Court Opinion

ID: 9949912
Source: CourtListenerOpinion
Date Created: 2024-03-12 20:00:31.092552+00
Date Added: 2024-06-11T14:34:41.828948
License: Public Domain

PRECEDENTIAL

    UNITED STATES COURT OF APPEALS
         FOR THE THIRD CIRCUIT
              _____________

 Nos. 23-1778/23-1790/23-1808/23-1984/23-2544/
            23-2559/23-2560/23-2612

      PJM POWER PROVIDERS GROUP,
         Petitioner in 23-1778/23-2612
                        v.
             FEDERAL ENERGY
        REGULATORY COMMISSION
                _____________

CONSTELLATION ENERGY GENERATION LLC,
       Petitioner in 23-1790/23-2544
                      v.
           FEDERAL ENERGY
      REGULATORY COMMISSION
              _____________

 ELECTRIC POWER SUPPLY ASSOCIATION,
       Petitioner in 23-1808/23-2559
                      v.
           FEDERAL ENERGY
      REGULATORY COMMISSION
              _____________
          NRG BUSINESS MARKETING LLC,
                Petitioner in 23-1984
                          v.
                FEDERAL ENERGY
            REGULATORY COMMISSION
                  _____________

           NRG BUSINESS MARKETING LLC,
        as successor to NRG Power Marketing LLC,
                   Petitioner in 23-2560
                             v.
                   FEDERAL ENERGY
              REGULATORY COMMISSION
                       _____________

  On Petitions for Review of Orders of the Federal Energy
                  Regulatory Commission
         (FERC Docket Nos. EL23-19, ER23-729)
                      _____________

                Argued: January 31, 2024
                    _____________

    Before: CHAGARES, Chief Judge, RESTREPO and
              FREEMAN, Circuit Judges

                 (Filed: March 12, 2024)
                     _____________

Nicholas M. Gladd
Wilson Sonsini Goodrich & Rosati
201 Washington Street

                            2
Suite 2000
Boston, MA 02108

Steffen N. Johnson
Kelsey Curtis
Wilson Sonsini Goodrich & Rosati
1700 K Street NW
5th Floor
Washington, DC 20006

      Counsel for Petitioner PJM Power Providers Group

Matthew Price [ARGUED]
Anand Viswanathan
Zachary B. Cohen
Jenner & Block
1099 New York Avenue NW
Suite 900
Washington, DC 20001

      Counsel for Petitioner Constellation Energy
      Generation LLC

Paul W. Hughes, III
David G. Tewksbury
Andrew A. Lyons-Berg
Connor J. Suozzo
McDermott Will & Emery

                             3
500 N Capitol Street NW
Washington, DC 20001

      Counsel for Petitioners Electric Power Supply
      Association and NRG Business Marketing LLC

Steven M. Richman
Clark Hill
210 Carnegie Center
Suite 102
Princeton, NJ 08540

      Counsel for Intervenor-Petitioners Advanced Energy
      United, American Clean Power Association, and Solar
      Energy Industries Association

Gabriel L. Tabak
American Clean Power Association
1501 M St NW
Washington, DC 20005

      Counsel for Intervenor-Petitioner American Clean
      Power Association

Jeremy McDiarmid
Advanced Energy United
1010 Vermont Ave. NW, Suite 1050
Washington, DC 20005

      Counsel for Advanced Energy United

Ben Norris
Melissa Alfano

                            4
Solar Energy Industries Association
1425 K St NW Ste. 1000
Washington, DC 20005

      Counsel for Solar Energy Industries Association

Natasha Gianvecchio
Anna R. Biegelsen
Eric Konopka
Richard H. Griffin
Latham & Watkins
555 11th Street NW
Suite 1000
Washington, DC 20004

      Counsel for Intervenor-Petitioner Vistra Corp

Matthew R. Christiansen
Robert H. Solomon
Federal Energy Regulatory Commission
888 1st Street NE
Washington, DC 20426

Jared B. Fish [ARGUED]
United Sates Department of Justice
Civil Division
950 Pennsylvania Avenue NW
Washington , DC 20530

      Counsel for Respondent Federal Energy Regulatory
      Commission

                             5
Regina A. Iorii
Office of Attorney General of Delaware
Delaware Department of Justice
820 N French Street
Carvel Office Building
Wilmington, DE 19801

      Counsel for Intervenor-Respondent Delaware Division
      of the Public Advocate

Robert A. Weishaar, Jr.
McNees Wallace & Nurick
1200 G Street NW
Suite 800
Washington, DC 20005

      Counsel for Intervenor-Respondent Delaware Public
      Service Commission

Scott H. Strauss
Peter Hopkins
Jeffrey A. Schwarz
Spiegel & McDiarmid
1875 Eye Street NW
Suite 700
Washington, DC 20006

      Counsel for Intervenor-Respondent Maryland Office
      of People’s Counsel

Miles H. Mitchell
Ransom E. Ted Davis
Maryland Public Service Commission

                            6
6 St. Paul Street
Baltimore, MD 21202

     Counsel for Intervenor-Respondent Maryland Public
     Service Commission

Adrienne E. Clair
Jecoliah R. Williams
Thompson Coburn
1909 K Street NW
Suite 600
Washington, DC 20006

     Counsel for Intervenor-Respondent Old Dominion
     Electric Cooperative

Jeffrey A. Lamken
Lucas M. Walker [ARGUED]
Jennifer E. Fischell
Jackson A. Myers
MoloLamken
600 New Hampshire Avenue NW
The Watergate, Suite 500
Washington, DC 20037

     Counsel for Intervenor-Respondent PJM
     Interconnection L.L.C.

Jeffrey W. Mayes
Monitoring Analytics
2621 Van Buren Avenue

                          7
Suite 160
Eagleville, PA 19403

       Counsel for Intervenor-Respondent Monitoring
       Analytics LLC

Thomas L. Rudebusch
Duncan Weinberg Genzer & Pembroke
1667 K Street NW
Suite 700
Washington, DC 20006

       Counsel for Intervenor-Respondent Delaware
       Municipal Electric Corp Inc.

Gerit F. Hull
American Municipal Power, Inc.
1111 Schrock Road
Suite 100
Columbus, OH 43229

       Counsel for Intervenor-Respondent American
       Municipal Power, Inc.

                       _____________

                 OPINION OF THE COURT
                     _____________

CHAGARES, Chief Judge.

      In these consolidated petitions, the petitioners challenge
orders of the Federal Energy Regulatory Commission

                               8
(“FERC”) on the ground that FERC allowed a new auction rule
to apply retroactively to a pending auction.                PJM
Interconnection L.L.C. (“PJM”), the entity in charge of
running the auction, applied this new rule to determine the
auction results. The petitioners contend that FERC’s orders
violate the filed rate doctrine, which forbids retroactive rates.
We agree. We will grant the petitions and vacate the orders in
relevant part.

                                I.

        Although the legal principles governing this case are
relatively straightforward, the background is complex. We lay
the groundwork with an overview of the statutory basis for the
filed rate doctrine, followed by a description of the tariff, or
rate, at issue here. Then we discuss the events leading up to
FERC’s orders and summarize FERC’s resolution of the
matter.

                               A.

        Section 201 of the Federal Power Act (“FPA”), 16
U.S.C. § 824(b), grants FERC exclusive jurisdiction over the
rates for the transmission and wholesale of electric energy in
interstate commerce. FERC v. Elec. Power Supply Ass’n, 577
U.S. 260, 264–66 (2016). Section 205 of the FPA requires that
all rates related to the transmission or sale of electric energy,
and all related rules and regulations, are “just and reasonable”
and not “undu[ly] preferen[tial].” 16 U.S.C. § 824d(a)–(b).
The rates a utility charges must first be filed with FERC and be
made publicly available. Id. § 824d(c). Once filed, “no change
shall be made . . . in any such rate, charge, classification, or
service, or in any rule, regulation, or contract relating thereto,

                                9
except after sixty days’ notice to the Commission and to the
public” through another filing with the agency. Id. § 824d(d).
Section 206 empowers FERC to fix or change unjust and
unreasonable rates and charges, but only prospectively. Id.
§ 824e(a).

       These statutory provisions “mandating the open and
transparent filing of rates and broadly proscribing their
retroactive adjustment are known collectively as the ‘filed rate
doctrine.’” Old Dominion Elec. Coop. v. FERC, 892 F.3d
1223, 1226–27 (D.C. Cir. 2018); see also Borough of Ellwood
City v. FERC, 583 F.2d 642, 648 (3d Cir. 1978) (“The filed
rate doctrine is . . . an application of explicit statutory
language.”). The filed rate doctrine “bind[s] regulated entities
to charge only the rates filed with FERC and to change their
rates only prospectively.” Okla. Gas & Elec. Co. v. FERC, 11
F.4th 821, 829 (D.C. Cir. 2021); see Ark. La. Gas Co. v. Hall,
453 U.S. 571, 577–78 (1981). The doctrine is unbending
regardless of where the equities lie. Okla. Gas, 11 F.4th at
829–30.

        Importantly, the filed rate doctrine “is not limited to
rates per se, but also extends to matters directly
affect[ing] . . . rates.” Id. at 829 (cleaned up) (quoting
Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953,
966–67 (1986)). This stems from the text of the FPA, which
“prohibits changes, not just to a rate, but also to ‘any such rate,
charge, classification, or service, or in any rule, regulation, or
contract relating thereto.’” Id. at 830 (quoting 16 U.S.C.
§ 824d(d)). In this case, the petitioners and FERC agree that
the filed rate is the PJM Open Access Transmission Tariff
(“Tariff”), which sets forth the procedures governing PJM’s
capacity auctions. See PJM Interconnection, L.L.C., 184

                                10
FERC ¶ 61,055, at 16 ¶ 28 (2023) (“Rehearing Order”)
(“PJM’s relevant rate on file with the Commission is the BRA
procedures, i.e., the market rules governing the conduct of the
capacity auctions . . . .”); PJM Interconnection, L.L.C., 182
FERC ¶ 61,109, at 79 ¶ 165 (2023) (“Initial Order”) (“The filed
rate doctrine thus applies to those rules as it would a stated rate,
requiring that the rules be on file with the Commission and that
changes apply only prospectively.”); FERC Br. 26 (“[T]hose
[auction] rules are deemed to be part of the filed rate itself.”);
Pets. Br. 10. 1
                                B.

        PJM is a FERC-regulated wholesale market operator
that covers thirteen states and the District of Columbia. To
ensure reliable electric supply at competitive prices, PJM
administers capacity auctions. “Capacity” is simply a
commitment by electric suppliers to produce electricity at a
certain time in the future. In a capacity auction, electricity-
generating resources (also known as suppliers or sellers) bid on
a price they are willing to accept in exchange for committing
their resources to provide electricity to the interstate electric
grid in the future. PJM employs an optimization algorithm tool
that assesses these bids against PJM’s projected demand curve,
resulting in a “clearing price” for each geographic region

1
 Citations to the Initial and Rehearing Orders reflect the page
and paragraph of the slip decisions. The Tariff is available at
https://etariff.ferc.gov/tariffbrowser.aspx?tid=1731
[https://perma.cc/F7FN-EWAY].

                                11
covered by the auction. All suppliers that clear the auction
receive the clearing price.

       In this case, PJM administered a capacity auction in
December 2022 for capacity in the June 2024 – May 2025
period (the “Auction”). PJM ran the Auction according to the
rules set out in the Tariff, which again is the filed rate in this
case.

       The Tariff provides a detailed roadmap of how the
Auction must unfold. Prior to conducting the Auction, PJM
must calculate and publicly post the parameters, or inputs, it
will use in the Auction. As relevant here, one of these
parameters is the Locational Deliverability Area (“LDA”)
Reliability Requirement.

        The LDA Reliability Requirement is “the amount of
capacity that must be produced to meet peak demand,
including a reserve margin” for a PJM region. Del. Div. of the
Pub. Advoc. v. FERC, 3 F.4th 461, 464 (D.C. Cir. 2021). The
LDA Reliability Requirement is important to the Auction
because it forms part of the demand curve in PJM’s
optimization algorithm. See FERC Br. 10; Appendix (“App.”)
245 (Danly, Comm’r., dissenting from Rehearing Order)
(describing the LDA Reliability Requirement as “the single
most important input to the capacity auction along with the
seller offers”).

        The Tariff next requires PJM to collect confidential
offers from suppliers during the offer window. Every supplier
who offers a price less than or equal to the clearing price is
legally bound to provide capacity at the clearing price.
Suppliers who attempt to back out of their binding offers after

                               12
the fact may incur significant penalties. PJM Interconnection,
L.L.C., 155 FERC ¶ 61,157, ¶ 18 (2016).

       Once the offer window closes, the Tariff provides that
PJM “shall employ an optimization algorithm . . . to evaluate
the Sell Offers and other inputs to such auction to determine
the Sell Offers that clear such auction.” Tariff, Attach. DD
§ 5.12. After PJM runs the optimization algorithm, it clears the
Auction by accepting offers, starting with the lowest price first
until it obtains sufficient capacity to satisfy the capacity
demands for each region. All offers that clear the Auction
receive the same clearing price for that region, which is equal
to the price of the last (and highest) offer accepted for that
region. Tariff, Attach. DD § 5.14(a). See, e.g., Hughes v.
Talen Energy Mktg., LLC, 578 U.S. 150, 156 n.1 (2016)
(describing this process); N.J. Bd. of Pub. Utils. v. FERC, 744
F.3d 74, 83–84 (3d Cir. 2014) (same).

      Finally, PJM must “post the results of each auction as
soon thereafter as possible.” Tariff, Attach. DD § 5.11(e).
PJM awards capacity commitments based on these results.

                               C.

       The Auction in this case proceeded smoothly at first:
PJM calculated and posted the Auction parameters on August
29, 2022, including the LDA Reliability Requirement; received
offers from suppliers during the offer window (between
December 7–13, 2022); and ran the optimization algorithm. 2

2
 FERC contends that PJM never ran its optimization algorithm
but that is contradicted by the record and by PJM itself. In any
event, we do not rely on this fact in our analysis.

                               13
PJM was scheduled to post the Auction results on December
20, 2022.

        But PJM perceived a problem. Based on its preliminary
assessment of the data, PJM realized that the Auction could
result in a high clearing price for the DPL-South zone, a small
region that covers the south of Delaware (the “DPL-South
region”). According to PJM, this “anomaly” occurred because,
as it turned out, the DPL-South region’s LDA Reliability
Requirement parameter rested on a faulty assumption. FERC
Br. 13. The assumption was that certain resources would
submit offers in the Auction, but many of those resources did
not. 3 PJM estimated that the DPL-South region’s clearing
price could be four times higher (or over $100 million) if PJM
could not correct this faulty assumption by adjusting the LDA
Reliability Requirement downward to reflect certain resources’
lack of participation in the Auction.

3
  Specifically, the LDA Reliability Requirement that PJM used
for the DPL-South region assumed that certain generation
resources would provide offers in the Auction. These
resources included large power plants and solar facilities, both
of which PJM considered relatively unreliable sources of
power: if a large power plant experiences an outage, the DPL-
South region would need a correspondingly large amount of
imported energy, and if the weather is overcast, solar facilities
would produce less power. As a result, PJM increased the
DPL-South region’s LDA Reliability Requirement in
anticipation of these resources’ participation in the Auction.
When a significant amount of these resources ended up not
submitting offers in the Auction, this resulted in a “double
whammy” to the DPL-South region’s clearing price. FERC
Br. at 14.

                               14
       PJM therefore halted the Auction and turned to FERC
for permission to amend the Tariff to allow this downward
adjustment.

                              D.

         PJM made two contemporaneous filings with FERC.
First, it proposed an amendment to the Tariff under section 205
of the FPA (the “Tariff Amendment”). If approved, the Tariff
Amendment would provide PJM the authority to adjust the
LDA Reliability Requirement downward to reflect certain
resources’ lack of participation in the Auction. PJM requested
permission from FERC to apply this new rule to the pending
Auction as well as future auctions.

       PJM’s second filing was a complaint under section 206
of the FPA (the “Complaint”). Section 206 provided PJM a
potentially different avenue to relief. To prevail, PJM would
first have to show that its existing tariff was unjust and
unreasonable. Once PJM made this showing, section 206 gave
FERC broad discretion to fashion a just and reasonable
remedy.

       A divided four-commissioner panel of FERC granted
the proposed Tariff Amendment in full and dismissed the
Complaint as moot. The three commissioners in the majority
ruled that the Tariff Amendment was consistent with the filed
rate doctrine. The panel concluded that the Tariff Amendment
was not retroactive because the Auction had not yet obligated
any suppliers to provide capacity or determined clearing prices.
The panel also rejected the notion that the Tariff Amendment
was retroactive by allowing PJM to adjust the LDA Reliability

                              15
Requirement after it had already calculated and posted it.
According to the panel, the posting requirement did not
“preclude PJM from prospectively updating the manner in
which that LDA Reliability Requirement is incorporated into a
later phase of the auction process pursuant to a separate section
of the Tariff.” Initial Order at 82 ¶ 171.

       Having determined that the Tariff Amendment did not
violate the filed rate doctrine, the panel then concluded that it
had authority to approve the Tariff Amendment because it was
“just and reasonable” under section 205 of the FPA. Initial
Order at 83 ¶ 173. The panel acknowledged that settled
expectations were relevant to this inquiry but expressed
skepticism that suppliers had settled expectations based on the
posted LDA Reliability Requirement. Assuming that they did,
the panel nonetheless concluded that those expectations were
outweighed by the Tariff Amendment’s benefits — namely,
preventing an “exorbitant price increase” in the DPL-South
region. Id.

       FERC denied rehearing. It issued a rehearing order that
reaffirmed the conclusions it reached in its initial order.

        One commissioner dissented from both the initial and
rehearing orders. In his view, the Tariff Amendment was an
illegal attempt to change the LDA Reliability Requirement
after it was established and after the Auction had run, in
violation of the filed rate doctrine. The commissioner
criticized the majority’s decision as “a misguided attempt to
protect consumers” that would actually “cause [them] more
harm” because it would lead to “lost confidence” in the
markets. App. 115 (Danly, Comm’r., dissenting from Initial
Order).

                               16
       After FERC approved the Tariff Amendment, PJM
determined the Auction results using the adjusted LDA
Reliability Requirement. PJM posted the Auction results on
February 27, 2023, and awarded capacity commitments based
on those results.

       The petitioners — electric suppliers and their trade
associations — filed petitions for review of FERC’s initial and
rehearing orders in this Court. We consolidated the petitions
and permitted several intervenors to participate in this appeal.

                              II.

      FERC had jurisdiction to approve the Tariff
Amendment under section 205 of the FPA. 16 U.S.C.
§ 824d(e). We have jurisdiction to review FERC’s orders
under 16 U.S.C. § 825l(b).

       We review FERC’s orders under the Administrative
Procedure Act and must set them aside if they are “arbitrary,
capricious, [or] an abuse of discretion.” 5 U.S.C.
§ 706(2)(A). Further, we must set aside FERC’s orders if they
are “not in accordance with law” or are “in excess of statutory
jurisdiction, authority, or limitations.” Id. § 706(2)(A), (C);
see FCC v. NextWave Pers. Commc’ns Inc., 537 U.S. 293, 300
(2003); New York v. Nat’l Highway Traffic Safety Admin.,
974 F.3d 87, 94 (2d Cir. 2020); Hydro Res., Inc. v. EPA, 608
F.3d 1131, 1145 (10th Cir. 2010) (en banc). Although we
generally give substantial deference to FERC’s interpretation
of filed tariffs, we do not defer to FERC when the tariff
language is unambiguous. N.J. Bd. of Pub. Utils., 744 F.3d at
104 n.30; Old Dominion, 892 F.3d at 1230. When a tariff is

                              17
unambiguous, as here, we simply “apply that unambiguous
meaning.” Okla. Gas, 11 F.4th at 827.

                               III.

                               A.

        To determine whether FERC’s orders violate the filed
rate doctrine, we must first define retroactivity. The text of the
FPA does not provide a definition. The definition FERC
proposes in this appeal is helpful: “retroactive rules alter the
past legal consequences of past actions.” Bd. of Cnty.
Comm’rs of Weld Cnty. v. U.S. EPA, 72 F.4th 284, 293–94
(D.C. Cir. 2023) (citation omitted). The court in Weld County
drew this definition from Landgraf v. USI Film Prods., 511
U.S. 244 (1994), the Supreme Court’s seminal opinion on
retroactivity. Landgraf concerned whether a civil rights
plaintiff could avail herself of a newly enacted statute
providing compensatory and punitive damages for Title VII
violations. Id. at 247. In answering that question in the
negative, the Court asked “whether the new provision attaches
new legal consequences to events completed before its
enactment.” Id. at 269–70. The Court explained that a
provision would be retroactive if, for example, it “would
impair rights a party possessed when he acted, increase a
party’s liability for past conduct, or impose new duties with
respect to transactions already completed.” Id. at 280.

       The Court in Landgraf acknowledged that determining
retroactivity “is not always a simple or mechanical task.” Id.
at 268. “Any test of retroactivity,” it cautioned, “will leave
room for disagreement in hard cases, and is unlikely to classify
the enormous variety of legal changes with perfect

                               18
philosophical clarity.” Id. at 270. For that reason, it
encouraged courts to rely on “familiar considerations of fair
notice, reasonable reliance, and settled expectations [for]
sound guidance.” Id.

       The petitioners ask us to ignore Landgraf but do not
offer a different definition of retroactivity. They argue that
Landgraf is inapposite because its reasoning derives from
provisions in the United States Constitution, whereas the filed
rate doctrine derives from the text of the FPA. Not so. While
Landgraf tells us that the presumption against retroactivity
derives from the Constitution, its analysis of when a legal
requirement is retroactive does not turn on any specific text.
That explains why courts routinely apply Landgraf’s well-
worn retroactivity principles to all sorts of agency actions —
including FERC’s. See Solar Energy Indus. Ass’n v. FERC,
80 F.4th 956, 981 (9th Cir. 2023) (citing cases “applying the
principles of Landgraf to the analysis of regulatory
retroactivity”); Weld Cnty., 72 F.4th at 292–94 (applying
Landgraf to conclude that the EPA retroactively imposed a
nonattainment designation on El Paso County, Texas); Bell
Atl. Tel. Cos. v. FCC, 79 F.3d 1195, 1207 (D.C. Cir. 1996)
(applying Landgraf to FCC orders). 4 Thus, we will use
Landgraf as a guide to our retroactivity analysis.

4
  We note that recent decisions from the Court of Appeals for
the District of Columbia Circuit applying the filed rate doctrine
do not mention Landgraf, but their analysis is consistent with
Landgraf. For example, in Oklahoma Gas, the court ruled that
it would be retroactive for FERC to waive a tariff’s one-year
billing deadline after it had elapsed. 11 F.4th at 829. Waiving
that requirement would be retroactive under Landgraf because
it would alter the legal consequence of the regional

                               19
                               B.

        The Tariff Amendment is retroactive because it altered
the legal consequence attached to a past action when it allowed
PJM to use a different LDA Reliability Requirement than the
one it had calculated and posted.

                               1.

         We begin with the text of the Tariff. See Okla. Gas, 11
F.4th at 827 (“A tariff provision must be understood according
to its plain meaning, which we draw from its text and
context.”). The Tariff provides that PJM must
“determine . . . the [LDA] Reliability Requirement . . . prior to
the conduct of the . . . Auction.” Tariff, Attach. DD
§ 5.10(a)(vi)(B). It further provides that PJM “will post” the
LDA Reliability Requirement “prior to conducting
the . . . Auction.” Id. § 5.11(a). And the LDA Reliability
Requirement “will be used for such . . . Auction.” Id.
§ 5.10(a)(vi)(A). These provisions expressly require PJM to
calculate and post the LDA Reliability Requirement prior to
conducting the Auction and then use this parameter in the
Auction.

transmission operator’s failure to meet the billing deadline. In
Old Dominion, the court ruled that it would be retroactive for
FERC to waive a tariff’s rate cap. 892 F.3d at 1231–32. Again,
waiving that requirement would be retroactive under Landgraf
because it would alter the legal consequence of the limit set by
the rate cap.

                               20
        Elsewhere, the Tariff sets forth limited circumstances in
which PJM could adjust the LDA Reliability Requirement after
it had run the optimization algorithm. For example, PJM may
adjust the LDA Reliability Requirement “to reflect Price
Responsive Demand.” Id. § 5.11(e). 5 And PJM may also
correct an “error” in the initial posting of auction results under
certain circumstances. Id. In addition, PJM may apply certain
mitigation techniques to account for market seller offer caps,
the details of which are not relevant here. Id. § 6.2(b).

        Read as a whole, the Tariff thus contemplates that the
calculated and posted LDA Reliability Requirement must be
used in the Auction but may be adjusted under certain limited,
enumerated circumstances listed in the Tariff. The Tariff
Amendment, however, added a new circumstance to this list:
if certain resources did not participate in the Auction, PJM
could adjust the LDA Reliability Requirement downward to
reflect this circumstance. All parties agree that PJM had no
authority under the Tariff to adjust the LDA Reliability
Requirement downward to reflect this circumstance. Only the
Tariff Amendment authorized this adjustment. See FERC Br.
39 (noting that the Tariff “at the time lacked a mechanism for
adjusting the [LDA Reliability] Requirement” to account for
certain resources’ lack of participation in the Auction
(emphasis added)); PJM Br. 15 (acknowledging that the Tariff
Amendment authorized “an additional adjustment to LDA
Reliability Requirements” (emphasis added)); Initial Order at
4 ¶ 5 (“PJM states that the current auction rules do not allow

5
  Price Responsive Demand “refers to end-use consumers
capable of curtailing their energy use within a short timeframe
in response to variable energy prices.” FERC Br. 12 n.3 (citing
Initial Order at 10 ¶ 17 n.58).

                               21
PJM to update the LDA Reliability Requirement during the
auction process . . . .” (emphasis added)). 6

                               2.

       The unambiguous language of the Tariff and Tariff
Amendment resolves this case. Under the Tariff, PJM
calculated and posted the LDA Reliability Requirement (past
action), and it was required to use it in the Auction (legal
consequence). The Tariff Amendment, however, permitted
PJM to use a different LDA Reliability Requirement to reflect
certain resources’ lack of participation.        The Tariff
Amendment thus altered the legal consequence attached to
PJM’s calculation and posting of the LDA Reliability
Requirement. For that reason, it is retroactive.

      FERC resists this conclusion. In its view, the Tariff
Amendment is not retroactive because it did not alter the fact
that PJM complied with the Tariff’s LDA Reliability
Requirement posting deadline. And FERC avers that PJM
“used” the LDA Reliability Requirement in the sense that, by

6
  The canon of construction known as expressio unius est
exclusio alterius, which means “the expression of one thing is
the exclusion of the other,” confirms this interpretation. United
States v. Nasir, 17 F.4th 459, 472 (3d Cir. 2021) (en banc). The
Tariff’s inclusion of circumstances in which the LDA
Reliability Requirement could be adjusted is evidence of its
intent to exclude all other circumstances not enumerated.
Because FERC and PJM concede that only the Tariff
Amendment provided PJM the mechanism to make the
adjustment it made, we need not rely on this interpretive canon
alone.

                               22
the time it adjusted the LDA Reliability Requirement, the
Tariff Amendment was on file and permitted this adjustment.
FERC argues that PJM’s compliance with “one stage of the
auction process” did not preclude it from “updating the manner
in which that LDA Reliability Requirement is incorporated
into a later phase of the auction process.” Initial Order at 82
¶ 171.

       We are unconvinced by the contortions in FERC’s
reasoning. The relevant inquiry is simply whether the Tariff
Amendment alters the legal consequences attached to past
actions. The Tariff is clear that PJM’s calculation and posting
of the LDA Reliability Requirement carried a legal
consequence: it “will be used for such . . . Auction.” Tariff,
Attach. DD § 5.10(a)(vi)(A). That simple instruction means
what it says: the calculated and posted LDA Reliability
Requirement cannot be altered outside of the limited
circumstances enumerated in the Tariff. Adjusting for certain
resources’ lack of participation was not one of them. Nothing
in the Tariff contemplates that “use” of this LDA Reliability
Requirement includes new updates at later stages of the
Auction. Thus, PJM did not “use” the calculated and posted
LDA Reliability Requirement as the Tariff required. The
Tariff Amendment is therefore retroactive.

        FERC’s attempt to fall back on other Tariff provisions
is unpersuasive. Section 5.12(a) of the Tariff provides that
PJM must conduct the Auction while “minimiz[ing] the cost of
satisfying the reliability requirements.” Id. § 5.12(a). FERC
seizes on this language to argue that PJM’s actions comported
with the Tariff. But this provision does not give PJM carte
blanche authority to minimize costs. Instead, it expressly
directs PJM (in the same sentence) to “respect[] all applicable

                              23
requirements and constraints.” Id. Furthermore, it would not
make sense to interpret section 5.12(a)’s general goal of
minimizing costs to override the Tariff’s specific requirement
that PJM use the calculated and posted LDA Reliability
Requirement in the Auction. See Okla. Gas, 11 F.4th at 828–
29 (“Whenever possible, the provisions of a tariff should be
interpreted harmoniously so as to give effect to all of its
provisions to and to avoid rendering any provision
meaningless.” (quotation marks omitted)).

        Section 5.11(e)’s “error” provision does not alter our
result, either. That provision provides that PJM may correct
“potential error[s] in the initial posting of auction results.”
Tariff, Attach. DD § 5.11(e). FERC claims that the artificially
inflated costs in the DPL-South region constituted an “error”
that PJM had authority to correct. Although section 5.11(e)
does not define “error,” it would be implausible to interpret that
term to give PJM freewheeling discretion to adjust the LDA
Reliability Requirement. Such an interpretation would render
the Tariff’s enumerated, limited circumstances in which PJM
may adjust that parameter superfluous. Moreover, FERC’s
position is undermined by its own admission that the Tariff
“lacked a mechanism” for adjusting the LDA Reliability
Requirement downward to reflect certain resources’ lack of
participation. FERC Br. 39. 7

7
  We are similarly unpersuaded by PJM’s reliance on section
9.2(b) of the Tariff, which authorizes PJM to seek “prompt”
amendments to prevent “imminent severe economic harm to
electric consumers.” Tariff § 9.2(b). That provision allows
PJM to bypass its ordinary process of consulting stakeholders
before submitting a section 205 filing. Of course, PJM is free
to seek tariff amendments on an emergency basis. But FERC

                               24
        FERC also relies on West Deptford Energy, LLC v.
FERC, 766 F.3d 10 (D.C. Cir. 2014), where the court vacated
a FERC order that failed adequately to explain why FERC
applied a superseded tariff to an agreement filed after the new
tariff’s effective date. Id. at 25. But that decision is inapposite.
Under its own precedents, FERC was required in that case to
apply the rate on file — the new tariff — to the agreement. Id.
at 19. Here, by contrast, FERC allowed PJM to apply a new
rule to an auction that was already underway, with the effect of
altering a legal consequence that attached to a past action in the
Auction.

        FERC cites Louisiana Public Service Commission v.
FERC, 10 F.4th 839 (D.C. Cir. 2021), for the proposition that
“the rule against retroactive ratemaking does not protect a
utility’s expectation that a rate will not change in the future.”
Id. at 848. That is true, but beside the point. Here, the Tariff
Amendment did more than just disappoint expectations; it
nullified a legal consequence attached to a past action taken in
the Auction. Thus, it is retroactive, and FERC violated the
filed rate doctrine by approving it. 8

is not free to approve amendments that violate the filed rate
doctrine, regardless of the equities. See infra Part III(C).
8
  The petitioners also argue that the Tariff Amendment is
retroactive because it allowed PJM to disregard the Auction
results. FERC maintains that the Auction produced no results
at the time it was halted. We decline to consider this alternative
argument because it is unnecessary to the resolution of this
case.

                                25
                                C.

       We emphasize that the equities play no role in our
application of the filed rate doctrine. It is well established that
the filed rate doctrine “does not yield, no matter how
compelling the equities.” Okla. Gas, 11 F.4th at 829–30
(quotation marks omitted). Accordingly, if FERC “violated
the filed rate doctrine or the rule against retroactive
ratemaking, we would not then invoke the Commission’s
assessment of the equities to overcome those violations.” Id.
at 832 (quoting Pub. Utils. Comm’n of the State of Cal. v.
FERC, 988 F.2d 154, 168 n.12 (D.C. Cir. 1993)).

        This bright-line rule could potentially produce a harsh
result in this case, but it advances a central purpose of the filed
rate doctrine: predictability. See AT&T Corp. v. Core
Commc’ns, Inc., 806 F.3d 715, 731 (3d Cir. 2015); Old
Dominion, 892 F.3d at 1230; W. Deptford, 766 F.3d at 12.
Courts have described the doctrine as a “two-way street”
because it requires “steady application regardless of what party
is seeking to reexamine the past.” Pub. Utils. Comm’n of the
State of Cal. v. FERC, 894 F.2d 1372, 1383–84 (D.C. Cir.
1990). The doctrine forbids “post hoc tinkering,” id. at 1383,
even where, as here, FERC claims its actions correct “errors of
judgment” or avoid “distortion in market signals,” Columbia
Gas Transmission Corp. v. FERC, 895 F.2d 791, 797 (D.C. Cir.
1990).

        Why is predictability of such importance? First,
because Congress said so. Recall that the filed rate doctrine is
“an application of explicit statutory language.” Borough of
Ellwood City, 583 F.2d at 648. As one court has observed, the
filed rate doctrine “reflects a congressional determination that

                                26
parties in the industry need to be able to rely on the finality of
approved rates, and that this interest outweighs the value of
being able to correct for decisions that in hindsight may appear
unsound.” Pub. Utilities Comm’n of the State of Cal., 894 F.2d
at 1383. FERC has no authority to disregard Congress’s will,
and neither do we.

        The second reason predictability is important is because
electricity markets depend on it. Stable markets depend on
stable rules. FERC’s position makes auction rules inherently
unstable because, in its view, it can change auction rules any
time before clearing prices are final and capacity commitments
are awarded without running afoul of the filed rate doctrine.
Initial Order at 79 ¶ 167; Oral Arg. 26:00–26:28. FERC’s
disregard of the filed rate doctrine as a limiting principle
creates unpredictability in the markets. Under FERC’s
interpretation of the filed rate doctrine, suppliers must submit
binding offers “with no assurance about what rules may
eventually be applied.” App. 251 (Danly, Comm’r., dissenting
from Rehearing Order). Auction rules would become, at best,
a “moving target.” App. 129 (Danly, Comm’r., dissenting
from Initial Order). By eroding confidence in the markets,
FERC may ultimately harm consumers who buy electricity in
those markets.

                               D.

       The petitioners ask us to vacate the orders approving the
Tariff Amendment. But only the portion of the orders that
allows PJM to apply the Tariff Amendment to the 2024/25
capacity auction is retroactive. The petitioners do not argue
that applying the Tariff Amendment to some other capacity
auction in the future would be retroactive. We will therefore

                               27
vacate only the portion of FERC’s orders that allows PJM to
apply the Tariff Amendment to the 2024/25 capacity auction.
See Weld Cnty., 72 F.4th at 296 (“[J]udicial remedies should
be ‘no more burdensome to the defendant than necessary to
provide complete relief’ to the plaintiffs or petitioners.”
(quoting Califano v. Yamasaki, 442 U.S. 682, 702 (1979))).

                            IV.

       We will grant the petitions for review and vacate the
portion of FERC’s orders that allows PJM to apply the Tariff
Amendment to the 2024/25 capacity auction.

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