United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 13, 2017 Decided April 18, 2017

No. 15-1139

EMERA MAINE, FORMERLY KNOWN AS BANGOR 

HYDRO-ELECTRIC COMPANY, ET AL.,

PETITIONERS

v.

FEDERAL ENERGY REGULATORY COMMISSION,

RESPONDENT

LS POWER TRANSMISSION, LLC, ET AL.,

INTERVENORS

Consolidated with 15-1141

On Petitions for Review of Orders of the 

Federal Energy Regulatory Commission

Sean A. Atkins argued the cause for petitioners Emera

Maine, et al. With him on the briefs were Kenneth G. Jaffe, 

Michael E. Ward, Jeffrey M. Jakubiak, Stephen M. Spina, 

David R. Poe, David B. Raskin, Karen Krug O=Neill, and S. 

Mark Sciarrotta. Jason J. Fleischer, Charles G. Cole, Mary E. 

Grover, and Phyllis E. Lemell entered appearances.
2

Jason Marshall argued the cause for petitioners New 

England States Committee on Electricity, Inc., et al. With him 

on the joint briefs were John Michael Adragna, Phyllis G. 

Kimmel, Jeffrey K. Janicke, F. Anne Ross, Edward McNamara, 

Clare E. Kindall and Robert D. Snook, Assistant Attorneys 

General, Office of the Attorney General for the State of 

Connecticut, Maura Healy, Attorney General, Office of the 

Attorney General for the Commonwealth of Massachusetts, 

Jeffrey M. Leupold, Senior Counsel, and Leo J. Wold, Assistant 

Attorney General, Office of the Attorney General for the State 

of Rhode Island.

Carol J. Banta, Senior Attorney, Federal Energy 

Regulatory Commission, argued the cause for respondent. 

With her on the brief was Robert H. Solomon, Solicitor.

Paul Alessio Mezzina argued the cause for intervenors 

supporting respondent in Case No. 15-1139. With him on the 

brief were Ashley C. Parrish, David G. Tewksbury, Gunnar 

Birgisson, and Michael R. Engleman.

Before: BROWN and WILKINS, Circuit Judges, and 

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge: We consider two petitions for 

review challenging determinations by the Federal Energy 

Regulatory Commission (“FERC” or “the Commission”)

following compliance filings by the regional transmission 

organization for New England’s electric grid. See ISO New 

England Inc., Order on Compliance Filings, 143 F.E.R.C. 

¶ 61,150 (May 17, 2013) (Initial Order), on reh’g, 150 F.E.R.C. 

¶ 61,209 (Oct. 16, 2014) (Rehearing Order).
3

For the reasons given below, both petitions for review are 

denied.

I.

In 2011, the Commission issued Order No. 1000, ordering 

utilities to remove certain “right of first refusal” provisions

from their existing tariffs and agreements. See Transmission 

Planning and Cost Allocation by Transmission Owning and 

Operating Public Utilities, F.E.R.C. Stats. & Regs. ¶ 31,323, 

76 Fed. Reg. 49,842 (2011) [hereinafter Order No. 1000]. 

These provisions granted incumbent utilities “the option to 

construct any new transmission facilities in their particular 

service areas, even if the proposal for new construction came 

from a third party.” S.C. Pub. Serv. Auth. v. FERC (South 

Carolina), 762 F.3d 41, 72 (D.C. Cir. 2014) (per curiam). 

Order No. 1000’s prohibition of such provisions was premised

on the rationale that rights of first refusal deterred new entrants 

“from proposing much-needed infrastructure reforms, 

discouraging competition within the industry, and potentially 

driving up the cost of rates charged for wholesale electricity 

service.” Okla. Gas & Elec. Co. v. FERC (Oklahoma Gas), 

827 F.3d 75, 76 (D.C. Cir. 2016).

Order No. 1000 was upheld by this Court in South 

Carolina. 762 F.3d at 71-81. The petitioners in that case raised 

a litany of challenges to the Order, including that FERC was 

prevented from eliminating rights of first refusal because those 

provisions were entitled to the Mobile-Sierra presumption. Id.

at 81. The Mobile-Sierra presumption requires the 

Commission to “presume a contract rate for wholesale energy 

is just and reasonable” and prohibits the Commission from 

setting aside that rate unless the Commission finds that the rate 
4

“seriously harm[s] the public interest.”1 Id.; see generally

United Gas Pipe Line Co. v. Mobile Gas Serv. Corp. (Mobile), 

350 U.S. 332 (1956); Fed. Power Comm’n v. Sierra Pac. 

Power Co. (Sierra), 350 U.S. 348 (1956). It is premised on the 

idea that arms-length bargaining generally results in contract 

rates that are just and reasonable. See NRG Power Mktg., LLC 

v. Me. Pub. Utils. Comm’n, 558 U.S. 165, 175 n.4 (2010).

In Order No. 1000, “[t]he Commission had reserved 

judgment on whether to apply this presumption to the rights of 

first refusal until evaluating the individual utilities’ compliance 

filings, and therefore so did we.” Oklahoma Gas, 827 F.3d at 

76 (citing South Carolina, 762 F.3d at 81).

Oklahoma Gas presented the situation South Carolina

anticipated and we considered a petition for review of a FERC 

compliance filing determination in which FERC refused to 

apply the Mobile-Sierra presumption to a right of first refusal 

provision. We held that the Mobile-Sierra presumption was 

inapplicable because the presumption does not extend to “terms 

arrived at by horizontal competitors with a common interest to 

exclude any future competition.” Id. at 80.

The case before us now presents a slight wrinkle on the 

question we answered in Oklahoma Gas, along with a separate 

challenge to an application of another provision of Order No. 

1000.

 1 In Oklahoma Gas, we noted that “the Supreme Court has at least 

thus far applied the doctrine to rates, although we are presented here 

with a right of first refusal provision.” 827 F.3d at 79. In that case, 

as here, because “neither party advocates for restricting MobileSierra exclusively to rates, there is no need to decide that question.” 

Id.
5

In response to Order No. 1000, a compliance filing was

made by ISO New England Inc. (“ISO-NE”) – the FERCapproved regional transmission organization whose tariff 

governs transmission service and wholesale electric markets in 

New England – and its participating transmission owners (the 

“Transmission Owners”). After FERC issued the Initial Order 

and Rehearing Order containing FERC’s compliance 

determinations, two petitions for review were filed with this 

Court.

The first petition for review was filed by the Transmission 

Owners, who object to FERC’s determination that the right of 

first refusal must be removed from the Transmission Operating 

Agreement among ISO-NE and the Transmission Owners. 

What makes this case different from Oklahoma Gas is that,

here, FERC purported to apply the Mobile-Sierra presumption 

as a matter of discretion, even though FERC continued to 

maintain that it was not required to apply the presumption as a 

matter of law (a position we vindicated in Oklahoma Gas). As 

a result, we must consider the new question of whether FERC 

has overcome the Mobile-Sierra presumption, which presents

a higher hurdle than the more deferential default standard for 

evaluating FERC actions.

The second petition for review was filed by the New 

England States Committee on Energy, Inc. (“NESCOE”) and 

governmental entities from five of the six states it represents in 

regional electricity matters: Connecticut, Massachusetts, New 

Hampshire, Rhode Island, and Vermont (collectively, with 

NESCOE, the “State Petitioners”). The State Petitioners argue 

that, in the ISO-NE compliance order, the Commission went 

beyond Order No. 1000 and impermissibly altered the balance 

of responsibility and power as between state governments and 

ISO-NE.
6

II.

We consider first the petition for review filed by the 

Transmission Owners.

In its orders, the Commission determined that the MobileSierra presumption did not apply as a matter of law. See Initial 

Order ¶¶ 160-72. Nevertheless, as a matter of discretion, the 

Commission applied the presumption to the right of first refusal 

provision in Section 3.09 of the Transmission Operating 

Agreement, noting that it had earlier accorded Mobile-Sierra

protection to the provision in 2004 when the Transmission 

Operating Agreement was first approved. See id. ¶ 172.

However, the Commission ultimately found that the right of 

first refusal “severely harm[s] the public interest,” meaning 

that the Mobile-Sierra presumption was overcome. Id. As a 

result of this analysis, the Commission ordered the right of first 

refusal provision stricken from the Transmission Operating 

Agreement. Id. ¶ 11.

The Transmission Owners first assert that the Commission 

erred in finding the Mobile-Sierra presumption inapplicable as 

a matter of law. In addition, the Transmission Owners contend 

that FERC did not properly establish that the right of first 

refusal harmed the public interest, as is required in order to 

overcome the presumption.

A.

The Commission argues that the Transmission Owners 

lack standing to contest the determination that the MobileSierra presumption does not apply as a matter of law, because 

the Commission nonetheless applied the presumption as a 

matter of discretion.
7

In support of its contention that standing is absent, the 

Commission cites New England Power Generators 

Association v. FERC, 707 F.3d 364 (D.C. Cir. 2013). In New 

England Power, the Commission was attacked from two sides 

after it concluded that rates resulting from an auction process 

were not contract rates, but nevertheless were subject to the 

Mobile-Sierra presumption. As we explained, one petitioner 

“like[d] the result but not the reasoning: it argue[d] the auction 

results, as contract rates, must receive the Mobile–Sierra

presumption,” while an opposing group of petitioners 

“support[ed] much of FERC’s reasoning but not the result: they 

contend that because the auction results are not contract rates, 

FERC cannot presume them just and reasonable.” New 

England Power, 707 F.3d at 366 (emphasis omitted). We held 

that the first petitioner lacked standing because “its desired 

outcome – application of Mobile-Sierra’s public interest 

standard – has already been achieved.” Id. at 369.

There is one crucial distinction between New England 

Power and this case, however: in New England Power, the 

petitioner had prevailed before the Commission and was 

objecting only to the Commission’s reasoning in reaching that 

favorable result. Here, by contrast, the Transmission Owners 

not only take issue with the Commission’s reasoning but are 

also aggrieved by the Commission’s conclusion that the right 

of first refusal must be removed from the Transmission 

Operating Agreement. 

Of course, the fact that the Mobile-Sierra presumption was 

applied as a matter of discretion by the Commission renders 

irrelevant the Transmission Owners’ argument that the 

Commission was required to apply it as a matter of law.2

 

 2 In any event, our decision in Oklahoma Gas has since rejected the 

Transmission Owners’ argument that FERC is required to apply the 
8

However, this does not diminish the Transmission Owners’ 

standing to challenge an adverse determination by the 

Commission.

B.

Since the Transmission Owners have standing to bring 

their challenge, we must evaluate whether the Commission 

erred in finding that the right of first refusal in the Transmission 

Operating Agreement “severely harm[s] the public interest.” 

See Initial Order ¶ 172. FERC’s determination will be set aside 

if it is “arbitrary, capricious, an abuse of discretion, or 

otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); 

see, e.g., Williams Gas Processing-Gulf Coast Co. v. FERC, 

475 F.3d 319, 326 (D.C. Cir. 2006).

The Transmission Owners’ objections fall into three 

categories. First, they assert that FERC’s orders were 

inconsistent with its past decisions. Second, the Transmission 

Owners allege that FERC applied the wrong legal standard as 

the yardstick for measuring whether the Mobile-Sierra

presumption had been overcome. Finally, the Transmission 

Owners argue that FERC’s determination was not in accord 

with the evidence before it. We consider these arguments in 

turn.

1.

“[I]t is ‘axiomatic that [agency action] must either be

consistent with prior [action] or offer a reasoned basis for its

departure from precedent . . . .’” Williams Gas, 475 F.3d at 

326 (alterations in original) (quoting Brusco Tug & Barge Co. 

v. NLRB, 247 F.3d 273, 278 (D.C. Cir. 2001)). The 

 

Mobile-Sierra presumption to rights of first refusal such as the one 

at issue in this case. See Oklahoma Gas, 827 F.3d at 80.
9

Transmission Owners allege that the Commission’s 

determinations in the challenged orders flunk this requirement 

because they are inconsistent with two prior actions by the 

Commission: Order No. 1000 and the 2004 order that first 

approved the Transmission Operating Agreement.

In Order No. 1000, the Commission declined to resolve the 

question of whether the Mobile-Sierra presumption applied to 

the threatened rights of first refusal in existing tariffs and 

agreements. The Commission noted that one commenter –

National Grid – had argued that the presumption applied to the 

specific right of first refusal in the Transmission Operating 

Agreement at issue here. However, the Commission found 

“that the record is not sufficient to address the specific issues 

raised by National Grid in this generic proceeding.” Order No. 

1000 ¶ 292. The Commission further explained:

[W]e generally do not interpret an individual contract 

in a generic rulemaking, and we are not persuaded to 

do so here given the limited record developed so far 

on section 3.09. Thus, we conclude that these 

arguments, including National Grid’s argument as to 

the applicable standard of review, are better addressed 

as part of the proceeding on ISO New England’s 

compliance filing pursuant to this Final Rule, where 

interested parties may provide additional information.

Id.

In the Rehearing Order, the Commission elaborated, 

noting that the record at the time of Order No. 1000 was 

insufficient because the Commission issued Order No. 1000 

“prior to having before it the universe of contracts and 

arguments to determine which lend support to, or provide 

evidence against the specific issue.” Rehearing Order ¶ 193. 
10

Once the specific contract and relevant arguments were 

submitted as part of the compliance filing process, “the 

Commission was able to examine together all the arguments 

relating to this specific issue – Mobile-Sierra protection of the 

right of first refusal provisions – as well as the individual 

contract provisions and other related documents, such as

Commission orders addressing these provisions.” Id. The 

Commission explained that its “findings on compliance were 

based on this more complete, and now sufficient, record.” Id.

The Transmission Owners take issue with the 

Commission’s characterization. They argue that the 

Commission’s decision in the orders now under review 

arbitrarily departed from the Commission’s finding in Order 

No. 1000 that the record was not sufficient to address the 

applicability of the Mobile-Sierra presumption. The thrust of

the petitioners’ argument is that the only new empirical data

introduced between the time FERC issued Order No. 1000 and 

the Initial Order was information introduced by the 

Transmission Owners to show that regional transmission needs 

were already being addressed while the right of first refusal was 

in place. Accordingly – per the Transmission Owners’ 

argument – if the record was insufficient to make a MobileSierra finding when Order No. 1000 was issued, it remained 

insufficient at the time of the Initial Order.

This misunderstands the way in which the record was “not 

sufficient” at the time of Order No. 1000. The Transmission 

Owners view the Initial Order as reaching a different verdict 

from Order No. 1000 in spite of the fact that no new evidence 

was introduced in support of that new verdict. To the contrary,

FERC did not come to any verdict on the Mobile-Sierra issue 

in Order No. 1000. Instead, the Commission deferred until 

later compliance proceedings the introduction of specific 

evidence about the Transmission Operating Agreement –
11

including the text of the agreement itself – and the region. See

Order No. 1000 ¶ 292. Because this evidence had not yet been 

introduced, the record in Order No. 1000 was “insufficient” to 

reach any verdict, not just insufficient to find that the right of 

first refusal was sufficiently harmful to overcome the MobileSierra presumption. See id. (“[T]he record is not sufficient to 

address the specific issues raised . . . .” (emphasis added)). It 

was not at all inconsistent for FERC to treat the record as 

sufficient to reach such a verdict after the introduction of the 

language of the provision at issue and other information from 

interested parties.

The Transmission Owners cite a second example of 

purportedly inconsistent decision-making. This time, the 

earlier decision was the 2004 order by the Commission 

approving the Transmission Operating Agreement in which the 

Commission found that the Transmission Operating 

Agreement’s right of first refusal provision “will have no 

adverse impact on third parties or the New England market.” 

ISO New England, Inc., 109 F.E.R.C. ¶ 61,147, ¶ 78 (2004). In 

its Initial Order, which is the subject of the petition for review 

in this case, the Commission addressed the argument that the 

2004 finding precluded its new determination that the right of 

first refusal “severely harm[s] the public interest” and therefore 

must be removed. See Initial Order ¶ 172. The Commission 

asserted that the 2004 finding presents no barrier because the 

Commission “is permitted to adapt its rules and policies in light 

of changing circumstances” and “changes in the electric 

industry driving the demand for new transmission, coupled 

with the advent of nonincumbent transmission developers, led 

the Commission to reexamine the effect of federal rights of first 

refusal on customers and nonincumbent transmission 

developers.” Id. ¶¶ 196-98.
12

In support of this proposition, the Commission cited a 

1968 Supreme Court decision upholding the Commission’s 

restriction of escalation clauses in natural gas contracts 

notwithstanding an earlier decision of the Commission that had 

expressly declined to limit their use. Id. ¶ 197 (citing In re 

Permian Basin Area Rate Cases, 390 U.S. 747, 783-84 (1968)). 

In the cited case, the Court held that the challenged decision

may not “properly be set aside merely because the Commission 

has on an earlier occasion reached another result; 

administrative authorities must be permitted, consistently with 

the obligations of due process, to adapt their rules and policies 

to the demands of changing circumstances.” Permian Basin, 

390 U.S. at 784.

This case presents another example of changing 

circumstances and an appropriate adaptation of rules and 

policies by FERC. While FERC reached a different conclusion

in its Initial Order than in its 2004 order approving the 

Transmission Operating Agreement, this different conclusion 

was not the result of arbitrary decision-making by the 

Commission. Rather, it was the natural consequence of the 

new policy adopted in Order No. 1000 to address the changing 

circumstances identified by the Commission.

2.

Turning to the meat of FERC’s analysis, the Transmission 

Owners argue that FERC did not apply the correct legal 

standard in analyzing whether the Mobile-Sierra presumption 

had been overcome. 

We considered the application of the Mobile-Sierra

standard in a similar context in Texaco Inc. v. FERC, 148 F.3d 

1091 (D.C. Cir. 1998), where we upheld FERC’s application 

of a generic rule – Order No. 636 – to a particular contract. 
13

Order No. 636 required pipelines to use a new pricing method 

that was intended to promote a national gas-sales market by 

reducing the impact of fixed costs – which vary significantly

between pipelines – on market prices. Id. at 1094.

In a rate filing shortly after FERC promulgated Order No. 

636, one pipeline proposed maintaining its existing rate 

structure for existing customers and adopting the new rate 

structure for new customers only. Id. FERC rejected that 

proposal, finding that it would “distort the pricing information 

signals that Order 636 was designed to regularize.” Id. at 1095. 

Because the rate provisions in the service agreements between 

the pipeline and its existing customers were subject to the 

Mobile-Sierra presumption, FERC was required to show that 

“the public interest required it to intervene.” Id. at 1096.

After reviewing the record, we found FERC’s public 

interest showing in Texaco to be sufficient. We explained that 

“the ‘public interest’ that permits FERC to modify private 

contracts is different from and more exacting than the ‘public 

interest’ that FERC seeks to serve when it promulgates its 

rules,” meaning that “more is required to justify regulatory 

intervention in a private contract than a simple reference to the 

policies served by a particular rule.” Id. at 1097. While “FERC 

relie[d] in part on the public interest rationale articulated in 

Order 636 to justify its modification of the” service 

agreements, FERC “did not rest its reformation of the [service]

agreements on the generalized public interest goals underlying 

Order 636.” Id. Instead, FERC determined that retaining the 

existing rate structure in the contracts at issue would adversely 

affect the public interest, specifically by “distort[ing] gas 

market pricing to the detriment of the integrated national gas 

sales market” and by inflicting “anti-competitive” harm on the 

pipeline’s main competitor. Id. (internal quotation marks 

omitted). 
14

In this way, Texaco drew a distinction between mere 

recitation of policy goals and a “particularized” analysis of the 

deleterious effects of the contract provision at issue. While 

new policies – such as those adopted in Order No. 636 in 

Texaco or Order No. 1000 here – may be supported by 

“generalized public interest goals,” “particularized” analysis is 

required in order to overcome the Mobile-Sierra presumption 

where it applies.

The Commission’s challenged orders in this case contain 

the requisite “particularized” analysis. In Order No. 1000, the 

Commission found that rights of first refusal are generally 

anticompetitive. See Order No. 1000 ¶¶ 256-57. In the orders 

now being challenged, FERC went further and found that the 

specific right of first refusal in ISO-NE’s Transmission 

Operating Agreement “would adversely affect transmission 

development.” Rehearing Order ¶ 204; see also id. ¶ 196-97 

(citing evidence of “transmission system expansion” in New 

England that “makes the need to foster competitive practices 

more acute”). Of course, the Transmission Owners may 

quibble with the evidentiary basis for that conclusion – and 

they do, as discussed below – but it cannot be said that the 

Commission failed to make the “particularized” finding 

required by our case law.

The Transmission Owners have one additional argument 

regarding the legal standard. They point to a statement from 

the Supreme Court’s decision in Morgan Stanley Capital 

Group Inc. v. Public Utility District No. 1, 554 U.S. 527 

(2008): “We have said that, under the Mobile-Sierra

presumption, setting aside a contract rate requires a finding of 

‘unequivocal public necessity’ or ‘extraordinary 

circumstances.’” Id. at 550-51 (citations omitted) (quoting 

Permian Basin, 390 U.S. at 822; Ark. La. Gas Co. v. Hall, 453 
15

U.S. 571, 582 (1981)). The Transmission Owners argue that 

this sentence requires FERC, in all cases in which the MobileSierra presumption applies, to make an explicit finding of 

either “unequivocal public necessity” or “extraordinary 

circumstances.”

We reject the invitation to don blinders and read this 

sentence as establishing an exclusive list of phrases FERC must 

incant to rebut the Mobile-Sierra presumption. Reading just 

two paragraphs down in the same opinion reveals the Court’s 

conclusion that “the FPA intended to reserve the Commission’s 

contract-abrogation power for those extraordinary 

circumstances where the public will be severely harmed.” Id.

at 551 (emphasis added). In other words, severe harm to the 

public constitutes extraordinary circumstances. Where FERC 

has made a finding of such harm, it has made the requisite 

finding of extraordinary circumstances. FERC made such a 

finding here, see Initial Order ¶ 172, thereby clearing the 

Mobile-Sierra bar as articulated in Morgan Stanley.

3.

The Transmission Owners also contend that, in reaching 

the conclusion that the rights of first refusal harmed the public 

interest, the Commission identified no evidence to support that 

conclusion and ignored the contrary evidence submitted by 

defenders of the right of first refusal.

The Transmission Owners’ first contention – that FERC 

identified no evidence in support of its conclusion – is based 

on the faulty premise that economic theory cannot provide the 

basis for FERC’s decisions. As we held in rejecting a nearly 

identical challenge to Order No. 1000, “at least in 

circumstances where it would be difficult or even impossible 

to marshal empirical evidence, the Commission is free to act 
16

based upon reasonable predictions rooted in basic economic 

principles.” South Carolina, 762 F.3d at 76; see also id. at 64-

65. This case presents a nearly identical circumstance to that 

addressed in South Carolina, as we once again must decide 

whether the Commission was entitled to rely on economic and 

competition theory to justify its decision in the absence of

empirical data. Again we reach the same result, mindful of the 

limitations of empirical data in evaluating a counterfactual and 

the proper role of other forms of evidence in some situations. 

Cf. id. at 65 (“Agencies do not need to conduct experiments in 

order to rely on the prediction that an unsupported stone will 

fall; nor need they do so for predictions that competition will 

normally lead to lower prices.” (quoting Associated Gas 

Distribs. v. FERC, 824 F.2d 981, 1008-09 (D.C. Cir. 1987))).

The Transmission Owners’ second contention – that FERC 

ignored the evidence they introduced into the record – is also 

wrong. The Transmission Owners introduced evidence that 

ISO-NE “has placed $4.7 billion in new transmission facilities 

in service and has placed another $5.7 billion in projects (in 

different stages of development) in the ISO-NE Regional 

System Plan.” Rehearing Order ¶ 196. This evidence of 

transmission development, they contend, demonstrates that the 

right of first refusal does not harm the public interest.

Far from ignoring this evidence, FERC confronted it headon. The Commission credited the evidence, but explicitly 

rejected the inference that “the incumbent transmission owners 

are sufficiently developing projects under the existing 

framework with their current rights of first refusal.” Id. ¶ 197. 

The Commission did note, however, that this evidence 

illustrated the “onset” of a “development trend” – noted earlier 

by the Commission in Order No. 1000 – that “demonstrates a 

changing circumstance in the marketplace, which continues to 

threaten the public interest by avoiding expected efficiencies 
17

and cost savings and makes the need to foster competitive 

practices more acute.” Id. (footnote omitted).

The rejection of the Transmission Owners’ preferred 

inference was well within the Commission’s discretion. 

Evidence of a certain level of past development does not 

compel a conclusion about the development that would have 

occurred in a counterfactual universe without the right of first 

refusal provision or, more importantly, the relative level of 

development that would occur in the future in alternate 

universes with and without the provision. The inference that 

there is a functioning market with the right of first refusal in 

place may be plausible, but the contrary conclusion drawn by 

FERC is plausible as well. “Where the evidence might support 

more than one rational interpretation, ‘the question we must 

answer . . . is not whether record evidence supports [the 

petitioner’s] version of events, but whether it supports 

FERC’s.’” Cogeneration Ass’n of Cal. v. FERC, 525 F.3d 

1279, 1283 (D.C. Cir. 2008) (alterations in original) (quoting 

Fla. Mun. Power Agency v. FERC, 315 F.3d 362, 368 (D.C. 

Cir. 2003)). Accordingly, we reject the Transmission Owners’ 

challenge to the Commission’s orders.

III.

We turn next to considering the petition for review filed 

by the State Petitioners, which takes issue with a different 

aspect of the Commission’s orders.

In addition to addressing rights of first refusal, Order No. 

1000 also required the consideration of transmission needs 

driven by public policy when determining what projects to 

include in the Regional System Plan for cost allocation 

purposes. See Order No. 1000 ¶¶ 78-84. Public policy 

requirements that could give rise to transmission needs include 
18

“enacted statutes (i.e., passed by the legislature and signed by 

the executive) and regulations promulgated by a relevant 

jurisdiction, whether within a state or at the federal level.” Id.

¶ 2.

ISO-NE’s compliance filing included a proposed multistep procedure for complying with this new requirement. See

Initial Order ¶¶ 77-84. Under this proposal, NESCOE – the 

regional committee that represents the New England states in 

electricity matters – would first “identify state and federal 

public policies that may drive the need for transmission in New 

England.” Id. ¶ 77. After transmission needs are identified, 

“ISO-NE will undertake scenario studies to provide a sense of 

the costs and benefits of various high-level alternatives.” Id. 

Then, “[i]f some or all states determine that those transmission 

solutions may meet their identified public policies,” those 

states may direct ISO-NE to solicit initial proposals from 

transmission developers. Id. ISO-NE was tasked with 

conducting a preliminary review of those proposals, after 

which NESCOE “may submit to ISO-NE a list of projects that 

one or more of the states would like to have further developed.” 

Id. ¶¶ 82-83. However, if NESCOE does not identify any 

projects to be further developed, the planning process would 

end. Id. ¶ 83. Ultimately, ISO-NE would place projects into 

the Regional System Plan only if requested by either NESCOE 

or the participating states’ utility regulatory authorities. Id.

¶ 84.

FERC rejected this proposed procedure because it left to 

NESCOE or the states several roles that FERC contends Order 

No. 1000 had directed ISO-NE – the regional transmission 

organization – to fulfill. See id. ¶¶ 108, 116. FERC asserted:

[T]o comply with Order No. 1000 the Filing Parties 

must propose a process for the public utility 
19

transmission providers in the region to select in the 

regional transmission plan for purposes of cost 

allocation the more efficient or cost-effective 

transmission solution that resolves an identified 

transmission need driven by public policy 

requirements.

Id. ¶ 108.

The State Petitioners object on two grounds. First, they 

argue that FERC’s determination impermissibly conflicts with 

and expands on Order No. 1000. This argument turns on the 

State Petitioners’ reading of the word “select” in the Initial 

Order as meaning that FERC requires not only a process to 

identify transmission needs driven by public policy 

requirements and evaluate potential transmission solutions that 

could meet those needs – two requirements that the State 

Petitioners do not dispute are contained in Order No. 1000 –

but also selection of whichever project is the most efficient or 

cost-effective.

We need not determine whether any such selection 

requirement would be permissible, however, because the 

Commission adamantly disclaims such a reading. The 

Commission explains that the language at issue was not 

distinguishing between identifying transmission needs and 

selecting projects, but rather was clarifying which entity must 

control each step of the process. The Rehearing Order made 

clear that there is no requirement that ISO-NE “must select . . . 

a transmission solution to address every identified transmission 

need driven by a public policy requirement.” Rehearing Order 

¶ 126. The only selection requirement is that if a solution is 

selected it “must be selected by ISO-NE rather than by 

NESCOE.” Id. In light of these clarifications by the 

Commission, there is no inconsistency with Order No. 1000.
20

The State Petitioners’ second objection is that the 

Commission exceeded the bounds of its authority under the 

Federal Power Act (“FPA”). Specifically, the State Petitioners 

point to section 201(a) of the FPA, which provides that FERC’s 

authority is “to extend only to those matters which are not 

subject to regulation by the States.” 16 U.S.C. § 824(a). The 

Supreme Court has explained: 

The policy declaration that federal regulation is “to 

extend only to those matters which are not subject to 

regulation by the States” is one of great generality. It 

cannot nullify a clear and specific grant of jurisdiction, 

even if the particular grant seems inconsistent with the 

broadly expressed purpose. But such a declaration is 

relevant and entitled to respect as a guide in resolving 

any ambiguity or indefiniteness in the specific 

provisions which purport to carry out its intent. It 

cannot be wholly ignored.

Conn. Light & Power Co. v. Fed. Power Comm’n, 324 U.S. 

515, 527 (1945). 

As the State Petitioners concede, the “clear and specific” 

grants of jurisdiction in the FPA include FERC’s authority to 

regulate the rates charged for transmission of electricity, see 16 

U.S.C. § 824d, and to “facilitate the planning of a reliable 

grid,” see South Carolina, 762 F.3d at 90. Nevertheless, the 

State Petitioners contend that the FPA does not grant FERC 

authority over what they characterize as “the means by which 

states meet their own public policy mandates.” Pet’rs’ (15-

1141) Joint Br. 35.

This argument fails because it is necessarily an objection 

to the entire regional planning and cost allocation scheme. The 
21

role of a regional transmission organization such as ISO-NE is 

to plan for the region’s transmission needs. Order No. 1000 

established a regional planning process that is agnostic as to the 

provenance of the transmission needs, whether resulting from 

population growth or federal public policy or state public 

policy. In South Carolina, we approved this process and 

explicitly rejected the argument that the regional planning 

“mandate infringes on the States’ traditional regulation of 

transmission planning, siting, and construction, violating the 

federalism principle recognized in Section 201(a).” 762 F.3d 

at 62; see also id. at 58-59. Similarly, we held that providing 

for cost allocation falls within the Commission’s authority to 

regulate the rates charged for electricity. Id. at 84.

The division of roles between ISO-NE and the states poses 

no jurisdictional problem for FERC. ISO-NE has no role in 

setting public policy for the states. ISO-NE considers 

transmission needs that arise from a variety of sources, one of 

which is the public policy requirements chosen by federal and 

state officials. See Rehearing Order ¶ 132 (“Transmission 

needs driven by public policy requirements, and not the public 

policy requirements themselves, are what must be considered 

by public utility transmission providers under Order No. 

1000.”). As we explained in South Carolina:

The [regional planning] mandate simply recognizes 

that state and federal policies might affect the 

transmission market and directs transmission 

providers to consider that impact in their planning 

decisions. In this regard, the requirement is no 

different from other facets of the planning process. 

The providers assess what transmission capacity is 

required to fulfill a variety of needs (such as reliability 

of the grid, geographic expansion, and now public 

policy requirements) and then plan how to develop 
22

that capacity. This fits comfortably within the 

Commission’s authority under Section 206.

762 F.3d at 89-90 (citations omitted).

Requiring that ISO-NE, rather than the states, evaluate 

transmission needs and potential solutions is a reasonable 

implementation of Order No. 1000’s regional planning process, 

which we upheld in South Carolina. That is true regardless of 

whether those transmission needs arise from state public policy 

requirements or any other source.

We note as well that the Commission’s conclusion that the 

proposed regional planning process did not satisfy Order No. 

1000 was supported by substantial evidence, as set forth in its 

Orders. See Initial Order ¶¶ 71-121; Rehearing Order ¶¶ 29-

32, 98-154.

***

For the foregoing reasons, both petitions for review are 

denied.

So ordered.