United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 15, 2021 Decided March 2, 2021

No. 19-1091

PUBLIC SERVICE ELECTRIC AND GAS COMPANY,

PETITIONER

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

NEW JERSEY BOARD OF PUBLIC UTILITIES, ET AL.,

INTERVENORS

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 State 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 petitioners. 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 respondent. 

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, Michael 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: SRINIVASAN, Chief Judge, ROGERS, Circuit Judge, 

and EDWARDS, Senior Circuit Judge.

Opinion for the Court by Circuit Judge ROGERS. 

ROGERS, 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 concerning 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 project to 

improve the reliability of three nuclear power plants in New

Jersey. In so doing, the Commission denied a complaint lodged 
3

by Delaware and Maryland alleging a large imbalance between 

the costs imposed on the Delmarva transmission zone and the 

benefits 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. The Commission’s replacement cost–

allocation method shifted 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 volte–face. They contend 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 from a coalition of Delaware and Maryland 

stakeholders, maintains that it engaged in reasoned 

decisionmaking. We conclude the Commission reasonably 

decided to adopt a different cost–allocation method for the type 

of project at issue here and adequately explained 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 utilitiesto 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–party 
4

complaint — whether an existing rate is “unjust, unreasonable, 

unduly discriminatory or preferential.” Id. § 824e(a). The

proponent of the rate change bears the burden of proof, and, if 

the Commission determines that the rate is unlawful, 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 

Me. 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.

The Commission haslong viewed the just–and–reasonable 

requirement to “incorporate a ‘cost–causation principle.’” Old 

Dominion Elec. Coop. v. FERC, 898 F.3d 1254, 1255 (D.C. 

Cir. 2018). That “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. FERC, 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 may 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 Allocation 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 “for 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.” Id. at P 622, 76 Fed. Reg. at 

49,937.

A.

PJM is an 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 accepted in 2013.

PJM Interconnection, 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 412. Half 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 measured by 

the amount of power flowing 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 to 
6

the reliability violation. In approving the 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. These generating units have long been plagued by 

operational issues stemming from an insufficient number of 

transmission lines connecting Artificial Island to the grid. 

Generation is constrained when one of the lines is out of

service, and various components of the transmission system 

require careful management to prevent the power plants from

becoming unstable and losing 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 entails the construction of a high–voltage line 

under the Delaware River to connect the power plants 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 38.
7

On August 28, 2015, PJM filed with the Commission

proposed cost allocations for the Artificial Island 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 protesting PJM’s cost assignments as unjust and 

unreasonable. 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 addresses

“inadequate outlets for generation output, the solution–based 

DFAX methodology invariably will link 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 68. The Commission similarly found unpersuasive the

argument that PJM’s cost assignments 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 methodology fails to align costs 

with benefits when the project addresses reliability violations 
8

unrelated to power flows. 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 (June 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, concluding that using 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”). The 

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 

generation and load” and, “depend[ing] on the nature of the 
9

problem,” can “be either a very local event or spread into a 

more substantial problem.” Id. at P 40. As a result, the

Commission found that the benefits of a facility built to

stabilize a specific generating unit are “not necessarily 

captured” by measuring power flows. 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.” Id. at P 38. Having so ruled, the 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 reversal 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 meaningfully to their arguments against rehearing. 

The Commission denied the requests for rehearing in 

February 2019. Del. Pub. Serv. Comm’n, 166 F.E.R.C. 

¶ 61,161 at PP 38–42 (Feb. 28, 2019) (“2019 Order”). The 

Commission first affirmed its conclusion that the solution–

based DFAX method does not allocate the cost of the Artificial 

Island Project in a just and reasonable manner. Id. at PP 37–

40. Next, the Commission responded to the argument that it 

acted arbitrarily because it offered no new evidence to overturn

the 2016 Order, 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 the 
10

argument that it erred in reopening the record. The

Commission explained that it “did not rely on the PJM White 

Paper in granting rehearing” but instead considered that 

evidence only “to determine the just and reasonable alternative 

rate.” Id. at P 42. The Commission then selected a replacement 

method, which was one of two methods advanced in the White 

Paper, and directed PJM to file a revised tariff implementing

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 Delmarva 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), Petitioners timely sought 

judicial review.

II.

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

to determining whether they are “arbitrary, capricious, an abuse 

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). The 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 regulatory 
11

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 that 

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 1260 (internal citations 

omitted). And, like other agencies, 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 failed 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 Artificial Island Project to finding those cost allocations 

unjust and unreasonable. The Commission, they maintain, 

failed to address its initial findings in either the 2018 or 2019

Order. They further maintain the Commission’s decision to 
12

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 

identifies the beneficiaries of stability–related reliability 

projects and that 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 stated 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.” 2018 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. 

This 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 identifies the beneficiaries of transmission 

facilities addressing stability–related reliability issues. See 

2016 Order, 155 F.E.R.C. ¶ 61,090 at PP 67–68. On rehearing, 

the Commission recognized that this conclusion was erroneous

because flow–based reliability issues and stability–related 
13

reliability issues are “analytically unique.” 2018 Order, 164 

F.E.R.C. ¶ 61,035 at P 38. For example, reliability 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, stability 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 whereas flow–based issues 

are solved by bringing power to a constrained area, stability–

related issues are solved by providing additional transmission 

pathways 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,” id., 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 Commission 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 inability 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 at 

P 39. The 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. 

Instead, the Delmarva zone was the “unlucky zone that 

happen[ed] to end up as the sink point for the project.” Id. at P 
14

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 roughly 

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 judgments.

Petitioners nonetheless 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. Initially, the Commission found that the 

Delmarva zone would “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.” Id. Subsequently, the

Commission determined this method does 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 derive any “benefit from those flows . . . because its 

transmission system already was adequate 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 to
15

prevent ad hoc decisionmaking and internecine conflicts 

among utilities. This contention is not persuasive.

To begin, Order No. 1000 does not concern the 

Commission; it requires transmission owners to have in place 

cost–allocation methodsfor 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). Insofar as any tension may 

exist between 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)). 

The 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 facilities 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 

processes.” 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 Commission 
16

found that PJM’s proposed cost allocations “would violate 

Order 1000’s core cost–allocation principle.” Ameren Servs., 

893 F.3d at 794. 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 Commission 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)). The Commission, 

however, 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. That 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. to Reopen the Record & Lodge

6–11 (Sept. 21, 2017). This argument was not ignored. The 

Commission expressly acknowledged the argument in the 2018 

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

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. Id. 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 explanation; (2) improperly focused on 

aligning 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 too, 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. 1000’s 

cost–causation requirement. 2019 Order, 166 F.E.R.C. 

¶ 61,161 at PP 33–34, 38–41. To the extent the Commission 

did not expressly address Petitioners’ contention that its 

decision clashed with Order No. 1000, this objection was of no

significance for the reasons explained, and the Commission did 

not err by ignoring it. 

New Jersey Agencies’ contention that the Commission 

ignored their 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 arguments. 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. Although 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,” id.
18

at P 42, which is the only decision New Jersey Agencies 

challenge. 

Accordingly, we deny the petitions for review.