D.C. Circuit Rejects Challenges To FERC’s Order No. 1000

The court turned back all challenges to FERC's order, which imposed major regional transmission planning requirements, concluding that FERC has adequately justified the order and acted within its statutory authority.

On August 15, the U.S. Court of Appeals for the District of Columbia Circuit rejected the challenges filed by various utilities, industry groups, and state commissions that claimed that the Federal Energy Regulatory Commission (FERC or the Commission) overstepped its authority when promulgating Order No. 1000.1 The court's decision in South Carolina Public Service Authority v. FERC,2 which FERC Chairman Cheryl LaFleur hailed as "critical to the Commission's efforts to support efficient, competitive, and cost-effective transmission,"3 substantially strengthens FERC's ability to establish the structures necessary to encourage and facilitate competitive transmission planning and development.

FERC Had the Authority to Promulgate the Rule

Certain petitioners had challenged FERC's authority to regulate transmission planning under section 206 of the Federal Power Act. These petitioners claimed that FERC's authority is limited to regulating voluntary planning arrangements and does not extend to requiring the new regional planning arrangements mandated by Order No. 1000.

The court rejected this argument, finding that the transmission planning practices regulated by Order No. 1000 are practices that affect rates. The court noted that what constitutes a "practice" is broad and that failing to engage in regional planning is itself a practice. The court viewed Order No. 1000 as "simply the next step" in the transmission planning reforms that began in Order No. 890, and which themselves grew out of Order No. 888.

The court also rejected claims that section 202(a) of the Federal Power Act prevents FERC from mandating transmission planning. Section 202(a) authorizes the Commission to divide the United States into districts and to promote the "voluntary interconnection and coordination of facilities" in those districts. According to the court, the Commission's interpretation that applied section 202(a) only to coordinated operations, as distinguished from pre-operational planning, was permissible.

Finally, the court rejected claims that Order No. 1000 impermissibly intrudes on states' authority to regulate the siting and construction of transmission, particularly because section 201(a) limits the Commission's authority to "only those matters which are not subject to regulation by the States." The court found that FERC "possesses greater authority over...