. FERC

proceedings, the challenger always bears the burden of 

persuasion—just as it did before the issuance of Order 872—

to demonstrate that the State’s rate choice does not 

accurately reflect a utility’s actual avoided costs. As FERC 

explained, nothing in Order 872 shifts the burden of 

persuasion in that proceeding: “Requiring an entity 

challenging the state’s use of the presumption in the first 

instance to show why the state was wrong does not negate 

the legal requirement that, unless the parties agree to another 

rate, the rates for purchases in a QF contract must equal a 

purchasing utility’s avoided costs.” Order 872-A, 85 Fed. 

Reg. at 86,666. In such a proceeding, “a state would need to 

address the challenging entity’s arguments in order to 

demonstrate that LMP represents the purchasing utility’s 

avoided costs,” and Order 872 does “not shift the burden of 

persuasion, only the burden of production.” Id. 

D 

Petitioners argue that FERC’s adjustment of the marketaccess presumption from 20 megawatts to five megawatts 

was arbitrary and capricious. 

As we have already explained, the APA ordinarily does 

not demand that an agency justify a policy change with 

reasons more substantial than would be required to adopt 

that same policy in the first instance. See Fox, 556 U.S. at 

514–15. But when a “new policy rests upon factual findings 

that contradict those which underlay its prior policy,” an 

agency must provide “a more detailed justification than what 

would suffice for a new policy created on a blank slate.” Id. 

at 515. In such cases, the agency must give a “reasoned 

explanation” for “disregarding facts and circumstances that 

underlay . . . the prior policy.” Id. at 516. 
SEIA V. FERC 49

In Order 688, the Commission concluded that, as a 

product of their size, “small” QFs may have difficulty 

accessing markets. Order 688, 71 Fed. Reg. at 64,352; Order 

688-A, 72 Fed. Reg. at 35,884. It therefore determined that 

it was reasonable to adopt a rebuttable presumption that 

small QFs lack nondiscriminatory market access. Faced with 

competing comments about how to define a “small” QF, the 

Commission acknowledged that “there is no unique and 

distinct megawatt size that uniquely determines if a 

generator is small.” Order 688-A, 72 Fed. Reg. at 35,884; 

see Order 688, 71 Fed. Reg. at 64,353 (“[N]o single per-MW 

demarcation is perfect.”). Nevertheless, the Commission 

concluded that a 20-megawatt threshold would be 

“reasonable and administratively workable.” Order 688, 71 

Fed. Reg. at 64,352. The Commission noted that it had used 

a 20-megawatt threshold in other rulemaking contexts, such 

as its interconnection rules, which subjected small 

generators of less than 20 megawatts to different rules than 

large generators. Id. at 64,352–53. But because the 

Commission recognized that there was no perfect 

demarcation, it emphasized that it was creating only a 

rebuttable presumption rather than a per se rule. Id. 

In Order 872, FERC cited changed circumstances since 

the issuance of Order 688 to justify its downward revision of 

the market-access presumption from 20 megawatts to five

megawatts. Order 872, 85 Fed. Reg. at 54,715. Because 

FERC’s revision of the presumption was based on “factual 

findings that contradict those which underlay its prior 

policy,” it was required to provide a “reasoned explanation” 

for its policy change. Fox, 556 U.S. at 515–16. 

The Commission did so by explaining that at the time it 

issued Order 688, organized markets had been in existence 

for only a few years. Order 872, 85 Fed. Reg. at 54,712. But 
50 SEIA V. FERC

in the years since then, “markets have matured,” and “market 

participants have gained a better understanding of the 

mechanics of such markets,” enabling facilities with 

capacities of less than 20 megawatts to participate in those 

markets in ways that they could not before. Id. at 54,716. 

Indeed, as FERC noted, the Commission’s own rules have 

enabled greater market access for small QFs, such as its rule 

requiring that regional markets use tariff schedules that 

accommodate resources as small as 100 kilowatts. Order 

872-A, 85 Fed. Reg. at 86,707. These rules “provide greater 

opportunities for small power production facilities to 

participate in wholesale organized markets” than were 

available when FERC issued Order 688. Id. And in the years 

since it issued Order 688, FERC observed “multiple 

examples of small power production facilities under 20 MW 

participating in . . . energy markets.” Order 872, 85 Fed. Reg. 

at 54,715.

Taking this evidence into account, FERC found that it 

was “reasonable to presume that access to the [regional 

markets] has improved and that it is appropriate to update 

the presumption for smaller production facilities.” Order 

872, 85 Fed. Reg. at 54,716. As in Order 688, FERC 

acknowledged in Order 872 that no single size threshold 

would perfectly distinguish facilities that lack adequate 

market access from those that have adequate market access. 

Id. And just as it did when issuing Order 688, FERC looked 

to the cutoffs used in other rules to guide its revision to the 

market-access presumption, such as its rules requiring that 

utilities increase the availability of “Fast-Track” 

interconnection procedures for projects up to five megawatts 

in size. Id. In the end, after considering an even lower 

threshold of one megawatt, FERC settled on a five-megawatt 

threshold. It concluded that “5 MW represents a reasonable 
SEIA V. FERC 51

new threshold that accounts for the change of circumstances 

indicating that 20 MW no longer is appropriate but also 

accommodates commenters’ concerns that a 1 MW 

threshold would be too low.” Id. 

FERC provided a “reasoned explanation” for its revision 

of the rebuttable presumption, and its decision survives 

review under the APA. Fox, 556 U.S. at 516. The 

Commission’s determination that market conditions have 

improved considerably for small facilities since the issuance 

of Order 688 implicates its “technical understanding and 

policy judgment” about the state and operation of energy 

markets, and thus we are particularly careful not to 

“substitute our own judgment for that of the Commission.” 

Electric Power Supply Ass’n, 577 U.S. at 295, 292. Given 

FERC’s reasonable determination that market conditions 

had changed, FERC’s choice of a five-megawatt threshold 

was not arbitrary and capricious. 

IV

That leaves the NEPA challenge, which is asserted only 

by the Environmental Organizations. FERC provided two 

independent grounds for its conclusion that it was not 

required to prepare an environmental assessment (EA) or 

environmental impact statement (EIS). First, FERC claimed 

that Order 872 falls within a “categorical exclusion” to 

NEPA. Order 872, 85 Fed. Reg. at 54,725–27. Second, 

FERC asserted that any downstream environmental impacts 

of Order 872 are too uncertain and unforeseeable to trigger 

NEPA review. Id. Reviewing FERC’s NEPA conclusions 

under the APA’s arbitrary-and-capricious standard, see 

Environmental Def. Ctr. v. Bureau of Ocean Energy Mgmt., 

36 F.4th 850, 871–72 (9th Cir. 2022), we reject both 

justifications. FERC was required to prepare an EA before 
52 SEIA V. FERC

issuing Order 872. But because of the extraordinary 

disruptive consequences of vacating the rules, we decline to 

order vacatur. 

A 

Before we turn to the merits of the NEPA claims, we 

consider whether we have jurisdiction. Utility-Intervenors 

(but not FERC) contend that the Environmental 

Organizations lack both Article III and prudential standing. 

We disagree.

In order to establish Article III standing, “a plaintiff must 

show (1) it has suffered an ‘injury in fact’ that is (a) concrete 

and particularized and (b) actual or imminent, not 

conjectural or hypothetical; (2) the injury is fairly traceable 

to the challenged action of the defendant; and (3) it is likely, 

as opposed to merely speculative, that the injury will be 

redressed by a favorable decision.” Association of Irritated 

Residents v. EPA, 10 F.4th 937, 943 (9th Cir. 2021) (quoting 

Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), 

Inc., 528 U.S. 167, 180–81 (2000)). We have explained that 

when a plaintiff alleges a “procedural injury”—such as the 

failure to comply with NEPA—the “‘normal standards for 

. . . [the] immediacy’ of the injury are relaxed.” Navajo 

Nation v. Department of the Interior, 876 F.3d 1144, 1160 

(9th Cir. 2017) (alterations in original) (quoting Lujan v. 

Defenders of Wildlife, 504 U.S. 555, 572 n.7 (1992)). 

Although “injury in fact requires a likelihood that the 

challenged action, if ultimately taken, would threaten a 

plaintiff’s interests,” id. at 1161, we do not require the 

plaintiff to show that the agency would necessarily have 

reached a different decision had it complied with NEPA. 

Lujan, 504 U.S. at 572 n.7. 
SEIA V. FERC 53

The Environmental Organizations have Article III 

standing. In their briefing and supplemental declarations, the 

Organizations adequately document the concrete harms that 

Order 872 could cause their members. According to the 

Organizations, Order 872 will reduce the incentives 

provided to QFs, many of which use renewable energy 

sources. This, in turn, could shift the mix of power 

generation in the United States away from renewable 

generation and toward fossil-fuel generation. This 

undeniably harms the economic interests of the 

Organizations’ members, many of which own QFs, and the 

environmental interests of the Organizations’ members, 

many of whose missions involve the promotion of renewable 

energy development. The Organizations’ members also live 

near facilities that burn fossil fuels, and if those facilities 

burn more fossil fuels, members will suffer greater air 

pollution. The threat of those concrete harms confers Article 

III standing. 

Utility-Intervenors suggest that the alleged harms “rest[] 

on a speculative chain of future possibilities,” depriving the 

Organizations of standing. (quoting Center for Biological 

Diversity v. Bernhardt, 946 F.3d 553, 560 (9th Cir. 2019)). 

But although Utility-Intervenors argue that the alleged 

environmental harms of Order 872 are not foreseeable 

because they depend on the subsequent, independent choices 

made by each State, even “a contingent ‘chain of events’ can 

create a ‘reasonably probable’ threat to a plaintiff’s 

interests.” Navajo Nation, 876 F.3d at 1161; cf. California 

ex rel. Lockyer v. United States Dep’t of Agric., 575 F.3d 

999, 1010–11 (9th Cir. 2009) (concluding that a NEPA 

challenge was ripe for adjudication, even though any alleged 

harms from the challenged rule would not materialize 

without subsequent action by individual States). And state 
54 SEIA V. FERC

implementation of Order 872 is far from speculative. To the 

contrary, multiple States in which the Organizations’

members live have already begun to implement the order. 

We conclude that there is at least a “reasonable probability” 

that FERC’s alleged NEPA violation will lead to concrete 

harm to the Organizations’ members. Navajo Nation, 876 

F.3d at 1161 (citation omitted). 

To be sure, the harm will be caused by third parties rather 

than directly by FERC itself. But that does not defeat the 

Organizations’ standing. Although “speculation about the 

decisions of independent actors” is not an adequate basis for 

standing, the relevant actors here are not genuinely 

independent. Clapper v. Amnesty Int’l, USA, 568 U.S. 398, 

414 (2013). Rather, they are the entities directly regulated by 

the regime established in Order 872, and as we have already 

explained, their responses to that order are hardly a matter of 

speculation. In the NEPA context, we have repeatedly held 

that predictable “third-party responses to agency action [are] 

sufficient to confer standing.” Idaho Conservation League v. 

Mumma, 956 F.2d 1508, 1515 (9th Cir. 1992). 

In addition to Article III standing, a plaintiff challenging 

an agency’s compliance with NEPA must establish 

prudential standing by demonstrating that its injury falls 

“within the zone of interests to be protected by the statute.” 

Ranchers Cattlemen Action Legal Fund United 

Stockgrowers of Am. v. United States Dep’t of Agric., 415 

F.3d 1078, 1103 (9th Cir. 2005) (quoting Nevada Land 

Action Ass’n v. United States Forest Serv., 8 F.3d 713, 715–

16 (9th Cir. 1993)). As its name makes clear, NEPA is an 

environmental statute, and thus “to assert a claim under 

NEPA, a plaintiff must allege injury to the environment; 

economic injury will not suffice.” Id. But although a purely

economic injury does not fall within NEPA’s zone of 
SEIA V. FERC 55

interests, a plaintiff can nevertheless satisfy NEPA’s zoneof-interests requirement even “if his or her interest is 

primarily economic, as long as he or she also alleges an 

environmental interest or economic injuries that are 

‘causally related to an act within NEPA’s embrace.’” Id.

(quoting Port of Astoria, Or. v. Hodel, 595 F.2d 467, 476 

(9th Cir. 1979)). 

The Environmental Organizations satisfy NEPA’s zoneof-interests test. The environmental harms that they fear—

namely, an increase in pollution and greenhouse-gas 

emissions resulting from reduced incentives provided to 

renewable sources—undoubtedly fall within NEPA’s zone 

of interests. Given the specific renewable-energy-promoting 

purposes of the Organizations, their interest is also clearly 

“distinct from the interest held by the public at large.” 

Navajo Nation, 876 F.3d at 1164 (quoting Cantrell v. City of 

Long Beach, 241 F.3d 674, 681 (9th Cir. 2001)). Further, the 

Organizations have expressly environmental missions, and 

thus they have a “direct interest” in ensuring that FERC 

complies with NEPA’s requirements. See Western 

Watersheds Project, 632 F.3d at 485–86 (concluding that a 

non-profit organization with a “direct interest” in seeing that 

the agency adequately evaluates the environmental effects of 

a proposed action fell within NEPA’s zone of interests). 

Because that interest is sufficient for prudential standing, we 

need not consider whether the economic harms that the 

Organizations’ members fear also fall within NEPA’s zone 

of interests.

B 

NEPA “imposes procedural requirements designed to 

force agencies to take a ‘hard look’ at environmental 

consequences” of their actions. Center for Cmty. Action & 
56 SEIA V. FERC

Env’t Just. v. FAA, 18 F.4th 592, 598 (9th Cir. 2021) 

(quoting Earth Island Inst. v. United States Forest Serv., 351 

F.3d 1291, 1300 (9th Cir. 2003)). To that end, NEPA 

requires agencies to prepare a detailed EIS for any “major 

Federal actions significantly affecting the quality of the 

human environment.” 42 U.S.C. § 4332(C). The threshold 

for NEPA analysis “is relatively low: ‘It is enough for the 

plaintiff to raise substantial questions whether a project may 

have a significant effect on the environment.’” Lockyer, 575 

F.3d at 1012 (citation omitted). 

Under NEPA’s implementing regulations, before an 

agency decides to prepare an EIS, it may prepare an EA, 

which is a “concise public document” designed to “provide 

sufficient evidence and analysis for determining whether to 

prepare an environmental impact statement or a finding of 

no significant impact.” 40 C.F.R. § 1508.9(a) (2020). An EA 

“is intended to help an agency decide if an EIS is warranted.”

Environmental Def. Ctr., 36 F.4th 850, 872 (9th Cir. 2022). 

If, after the completion of an EA, there remain “‘substantial 

questions’ about whether an agency action will have a 

significant effect,” an EIS is required. Bark v. United States 

Forest Serv., 958 F.3d 865, 868 (9th Cir. 2020) (citation 

omitted). Otherwise, the agency “may issue a finding of no 

significant impact (‘FONSI’) in lieu of preparing an EIS.” 

Id. (citation omitted).

But an agency is not required to prepare an EA or EIS if 

the proposed action falls within a “categorical exclusion.” 40 

C.F.R. § 1508.4; see Save Our Skies LA v. FAA, 50 F.4th 

854, 859–60 (9th Cir. 2022). Agencies may establish 

categorical exclusions for “actions which do not individually 

or cumulatively have a significant effect on the human 

environment.” 40 C.F.R. § 1508.4; see id. § 1507.3(e)(2)(ii). 

When a categorical exclusion applies, “neither an 
SEIA V. FERC 57

environmental assessment nor an environmental impact 

statement is required” unless “extraordinary circumstances” 

are present. Id. § 1508.4.

C

We start with FERC’s contention that Order 872 falls 

within a categorical exclusion to NEPA. FERC established a 

categorical exclusion for rules that are “clarifying, 

corrective, or procedural, or that do not substantially change 

the effect of . . . regulations being amended.” 18 C.F.R. 

§ 380.4(a)(2)(ii). When that categorical exclusion applies, 

“neither an environmental assessment nor an environmental 

impact statement” is required. Id. § 380.4(a). 

We agree with FERC that some elements of Order 872, 

considered on their own, might fall into the categorical 

exclusion for clarifying, corrective, or procedural rules. For 

example, Order 872’s update to Form 556—used by QFs 

when applying for certification—can reasonably be 

described as a “procedural” change. Order 872, 85 Fed. Reg. 

at 54,728. Likewise, its revision to the definition of the term 

“electrical generating equipment” can reasonably be 

characterized as “clarifying” whether particular kinds of 

equipment (such as wind turbines or solar panels) fall within 

the term’s scope. Id. at 54,703. 

We reject FERC’s contention, however, that the more 

substantive elements of Order 872 fall within the categorical 

exclusion. FERC interpreted the “corrective” portion of its 

categorical exclusion as “including changes needed in order 

to ensure that a regulation conforms to the requirements of 

the statutory provisions being implemented by the 

regulation.” Order 872, 85 Fed. Reg. at 54,728. FERC 

characterized three of Order 872’s rule changes as 

“corrective”: (1) modification of the Site Rule, (2) 
58 SEIA V. FERC

modification of the Fixed-Rate Rule, and (3) modification of 

the presumption of non-discriminatory access. Id. In FERC’s 

view, because it adopted those changes in order to better 

conform to PURPA’s statutory text, the revisions were 

corrective in nature and thus fit within the categorical 

exclusion. Id.

Although we owe some deference to FERC’s 

interpretation of its own regulation, see Kisor v. Wilkie, 139 

S. Ct. 2400 (2019), the “corrective” component of the 

categorical exclusion cannot reasonably be read so broadly. 

Agencies regularly adjust their policies to better comply with 

a statute. See Encino Motorcars, 579 U.S. at 222–24. That is 

especially so where, as here, a statute provides an agency 

with broad discretion to fulfill its obligations in any number 

of reasonable and permissible ways. See 16 U.S.C. § 824a3(a). But when an agency adopts broad, transformative, and 

substantive changes to its regulations, it cannot sidestep 

NEPA’s requirements by claiming that it was motivated by 

its desire to better conform to the statute and then applying a 

“corrective” label. A regulatory change as significant as 

Order 872 is not corrective merely because the agency 

expresses some interest in better statutory compliance. If it 

were, nearly any regulatory change could evade NEPA 

review. See Order 872-A, 85 Fed. Reg. at 86,754 (Glick, 

Comm’r, dissenting in part). 

FERC’s own NEPA implementing regulations provide 

additional support for our conclusion. Even if Order 872 

could reasonably be characterized as creating “corrective” 

rules, and therefore as falling within a categorical exclusion, 

FERC’s regulations state that when a rule would otherwise 

fall within a categorical exclusion but “the environmental 

effects are uncertain,” the Commission will generally 
SEIA V. FERC 59

prepare an EA or EIS regardless. 18 C.F.R. 

§§ 380.4(b)(1)(ii), (b)(2)(vii).

In support of its application of the categorical exclusion, 

FERC relies on Department of Transportation v. Public 

Citizen, 541 U.S. 752 (2004). In that case, the Supreme 

Court rejected an argument that the Federal Motor Carrier 

Safety Administration had violated NEPA because the EA 

accompanying certain regulations failed to consider the 

potential environmental effects of increased cross-border 

travel by Mexican motor carriers. Id. at 755. The Court 

observed that only the President, not the agency, “could 

authorize (or not authorize) cross-border operations from 

Mexican motor carriers.” Id. at 770. Thus, because the 

agency had “no discretion to prevent the entry of Mexican 

trucks, its EA did not need to consider the environmental 

effects arising from the entry.” Id. 

Drawing on Public Citizen, FERC argues that it had “no 

discretion” to keep the prior rules in effect once it 

determined that “certain of the 1980 PURPA Regulations 

conflicted with PURPA’s statutory mandates.” And, FERC 

says, because it had no option but to issue the “corrective” 

rules of Order 872, it “did not need to consider the 

environmental effects arising from” its revisions and could 

therefore apply the categorical exclusion. Public Citizen, 

541 U.S. at 770. In fact, as FERC emphasized throughout the 

rulemaking process, PURPA provides FERC with broad 

discretion. For example, as explained above, FERC 

reasonably determined that its new Site Rule better served 

the “spirit and purpose of PURPA.” Order 872-A, 85 Fed. 

Reg. at 86,691. But that does not mean that the 2020 Site 

Rule was the only permissible implementation of FERC’s 

authority to define whether two facilities are located “at the 

same the site,” or that such a change was mandated by the 
60 SEIA V. FERC

statute. The same is true of FERC’s modification of the 

market-access presumption. While FERC reasonably 

concluded in Order 872 that facilities with a power 

production capacity exceeding five megawatts could be 

rebuttably presumed to possess non-discriminatory market 

access, 85 Fed. Reg. at 54,716, we cannot say that this was 

the only threshold that FERC could have chosen. Even if 

FERC issued Order 872, in part, to better conform to its 

interpretation of PURPA’s statutory language, FERC 

nevertheless retained discretion in carrying out its statutory 

mandate. That discretion distinguishes this case from Public 

Citizen and makes FERC’s reliance on the categorical 

exclusion unreasonable.

D

FERC also concluded that it was not required to prepare 

an EA or EIS because “any potential environmental impacts 

from the final rule are not reasonably foreseeable.” Order 

872-A, 85 Fed. Reg. at 86,716. According to FERC, Order 

872 “does not involve a particular project that define[s] 

fairly precisely the scope and limits of the proposed 

development.” Id. (citation and quotation marks omitted).

Rather, its rules merely provide state regulatory authorities 

with expanded discretion in administering PURPA. Id. at 

86,717. Thus, it was “impossible to know what the states 

may choose to do in response to the final rule, whether they 

will make changes in their current practices or not, and how 

those state choices would impact QF development and the 

environment.” Id.

FERC misunderstands NEPA’s requirements. Both the 

applicable regulations and our case law make clear that, in 

the ordinary course, an agency “shall . . . prepare an 

environmental assessment” for a major agency action unless 
SEIA V. FERC 61

the proposed action is one that “normally . . . do[es] not have 

a significant effect on the human environment” and therefore 

falls within a categorical exclusion. 40 C.F.R. § 1501.4 

(emphasis added); see Klamath Siskiyou Wildlands Ctr. v. 

Boody, 468 F.3d 549, 562 (9th Cir. 2006) (“[I]f the proposed 

action does not categorically require the preparation of an 

EIS, the agency must prepare an EA to determine whether 

the action will have a significant effect on the 

environment.”) (alteration in original) (emphasis added) 

(quoting Kern v. Bureau of Land Mgmt., 284 F.3d 1062, 

1066 (9th Cir. 2002)); Lockyer, 575 F.3d at 1012 (requiring 

an EIS, EA, or categorical exclusion to comply with NEPA); 

Steamboaters v. FERC, 759 F.2d 1382, 1393 (9th Cir. 1985) 

(noting that the “only exception” to the requirement that an 

agency prepare at least an EA is when the proposed action 

falls within a categorical exclusion). And FERC’s own 

regulations state that “[a]n environmental assessment will 

normally be prepared” for regulations not covered by a 

categorical exclusion. 18 C.F.R. §§ 380.5(a), (b)(12).

Relying on Center for Biological Diversity v. Ilano, 928 

F.3d 774 (9th Cir. 2019), FERC argues that Order 872 did 

not authorize “a particular project” requiring environmental 

analysis. Id. at 780. In Ilano, we upheld the United States 

Forest Service’s determination that no EA or EIS was 

required before the Service designated forest land as a 

“landscape-scale area” under the Healthy Forests 

Restoration Act because such a designation did not “‘change 

the status quo,’” authorize a “particular project,” or 

“foreseeably impact the environment,” but instead merely 

identified forest areas suffering from threats like insect 

infestation and disease. Id. at 774, 780–81 (quoting 

Northcoast Env’t Ctr. v. Glickman, 136 F.3d 660, 668 (9th 

Cir. 1998)). We explained that no NEPA analysis was 
62 SEIA V. FERC

necessary because NEPA does not require an agency to 

“consider the environmental effects that speculative or 

future projects might have.” Id. at 781 (quoting Northcoast 

Env’t Ctr., 136 F.3d at 668).

FERC suggests that any environmental assessment of 

Order 872 would be similarly speculative. Order 872, it says, 

merely provides States with new policy options, which they 

can choose to embrace or not; it does not authorize any 

particular project. But while the designation in Ilano did not 

“change the status quo” or “foreseeably impact the 

environment,” the same cannot be said of FERC’s overhaul 

of its longstanding PURPA regulations. Even if Order 872 

did not authorize any particular project, it was eminently 

foreseeable that a regulatory change of this magnitude could 

produce significant environmental effects. It was a nearcertainty, for example, that at least some QFs could lose their 

status under the 2020 Site Rule, or that at least some States 

would eliminate the fixed-rate option for the calculation of 

avoided costs. Cf. Lockyer, 575 F.3d 999 (requiring NEPA

analysis when replacing a nationwide rule with a varied,

state-by-state rule).

The effects of those actions differ from the 

environmental harms in Ilano, which were necessarily 

location- and project-specific. At the designation stage, it 

was impossible for the Forest Service to predict the relevant 

environmental concerns—for instance, the effect of the 

designation on the California spotted owl—without knowing 

the location and type of the forest-treatment projects that 

would later be implemented. We agree with FERC that it 

could not reasonably consider the local effects of Order 872 

on, say, vegetation, water quality, and wildlife because it 

could not predict which States would adopt which 

components of Order 872. Order 872-A, 85 Fed. Reg. at 
SEIA V. FERC 63

86,717. But unlike in Ilano, the most significant 

environmental impact of Order 872 is the possible effect on 

greenhouse-gas emissions, which does not require any 

location- or project-specific analysis. 

FERC also contends that it had no meaningful way to 

model or predict the effects of Order 872. Order 872, 85 Fed. 

Reg. at 54,728–29. As FERC put it in the order, “any 

consideration of whether the final rule could potentially have 

significant environmental impacts would be so speculative 

as to render meaningless any environmental analysis of these 

hypothetical impacts.” Order 872-A, 85 Fed. Reg. at 86,718.

We acknowledge that NEPA does not require an agency

to “peer into a crystal ball,” “engage in speculative analysis,”

or “‘do the impractical, if not enough information is

available to permit meaningful consideration.’” Northern

Plains Res. Council v. Surface Transp. Bd., 668 F.3d 1067,

1078–79 (9th Cir. 2011) (quoting Environmental Prot. Info.

Ctr. v. United States Forest Serv., 451 F.3d 1005, 1014 (9th

Cir. 2006)). At the same time, we have recognized that the 

“effects [of a proposed action] may be difficult to measure 

and may be determined ultimately to be too imprecise to 

influence the [action], but this is precisely the type of 

determination that only can be intelligently made after the 

preparation of at least an EA.” California Wilderness Coal. 

v. United States Dep’t of Energy, 631 F.3d 1072, 1103 (9th 

Cir. 2011). Thus, when an agency is uncertain about the 

possible environmental effects of a proposed action, the 

proper course is to prepare an EA to the best of the agency’s 

ability, not to avoid environmental analysis altogether. 

Because at least some degree of “speculation . . . is implicit 

in NEPA,” agencies may not “shirk their responsibilities 

under NEPA by labeling any and all discussion of future 

environmental effects as crystal ball inquiry.” Northern 
64 SEIA V. FERC

Plains Res. Council, 668 F.3d at 1079 (quoting Selkirk 

Conservation All. v. Forsgren, 336 F.3d 944, 962 (9th Cir. 

2003) (omission in original)); see also Sierra Club v. FERC,

867 F.3d 1357, 1374 (D.C. Cir. 2017) (“NEPA analysis

necessarily involves some ‘reasonable forecasting,’ and . . .

agencies may sometimes need to make educated

assumptions about an uncertain future.” (quoting Delaware

Riverkeeper Network v. FERC, 753 F.3d 1304, 1310 (D.C.

Cir. 2014))).

Here, the public raised “substantial questions” as to 

whether Order 872 would produce significant environmental 

impacts. Lockyer, 575 F.3d at 1018. Commenters pointed out 

that FERC’s sweeping overhaul of its PURPA rules would 

reduce the incentives provided to QFs—a consequence of 

Order 872 that no one seriously disputes. See, e.g., Order 

872-A, 85 Fed. Reg. at 86,753 (Glick, Comm’r, dissenting 

in part). And because many QFs rely on renewable power 

sources, it takes little imagination to see that a reduction in 

the incentives provided to QFs could, in turn, alter the mix 

of energy production, shifting production away from 

renewable production and toward fossil-fuel production. See 

2019 NPRM, 84 Fed. Reg. at 53,249 (noting that even after 

the expanded development of non-PURPA renewable 

facilities since 2005, QFs have accounted for “10 to 20 

percent of all renewable resource capacity in service in the 

United States”).

Those effects were “reasonably foreseeable” in that they 

were “sufficiently likely to occur that a person of ordinary

prudence would take [them] into account in reaching a

decision.” Sierra Club, 867 F.3d at 1371 (alteration in

original) (quoting EarthReports, Inc. v. FERC, 828 F.3d 949,

955 (D.C. Cir. 2016)). They were enough to trigger FERC’s 

obligation to conduct, or at least attempt to conduct, 
SEIA V. FERC 65

environmental analysis in the form of an EA. The possibility 

of environmental effects was not so remote that the 

Commission was entitled to throw up its hands and forgo 

environmental analysis altogether. Cf. California Wilderness 

Coal., 631 F.3d at 1097 (“[A]n agency cannot merely assert 

that its decision will have an insignificant effect on the 

environment, but ‘must adequately explain its decision.’” 

(quoting Alaska Ctr. for Env’t v. United States Forest Serv., 

189 F.3d 851, 859 (9th Cir. 1999))).

Significantly, FERC has previously modeled the 

potential environmental effects of other major rules affecting 

electricity markets. See, e.g., Promoting Wholesale 

Competition Through Open Access Non-Discriminatory 

Transmission Services by Public Utilities, Order 888, 61 

Fed. Reg. 21,540, 21,542 (May 10, 1996) (noting that the 

Commission prepared an EIS). Most relevantly, before it 

adopted its original PURPA rules in 1980, the Commission 

produced an EA using “market penetration analyses.” Order 

70, 45 Fed. Reg. at 17,964. Even though the EA concluded 

that the 1980 Rules, as a whole, would not significantly 

affect the environment, FERC nevertheless prepared a full 

EIS to evaluate the effects of certain diesel cogeneration 

QFs. Id. at 17,965. In preparing its 1980 NEPA review, the 

Commission confronted—and overcame—the very same 

analytical obstacles that it now claims prevent it from 

conducting environmental review. The 1980 NEPA analysis, 

for example, noted that the Commission’s rules did not 

“authorize or fund any particular projects” or “authorize or 

forbid the use of certain fuels,” but rather “provide[d] certain 

economic incentives to, and remove[d] other disincentives, 

. . . from certain classes of technologies.” Id. at 17,964. 

FERC also observed that “identifying the levels of the 

environmental effects associated with the programmatic 
66 SEIA V. FERC

encouragement and deregulation of various types of 

technologies” is difficult, and that any environmental 

analysis would necessarily contain “a great number of 

uncertainties.” Id. at 17,965. 

FERC argues that the simplifying assumptions that 

enabled the 1980 EA are not replicable here. For example, 

the 1980 analysis could assume a simpler market structure 

than could be used today (because there was virtually no 

independent power development in 1980), and could assume 

that the States would implement the 1980 Rules uniformly 

(without the many optional elements provided by Order 

872). Order 872-A, 85 Fed. Reg. at 86,722–23. We share the 

dissenting Commissioner’s skepticism that FERC’s 

modeling capabilities “have not improved dramatically over 

the course of the last four decades” such that at least some 

environmental review would nevertheless be possible. Id. at 

86,753 (Glick, Comm’r, dissenting in part); see also Sierra 

Club, 867 F.3d at 1374 (noting that an agency’s inability to 

provide precise quantitative estimates of downstream 

greenhouse-gas emissions did not excuse its wholesale 

failure to discuss them, even though any such analysis 

“depend[ed] on several uncertain variables”). 

But we need not evaluate FERC’s various explanations 

for its inability to model the environmental impacts of Order 

872. When an agency has concerns about its technical ability 

to evaluate the environmental effects of a rule, it must fully 

explore those concerns in an EA. See California Wilderness 

Coal., 631 F.3d at 1103. Perhaps more fundamentally, 

FERC’s explanation in Order 872 is flawed because it does 

not indicate that the agency took the “hard look” that NEPA 

requires. Whatever can be said of FERC’s various 

arguments, the dissenting Commissioner was correct to 

observe that “the Commission’s assertion that Order No. 
SEIA V. FERC 67

872’s effects are overly speculative is tough to square with 

the fact that it has not undertaken any effort whatsoever to 

assess those effects.” Order 872-A, 85 Fed. Reg. at 86,753 

(Glick, Comm’r, dissenting in part). FERC did not produce 

a single sentence of environmental analysis before issuing 

sweeping changes to its PURPA regulations. Nor did FERC 

attempt—in even the most rudimentary or non-quantitative 

manner—to predict the environmental consequences of 

Order 872. 

This is not a case in which the agency “engaged in 

significant environmental analysis before reaching a 

decision but failed to comply precisely with NEPA 

procedures.” See Nevada v. Department of Energy, 457 F.3d 

78, 90 (D.C. Cir. 2006) (noting that the court had previously 

excused an agency’s failure to prepare an EA because the 

agency had thoroughly considered the environmental 

consequences during the rulemaking). Indeed, we are aware 

of no case approving an agency’s decision not to engage in 

any environmental analysis for a rulemaking of this 

magnitude. And while the lack of reasonably foreseeable 

environmental impacts may justify an agency’s decision not 

to complete an EIS, it cannot relieve an agency of its 

obligation to produce an EA. 

E 

Having concluded that FERC violated NEPA by failing 

to prepare an EA, we must determine the appropriate 

remedy. When an agency violates NEPA, the presumptive 

remedy is vacatur of the deficient action. Alliance for the 

Wild Rockies v. United States Forest Serv., 907 F.3d 1105, 

1121 (9th Cir. 2018). But we are not without discretion: 

“When equity demands,” we may leave the action in place 

on remand while the agency reconsiders the action or cures 
68 SEIA V. FERC

a procedural defect. Id.; see California Cmtys. Against 

Toxics v. EPA, 688 F.3d 989, 992 (9th Cir. 2012) (per 

curiam) (“A flawed rule need not be vacated.”).

In deciding whether to vacate a defective agency action, 

we apply the two-factor balancing test prescribed in AlliedSignal, Inc. v. United States Nuclear Regulatory 

Commission, 988 F.2d 146 (D.C. Cir. 1993). Under that test, 

“[w]e weigh the seriousness of the agency’s errors against 

‘the disruptive consequences of an interim change that may 

itself be changed.’” Center for Food Safety v. Regan, 56 

F.4th 648, 663 (9th Cir. 2022) (quoting Allied-Signal, 988 

F.2d at 150–51). Here, although the agency’s errors are 

significant, the disruptive consequences are great enough to 

warrant remand without vacatur. 

As to the seriousness of the error, we recognize that the 

failure to produce an EA is a serious omission. NEPA makes 

producing an EA “fundamental” to the decision-making 

process because an EA helps the agency determine whether 

an EIS is necessary. Klamath Siskiyou Wildlands Ctr., 468 

F.3d at 562 (quoting Metcalf v. Daley, 214 F.3d 1135, 1143 

(9th Cir. 2000)). But when considering whether to vacate an 

order, we do not evaluate the seriousness of the agency’s 

error in the abstract. Instead, we ask “whether the agency 

would likely be able to offer better reasoning or whether by 

complying with procedural rules, it could adopt the same 

rule on remand, or whether such fundamental flaws in the 

agency’s decision make it unlikely that the same rule would 

be adopted on remand.” Pollinator Stewardship Council v. 

EPA, 806 F.3d 520, 532 (9th Cir. 2015).

We do not believe that Order 872 suffers from 

“fundamental flaws” making it unlikely that FERC could 

adopt the same rule on remand. While FERC’s 
SEIA V. FERC 69

environmental analysis was deficient, we have been given 

no reason to believe that the agency would be unable to cure 

those deficiencies on remand. Although we hold that FERC 

should have conducted an EA—and must do so on remand—

we acknowledge that, given the manner in which Order 872 

operates, any environmental analysis may well determine 

that the effects of the order are difficult to forecast and 

subject to considerable uncertainty. And if FERC were to 

conduct an EA, its understanding of its own modeling 

capability would be entitled to deference. See Sierra Club, 

867 F.3d at 199 (D.C. Cir. 2017). So while we are skeptical 

of FERC’s current unsupported claim that the impacts of 

Order 872 are impossible to forecast, it is possible that FERC 

could reach the same conclusion about its forecasting 

limitations in a NEPA-compliant EA. 

On the other hand, the disruptive consequences of 

vacatur would be significant. See California Cmtys. Against 

Toxics, 688 F.3d at 993 (remanding without vacatur because 

the “delay and trouble vacatur would cause are severe”). 

Order 872 has been in effect since December 31, 2020. Since 

then, FERC, various States, and regulated parties have all 

begun to implement it. For example, the Commission has 

already relied upon Order 872 to determine whether a given 

facility qualifies as a small power production facility under 

the revised site rule. Several States have initiated 

proceedings to modify their PURPA rules in response to 

Order 872. And using the revised market-access 

presumption, several utilities have already applied for—and 

received—relief from their mandatory-purchase obligations 

when dealing with facilities between five and 20 megawatts 

in size. Were we to vacate Order 872, the investments that 

States and the regulated community have made in complying 

with the rules could not easily be undone—and if they were, 
70 SEIA V. FERC

they might then need to be repeated if FERC were to readopt 

the rules after completing its NEPA analysis. Our decision 

not to vacate the rules thus avoids “the disruptive 

consequences of an interim change that may itself be 

changed.” Center for Food Safety, 56 F.4th at 663 (quoting 

California Cmtys. Against Toxics, 688 F.3d at 992); see also 

American Great Lakes Ports Ass’n v. Schultz, 962 F.3d 510, 

519 (D.C. Cir. 2020) (“[A] quintessential disruptive 

consequence arises when an agency cannot easily unravel a 

past transaction in order to impose a new outcome.”); Sugar 

Cane Growers Co-op. of Fla. v. Veneman, 289 F.3d 89, 97 

(D.C. Cir. 2002) (“The egg has been scrambled and there is 

no apparent way to restore the status quo ante.”).

We recognize that because NEPA is a “purely procedural 

statute,” routinely excusing an agency’s deficient NEPA 

analysis would “vitiate” the statute. Oglala Sioux Tribe v. 

United States Nuclear Regul. Comm’n, 896 F.3d 520, 536 

(D.C. Cir. 2018). In many cases—indeed, in most cases—an 

agency’s failure to prepare an EA or attempt environmental 

analysis will require vacatur. But in light of the significant 

disruptive consequences of vacatur—affecting not only 

FERC, but also state agencies and regulated entities—we 

remand to FERC without vacating Order 872. See, e.g., id.

at 538 (remanding without vacatur despite a “significant 

deficiency” in the agency’s NEPA compliance); Vecinos 

para el Bienestar de la Comunidad Costera v. FERC, 6 F.4th 

1321, 1332 (D.C. Cir. 2021) (remanding without vacatur).

PETITION GRANTED in part and DENIED in part; 

REMANDED.
SEIA V. FERC 71

MILLER, Circuit Judge, with whom NGUYEN, Circuit 

Judge, joins, concurring:

I join the court’s opinion in full and write separately to 

respond to Judge Bumatay’s concurrence and dissent.

Judge Bumatay observes that Chevron “has been 

criticized”—by critics with whom he evidently agrees—“as 

ahistorical and violative of the separation of powers.” The 

relevance of that observation to this case is unclear, for as 

Judge Bumatay recognizes, “[w]hether the Chevron project 

continues is up to the Supreme Court and falls outside of our 

court’s purview.” Quite so. The Supreme Court has 

repeatedly instructed us that “[i]f a precedent of [the 

Supreme] Court has direct application in a case, yet appears 

to rest on reasons rejected in some other line of decisions, 

the Court of Appeals should follow the case which directly 

controls.” Rodriguez de Quijas v. Shearson/Am. Express, 

Inc., 490 U.S. 477, 484 (1989); accord Tenet v. Doe, 544 

U.S. 1, 10–11 (2005); State Oil Co. v. Khan, 522 U.S. 3, 20 

(1997).

According to Judge Bumatay, “[t]his case should not be 

about Chevron deference,” and we should instead “rely on 

PURPA’s plain language in evaluating whether FERC’s 

rules complied with the law.” But that is precisely what the 

court’s opinion does. At step one of Chevron, a court must 

ask whether Congress “directly addressed the precise 

question” presented. Chevron U.S.A. Inc. v. NRDC, Inc., 467 

U.S. 837, 843 (1984). With respect to each of the statutory 

issues that Judge Bumatay mentions, the court’s opinion 

examines the plain text of the statute and concludes that 

Congress did not directly address the questions but instead 

left their resolution to FERC’s discretion.
72 SEIA V. FERC

For example, in considering the “encouragement” 

provision of 16 U.S.C. § 824a-3(a), the court’s opinion 

concludes, at Chevron step one, that “the statute gives FERC 

broad discretion to evaluate which rules are necessary to 

encourage QFs and which are not.” Judge Bumatay says 

almost exactly the same thing: He describes the statute as “a 

broad delegation of authority to FERC to make rules that 

‘encourage’ Qualifying Facilities as it sees fit.” Then, at 

Chevron step two, the court’s opinion confirms that FERC’s 

interpretation of that broad discretion is not unreasonable. 

Judge Bumatay does the same analysis without naming it, 

explaining how FERC’s approach is not “contrary to this 

statutory guidance.” So why the complaint that “circuit 

courts have been over eager to reach Chevron’s second step” 

by “glid[ing] past step one too readily”? Whether or not that 

is true in general, on Judge Bumatay’s own view, it does not 

seem to be true in this case.

In short, Judge Bumatay would reach the same 

conclusion as the court, and for essentially the same reasons. 

The only difference in approach is that he would do so 

without admitting that he is following Chevron, instead 

treating that decision—which, it bears repeating, remains 

binding Supreme Court precedent—as the Case-That-MustNot-Be-Named. The Supreme Court has “the prerogative of 

overruling its own decisions,” whether expressly or sub 

silentio. Rodriguez de Quijas, 490 U.S. at 484. We do not.
SEIA V. FERC 73

BUMATAY, J., concurring in part and dissenting in part:

Because the Federal Energy Regulatory Commission 

was well within its statutory authority to revise its rules for 

encouraging independent energy producers under the Public 

Utility Regulatory Policies Act of 1978 (“PURPA”), I 

concur with denying the petition challenging the enactment 

of those revised rules. But given PURPA’s clear text, I 

would not rely on Chevron deference to reach this 

conclusion. I write separately to show why we should have 

applied the traditional tools of statutory interpretation to 

resolve the challenges to FERC’s rules. 

As for the claim that FERC violated the National 

Environmental Policy Act of 1969 (“NEPA”) in enacting 

these rules without an environmental assessment, I would 

hold that no petitioner has standing to bring a NEPA claim. 

I thus would deny the petition on NEPA grounds as well. 

I join the majority opinion in all other respects. 

I.

This case should not be about Chevron deference. By 

now, most legal observers are familiar with the Chevron 

framework—although not necessarily for positive reasons. 

Under that doctrine, courts conduct a two-step inquiry to 

determine whether to defer to an agency’s interpretation of a 

federal statute. At step one, we ask “whether Congress has 

directly spoken to the precise question at issue.” Chevron, 

U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 842 

(1984). If so, “that is the end of the matter” and we apply 

the law as written. Id. If, however, we find that “the statute 

is silent or ambiguous with respect to the specific issue,” we 

proceed to step two and ask whether the agency’s 

interpretation of the text is a “permissible” one. Id. at 843. 
74 SEIA V. FERC

So long as an agency’s reading of a statute is “reasonable,” 

we are told that we should defer to the agency’s position. Id. 

at 845. At its most extreme, we are even told that Chevron

requires courts to treat the agency as “speak[ing] with the 

force of law when it addresses ambiguity in the statute or 

fills a space in the enacted law.” United States v. Mead 

Corp., 533 U.S. 218, 229 (2001).

In more recent times, the Chevron framework has been 

criticized as ahistorical and violative of the separation of 

powers. See, e.g., Buffington v. McDonough, 143 S. Ct. 14, 

16–22 (2022) (Gorsuch, J., dissenting from the denial of 

certiorari); Aditya Bamzai, The Origins of Judicial 

Deference to Executive Interpretation, 126 Yale L. J. 908, 

987–90 (2017); Douglas H. Ginsburg & Steven Menashi, 

Our Illiberal Administrative Law, 10 N.Y.U. J.L. & Liberty 

475, 491–95 (2016). Whether the Chevron project continues 

is up to the Supreme Court and falls outside of our court’s 

purview.

But before resorting to Chevron deference, we should 

pay close attention to how the Supreme Court has told us to 

apply it. The Court has repeatedly instructed us not to glide 

past step one too readily—accepting any hint of possible 

ambiguity as a way to defer to an agency. Deference is 

“called for only when the devices of judicial construction 

have been tried and yield no clear sense of congressional 

intent.” Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 

581, 600 (2004). Thus, “we must ‘exhaust all the traditional 

tools of construction’ before we ‘wave the ambiguity flag.’” 

Medina Tovar v. Zuchowski, 982 F.3d 631, 634 (9th Cir. 

2020) (en banc) (quoting Kisor v. Wilkie, 139 S. Ct. 2400, 

2415 (2019)).
SEIA V. FERC 75

Unfortunately, circuit courts have been over-eager to 

reach Chevron’s second step. According to one study, from 

2003 to 2013, circuit courts jumped to Chevron step two in 

70.0% of cases applying the Chevron framework. Kent H. 

Barnett & Christopher J. Walker, Chevron in the Circuit 

Courts, 116 Mich. L. Rev. 1, 5–6 (2017). And the 

consequence of that interpretive move is significant. The 

government prevailed 93.8% of the time at Chevron step 

two—compared to the government’s win rate of only 39.0% 

at Chevron step one. Id. These numbers, I’m certain, do not 

align with the Supreme Court’s percentages over the last few 

years. All this suggests that we should pause before

embracing the Chevron framework. If the traditional tools 

of statutory interpretation resolve the case, that should end 

the analysis.

Here, PURPA’s text is relatively straightforward, and we 

need not apply Chevron to decide this case. Instead, under 

our Article III authority and our duty under the 

Administrative Procedure Act to “decide all relevant 

questions of law” and “interpret . . . statutory provisions,” 5 

U.S.C. § 706, I would rely on PURPA’s plain language in 

evaluating whether FERC’s rules complied with the law. 

Because the majority relied on Chevron deference to uphold 

(1) Order 872’s compliance with PURPA’s 

“encouragement” provision, (2) the 2020 Site Rule, and (3) 

the modified Fixed-Rate Rule, I analyze them separately 

here. 

A.

To start, Petitioners generally challenge the four rules 

FERC promulgated through Order 872, claiming that they 

conflict with FERC’s statutory obligation to “encourage” the 

development of independent energy producers, known as 
76 SEIA V. FERC

“Qualifying Facilities.” 16 U.S.C. § 824a-3(a). Qualifying 

Facilities include cogeneration and small power production 

facilities. See 16 U.S.C. § 796(17)-(18). Petitioners assert 

that Order 872 reduces incentives for Qualifying Facilities 

and thus “discourages” them compared to the status quo. 

But PURPA’s plain text forecloses this argument. In 

PURPA, Congress granted FERC broad authority to 

“prescribe . . . rules as it determines necessary to encourage 

cogeneration and small power production.” 16 U.S.C. 

§ 824a-3(a) (emphasis added). Congress also instructed 

FERC to “revise” such rules “from time to time.” Id. 

This language is a broad delegation of authority to FERC 

to make rules that “encourage” Qualifying Facilities as it 

sees fit. In this context, “encourage” is a capacious term. 

Around the time of PURPA’s enactment in 1978, 

“encourage” was defined to mean “to spur on.” Webster’s 

New Collegiate Dictionary 375 (1977); Webster’s Third 

New International Dictionary 747 (1971). It also meant “[t]o 

stimulate” and “[t]o allow or promote the growth of[.]” 

Shorter Oxford English Dictionary 653 (1973). Armed with 

express authority to apply this expansive term, FERC may 

make any rules that aren’t contrary to this statutory guidance. 

Nothing in the plain text of the encouragement provision 

requires that FERC “spur on,” “stimulate,” or “promote” the 

development of Qualifying Facilities to the maximum extent 

possible.

Imagine parents seeking to “encourage” their children to 

do their weekly chores. A $10-a-week allowance would be 

a good encouragement. But say, after several years, when 

the children get older and more responsible, the parents 

reduce the weekly allowance to $5 a week. Would anyone 

say that the new allowance discourages the children from 
SEIA V. FERC 77

completing their chores? Of course not. While the children 

might be accustomed to a $10 reward, any allowance would 

be an encouragement compared to the baseline of receiving 

nothing. 

So too with Qualifying Facilities. A simple statutory 

directive to “encourage” the development of Qualifying 

Facilities is not a one-way ratchet. That prior FERC rules 

might have offered more encouragement than current ones 

doesn’t mean that FERC’s new rules violate PURPA. While 

FERC may not choose to discourage Qualifying Facilities, 

nothing in PURPA’s text prevents FERC from tweaking its 

rules in response to changes in the energy sector, as 

Congress told them to do. 

B.

Next, the plain language of PURPA also authorizes 

FERC’s 2020 Site Rule. PURPA specifies that a “small 

power production facility” must have a power production 

capacity “which, together with any other facilities located at 

the same site (as determined by the Commission), is not 

greater than 80 megawatts.” 16 U.S.C. § 796(17)(A)(ii). 

The 2020 Site Rule modified FERC’s old test for 

determining when facilities within close proximity 

constitute the “same site” or separate sites. Under the old 

approach, facilities located more than one mile apart were 

considered separate sites. Small Power Production and 

Cogeneration Facilities—Qualifying Status, 45 Fed. Reg. 

17959, 17965 (March 20, 1980). The 2020 Site Rule applies 

a rebuttable presumption that facilities located more than one 

but less than ten miles apart are separate sites. Qualifying 

Facility Rates and Requirements Implementation Issues 

Under the Public Utility Regulatory Policies Act of 1978, 85 

Fed. Reg. 54638, 54696 (Sept. 2, 2020) (“Order 872”). This 
78 SEIA V. FERC

presumption may be overcome based on a list of nonexhaustive factors that support treating the facilities as part 

of the same site. Id. at 54701. 

Petitioners argue that the 2020 Site Rule conflicts with 

the plain meaning of “site” by allowing FERC to treat 

facilities located miles apart as the “same site” based on nongeographic factors. But once again, Congress expressly 

granted FERC the authority to “determine” what counts as 

the “same site” for purposes of the 80-megawatt limit. Id. 

Indeed, Congress didn’t use “same site” in the ordinary sense 

here; otherwise, it would not be necessary to specify that 

FERC got to choose what it means. See Am. Bankers Ass’n 

v. Nat’l Credit Union Admin., 934 F.3d 649, 663 (D.C. Cir. 

2019) (“An express delegation of definitional power 

necessarily suggests that Congress did not intend the terms 

to be applied in their plain meaning sense[.]”) (simplified)). 

And Petitioners haven’t shown that FERC acted 

inconsistently with the technical meaning of “same site” in 

PURPA, which doesn’t foreclose non-geographic 

considerations.

C.

Lastly, PURPA’s plain language authorizes FERC’s 

modified Fixed-Rate Rule. PURPA requires utilities to buy 

electricity from Qualifying Facilities at FERC’s established 

prices. 16 U.S.C. § 824a-3(b). PURPA mandates that the 

purchase rate not “exceed[] the incremental cost to the 

electric utility of alternative electric energy.” Id. FERC 

regulations call this the utility’s “avoided cost”—the cost 

that the utility would otherwise pay to produce the power 

itself or purchase it from another source. See 18 C.F.R. 

§ 292.304. FERC’s old 1980 rule allowed Qualifying 

Facilities to choose between two methods of calculating the 
SEIA V. FERC 79

purchase price: a rate calculated at the time of energy 

delivery or a rate fixed at the time the contract is signed with 

the utility. See Winding Creek Solar LLC v. Peterman, 932 

F.3d 861, 863 (9th Cir. 2019). Under the modified rule, 

States may eliminate the fixed-rate option. 18 C.F.R. 

§ 292.304(d)(2); Order 872, 85 Fed. Reg. at 54648. FERC 

contends that this modified rule more closely adheres to 

utilities’ actual avoided costs. 

Applying traditional tools of statutory construction, I 

would hold that the modified Fixed-Rate Rule aligns with 

the best reading of PURPA’s text. PURPA defines 

“incremental cost of alternative electric energy” to mean 

“the cost to the electric utility of the electric energy which, 

but for the purchase from such cogenerator or small power 

producer, such utility would generate or purchase from 

another source.” 16 U.S.C. 824a-3(d). Because PURPA 

doesn’t supply a technical meaning for “cost,” the ordinary 

meaning of the term applies. See Asgrow Seed Co. v. 

Winterboer, 513 U.S. 179, 187 (1995) (“When terms used in 

a statute are undefined, we give them their ordinary 

meaning.”). At the time of PURPA’s passage, “cost” meant 

“the amount or equivalent paid or charged for something.” 

Webster’s New Collegiate Dictionary 257 (1977); see also 

Webster’s Third New International Dictionary 515 (1971) 

(“[T]he amount or equivalent paid or given or charged or 

engaged to be paid or given for anything bought or taken in 

barter or for service rendered[.]”); The Shorter Oxford 

English Dictionary 434 (1973) (“That which must be given 

in order to acquire, produce, or effect something; the price 

paid for a thing.”). 

Putting these definitions together, FERC is correct that 

the most natural reading of the text requires that Qualifying 

Facilities receive payments that do not exceed the actual cost 
80 SEIA V. FERC

that a utility would otherwise pay for the same quantity of 

energy. We’ve already upheld FERC’s interpretation of 

“PURPA to require an examination of the costs that a utility 

is actually avoiding.” Californians for Renewable Energy v.

Cal. Pub. Util. Comm’n, 922 F.3d 929, 938 (9th Cir. 2019) 

(approving rule that established that a Qualifying Facility 

“would not be entitled to capacity costs unless it actually 

displaced the utility’s need for additional capacity”). And 

FERC’s revised rule is more faithful to this statutory 

directive than the previous fixed-rate option. A predetermined contractual price might approximate what a 

utility would pay for energy from another source, but the 

most accurate measure of that cost is the price at the time of 

delivery. 

We also previously acknowledged the shortcomings of 

the fixed-rate approach as an estimate of avoided costs. 

Nearly thirty years ago, we confronted a case in which the 

fixed contractual rates paid to Qualifying Facilities “were 

higher than the actual avoided cost rates” because fuel prices 

had declined unexpectedly. Indep. Energy Producers Ass’n, 

Inc. v. California Pub. Utilities Comm’n, 36 F.3d 848, 852 

(9th Cir. 1994). While the disparity between the contractual 

rate and the utilities’ actual costs wasn’t enough to justify 

unilateral modification of the standard offer contract, we 

understood the tension with PURPA’s requirements and 

observed that the “proper remedy for such a situation is to 

ensure that future . . . contracts contain more flexible pricing 

mechanisms.” Id. at 858–59.

Here, FERC’s revisions accomplish just that—affording 

States the latitude to require the “more flexible” method of 

calculating avoided cost at the time of delivery so that 

utilities don’t get locked into overpriced fixed rates. This 

change brings the rule into closer alignment with PURPA’s 
SEIA V. FERC 81

text. I would thus uphold the revised rule based on PURPA’s 

plain language. 

D.

The majority in concurrence faults me for reaching the 

same conclusions as they do in approving of FERC’s 

regulatory changes without relying on Chevron deference. 

It’s true we reach the same conclusions—that’s why this part 

of my writing is a concurrence. But our approaches are 

fundamentally different—while the majority defers to 

FERC’s interpretation, I defer to the words that Congress 

wrote.

II.

Moving on to the NEPA claim. Simply, Petitioners 

haven’t alleged that they will suffer an environmental harm 

sufficient to confer NEPA standing. 

“NEPA establishes a ‘national policy [to] encourage 

productive and enjoyable harmony between man and his 

environment,’ and was intended to reduce or eliminate 

environmental damage and to promote ‘the understanding of 

the ecological systems and natural resources important to’ 

the United States.” Dep’t of Transp. v. Pub. Citizen, 541 

U.S. 752, 756 (2004) (quoting 42 U.S.C. § 4321). Because 

NEPA does not provide a private right of action, petitioners 

seeking to enforce its provisions must meet the APA’s 

statutory standing requirements. See Ranchers Cattlemen 

Action Legal Fund United Stockgrowers of Am. v. U.S. Dep’t 

of Agric., 415 F.3d 1078, 1102 (9th Cir. 2005). To do so, 

petitioners “must allege that [their] injury is within the zone 

of interests protected by NEPA.” Nev. Land Action Ass’n v. 

U.S. Forest Serv., 8 F.3d 713, 716 (9th Cir. 1993); see also 

Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 
82 SEIA V. FERC

U.S. 118, 126 (2014) (holding that a plaintiff seeking to 

bring suit under a federal statute must show not only that he 

has standing under Article III, but also that his “complaint 

fall[s] within the zone of interests protected by the law” 

invoked) (simplified)). 

Given that the “purpose of NEPA is to protect the 

environment, not the economic interests of those adversely 

affected by agency decisions,” a petitioner who asserts only 

“purely economic injuries” lacks standing to bring a NEPA 

challenge. Nev. Land Ass’n, 8 F.3d at 716 (simplified); see 

also Ashley Creek Phosphate Co. v. Norton, 420 F.3d 934, 

939–40 (9th Cir. 2005) (“[P]urely economic interests do not 

fall within NEPA’s zone of interests.”). Rather, to bring a 

NEPA claim, a petitioner “must allege injury to the 

environment” that is sufficiently concrete and 

individualized. See Ranchers Cattlemen Action, 415 F.3d at 

1103. In other words, a petitioner must show by a 

“reasonable probability” that the petitioner will personally 

suffer an environmental injury from the challenged agency 

action. Citizens for Better Forestry v. U.S. Dep’t of Agric., 

341 F.3d 961, 972 (9th Cir. 2003) (simplified). And “mere 

speculation or subjective apprehension about future harm 

[does not] support [NEPA] standing.” Navajo Nation v. 

Dep’t of the Interior, 876 F.3d 1144, 1163 (9th Cir. 2017) 

(simplified).

Here, Petitioners are a mix of environmental 

organizations, intergovernmental groups, and coalitions of 

owners and operators of Qualifying Facilities. Petitioners 

readily admit that FERC’s rulemaking may hit their 

pocketbooks—reducing revenue from their renewable 

energy sales. Perhaps acknowledging that this doesn’t 

confer NEPA standing, they also broadly proclaim that they 

have “environmental interests [in] transitioning away from 
SEIA V. FERC 83

fossil fuels to less polluting forms of electricity generation.” 

Yet NEPA standing requires an interest “distinct from the 

interest held by the public at large.” Navajo Nation, 876 F.3d 

at 1164 (simplified). Probably realizing that this interest 

isn’t particularized enough, Petitioners try to assert a 

concrete injury by alleging that FERC’s rule changes “will 

reduce renewable generation development, leading to an 

increase in fossil-fuel generation that produces pollution that 

harms Petitioners’ members.”

But we aren’t obliged to accept speculative injuries to 

bring the Petitioners within NEPA’s zone of interests. And 

to accept the Petitioners’ claim of injury here requires 

stacking speculation upon speculation. Their theory of 

injury goes something like this:

To traverse the gap between FERC’s rule changes and 

their asserted injury, Petitioners layer conjecture on top of 

speculation on top of guesswork about how State 
84 SEIA V. FERC

governments, individual Qualifying Facilities, the broader 

energy market, and emissions will react to the rule changes. 

To credit their claim, we must accept that FERC’s new rules 

will lead to greater fossil-fuel consumption in some 

unspecified manner, in some unspecified location, to some 

unspecified degree, by the independent actions of third 

parties—all leading to an unspecified harm to Petitioners’ 

members.

One problem is that their theory only considers FERC’s 

rules in a vacuum. Energy markets are complex. FERC’s 

rules are not the only forces influencing the development of 

new renewable facilities. Take Montana’s energy market. 

Renewable energy projects are thriving in Montana even 

without PURPA’s incentives. As amicus NorthWestern

Corporation notes, out of 40 wind and solar projects 

currently underway in Montana, nearly half of them are 

larger than 80 megawatts—too big to be Qualifying 

Facilities. Br. of Amicus Curiae Nw. Corp. 9–10. One 

proposal involves a 750-megawatt wind farm, nearly ten 

times PURPA’s upper limit for Qualifying Facility output. 

Id. at 9. In other words, a significant swath of the wind and 

solar energy boom in Montana is happening without any 

direct help from PURPA’s incentives. This shows that 

FERC’s regulations are just one component of a much larger 

web of market forces influencing the supply and demand of 

renewable energy nationwide—making any concrete injury 

to Petitioners purely speculative. 

Another major weakness in Petitioners’ theory is that 

most of FERC’s rule changes are permissive—allowing 

independent parties to respond to them as they wish. States 

can freely choose whether to adopt the new fixed-rate rule or 

locational marginal price presumption. See, e.g., 18 C.F.R. 

§§ 292.304(b)(6), 292.304(d)(2). And the new 
SEIA V. FERC 85

nondiscriminatory access presumption only grants utilities 

greater flexibility in purchasing energy from Qualifying 

Facilities. See 18 C.F.R. § 292.309(d)(2). As the Supreme 

Court has warned, we shouldn’t “endorse standing theories 

that rest on speculation about the decisions of independent 

actors.” Clapper v. Amnesty Int’l, USA, 568 U.S. 398, 414 

(2013). Petitioners have identified only Georgia, Idaho, and 

Montana as making any moves in response to FERC’s rule 

changes. But that doesn’t establish a “reasonable 

probability” that this will lead to harm at Petitioners’ 

members’ homes. 

While Petitioners “need not provide smoking-gun 

allegations of harm,” Navajo Nation, 876 F.3d at 1163 

(simplified), their theory of injury is too speculative to give 

rise to NEPA standing. In Navajo Nation, an Indian tribe 

brought a NEPA claim against the Department of the 

Interior’s guidelines for access to the Colorado River. Id. at 

1152. To assert standing, the tribe alleged that the guidelines 

would impair their water rights by “creat[ing] a complex and 

difficult-to-reverse combination of third-party reliance and 

political inertia” that would hamper the tribe’s future efforts 

to access water. Id. at 1162. In short, the tribe posited a 

“chain of events” by which Interior’s actions would cause 

surrounding States to rely on Colorado River water, which 

in turn may disincline the federal government from 

protecting the tribe’s interest in the river. Id. at 1163. We 

held that the tribe’s “realpolitik predictions”—predicated on 

a “string of contingencies” and “conjecture,” unsupported by 

“facts, figures, or data”—was “too speculative to confer 

standing.” Id. (simplified).

We should have done the same here. Much like the 

tribe’s theory of injury, Petitioners here assert an 

unquantified future harm that will purportedly result from a 
86 SEIA V. FERC

chain reaction of third-party decisions and market forces. 

With scant evidence suggesting that the harm will occur or 

that it will be attributable to FERC’s modified rules, we 

should not have entertained Petitioners’ NEPA claim.

Based on all this, I would hold that Petitioners have 

failed to meet their burden of alleging an injury within 

NEPA’s zone of interests. I would thus not reach the merits 

of their claim nor grant the petition to order an 

environmental assessment. 

III.

For these reasons, I respectfully dissent in part.