(Slip Opinion) OCTOBER TERM, 2015 1 

Syllabus 

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader. 

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

HUGHES, CHAIRMAN, MARYLAND PUBLIC SERVICE 

COMMISION, ET AL. v. TALEN ENERGY MARKETING, 

LLC, FKA PPL ENERGYPLUS, LLC, ET AL.
 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 

THE FOURTH CIRCUIT 

No. 14–614. Argued February 24, 2016—Decided April 19, 2016* 

The Federal Power Act (FPA) vests in the Federal Energy Regulatory 

Commission (FERC) exclusive jurisdiction over wholesale sales of 

electricity in the interstate market, but “leaves to the States alone, 

the regulation of [retail electricity sales].” FERC v. Electric Power 

Supply Assn., 577 U. S. ___, ___. In Maryland and other States that 

have deregulated their energy markets, “load serving entities” (LSEs)

purchase electricity at wholesale from independent power generators 

for delivery to retail consumers. Interstate wholesale transactions in 

deregulated markets typically occur through (1) bilateral contracting, 

where LSEs agree to purchase a certain amount of electricity from

generators at a certain rate over a certain period of time; and (2) 

competitive wholesale auctions administered by Regional Transmission Organizations (RTOs) and Independent System Operators

(ISOs), nonprofit entities that manage certain segments of the electricity grid.

PJM Interconnection (PJM), an RTO overseeing a multistate grid, 

operates a capacity auction. The capacity auction is designed to identify need for new generation and to accommodate long-term bilateral

contracts for capacity. PJM predicts demand three years into the future and assigns a share of that demand to each participating LSE.

Owners of capacity to produce electricity in three years’ time then bid 

—————— 

*Together with No. 14–623, CPV Maryland, LLC v. Talen Energy 

Marketing, LLC, fka PPL EnergyPlus, LLC, et al., also on certiorari to 

the same court 
 

 

 

2 HUGHES v. TALEN ENERGY MARKETING, LLC 

Syllabus 

that capacity into the auction for sale to PJM at rates the sellers set 

in their bids. PJM accepts bids until it has purchased enough capacity to satisfy anticipated demand. All accepted capacity sellers receive 

the highest accepted rate, called the “clearing price.” LSEs then 

must purchase, from PJM, enough electricity to satisfy their assigned

share of overall projected demand. FERC extensively regulates the

structure of the capacity auction to ensure that it efficiently balances 

supply and demand, producing a just and reasonable clearing price. 

Concerned that the PJM capacity auction was failing to encourage

development of sufficient new in-state generation, Maryland enacted

its own regulatory program. Maryland selected, through a proposal

process, petitioner CPV Maryland, LLC (CPV), to construct a new 

power plant and required LSEs to enter into a 20-year pricing contract (called a contract for differences) with CPV at a rate CPV specified in its proposal. Under the terms of the contract, CPV sells its 

capacity to PJM through the auction, but—through mandated payments from or to LSEs—receives the contract price rather than the 

clearing price for these sales to PJM. In a suit filed by incumbent 

generators (respondents here) against members of the Maryland Public Service Commission—CPV intervened as a defendant—the District Court issued a declaratory judgment holding that Maryland’s

program improperly sets the rate CPV receives for interstate wholesale capacity sales to PJM. The Fourth Circuit affirmed. 

Held: Maryland’s program is preempted because it disregards the interstate wholesale rate FERC requires. A state law is preempted

where “Congress has legislated comprehensively to occupy an entire 

field of regulation,” Northwest Central Pipeline Corp. v. State Corporation Comm’n of Kan., 489 U. S. 493, 509, as well as “ ‘where, under 

the circumstances of [a] particular case, [the challenged state law] 

stands as an obstacle to the accomplishment and execution of the full 

purposes and objectives of Congress,’ ” Crosby v. National Foreign 

Trade Council, 530 U. S. 363, 373. Exercising its exclusive authority

over interstate wholesale sales, see 16 U. S. C. §824(b)(1), FERC has

approved PJM’s capacity auction as the sole ratesetting mechanism 

for capacity sales to PJM, and has deemed the clearing price per se 

just and reasonable. However, Maryland—through the contract for 

differences—guarantees CPV a rate distinct from the clearing price 

for its interstate capacity sales to PJM. By adjusting an interstate 

wholesale rate, Maryland’s program contravenes the FPA’s division

of authority between state and federal regulators. 

That Maryland was attempting to encourage construction of new 

in-state generation does not save its program. States may regulate

within their assigned domain even when their laws incidentally affect areas within FERC’s domain. But they may not seek to achieve 
 

 

Cite as: 578 U. S. ____ (2016) 3 

Syllabus 

ends, however legitimate, through regulatory means that intrude on

FERC’s authority over interstate wholesale rates, as Maryland has

done here. See Mississippi Power & Light Co. v. Mississippi ex rel. 

Moore, 487 U. S. 354, 373; Nantahala Power & Light Co. v. Thornburg, 476 U. S. 953, 966. Maryland and CPV analogize the contract

for differences to traditional bilateral contracts for capacity. Unlike 

traditional bilateral contracts, however, the contract for differences 

does not transfer ownership of capacity from one party to another 

outside the auction. Instead, Maryland’s program operates within 

the auction, mandating LSEs and CPV to exchange money based on

the cost of CPV’s capacity sales to PJM.

Maryland’s program is rejected only because it disregards an interstate wholesale rate required by FERC. Neither Maryland nor other

States are foreclosed from encouraging production of new or clean 

generation through measures that do not condition payment of funds

on capacity clearing the auction. Pp. 11–15. 

753 F. 3d 467, affirmed. 

GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, 

C. J., and KENNEDY, BREYER, ALITO, SOTOMAYOR, and KAGAN, JJ., 

joined. SOTOMAYOR, J., filed a concurring opinion. THOMAS, J., filed an 

opinion concurring in part and concurring in the judgment. 
 

 

_________________ 

_________________ 

 

Cite as: 578 U. S. ____ (2016) 1 

Opinion of the Court 

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press. 

SUPREME COURT OF THE UNITED STATES 

Nos. 14–614 and 14–623 

W. KEVIN HUGHES, CHAIRMAN, MARYLAND PUBLIC 

SERVICE COMMISSION, ET AL., PETITIONERS 

14–614 v. 

TALEN ENERGY MARKETING, LLC, FKA PPL 

ENERGYPLUS, LLC, ET AL. 

CPV MARYLAND, LLC, PETITIONER 

14–623 v. 

TALEN ENERGY MARKETING, LLC, FKA PPL 

ENERGYPLUS, LLC, ET AL. 

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT 

[April 19, 2016] 

JUSTICE GINSBURG delivered the opinion of the Court. 

The Federal Power Act (FPA), 41 Stat. 1063, as amended,

16 U. S. C. §791a et seq., vests in the Federal Energy

Regulatory Commission (FERC) exclusive jurisdiction over 

wholesale sales of electricity in the interstate market.

FERC’s regulatory scheme includes an auction-based

market mechanism to ensure wholesale rates that are just 

and reasonable. FERC’s scheme, in Maryland’s view,

provided insufficient incentive for new electricity generation in the State. Maryland therefore enacted its own 

regulatory program. Maryland’s program provides subsidies, through state-mandated contracts, to a new generator, but conditions receipt of those subsidies on the new 
 

2 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

generator selling capacity into a FERC-regulated wholesale auction. In a suit initiated by competitors of Maryland’s new electricity generator, the Court of Appeals for 

the Fourth Circuit held that Maryland’s scheme impermissibly intrudes upon the wholesale electricity market, a

domain Congress reserved to FERC alone. We affirm the 

Fourth Circuit’s judgment. 

I 

A 

Under the FPA, FERC has exclusive authority to regulate “the sale of electric energy at wholesale in interstate 

commerce.” §824(b)(1). A wholesale sale is defined as a 

“sale of electric energy to any person for resale.” §824(d).

The FPA assigns to FERC responsibility for ensuring that

“[a]ll rates and charges made, demanded, or received by

any public utility for or in connection with the transmission or sale of electric energy subject to the jurisdiction of 

the Commission . . . shall be just and reasonable.” 

§824d(a). See also §824e(a) (if a rate or charge is found to

be unjust or unreasonable, “the Commission shall determine the just and reasonable rate”). “But the law places 

beyond FERC’s power, and leaves to the States alone, the 

regulation of ‘any other sale’—most notably, any retail

sale—of electricity.” FERC v. Electric Power Supply Assn., 

577 U. S. ___, ___ (2016) (EPSA) (slip op., at 1) (quoting 

§824(b)). The States’ reserved authority includes control 

over in-state “facilities used for the generation of electric

energy.” §824(b)(1); see Pacific Gas & Elec. Co. v. State 

Energy Resources Conservation and Development Comm’n, 

461 U. S. 190, 205 (1983) (“Need for new power facilities, 

their economic feasibility, and rates and services, are

areas that have been characteristically governed by the

States.”).

“Since the FPA’s passage, electricity has increasingly

become a competitive interstate business, and FERC’s role 
Cite as: 578 U. S. ____ (2016) 3 

Opinion of the Court 

has evolved accordingly.” EPSA, 577 U. S., at ___ (slip op., 

at 4). Until relatively recently, most state energy markets

were vertically integrated monopolies—i.e., one entity, 

often a state utility, controlled electricity generation,

transmission, and sale to retail consumers. Over the past

few decades, many States, including Maryland, have

deregulated their energy markets. In deregulated markets, the organizations that deliver electricity to retail

consumers—often called “load serving entities” (LSEs)—

purchase that electricity at wholesale from independent 

power generators. To ensure reliable transmission of 

electricity from independent generators to LSEs, FERC

has charged nonprofit entities, called Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs), with managing certain segments of the 

electricity grid. 

Interstate wholesale transactions in deregulated markets typically occur through two mechanisms. The first is 

bilateral contracting: LSEs sign agreements with generators to purchase a certain amount of electricity at a certain

rate over a certain period of time. After the parties have

agreed to contract terms, FERC may review the rate for

reasonableness. See Morgan Stanley Capital Group Inc. v. 

Public Util. Dist. No. 1 of Snohomish Cty., 554 U. S. 527, 

546–548 (2008) (Because rates set through good-faith

arm’s-length negotiation are presumed reasonable, “FERC 

may abrogate a valid contract only if it harms the public

interest.”). Second, RTOs and ISOs administer a number 

of competitive wholesale auctions: for example, a “sameday auction” for immediate delivery of electricity to LSEs

facing a sudden spike in demand; a “next-day auction” to 

satisfy LSEs’ anticipated near-term demand; and a “capacity auction” to ensure the availability of an adequate 

supply of power at some point far in the future.

These cases involve the capacity auction administered 

by PJM Interconnection (PJM), an RTO that oversees the 
 

 

4 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

electricity grid in all or parts of 13 mid-Atlantic and Midwestern States and the District of Columbia. The PJM 

capacity auction functions as follows. PJM predicts electricity demand three years ahead of time, and assigns a

share of that demand to each participating LSE. Owners 

of capacity to produce electricity in three years’ time bid to 

sell that capacity to PJM at proposed rates. PJM accepts

bids, beginning with the lowest proposed rate, until it has

purchased enough capacity to satisfy projected demand.

No matter what rate they listed in their original bids, all 

accepted capacity sellers receive the highest accepted rate, 

which is called the “clearing price.”1 LSEs then must 

purchase from PJM, at the clearing price, enough electricity to satisfy their PJM-assigned share of overall projected 

demand. The capacity auction serves to identify need for

new generation: A high clearing price in the capacity

auction encourages new generators to enter the market, 

increasing supply and thereby lowering the clearing price 

in same-day and next-day auctions three years’ hence; a

low clearing price discourages new entry and encourages 

retirement of existing high-cost generators.2 

The auction is designed to accommodate long-term

bilateral contracts for capacity. If an LSE has acquired a 

—————— 

1For example, if four power plants bid to sell capacity at, respectively, 

$10/unit, $20/unit, $30/unit, and $40/unit, and the first three plants

provide enough capacity to satisfy projected demand, PJM will purchase capacity only from those three plants, each of which will receive

$30/unit, the clearing price. 2Because PJM operates the electricity grid in a very large region of 

the country, PJM divides its overall grid into geographic subregions

and makes adjustments to the clearing price to reflect operating conditions in those subregions. For instance, PJM may pay a higher rate in 

or near areas where transmission-line congestion limits the amount of 

electricity that can be imported from other areas. The elevated clearing 

price might encourage a company to site a new power plant in a subregion where the need for local generation is great rather than elsewhere

in PJM’s grid. 
Cite as: 578 U. S. ____ (2016) 5 

Opinion of the Court 

certain amount of capacity through a long-term bilateral 

contract with a generator, the LSE—not the generator—is

considered the owner of that capacity for purposes of the

auction. The LSE sells that capacity into the auction,

where it counts toward the LSE’s assigned share of PJMprojected demand, thereby reducing the net costs of the

LSE’s required capacity purchases from PJM.3 LSEs 

generally bid their capacity into the auction at a price of

$0, thus guaranteeing that the capacity will clear at any 

price. Such bidders are called “price takers.” Because the 

fixed costs of building generating facilities often vastly 

exceed the variable costs of producing electricity, many

generators also function as price takers.

FERC extensively regulates the structure of the PJM

capacity auction to ensure that it efficiently balances 

supply and demand, producing a just and reasonable 

clearing price. See EPSA, 577 U. S., at ___ (slip op., at 5) 

(the clearing price is “the price an efficient market would 

produce”). Two FERC rules are particularly relevant to 

—————— 

3To take a simplified example, assume an LSE has signed a longterm bilateral contract with a generator to purchase 50 units of electricity annually at a price of $40/unit (total annual cost: $2,000). In a 

given year when the auction clearing price is $50/unit, assume PJM 

requires the LSE to purchase 100 units of electricity to satisfy its share 

of projected demand. The LSE bids the 50 units of capacity it already 

owns into the PJM auction, and PJM pays the LSE $2,500 for those 50 

units. Although the LSE then must pay PJM $5,000 for the 100 units it

must purchase to satisfy projected demand, the net cost to the LSE of 

auction participation is only $2,500. Note that the effective price the 

LSE pays for 50 of the 100 units it must purchase from PJM—the

amount purchased through the long-term contract—is the contract 

price, not the clearing price. That is, the LSE pays the utility $2,000

for 50 units of capacity, receives $2,500 from PJM after selling that

capacity into the auction, and then pays $2,500 to PJM to purchase 50

units of capacity, resulting in a net cost of $2,000—the contract price—

for those 50 units. The LSE, of course, must pay the full clearing

price—$50/unit—for the other 50 units it is obliged to purchase to

satisfy its full share of projected demand. 
 

6 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

these cases. First, the Minimum Offer Price Rule (MOPR)

requires new generators to bid capacity into the auction at 

or above a price specified by PJM, unless those generators 

can prove that their actual costs fall below the MOPR 

price. Once a new generator clears the auction at the 

MOPR price, PJM deems that generator an efficient entrant and exempts it from the MOPR going forward, allowing it to bid its capacity into the auction at any price it

elects, including $0. Second, the New Entry Price Adjustment (NEPA) guarantees new generators, under certain circumstances, a stable capacity price for their first

three years in the market. The NEPA’s guarantee eliminates, for three years, the risk that the new generator’s

entry into the auction might so decrease the clearing price 

as to prevent that generator from recovering its costs. 

B 

Around 2009, Maryland electricity regulators became

concerned that the PJM capacity auction was failing to 

encourage development of sufficient new in-state generation. Because Maryland sits in a particularly congested

part of the PJM grid, importing electricity from other

parts of the grid into the State is often difficult. To address this perceived supply shortfall, Maryland regulators

proposed that FERC extend the duration of the NEPA 

from three years to ten. FERC rejected the proposal. 

PJM, 126 FERC ¶62,563 (2009). “[G]iving new suppliers

longer payments and assurances unavailable to existing

suppliers,” FERC reasoned, would improperly favor new 

generation over existing generation, throwing the auction’s market-based price-setting mechanism out of balance. Ibid. See also PJM, 128 FERC ¶61,789 (2009) 

(order on petition for rehearing) (“Both new entry and

retention of existing efficient capacity are necessary to

ensure reliability and both should receive the same price

so that the price signals are not skewed in favor of new 
 

Cite as: 578 U. S. ____ (2016) 7 

Opinion of the Court 

entry.”).

Shortly after FERC rejected Maryland’s NEPA proposal,

the Maryland Public Service Commission promulgated the

Generation Order at issue here. Under the order, Maryland solicited proposals from various companies for construction of a new gas-fired power plant at a particular 

location, and accepted the proposal of petitioner CPV 

Maryland, LLC (CPV). Maryland then required LSEs to 

enter into a 20-year pricing contract (the parties refer to 

this contract as a “contract for differences”) with CPV at a

rate CPV specified in its accepted proposal.4 Unlike a 

traditional bilateral contract for capacity, the contract for 

differences does not transfer ownership of capacity from

CPV to the LSEs. Instead, CPV sells its capacity on the 

PJM market, but Maryland’s program guarantees CPV 

the contract price rather than the auction clearing price. 

If CPV’s capacity clears the PJM capacity auction and

the clearing price falls below the price guaranteed in the 

contract for differences, Maryland LSEs pay CPV the 

difference between the contract price and the clearing

price. The LSEs then pass the costs of these required 

payments along to Maryland consumers in the form of 

higher retail prices. If CPV’s capacity clears the auction

and the clearing price exceeds the price guaranteed in the

contract for differences, CPV pays the LSEs the difference

between the contract price and the clearing price, and the 

LSEs then pass the savings along to consumers in the 

form of lower retail prices. Because CPV sells its capacity

exclusively in the PJM auction market, CPV receives no 

payment from Maryland LSEs or PJM if its capacity fails 

to clear the auction. But CPV is guaranteed a certain rate 

if its capacity does clear, so the contract’s terms encourage 

—————— 

4New Jersey implemented a similar program around the same time.

The duration of the price guarantee for the New Jersey program is 15 

years rather than Maryland’s 20. 
 

 

8 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

CPV to bid its capacity into the auction at the lowest 

possible price.5 

Prior to enactment of the Maryland program, PJM had

exempted new state-supported generation from the 

MOPR, allowing such generation to bid capacity into the 

—————— 

5Two simplified examples illustrate how Maryland’s program interacts with the PJM capacity auction. First, consider a hypothetical

situation where the clearing price falls below the price guaranteed in 

the contract for differences. Assume that CPV’s plant produces 10,000

units of electricity a year, and that the 20-year price guaranteed under

the contract is $30/unit. Assume further that, in a given year during

the duration of the price guarantee, the clearing price is $20/unit, and

CPV’s capacity clears the auction. CPV receives payments from Maryland LSEs of $10/unit, or $100,000, and payments from PJM of 

$20/unit, or $200,000. The rate CPV receives from the capacity auction

is therefore $30/unit—the contract price—not $20/unit—the clearing

price. Under PJM auction rules, Maryland LSEs then must purchase 

from PJM, at the clearing price of $20/unit, enough capacity to satisfy

their assigned shares of anticipated demand. Assume that PJM requires Maryland LSEs to purchase 40,000 units of capacity. Total 

capacity-auction expenses for Maryland LSEs would therefore include

both the payment to CPV ($100,000) and the full cost of purchasing 

capacity from PJM ($800,000), or $900,000. Absent Maryland’s program, the LSEs’ capacity-auction expenses would have included only

the total cost of capacity purchases from PJM, or $800,000. 

Now assume instead that the clearing price in a given year is 

$40/unit, which exceeds the $30/unit contract price, and that CPV’s

capacity clears the auction. CPV receives payments from PJM of 

$40/unit, or $400,000. CPV then must pay Maryland LSEs the difference between the contract price and the clearing price—in this case,

$10/unit, or $100,000. The rate CPV receives from the capacity auction

is therefore the contract price—$30/unit—the same price CPV received 

in the above example. Maryland LSEs then must purchase from PJM,

at the clearing price of $40/unit, enough capacity to satisfy their share 

of anticipated demand. Assume that PJM again requires Maryland

LSEs to purchase 40,000 units of capacity. Total capacity-auction

expenses for Maryland LSEs would therefore include the full cost of 

capacity purchases from PJM ($1,600,000), minus the payment from

CPV ($100,000), or $1,500,000. Absent Maryland’s program, the LSEs

would have had to pay $1,600,000 to PJM without receiving any offsetting payments from CPV. 
 

Cite as: 578 U. S. ____ (2016) 9 

Opinion of the Court 

auction at $0 without first clearing at the MOPR price. 

Responding to a complaint filed by incumbent generators

in the Maryland region who objected to Maryland’s program (and the similar New Jersey program), FERC eliminated this exemption. PJM, 135 FERC ¶61,106 (2011).

See also 137 FERC ¶61,145 (2011) (order on petition for 

rehearing) (“Our intent is not to pass judgment on state 

and local policies and objectives with regard to the development of new capacity resources, or unreasonably interfere with those objectives. We are forced to act, however, 

when subsidized entry supported by one state’s or locality’s policies has the effect of disrupting the competitive

price signals that PJM’s [capacity auction] is designed to 

produce, and that PJM as a whole, including other states,

rely on to attract sufficient capacity.”); New Jersey Bd. of 

Pub. Util. v. FERC, 744 F. 3d 74, 79–80 (CA3 2014) (upholding FERC’s elimination of the state-supported generation exemption). In the first year CPV bid capacity from

its new plant into the PJM capacity auction, that capacity

cleared the auction at the MOPR rate, so CPV was thereafter eligible to function as a price taker.

In addition to seeking the elimination of the statesupported generation exemption, incumbent generators—

respondents here—brought suit in the District of Maryland against members of the Maryland Public Service 

Commission in their official capacities. The incumbent 

generators sought a declaratory judgment that Maryland’s

program violates the Supremacy Clause by setting a

wholesale rate for electricity and by interfering with

FERC’s capacity-auction policies.6 CPV intervened as a 

—————— 

6Because neither CPV nor Maryland has challenged whether plaintiffs may seek declaratory relief under the Supremacy Clause, the 

Court assumes without deciding that they may. See Brief for Public 

Utility Law Project of New York, Inc., as Amicus Curiae 21 (arguing

that the incumbent generators should have been required to exhaust 

administrative remedies before filing suit). 
 

 

10 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

defendant. After a six-day bench trial, the District Court 

issued a declaratory judgment holding that Maryland’s

program improperly sets the rate CPV receives for interstate wholesale capacity sales to PJM. PPL Energyplus, 

LLC v. Nazarian, 974 F. Supp. 2d 790, 840 (Md. 2013).

“While Maryland may retain traditional state authority to

regulate the development, location, and type of power

plants within its borders,” the District Court explained,

“the scope of Maryland’s power is necessarily limited by

FERC’s exclusive authority to set wholesale energy and

capacity prices.” Id., at 829.7 

The Fourth Circuit affirmed. Relying on this Court’s

decision in Mississippi Power & Light Co. v. Mississippi ex 

rel. Moore, 487 U. S. 354, 370 (1988), the Fourth Circuit 

observed that state laws are preempted when they “den[y] 

full effect to the rates set by FERC, even though [they do] 

not seek to tamper with the actual terms of an interstate

transaction.” PPL EnergyPlus, LLC v. Nazarian, 753 

F. 3d 467, 476 (2014). Maryland’s program, the Fourth

Circuit reasoned, “functionally sets the rate that CPV

receives for its sales in the PJM auction,” “a FERCapproved market mechanism.” Id., at 476–477. “[B]y

adopting terms and prices set by Maryland, not those 

sanctioned by FERC,” the Fourth Circuit concluded, Maryland’s program “strikes at the heart of the agency’s statutory power.” Id., at 478.8 The Fourth Circuit cautioned 

that it “need not express an opinion on other state efforts 

to encourage new generation, such as direct subsidies or 

—————— 

7Respondents also raised arguments under the Dormant Commerce

Clause and 42 U. S. C. §1983. The District Court rejected those arguments, PPL Energyplus, LLC v. Nazarian, 974 F. Supp. 2d 790, 841–

855 (Md. 2013), the Fourth Circuit did not address them, and they are

irrelevant at this stage. 8For the same reason, the Third Circuit found New Jersey’s similar 

program preempted. PPL Energyplus, LLC v. Solomon, 766 F. 3d 241, 

246 (2014). 
Cite as: 578 U. S. ____ (2016) 11 

Opinion of the Court 

tax rebates, that may or may not differ in important ways

from the Maryland initiative.” Ibid. 

The Fourth Circuit then held that Maryland’s program

impermissibly conflicts with FERC policies. Maryland’s

program, the Fourth Circuit determined, “has the potential to seriously distort the PJM auction’s price signals,” 

undermining the incentive structure FERC has approved

for construction of new generation. Ibid. Moreover, the 

Fourth Circuit explained, Maryland’s program “conflicts 

with NEPA” by providing a 20-year price guarantee to a 

new entrant—even though FERC refused Maryland’s

request to extend the duration of the NEPA past three 

years. Id., at 479. 

We granted certiorari, 577 U. S. ___ (2015), and now 

affirm. 

II 

The Supremacy Clause makes the laws of the United

States “the supreme Law of the Land; . . . any Thing in the 

Constitution or Laws of any State to the Contrary notwithstanding.” U. S. Const., Art. VI, cl. 2. Put simply,

federal law preempts contrary state law. “Our inquiry

into the scope of a [federal] statute’s pre-emptive effect is 

guided by the rule that the purpose of Congress is the

ultimate touchstone in every pre-emption case.” Altria 

Group, Inc. v. Good, 555 U. S. 70, 76 (2008) (internal 

quotation marks omitted). A state law is preempted 

where “Congress has legislated comprehensively to occupy

an entire field of regulation, leaving no room for the States 

to supplement federal law,” Northwest Central Pipeline 

Corp. v. State Corporation Comm’n of Kan., 489 U. S. 493, 

509 (1989), as well as “where, under the circumstances of 

a particular case, the challenged state law stands as an 

obstacle to the accomplishment and execution of the full

purposes and objectives of Congress,” Crosby v. National 

Foreign Trade Council, 530 U. S. 363, 373 (2000) (brackets 
 

 

 

12 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

and internal quotation marks omitted). 

We agree with the Fourth Circuit’s judgment that Maryland’s program sets an interstate wholesale rate, contravening the FPA’s division of authority between state

and federal regulators. As earlier recounted, see supra, at 

2, the FPA allocates to FERC exclusive jurisdiction over

“rates and charges . . . received . . . for or in connection 

with” interstate wholesale sales. §824d(a). Exercising

this authority, FERC has approved the PJM capacity

auction as the sole ratesetting mechanism for sales of 

capacity to PJM, and has deemed the clearing price per se 

just and reasonable. Doubting FERC’s judgment, Maryland—through the contract for differences—requires CPV 

to participate in the PJM capacity auction, but guarantees

CPV a rate distinct from the clearing price for its interstate sales of capacity to PJM. By adjusting an interstate 

wholesale rate, Maryland’s program invades FERC’s

regulatory turf. See EPSA, 577 U. S., at ___ (slip op., 

at 26) (“The FPA leaves no room either for direct state

regulation of the prices of interstate wholesales or for 

regulation that would indirectly achieve the same result.”

(internal quotation marks omitted)).9 

That Maryland was attempting to encourage construction of new in-state generation does not save its program.

States, of course, may regulate within the domain Congress assigned to them even when their laws incidentally 

—————— 

9According to Maryland and CPV, the payments guaranteed under

Maryland’s program are consideration for CPV’s compliance with 

various state-imposed conditions, i.e., the requirements that CPV build

a certain type of generator, at a particular location, that would produce

a certain amount of electricity over a particular period of time. The 

payments, Maryland and CPV continue, are therefore separate from 

the rate CPV receives for its wholesale sales of capacity to PJM. But 

because the payments are conditioned on CPV’s capacity clearing the 

auction—and, accordingly, on CPV selling that capacity to PJM—the 

payments are certainly “received . . . in connection with” interstate 

wholesale sales to PJM. 16 U. S. C. §824d(a). 
Cite as: 578 U. S. ____ (2016) 13 

Opinion of the Court 

affect areas within FERC’s domain. See Oneok, Inc. v. 

Learjet, Inc., 575 U. S. ___, ___ (2015) (slip op., at 11) 

(whether the Natural Gas Act (NGA) preempts a particular state law turns on “the target at which the state law 

aims”).10 But States may not seek to achieve ends, however legitimate, through regulatory means that intrude on 

FERC’s authority over interstate wholesale rates, as 

Maryland has done here. See ibid. (distinguishing between “measures aimed directly at interstate purchasers

and wholesalers for resale, and those aimed at subjects

left to the States to regulate” (internal quotation marks 

omitted)).11 

The problem we have identified with Maryland’s program mirrors the problems we identified in Mississippi 

Power & Light and Nantahala Power & Light Co. v. 

Thornburg, 476 U. S. 953 (1986). In each of those cases, a 

State determined that FERC had failed to ensure the 

reasonableness of a wholesale rate, and the State therefore prevented a utility from recovering—through retail

rates—the full cost of wholesale purchases. See Mississippi Power & Light, 487 U. S., at 360–364; Nantahala, 

—————— 

10Although Oneok, Inc. v. Learjet, Inc., 575 U. S. ___ (2015), involved

the NGA rather than the FPA, the relevant provisions of the two

statutes are analogous. This Court has routinely relied on NGA cases

in determining the scope of the FPA, and vice versa. See, e.g., id., at 

14–15 (discussing FPA cases while determining the preemptive scope of

the NGA). 11Maryland’s program, Maryland and CPV assert, is consistent with

federal law because FERC has accommodated the program by eliminating the MOPR’s state-supported generation exception. Even assuming

that this change has prevented Maryland’s program from distorting the

auction’s price signals, however—a point the parties dispute—

Maryland cannot regulate in a domain Congress assigned to FERC and

then require FERC to accommodate Maryland’s intrusion. See Northwest Central Pipeline Corp. v. State Corporation Comm’n of Kan., 489 

U. S. 493, 518 (1989) (“The NGA does not require FERC to regulate

around a state rule the only purpose of which is to influence purchasing 

decisions of interstate pipelines, however that rule is labeled.”). 
 

14 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of the Court 

476 U. S., at 956–962. This Court invalidated the States’ 

attempts to second-guess the reasonableness of interstate

wholesale rates. “‘Once FERC sets such a rate,’” we observed in Mississippi Power & Light, “‘a State may not 

conclude in setting retail rates that the FERC-approved

wholesale rates are unreasonable. A State must rather 

give effect to Congress’ desire to give FERC plenary authority over interstate wholesale rates, and to ensure that

the States do not interfere with this authority.’” 487 

U. S., at 373 (quoting Nantahala, 476 U. S., at 966). True, 

Maryland’s program does not prevent a utility from recovering through retail sales a cost FERC mandated it incur—Maryland instead guarantees CPV a certain rate for 

capacity sales to PJM regardless of the clearing price. But 

Mississippi Power & Light and Nantahala make clear that 

States interfere with FERC’s authority by disregarding

interstate wholesale rates FERC has deemed just and

reasonable, even when States exercise their traditional 

authority over retail rates or, as here, in-state generation.

The contract for differences, Maryland and CPV respond, is indistinguishable from traditional bilateral 

contracts for capacity, which FERC has long accommodated in the auction. See supra, at 4–5, and n. 3. But the 

contract at issue here differs from traditional bilateral 

contracts in this significant respect: The contract for differences does not transfer ownership of capacity from one 

party to another outside the auction. Instead, the contract 

for differences operates within the auction; it mandates 

that LSEs and CPV exchange money based on the cost of

CPV’s capacity sales to PJM. Notably, because the contract for differences does not contemplate the sale of capacity outside the auction, Maryland and CPV took the 

position, until the Fourth Circuit issued its decision, that

the rate in the contract for differences is not subject to 

FERC’s reasonableness review. See §824(b)(1) (FERC has 

jurisdiction over contracts for “the sale of electric energy at 
 

Cite as: 578 U. S. ____ (2016) 15 

Opinion of the Court 

wholesale in interstate commerce.” (emphasis added)).12 

Our holding is limited: We reject Maryland’s program

only because it disregards an interstate wholesale rate

required by FERC. We therefore need not and do not 

address the permissibility of various other measures

States might employ to encourage development of new or 

clean generation, including tax incentives, land grants,

direct subsidies, construction of state-owned generation

facilities, or re-regulation of the energy sector. Nothing in

this opinion should be read to foreclose Maryland and

other States from encouraging production of new or clean 

generation through measures “untethered to a generator’s 

wholesale market participation.” Brief for Respondents

40. So long as a State does not condition payment of funds

on capacity clearing the auction, the State’s program

would not suffer from the fatal defect that renders Maryland’s program unacceptable.13 

* * * 

For the reasons stated, the judgment of the Court of

Appeals for the Fourth Circuit is 

Affirmed. 

—————— 

12Our opinion does not call into question whether generators and 

LSEs may enter into long-term financial hedging contracts based on the

auction clearing price. Such contracts, also frequently termed contracts 

for differences, do not involve state action to the same degree as Maryland’s program, which compels private actors (LSEs) to enter into 

contracts for differences—like it or not—with a generator that must sell

its capacity to PJM through the auction. 13Because the reasons we have set out suffice to invalidate Maryland’s program, we do not resolve whether, as the incumbent generators also assert, Maryland’s program is preempted because it counteracts FERC’s refusal to extend the NEPA’s duration, or because it 

interferes with the capacity auction’s price signals. 
_________________ 

_________________ 

Cite as: 578 U. S. ____ (2016) 1 

SOTOMAYOR, J., concurring 

SUPREME COURT OF THE UNITED STATES 

Nos. 14–614 and 14–623 

W. KEVIN HUGHES, CHAIRMAN, MARYLAND PUBLIC 

SERVICE COMMISSION, ET AL., PETITIONERS 

14–614 v. 

TALEN ENERGY MARKETING, LLC, FKA PPL 

ENERGYPLUS, LLC, ET AL. 

CPV MARYLAND, LLC, PETITIONER 

14–623 v. 

TALEN ENERGY MARKETING, LLC, FKA PPL 

ENERGYPLUS, LLC, ET AL. 

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT 

[April 19, 2016] 

JUSTICE SOTOMAYOR, concurring. 

I write separately to clarify my understanding of the 

pre-emption principles that should guide this Court’s

analysis of the Federal Power Act and that underpin its 

conclusion in these cases. 

The process through which consumers obtain energy 

stretches across state and federal regulatory domains. 

The Federal Power Act authorizes the States to regulate

energy production. 16 U. S. C. §824(b). It then instructs 

the Federal Government to step in and regulate wholesale 

purchases and energy transportation. §824(a). Finally,

it allows the States to assume control over the ultimate 

sale of energy to consumers. §824(b). In short, the 

Federal Power Act, like all collaborative federalism statutes, envisions a federal-state relationship marked by 

interdependence. 
 

2 HUGHES v. TALEN ENERGY MARKETING, LLC 

SOTOMAYOR, J., concurring 

Pre-emption inquiries related to such collaborative 

programs are particularly delicate. This Court has said 

that where “coordinate state and federal efforts exist 

within a complementary administrative framework, and in 

the pursuit of common purposes, the case for federal preemption becomes a less persuasive one.” New York State 

Dept. of Social Servs. v. Dublino, 413 U. S. 405, 421 

(1973). That is not to say that pre-emption has no role in

such programs, but courts must be careful not to confuse 

the “congressionally designed interplay between state and

federal regulation,” Northwest Central Pipeline Corp. v. 

State Corporation, Comm’n of Kan., 489 U. S. 493, 518 

(1989), for impermissible tension that requires preemption under the Supremacy Clause.

In this context, therefore, our general exhortation not to 

rely on a talismanic pre-emption vocabulary applies with

special force. See Hines v. Davidowitz, 312 U. S. 52, 67 

(1941) (“This Court . . . has made use of the following 

expressions: conflicting; contrary to; occupying the field; 

repugnance; difference; irreconcilability; inconsistency;

violation; curtailment; and interference. But none of these 

expressions provides an infallible constitutional test or an

exclusive constitutional yardstick” (footnote omitted)). 

I understand today’s opinion to reflect these principles. 

Using the purpose of the Federal Power Act as the “ultimate touchstone” of its pre-emption inquiry, Altria Group, 

Inc. v. Good, 555 U. S. 70, 76 (2008), rather than resting 

on generic pre-emption frameworks unrelated to the Federal Power Act, the Court holds that Maryland has impermissibly impeded the performance of one of FERC’s

core regulatory duties. Ensuring “just and reasonable” 

wholesale rates is a central purpose of the Act. See 16 

§824d(a). Pursuant to its mandate to set such rates, 

FERC has approved the PJM Interconnection capacity

auction as the proper mechanism to determine the “just 

and reasonable” rate for the sale of petitioner CPV Mary-
 

 

Cite as: 578 U. S. ____ (2016) 3 

SOTOMAYOR, J., concurring 

land, LLC’s energy at wholesale. Ante, at 12. Maryland,

however, has acted to guarantee CPV a rate different from

FERC’s “just and reasonable” rate and has thus contravened the goals of the Federal Power Act. Ibid. Such 

actions must be preempted. Mississippi Power & Light Co. 

v. Mississippi ex rel. Moore, 487 U. S. 354, 374 (1988) 

(“States may not regulate in areas where FERC has

properly exercised its jurisdiction to determine just and 

reasonable wholesale rates”). The Court, however, also 

rightly recognizes the importance of protecting the States’ 

ability to contribute, within their regulatory domain, to

the Federal Power Act’s goal of ensuring a sustainable 

supply of efficient and price-effective energy. Ante, at 15. 

Endorsing those conclusions, I join the Court’s opinion 

in full. 
_________________ 

_________________ 

Cite as: 578 U. S. ____ (2016) 1 

Opinion of THOMAS, J. 

SUPREME COURT OF THE UNITED STATES 

Nos. 14–614 and 14–623 

W. KEVIN HUGHES, CHAIRMAN, MARYLAND PUBLIC 

SERVICE COMMISSION, ET AL., PETITIONERS 

14–614 v. 

TALEN ENERGY MARKETING, LLC, FKA PPL 

ENERGYPLUS, LLC, ET AL. 

CPV MARYLAND, LLC, PETITIONER 

14–623 v. 

TALEN ENERGY MARKETING, LLC, FKA PPL 

ENERGYPLUS, LLC, ET AL. 

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE FOURTH CIRCUIT 

[April 19, 2016] 

JUSTICE THOMAS, concurring in part and concurring in 

the judgment. 

The Court concludes that Maryland’s regulatory program invades the Federal Energy Regulatory Commission’s (FERC) exclusive jurisdiction over interstate wholesale sales of electric energy. Ante, at 12. I agree that the

statutory text and framework compel that conclusion, and

that Maryland’s program therefore cannot stand. Because 

the statute provides a sufficient basis for resolving these

cases, I would not also rest today’s holding on principles of

implied pre-emption. See, e.g., ante, at 11–12. For that 

reason, I join the Court’s opinion only to the extent that it

rests on the text and structure of the Federal Power Act 

(FPA), 41 Stat. 1063, as amended, 16 U. S. C. §791a et seq.

The FPA divides federal and state jurisdiction over the

regulation of electricity sales. As relevant here, the FPA 
 

 

 

2 HUGHES v. TALEN ENERGY MARKETING, LLC 

Opinion of THOMAS, J. 

grants FERC the authority to regulate “the sale of electric

energy at wholesale in interstate commerce.” §824(b)(1).

That federal authority over interstate wholesale sales is

exclusive. See, e.g., Nantahala Power & Light Co. v. 

Thornburg, 476 U. S. 953, 966 (1986) (recognizing that

Congress “vested” in FERC “exclusive jurisdiction” and

“plenary authority over interstate wholesale rates”); Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 

U. S. 354, 377 (1988) (Scalia, J., concurring in judgment) 

(“It is common ground that if FERC has jurisdiction over a

subject, the States cannot have jurisdiction over the same

subject”).

To resolve these cases, it is enough to conclude that

Maryland’s program invades FERC’s exclusive jurisdiction. Maryland has partially displaced the FERCendorsed market mechanism for determining wholesale

capacity rates. Under Maryland’s program, CPV Maryland, LLC, is entitled to receive, for its wholesale sales 

into the capacity auction, something other than what

FERC has decided that generators should receive. That is 

a regulation of wholesale sales: By “fiddling with the 

effective . . . price” that CPV receives for its wholesale

sales, Maryland has “regulate[d]” wholesale sales “no less

than does direct ratesetting.” FERC v. Electric Power 

Supply Assn., 577 U. S. ___, ___ (2016) (Scalia, J., dissenting) (slip op., at 6) (emphasis deleted) (addressing analogous situation involving retail sales). Maryland’s program

therefore intrudes on the exclusive federal jurisdiction

over wholesale electricity rates.

Although the Court applies the FPA’s framework in 

reaching that conclusion, see ante, at 12, it also relies on 

principles of implied pre-emption, see, e.g., ante, at 11–12. 

Because we can resolve these cases based on the statute 

alone, I would affirm based solely on the FPA. Accordingly, I concur in the judgment and I join the Court’s 

opinion to the extent that it holds that Maryland’s program invades FERC’s exclusive jurisdiction.