Opinion ID: 4519330
Heading Depth: 2
Heading Rank: 1

Heading: Federal ROFR

Text: Pursuant to the Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) regulates interstate transmission of electricity and the sale of electricity at wholesale in interstate commerce. LSP Transmission Holdings, LLC v. Lange, 329 F. Supp. 3d 695, 700 (D. Minn. 2018) (citing 16 U.S.C. § 824(b)(1)). States, however, retain jurisdiction over the retail sale of electricity and the generation, transmission, and distribution of electricity in intrastate commerce. Id. (citing 16 U.S.C. § 824(b)(1)). FERC is also authorized to “divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission, and sale of electric energy” and to “promote and encourage such interconnection and coordination within each such district and between such districts.” Id. (quoting 16 U.S.C. § 824a(a)). “Regionally, FERC-approved nongovernmental agencies, independent system operators (‘ISO’s), oversee the operation and expansion of electric transmission grids. Each ISO issues a tariff, which establishes the terms by which its members build and operate grids. These tariffs are subject to the approval of FERC.” Id. at 700–01 (internal citations omitted). Before issuing Order 1000, FERC allowed incumbent public utility transmission providers to exercise their federal ROFR. Under that regulatory regime, incumbents held priority status in choosing to construct new electric transmission lines in their respective service territories. See id. at 701 (citing MISO Transmission Owners v. FERC, 819 F.3d 329, 332 (7th Cir. 2016)). In 2011, “FERC issued Order 1000,” which in part, “eliminated the federal ROFR.” Id. (citing Transmission Planning & Cost Allocation by Transmission Owning & Operating Pub. Utils., 136 FERC 61051, 3 ¶ 7 (2011) (hereinafter “Order 1000”)). Order 1000 specifically “direct[s] public utility transmission providers to remove from their [Open Access -3- Transmission Tariffs] or other Commission-jurisdictional tariffs and agreements any provisions that grant a federal right of first refusal to transmission facilities that are selected in a regional transmission plan for purposes of cost allocation.”Order 1000 at 3 ¶ 7.2 In substance, FERC’s Order 1000 reformed “its electric transmission planning and cost allocation requirements for public utility transmission providers.” Order 1000 at 1 ¶ 1 (citing 16 U.S.C. § 824e). “Order 1000 [is also] consistent with [FERC’s] effort to manage electric grids on a regional level” but “recognize[s] that states c[an] continue to regulate electric transmission lines.” LSP Transmission, 329 F. Supp. 3d at 701 (“We acknowledge that there is longstanding state authority [over] certain matters that are relevant to transmission planning and expansion, such as matters relevant to siting, permitting, and construction. However, nothing in . . . [Order 1000] involves an exercise of siting, permitting, and construction authority.” (quoting Order 1000 at 33 ¶ 107)). 2 “A ‘transmission facility selected in a regional transmission plan for purposes of cost allocation’ is one that has been selected, pursuant to a Commission-approved regional transmission planning process, as a more efficient or cost-effective solution to regional transmission needs.” Order 1000 at 2 ¶ 5. The elimination of the federal ROFR did not apply to utilities that were not selected in a regional transmission plan for purposes of cost allocation. See id. at 3 ¶ 7. This limitation was born of . . . [FERC’s] concern that a complete ban could potentially threaten grid reliability if nonincumbents failed to complete needed projects in a timely fashion. The upshot was that rights of first refusal could be retained for facilities located wholly within the service territory of an incumbent whose development costs would not be spread to other parties . . . . S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41, 73 (D.C. Cir. 2014). -4-