On December 5, 2024, the U.S. Court of Appeals for the Third Circuit heard oral arguments in Transource Pennsylvania LLC v. Steven M. Defrank, et.al. The case presents the question of potential tension between FERC’s exclusive authority over transmission planning and a state’s siting authority. The court has not yet decided the case.

During the oral arguments, the court inquired about the respective roles of the federal and state governments in regional transmission planning and siting. Certain lines of questioning from the court seemed to express concern about the ability to realize federally-approved transmission projects if a state can deny a permit on grounds that state regulators simply disagree with the federal needs analysis.

The case concerns an interstate electric transmission project proposed by Transource Pennsylvania LLC (“Transource”) and approved by PJM Interconnection, L.L.C. (“PJM”) to relieve congestion within PJM under its FERC-approved regional transmission planning process. After PJM approved of the project, however, the Pennsylvania Public Utility Commission (“PUC”) denied Transource’s application for a certificate of public convenience on the basis that Transource failed to demonstrate a need for the project. Following the administrative litigation at the PUC, Transource sought judicial review. A federal district court granted Transource summary judgment, holding that the PUC violated both the Supremacy and dormant Commerce Clauses of the U.S. Constitution by, inter alia, “second-guessing” PJM’s FERC-approved methodology and applying its own cost-benefit analysis. The PUC appealed.

During oral argument held on December 5, 2024, the court’s questions indicated potential concern that, should it adopt the PUC’s position, a single state could single-handedly disrupt regional projects and interfere with the regional transmission planning role Congress bestowed on FERC. The court asked how regional transmission projects would ever get constructed under the PUC’s proposed framework. The court also asked a series of questions about the relationship between concepts of “need” under Pennsylvania law as compared to federally-approved planning rules.

A recording of the oral argument is available here.