News & Insights

Energy Law Exchange

September 10, 2014

D.C. Circuit Upholds FERC’s Order No. 1000

On August 15, 2014, the D.C. Circuit issued a per curiam decision rejecting challenges to the Federal Energy Regulatory Commissions Order No. 1000 rulemaking brought by certain petitioners, including state regulatory authorities, public utilities, regional transmission organizations and trade associations. Order No. 1000 requires public utility transmission providers to participate in a regional transmission planning process and establishes certain requirements for transmission cost allocation.

The Court rejected petitioners arguments that Order No. 1000 exceeded the scope of FERCs authority under the Federal Power Act. Petitioners contended that FERC lacks authority to require mandatory transmission planning because Section 202(a) of the Federal Power Act refers to the voluntary interconnection and coordination of facilities. The Court found no merit to that argument, agreeing with FERC that Section 202(a) addresses only the operation of existing transmission facilities and does not to extend to the planning of future facilities. Petitioners also claimed that Order No. 1000 interferes with the States regulation of transmission planning, siting, and construction, but the Court rejected that argument as well. Pointing out that Section 201(b) of the Federal Power Act does not limit FERCs jurisdiction over retail transmission, the Court found that FERC has broad authority over transmission and reasonably exercised its authority to regulate transmission planning.

The Court also rejected several other challenges to Order No. 1000, including arguments that FERC had improperly required transmission providers to remove provisions from their tariffs giving incumbent utilities preferential rights of first refusal with respect to the construction of any new transmission facilities in their service areas. The Court held that FERC has authority to regulate because right-of-first-refusal provisions directly affect transmission rates, and it concluded that FERC had reasonably found that rights of first refusal are unduly discriminatory and stifle the development of transmission facilities.

FERC Chair Cheryl LaFleur welcomed the decision, emphasizing the need for substantial investment in transmission infrastructure to adapt to changes in [the] resource mix and environmental policies, and describing Order No. 1000 as critical to [FERC]s efforts to support efficient, competitive, and cost-effective transmission.