On November 17, 2023, the U.S. Court of Appeals of the District of Columbia Circuit (“D.C. Circuit”) denied petitions challenging FERC’s approval of recent changes to the PJM Interconnection, L.L.C.’s (“PJM”) Open Access Transmission Tariff. The changes permit Transmission Owners in PJM to plan for “asset management projects” and certain End of Life (“EOL”) projects without satisfying PJM regional planning criteria. The D.C. Circuit also dismissed certain petitions for lack of standing.

The PJM Transmission Owners Agreement Administrative Committee (“TOA-AC”) filed its proposed changes to Attachment M-3 of the PJM Tariff in June 2020. Attachment M-3 provides procedures by which Transmission Owners plan Supplemental Projects, comprised of expansions and enhancements to their existing transmission infrastructure, which are exempt from PJM regional planning criteria. The proposal sought to expand the type of projects to include “asset management projects” (i.e., modifications or replacements that do not result in more than an “Incidental Increase” in transmission capacity) and to coordinate EOL projects with the regional expansion plan (“RTEP”) where one solution could address both needs. FERC accepted the proposal in August 2020, after which several parties ultimately petitioned the court for review.

As an initial matter, the court found that FERC reasonably accepted the proposal despite the fact that the TOA-AC did not hold a vote of the present quorum prior to filing with the Commission. Specifically, the court held that “the Commission reasonably concluded that all § 205 filings have not been ceded to PJM, and without an unambiguous ceding of filing rights to PJM, the transmission owners still retain them.”

Petitioners’ principal concern was whether PJM should have planning authority over the types of projects identified in the proposal. The D.C. Circuit agreed with FERC that Transmission Owners retained exclusive rights under the PJM Owners Agreement to plan asset management projects, including certain EOL needs. Petitioners disagreed with FERC that Transmission Owners retained planning authority over asset management projects because PJM retains planning authority over “enhancements and expansions,” which they alleged include some of the projects in this category. However, the D.C. Circuit deferred to FERC under its “Chevron-like deference” that the category of “enhancements and expansions” does not overlap with “asset management projects,” as defined under the proposal, because whether an enhancement “adds no more than an incidental increase is ambiguous” and FERC’s decision was reasonable. Though the court admitted that whether this interpretation is consistent with FERC’s precedent was a “closer call,” it ultimately sided with the Commission because the proposal (1) limits such improvements to those that are not “reasonably severable” from the asset management project and (2) based its definition of Incidental Increase on that precedent.

Petitioners also alleged that FERC’s assignment of EOL needs to Transmission Owners violated Order Nos. 1000 and 2000 by allowing them “to locally dictate the future of the Transmission Facilities and system that PJM administers.” The court agreed with FERC that Order No. 2000 provided for “considerable flexibility” in transmission planning. The court also found that the proposal could not violate Order No. 1000, concerning cost allocation and planning of regional transmission projects, because the proposal concerns only local projects that Transmission Owners have retained the rights over. Furthermore, the court found that FERC’s decision not to address cost allocation was reasonable because the proposal did not seek revisions to such provisions in the PJM Tariff.

A copy of the court’s opinion can be found here.