# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 15, 2021 Decided March 2, 2021

No. 19

- 1091

P UBLIC S ERVICE E LECTRIC AND G AS C OMPANY
, P ETITIONER

v.

F EDERAL E NERGY R EGULATORY C OMMISSION
, R ESPONDENT

N EW J ERSEY B OARD OF P UBLIC U TILITIES
, ET AL
., I NTERVENORS

Consolidated with 20

- 1039

On Petitions for Review of Orders of the Federal Energy Regulatory Commission

John Longstreth argued the cause for petitioners. With
him on the briefs were Cara J. Lewis

, Donald A. Kaplan, Kimberly B. Frank, and Steven Nadel. William M. Keyser III entered an appearance.

Gurbir S. Grewal, Attorney General, Office of the Attorney General for the S tate of New Jersey, Paul Youchak

, Deputy Attorney General, and Stefanie A. Brand , Director,2

New Jersey Division of Rate Counsel, were on the brief for intervenor New Jersey Board of Public Utilities and New Jersey Division of Rate Counsel in support of pet itioners . Alex Moreau, Attorney, Office of the Attorney General for the State of New Jersey, Stephen C. Pearson, and Scott H. Strauss entered appearances.

Elizabeth E. Rylander , Attorney, Federal Energy Regulatory Commission, argued the cause for responde nt. With her on the brief were David L. Morenoff , Acting General Counsel, and Robert H. Solomon , Solicitor.

Robert A. Weishaar, Jr., Kenneth R. Stark, Thomas L. Rudebusch, Bhaveeta K. Mody, Timothy G. McCormick, William F. Fields, Joseph G. Cleaver, Mich ael R. Engleman, Regina A. Iorii, Miles H. Mitchell, Adrienne E. Clair, and
Rebecca L. Shelton were on the brief for intervenor Public Service Commission for the State of Delaware, et al. in support of respondent. Kayla Grant entered an appearance.

Before: S RINIVASAN
, Chief Judge

, R OGERS
, Circuit Judge

, and E DWARDS
, Senior Circuit Judge

.

Opinion f or the Court by Circuit Judge R OGERS

.

R OGERS
, Circuit Judge : Public Service Electric and Gas Company and PPL Electric Utilities Corporation petition for
review of three orders of the Federal Energy Regulatory
Commission concern ing cost sharing for certain upgrades to the Mid

– Atlantic electricity transmission grid. In 2016, the Commission approved as just and reasonable cost allocations
filed by PJM Interconnection, L.L.C. (“PJM”), the Mid

– Atlantic’s regional transmission organization, for a projec t to improve the reliability of three nuclear power plants in New Jersey

. In so doing, the Commission denied a complaint lodged3

by Delaware and Maryland alleging a large imbalance between the costs imposed on the Delmarva transmission zone and the
benefit s that zone would accrue from the project

. On rehearing
in 2018

, however, the Commission reversed course

, concluding that , upon reexamination of the evidence

, application of PJM’s cost

– allocation method to the project
violated cost

– causation principles and was therefore unjust and
unreasonable in violation of section 206 of the Federal Power Act, 16 U.S.C. § 824e. T he Commission ’s replacement cost

– allocation method shif t ed primary cost responsibility for the project from the Delmarva zone to utilities in New Jersey.

Petitioners

, PJM transmission owners , and intervenors New Jersey Board of Public Utilities and New Jersey Division
of Rate Counsel (“New Jersey Agencies”) contest the rationality of the Commission’s volt e

– face

. They conten d the Commission departed from precedent without adequate explanation, made findings that are unsupported by substantial evidence, and failed to respond meaningfully to objections raised during the proceedings. For its part, the Commission, with support f rom a coalition of Delaware and Maryland stakeholders, maintains that it engaged in reasoned decisionmaking

. We conclude t he Commission reasonably decided to adopt a different cost

– allocation method for the type of project at issue here and adequately exp lained its departure
from the cost allocations it had approved in 2016

. Accordingly, we deny the petitions for review.

I.

The Federal Power Act requires that the Commission

ensure the rates charged by public utilities to provide electricity

are “just and reasonable .” 16 U.S.C. § 824d(a). Pursuant to
section 206 of the Federal Power Act

, the Commission may investigate

— on its own initiative or based on a third

– party4

complaint

— whether an existing rate is “unjust, unrea sonable, unduly discriminatory or preferential.” Id. § 824e(a). T he proponent of the rate change bears the burden of proof , and

, if
the Commission determines that the rate is un lawful, it must establish a just and reasonable replacement rate. Id. § 824e (a), (b)

. Section 206 therefore “mandates a two

– step procedure” whereby the Commission must “make an explicit finding that the existing rate is unlawful before setting a new rate.” Emera
M e. v. FERC , 854 F.3d 9, 24 (D.C. Cir. 2017). Thus,

“ [w] ithout a showing that the existing rate is unlawful,” the Commission “has no authority to impose a new rate.” Id. at 25

.

T he Commission has long viewed the jus t

– and

– reasonable requirement to “ incorporate a ‘ cost

– causation principle .’ ” Old Dominion Elec. Coop. v. FERC , 898 F.3d 1254, 1255 (D.C. Cir. 2018)

. T hat “ principle requires costs ‘to be allocated to those who cause the costs to be incurred and reap the resulting
benefits

. ’ ” S.C. Pub. Serv. Auth. v. F ERC , 762 F.3d 41, 87 (D.C. Cir. 2014) (quoting Nat’l Ass ’ n of Regul

. Util. Comm ’rs
v. FERC , 475 F.3d 1277, 1285 (D.C. Cir. 2007) ). So, although
the Commission need not “ allocate costs with exacting precision ,” the costs assessed against a party must bear some
resemblance “to the burdens imposed or benefits drawn by that party.” Midwest ISO Transmission Owners v. FERC , 373 F.3d 1361, 1368

– 69 (D.C. Cir. 2004). In practice, this means “ the Commission generally ma y not single out a party for the full cost of a project, or even most of it, when the benefits of the project are diffuse.” BNP Paribas Energy Trading GP v.
FERC , 743 F.3d 264, 268 (D.C. Cir. 2014).

Consistent with the cost

– causation principle, the
Commission issued “Order No. 1000” in 2011 to foster the efficient development of the transmission grid. Transmission Planning and Cost A llocation by Transmission Owning and Operating Public Utilities

, F

. E

. R

. C

. Stats. & Regs. ¶ 31 ,323,5

76 Fed. Reg. 49,842 ( Aug. 11, 2011), petitions for review
denied

, S.C. Pub. Serv. Auth. , 762 F.3d 41

. Among other things, Order No. 1000 requires utilities to participate in regional transmission planning and to include in their tariffs a
formula “f or allocating the costs of new transmission facilities selected in the regional transmission plan.” Id. at P 558, 76 Fed. Reg. at 49,929. To comply with Order No. 1000, a utility’s cost

– allocation method must satisfy six criteria

, the
first of which embodies the cost

– causation principle by requiring that costs be “allocated in a way that is roughly
commensurate with benefits

. ” I d. at P 622, 76 Fed. Reg. at 49,937.

A.

PJM is a n independent entity that coordinates the
transmission of wholesale electricity in the Mid

– Atlantic region. In accordance with Order No. 1000, Schedule 12 of PJM’s Open Access Transmission Tariff outlines its cost

– sharing requirements

, which the Commission a ccepted in 2013.
PJM I nterconnection, L

. L

. C

. , 142 F.E.R.C. ¶ 61,214 at PP
411

– 12 ( Mar. 22, 2013), order on reh’g & compliance , 147 F.E.R.C. ¶ 61,128 ( May 15, 2014)

. As relevant here, PJM uses a combination of two methods to assign the costs of high

– voltage transmission facilities built to improve grid reliability

. Id. at P 41 2

. H alf of the cost is allocated under the “postage

– stamp method

, ” which assigns costs pro rata based on the level
of customer demand within each zone. Id. The other half is apportioned using the “ Solution

– Based DFAX method

. ” Id. Relying on “ power flow analysis, ” that method assigns costs according to the relative use of the new facility as meas ured by
the amount of power flow ing over the new facility to each
transmission zone

. Id. at P 416. Solution

– based DFAX replaced PJM’s “violation

– based DFAX” method, which assigned costs retrospectively to the zones that contributed to6

the reliability violation

. In approving th e new method , the Commission touted the advantages of assigning costs prospectively to the zones that will benefit from the project, noting that the violation

– based DFAX method “does not account for multiple constraints in multiple areas, and cannot account for changes in usage and flow direction over time.” Id.

at P 427

.

Located on the New Jersey side of the Delaware River,
Artificial Island is home to three nuclear power plants owned by a subsidiary of petitioner Public Service Electric and Gas Company

. T hese generating units have long been plagued by operational issues stemming from an insufficient number of transmission lines connecting Artificial Island to the grid

. G eneration is constrained when one of the lines is out of
service , and various componen ts of the transmission system require careful manag ement to prevent the power plants from becoming unstable and los ing synchronism with the grid. Such losses of synchronism are referred to as “stability” problems.

B

.

In July 2013, PJM solicited proposals to improve the reliability of Artificial Island. See PJM, Artificial Island Project Recommendation White Paper 1 (July 29, 2015). After

two years of study, PJM selected the “Artificial Island Project,”
which primarily entail s the cons truction of a high

– voltage line
under the Delaware River to connect the power plan t s to a new substation in Delaware. Letter from Terry Boston, PJM, to PJM Members Committee (July 29, 2015); PJM 2015 White Paper 35

– 37

. Under PJM’s hybrid cost

– allocation method, nearly 90 percent of the Artificial Island Project’s $275.4 million cost was assigned to the Delmarva transmission zone.
PJM 2015 White Paper 3 8.7

On August 28, 2015, PJM filed with the Commission proposed cost allocations for the Artificial Isla nd Project . PJM, Tariff Filing (Aug. 28, 2015)

. The same day, the Delaware and Maryland Public Service Commissions filed a complaint with
the Commission pursuant to section 206 of the Federal Power
Act p rotesting PJM’s cost assignments as unjust and

unre asonable. Applying the solution

– based DFAX method to the Artificial Island Project was unjust, they argued, because
when used to allocate the costs of a facility that address es “inadequate outlets for generation output , the solution

– based DFAX methodology invariably will lin k cost responsibility with the zone that just happens to be the end

– point for the new or expanded generation output.” Compl. ¶ 32 (Aug. 28, 2015). A group of PJM transmission owners intervened in support of
PJM’s proposed tariff

.

Following a technical conference, the Commission accepted PJM’s cost allocations and denied the complaint in April 2016. Del. Pub. Serv. Comm’n , 155 F.E.R.C. ¶ 61,090 at
PP 65

– 76 ( Apr. 22, 2016) (“2016 Order”)

. The Commission rejected the argument that use of the solution

– based DFAX
method was inappropriate , observing that “even if a stability violation is the primary driver of a transmission project, ” the
method “ allocates costs

. . . based on use of the facilities.” Id.
at P 6 8

. T he Commission similarly found unpersuasive the argument that PJM’s cost assignment s were unjust because the
Delmarva zone did not contribute to the need for the Artificial Island Project . That argument misunderstood the solution

– based DFAX method , which focuses on “the identification of beneficiaries,” “not the initial nature of the reliability problem.” Id. at P 69

. One Commissioner dissented

, explaining that, in her view, the record established that PJM’s
flow

– based cost

– allocation method ology fails to align costs
with benefits when the project addresse s reliability violations8

unrelated to power flow s

. See id. (LaFleur, Comm’r, dissenting).

Delaware and Maryland requested rehearing, but before the Commission acted, PJM suspended the Artificial Island Project. Letter from Pauline Foley, PJM, to FERC Secretary Kimberly D. Bose (Aug. 5, 2016)

. When PJM lifted the suspension in April 2017, it acknowledged that “the DFAX Methodology can result in cost allocations that seem anomalous where the engineering rationale or need for a project is not one driven by power flow

. ” Letter from Andrew Ott, PJM, to PJM Members (Apr. 6, 2017)

. To that end, PJM released a white paper assessing two alternative approaches to identify the beneficiaries of the Artificial Island Project. See PJM, Alternative Approaches to Identification of Artificial Island Beneficiaries (Jun e 9, 2017)

. Soon after

, Delaware and Maryland renewed their request for rehearing and also moved to reopen the record. See Mot. to Reopen the Record (Sept. 6, 2017)

.

In July 2018, the Commission granted rehearing of the
2016 Order , c oncluding that us ing the solution

– based DFAX method to assign the cost of the Artificial Island Project
violated the cost

– causation principle and was therefore unjust
and unreasonable. Del. Pub. Serv. Comm ’ n , 164 F.E.R.C. ¶ 61,035 at PP 36

– 41 ( July 19, 2018) (“2018 Order”)

. T he
Commission observed that the solution

– based DFAX method “is a reasonable method for identifying beneficiaries of thermal overload and voltage related reliability issues” because when a facility resolves a flow

– based reliability issue, “the
beneficiaries of that solution are readily identified based upon those power flows.” Id. at P 39. However, “stability

– related reliability issues” are “analytically unique

, ” the Commission explained, because they “result from an imbalance of
generat ion and load” and, “depend[ing] on the nature of the9

problem,” can “be either a very local event or spread into a more substantial problem.” Id. at P 40

. As a result, t he
Commission found that the benefits of a facility built to
stabilize a specific generating unit are “not necessarily captured” by measuring power flow s

. Id. P 41

. The
Commission thus determined that the solution

– based DFAX
method “ does not allocate the costs of such transmission projects in a manner that is at least roughly commensurate with
their benefits

. ” I d. at P 38. Having so ruled, t he Commission established paper hearing procedures to select a new cost

– allocation method

. Id. at P 42.

This time, the PJM transmission owners and New Jersey Agencies filed a request for rehearing

. See Req. for Reh’g of PJM Transmission Owners (Aug. 20, 2018); Req. for Reh’g of
N.J. Bd. of Pub. Util. Pub. Utilities & N.J. Div. of Rate Counsel (Aug. 20, 2018). They argued the Commission’s rever sal of
the 2016 Order was arbitrary and capricious because it was inadequately explained

, lacked substantial evidence , and improperly focused on assigning costs to violators rather than
beneficiaries

. They also maintained that the 2018 Order was
inconsistent with Order 1000 and that the Commission failed to respond meaningful ly to their arguments against rehearing

.

The Commission denied th e requests for rehearing in February 2019

. Del. Pub. Serv. Comm ’ n , 166 F.E.R.C. ¶ 61,161 at PP 38

– 4 2 ( Feb. 28, 2019) (“2019 Order”). The
Commission first affirmed its conclusion that the solution

– based DFAX method d oes not allocate the cost of the Artificial
Island Project in a just and reasonable manner. Id. at PP 37

– 40. Next, t he Commission responded to the argument that it acted arbitrarily because it offered no new evidence to overturn the 2016 Orde r , stating that its decision was “based on further
consideration of th [e] existing record ” and the parties’
arguments .” Id. at P 41

. Finally, the Commission rejected the10

argument that it erred in reopening the record

. The
Commission explained that it “did not rely on the PJM White Paper in granting rehearing ” bu t instead considered that
evidence only “ to determine the just a nd reasonable alternative
rate.” Id. at P 42

. T he Commission then select ed a replacement
method , which was one of two methods advanced in the White Paper, and direc t ed PJM to file a revised tariff i mplement ing
its order. Id. at P 43. Not challenged here, the Commission’s

new method shifted primary cost responsibility for the
Artificial Island Project from the Del marva zone to utilities in New Jersey

.

Following minor modifications by the Commission to
PJM ’s compliance filing

, see Del. Pub. Serv. Comm’n , 169 F.E.R.C. ¶ 61,234 ( Dec. 19, 2019)

, P etitioners timely sought judicial review.

II.

The court ’s review of the Commission’s orders is limited

to determin ing whether they are “arbitrary, capricious, an abus e of discretion, or otherwise not in accordance with law.”

5 U.S.C. § 706(2)(A); see FERC v. Elec. Power Supply Ass’n

, 136 S. Ct. 760, 782 (2016). T he court will affirm the Commission’s orders so long as it “ examined the relevant considerations and articulated a satisfactory explanation for its action, including a rational connection between the facts found
and the choice made.” Elec. Power Supply Ass’n , 136 S. Ct. at
782 (alterations adopted ) (quoting Motor Vehicle Mfrs. Assn. of U.S., Inc. v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 43 (1983)). Further, where, as here, the dispute centers on the
Commission’s exercise of its rate

– setting authority, the court is “particularly deferential ” to the Commission ’s determinations

“ because such matters are either fairly technical or ‘ involve policy judgments that lie at the core of the regulatory11

mission. ’ ” S.C. Pub. Serv. Auth. , 762 F.3d at 55 ( quoting Alcoa
Inc. v. FERC , 564 F.3d 1342, 1347 (D.C. Cir. 2009) )

. All t hat said, the court will vacate the Commission’s orders if the “allocation of costs [is] either unreasonable or inadequately explained.” Old Dominion

, 898 F.3d at 12 60 (internal citations omitted). And

, like other agenc ies

, the Commission “ cannot depart from [its] rulings without ‘ provid[ing] a reasoned analysis indicating that prior policies and standards are being deliberately changed.’ ” W. Deptford Energy, LLC v. FERC

, 766 F.3d 10, 17 (D.C. Cir. 2014) (second alteration in original) (quoting Alcoa

, 564 F.3d at 1347 ).

Petitioners and New Jersey Agencies challenge the Commission’s decision to grant rehearing of the 2016 Order on three grounds. Their principal contention is that the
Commission faile d to adequately justify its finding that the
solution

– based DFAX method is unjust and unreasonable as applied to the Artificial Island Project

. Petitioners additionally contend the Commission’s decision is contrary to Order No.
1000

. Finally, Petitioners and New Jersey Agencies submit the Commission failed to meaningfully respond to their arguments in support of the solution

– based DFAX method and in opposition to reopening the record. None of these challenges
has merit

.

A

.

In the main, Petitioners and New Jersey Agencies contend
the Commission failed to carry its burden under section 206
and acted arbitrarily by changing its position from approving
the use of the solution

– based DFAX method to assign the cost
of the Artificia l Island Project to finding those cost allocations unjust and unreasonable

. The Commission

, they maintain

, failed to address its initial findings in either the 201 8 or 2019
Order. T hey further maintain the Commissio n ’s decision to12

grant rehearing rests on insufficient evidence because it pointed

to no new evidence or change in circumstances that undercut its prior conclusions that the solution

– based DFAX method
identif ies the beneficiaries of stability

– related reliability project s and tha t the Delmarva zone will benefit from Artificial Island Project

.

The Commission’s decision to grant rehearing of the 2016
Order is neither arbitrary nor capricious and is consistent with
its statutory obligations under section 206

. As an initial matter, the Commission did not, as Petitioners suggest, “swerve[]”
from the 2016 Order “without any acknowledgment.” Pet’rs’
Br. 54. To the contrary

, the Commission expressly acknowledged its change of position in the 2018 Order . There,
the Commission s tated that

, “based on the arguments presented in the rehearing requests,” it was “grant[ing] rehearing of the April 22, 2016 Order” and therefore would “reopen the record and seek additional information . . . to establish the just and
reasonable rate.” 20 18 Order , 164 F.E.R.C. ¶ 61,035 at P 36. The Commission then proceeded to explain in detail why it was unjust and unreasonable to rely on the solution

– based DFAX
method to distribute the costs of stability

– related reliability projects

— the exact opposite conclusion it reached in 2016.
T his analysis demonstrates that the Commission was consciously changing its position.

That change of position is also adequately explained and supported by substantial evidence. In 2016, the Commission approved PJM’s cost allocations for the Artificial Island Project based on its conclusion that the solution

– based DFAX
method accurately identifie s the beneficiaries of transmission
facilities address ing stability

– related reliability issues

. See
2016 Orde r , 155 F.E.R.C. ¶ 61,090 at P P 67

– 68

. O n rehearing

, the Commission recognized that this conclusion was erroneous because flow

– based reliability issues and stability

– related13

reliability issue s are “ analytically unique.” 2018 Order , 164 F.E.R.C. ¶ 61,035 at P 38. For example, r eliability issues caused by thermal overload are solved by increasing the amount of power flowing to the constrained region. In these
circumstances , “the beneficiaries of that solution are readily
identified based upon those power flows” because “change[s] in power flows are consistent with the intended solution.” Id.
at P 39

. By contrast, s tability issues arise from the inability of a particular generating unit to maintain synchronism with the grid , which in turn can result in constrained generation as well as facility outages. Id. at P 40

. And w hereas flow

– based issues are solved by bri nging power to a constr ained area, stability

– related issues are solved by providing additional transmission pathway s from the generator to the grid. Thus, because “the flows on a transmission project to resolve a stability

– related reliability issue do not necessarily resolve a constraint by bringing power to load

, ” i d.

, the Commission found that the
beneficiaries of such a project “are not necessarily captured” by following the electrons to their end

– point, id. at P 41.

Applying this new framework , the Co mmission reasonably
found that the solution

– based DFAX method was unjust and unreasonable as applied to the Artificial Island Project

. As the Commission explained in the 2019 Order, because the need for the Artificial Island Project stems from the inabili ty of
transmission zones in New Jersey to fully absorb the power plants’ generation, those zones “both contribute to the need for, and will benefit from, a transmission project that will increase stability performance.” 2019 Order , 166 F.E.R.C. ¶ 61,161 a t P 39. T he Delmarva zone , however, “neither caused the need for the line nor does it benefit from those flows sufficiently because its transmission system already was adequate to serve its load without the Artificial Island Project.” Id. at P 40.
In stead , the Delmarva zone was the “unluc ky zone that happen[ed] to end up as the sink point for the project.” Id. at P14

39 n.40. Given these findings, the Commission concluded that assigning nearly 90 percent of the Artificial Island Project’s
cost to the Delmarva zone “would not be at least ro ughly
commensurate with the benefits received” as Order No. 1000 required and violated section 206. Id. at P 40

. Because this explanation is reasonable and supported by the record , we defer to the Commission’s technical judgment s.

Petitioners nonethe less insist that the Commission’s orders

are defective because it never disavowed the finding in the
2016 Order that the Delmarva zone will benefit from the Artificial Island Project. Pet’rs’ Reply Br. 14; Oral Arg. Recording 7:00

– 7:30

. I nitially

, the Commission foun d that the
Delmarva zone w ould “ receive significant benefits ” from the Artificial Island Project.” 2016 Order, 155 F.E.R.C. ¶ 61,090
at P 72 . But Petitioners overlook the context of this finding, specifically that these benefits were based on “the results of the
solution

– based DFAX analysis

. ” I d. Subsequently, the
Commission determined this method d oes not accurately
measure the benefits of the Artificial Island Project

. As the
Commission explained in the 2019 Order

, although the Delmarva zone “will use the Artificial Island Project as measured by the solution

– based DFAX method,” it would not actually d erive any “benefit from those flows . . . because its transmission system already was ad equate to serve its load.” 2019 Order, 166 F.E.R.C. ¶ 61,161 at P 40

. Petitioners’
contentions therefore provide no basis to set aside the Commission’s decision to grant rehearing of the 2016 Order.

B

.

Petitioners additionally maintain that the Commission ’s decision to grant rehearing is contrary to Order No. 1000’s
directive that cost

– allocation rules be set ex ante so as to15

prevent ad hoc decision making and internecine conflicts among utilities. This contention is not persuasive.

To b egin

, Order No. 1000 does not concern the Commission; it requires transmission owners to have in place

cost

– allocation methods for certain transmission facilities . Nor
does Order No. 1000 purport to constrain the Commission ’s ability to comply with its statutory obligation under section
206 , which provides that the Commission “shall” reform “any
rate” that is “unjust, unreasonable, unduly discriminatory or preferential

. ” 16 U.S.C. § 824e(a). I nsofar as any tension may exist b etween Order No. 1000 ’s goals and the Commission’s exercise of its section 206 authority

, “a regulation can never ‘trump the plain meaning of a statute.’” Texas v. EPA , 726 F.3d 180, 195 (D.C. Cir. 2013) (quoting Atl. City Elec. Co. v. FERC

, 295 F.3d 1, 11 (D.C. Cir. 2002)).

T he Commission’s decision to grant rehearing of the 2016 Order comports with Order No. 1000

. As noted, the animating purpose of Order No. 1000 is to promote the efficient and cost

– effective construction of new transmission faci lit ies that provide region

– wide benefits. See S.C. Pub. Auth. , 762 F.3d at
52. Order No. 1000’s cost

– allocation provisions , which codify
the cost

– causation principle, “further that goal ” by requiring transmission owners to agree ex ante to rate

– distribution
methods “that avoid free rider problems, that improve transparency with respect to the costs of interregional projects, and that otherwise align regional and interregional planning

pr ocesses. ” Ameren Servs. Co. v. FERC , 893 F.3d 786, 789 (D.C. Cir. 2018)

. Here , the Commission determined in the 2018 Order that, when applied to stability

– related reliability projects such as the Artificial Island Project, the solution

– based
DFAX method does not assign costs “in a manner that is at least roughly commensurate with their benefits.” 2018 Order, 164 F.E.R.C. ¶ 61,035 at P 38. In other words, the Commission16

found that PJM’s proposed cost allocations “would violate
Order 1000 ’ s core cost

– allo cation principle .” Ameren Servs.

, 893 F.3d at 7 94. The Commission’s decision to grant rehearing and identify a replacement cost

– allocation method was
therefore not inconsistent with Order No. 1000.

C

.

Finally, Petitioners and New Jersey Agencies contend the Commission’s failure to meaningfully respond to their arguments against reopening the record and in favor of rehearing the 2018 Order renders its orders arbitrary and capricious. “It is well established that the Commis sion must ‘respond meaningfully to the arguments raised before it.’” New England Power Generators Ass ’ n, Inc. v. FERC , 881 F.3d 202, 210 (D.C. Cir. 2018) (quoting TransCanada Power Mktg. Ltd.
v. FERC , 811 F.3d 1, 12 (D.C. Cir. 2015) ). T he Commission

, how ever, must respond only to “significant comments”; it is

“ free to ignore insignificant ones.” Nat’l Ass’n of Regul. Util.
Comm’rs

, 475 F.3d at 1285. Th at is all the Commission did
here.

Petitioners raised a single argument in opposing Delaware and Maryland’s request for rehearing of the 2016 Order : that
the existence of superior alternative cost

– allocation methodologies did not provide a basis to discard the solution

– based DFAX method. See Answer in Opp’n of the PJM
Transmission Owners to Mot. t o Reopen the Record & Lodge
6

– 11 (Sept. 21, 2017). This argument was not ignored. The
Commission expressly acknowledged th e argument in the 2018
Order

. 2018 Order, 164 F.E.R.C. ¶ 61,035 at P 26 n. 35

. A nd
it necessarily rejected the premise of Petitioners’ argument by finding that, as applied to the Artificial Island Project, the
solution

– based DFAX method was not inferior to other
methods but , in fact, unjust and unreasonable

. I d. at P 41.17

Nor did the Commission disregard Petitioners’ objections
in their request for rehearing. In pursuit of rehearing,
Petitioners argued the 2018 Order was defective because the Commission (1) changed its position without substantial evidence or adequate expl anation; (2) improperly focuse d on align ing costs to causes rather than beneficiaries ; (3) acted
inconsistent with Order No. 1000; and (4) failed to address
their arguments in the 2018 Order

. See Req. for Reh’g of the
PJM Transmission Owners 7

– 17. Here t oo, the Commission
summarized Petitioners’ arguments in the 2019 Order and meaningfully responded to them by defending its finding that the cost allocations for the Artificial Island Project generated by the solution

– based DFAX method failed Order No. 100 0’s

cost

– causation requirement

. 2019 Order, 166 F.E.R.C. ¶ 61,161 at PP 33

– 34, 38

– 41. T o the extent the Commission
did not expressly address Petitioners’ contention that its
decision clashed with Order No. 1000 , this objection wa s of no

s ignifican ce for the reasons explained , and the Commission did

not err by ignoring it.

New Jersey Agencies’ contention that the Commission ignored th eir objections to reopening the record is likewise unavailing

. They are correct that despite acknowledging their opposition to reopening the record in the 2018 Order

, see 2018
Order

, 164 F.E.R.C. ¶ 61,035 at P 11, the Commission did not
address their argu ments. Nonetheless, the 2019 Order makes clear that these comments were not significant. As the Commission explained there, it decided to grant rehearing of
the 2016 Order based on reconsideration of the existing record and the parties’ arguments. 2019 Order, 166 F.E.R.C. ¶ 61,161

at P 41

. A lthough the Commission granted the motion to reopen the record, no basis is offered for the court to question
the Commission’s statement that it “did not rely on the PJM White Paper in granting rehearing of the April 2016 Order

, ” i d.18

at P 42 , which is the only de cision New Jersey Agencies challenge.

Accordingly, we deny the petitions for review.