Fed. Energy Regulatory Comm'n v. Elec. Power Supply Ass'n, Nos. 14–840

CourtU.S. Supreme Court
Writing for the CourtJustice KAGAN delivered the opinion of the Court.
Citation577 U.S. 260,136 S.Ct. 760,193 L.Ed.2d 661
Parties FEDERAL ENERGY REGULATORY COMMISSION, Petitioner v. ELECTRIC POWER SUPPLY ASSOCIATION, et al. EnerNOC, Inc., et al., Petitioners v. Electric Power Supply Association, et al.
Decision Date25 January 2016
Docket NumberNos. 14–840,14–841.

577 U.S. 260
136 S.Ct.
760
193 L.Ed.2d 661

FEDERAL ENERGY REGULATORY COMMISSION, Petitioner
v.
ELECTRIC POWER SUPPLY ASSOCIATION, et al.

EnerNOC, Inc., et al., Petitioners
v.
Electric Power Supply Association, et al.

Nos. 14–840
14–841.

Supreme Court of the United States

Argued Oct. 14, 2015.
Decided Jan. 25, 2016.

As Revised Jan. 28, 2016.


Donald B. Verrilli, Jr., Solicitor General, for Federal Energy Regulatory Commission.

Carter G. Phillips, Washington, DC, for EnerNOC, Inc., et al.

Arocles Aguilar, General Counsel, Harvey Y. Morris, Assistant General Counsel, Elizabeth Dorman, Principal Counsel, California Public, Utilities Commission, San Francisco, CA, for Respondent.

Carter G. Phillips, C. Frederick Beckner III, Sidley Austin LLP, Washington, DC, Matthew J. Cushing, EnerNOC, Inc., Boston, MA, for EnerNOC, Inc.

Marvin T. Griff, Husch Blackwell LLP, Washington, DC, for EnergyConnect, Inc.

Robert A. Weishaar, Jr., McNees Wallace & Nurick LLC, Washington, DC, for the Coalition of MISO Transmission Customers, and PJM Industrial, Customer Coalition.

Allen M. Freifeld, Philadelphia, PA, for Viridity Energy, Inc.

Cynthia S. Bogorad, William S. Huang, Katharine M. Mapes, Jessica R. Bell, Spiegel & McDiarmid LLP, Washington, DC, for Respondents Midwest Load–Serving Entities.

Roger E. Collanton, General Counsel, Burton Gross, Assistant General Counsel, Daniel J. Shonkwiler, Lead Counsel, California Independent System Operator Corp., Folsom, CA, Catherine E. Stetson, Counsel of Record, Elizabeth Austin Bonner, Hogan Lovells US LLP, Washington, DC, for Respondent.

Elizabeth Dorman, Counsel of Record, Principal Counsel, California Public Utilities Commission, San Francisco, CA, H. Robert Erwin, Jr., General Counsel, Ransom E. Davis, Associate General Counsel, Public Service Commission of Maryland, Baltimore, MA, Bohdan R. Pankiw, Chief Counsel, Kriss E. Brown, Assistant Counsel, Pennsylvania Public Utility Commission, Harrisburg, PA, for joint states.

David L. Morenoff, General Counsel, Robert H. Solomon, Solicitor, Holly E. Cafer, Attorney, Federal Energy Regulatory Commission, Washington, DC, Donald B. Verrilli, Jr., Solicitor General, Counsel of Record, Edwin S. Kneedler, Deputy Solicitor General, John F. Bash, Assistant to the Solicitor General, Department of Justice, Washington, DC, for Petitioner.

Vincent P. Duane, Senior Vice President and General Counsel, PJM Interconnection, L.L.C., Audubon, PA, Craig Glazer, Vice President–Federal Government Policy, PJM Interconnection, L.L.C., Washington, DC, Barry S. Spector, Counsel of Record, Paul M. Flynn, Wright & Talisman, P.C., Washington, DC, for Respondent PJM Interconnection, L.L.C.

Ashley C. Parrish, David G. Tewksbury, King & Spalding LLP, Washington, DC, for Electric Power Supply Association.

Paul D. Clement, Counsel of Record, Erin E. Murphy, Bancroft PLLC, Washington,

136 S.Ct. 766

DC, for all respondents joining this brief.

Harvey L. Reiter, Adrienne E. Clair, Stinson Leonard Street LLP, Washington, DC, for American Public Power Association, National Rural Electric Cooperative Association, and Old Dominion Electric Cooperative.

David B. Raskin, Steptoe & Johnson LLP, Washington, DC, for Edison Electric Institute.

Sandra E. Rizzo, Arnold & Porter LLP, Washington, DC, for PPL Electric Utilities Corporation, PPL, EnergyPlus, LLC, PPL Brunner Island, LLC, PPL, Holtwood, LLC, PPL Martins Creek, LLC, PPL, Maine, LLC, PPL Montour, LLC, PPL Susquehanna, LLC, Lower Mount Bethel Energy, LLC, and PJM Power Providers Group.

Paul Breakman, National Rural Electric, Cooperative Association, Arlington, VA, for National Rural Electric Cooperative Association.

Edward H. Comer, Henri D. Bartholomot, Edison Electric Institute, Washington, DC, for Edison Electric Institute.

Delia D. Patterson, Randolph Lee Elliott, American Public Power Association, Arlington, VA, for American Public Power Association.

Jesse A. Dillon, Talen Energy, Allentown, PA, for Talen Energy Marketing, LLC, Brunner Island, LLC, Holtwood, LLC, Martins Creek, LLC, Talen Maine, LLC, Montour, LLC, Susquehanna Nuclear, LLC, and Lower Mount Bethel Energy, LLC.

Michael A. McGrail, PPL Services Corporation, Allentown, PA, for PPL Electric Utilities Corporation.

Justice KAGAN delivered the opinion of the Court.

577 U.S. 264

The Federal Power Act (FPA or Act), 41 Stat. 1063, as amended, 16 U.S.C. § 791a et seq., authorizes the Federal Energy Regulatory Commission (FERC or Commission) to regulate "the sale of electric energy at wholesale in interstate

577 U.S. 265

commerce," including both wholesale electricity rates and any rule or practice "affecting" such rates. §§ 824(b), 824e(a). But the law places beyond FERC's power, and leaves to the States alone, the regulation of "any other sale"—most notably, any retail sale—of electricity. § 824(b). That statutory division generates a steady flow of jurisdictional disputes because—in point of fact if not of law—the wholesale and retail markets in electricity are inextricably linked.

136 S.Ct. 767

These cases concern a practice called "demand response," in which operators of wholesale markets pay electricity consumers for commitments not to use power at certain times. That practice arose because wholesale market operators can sometimes—say, on a muggy August day—offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production. In the regulation challenged here, FERC required those market operators, in specified circumstances, to compensate the two services equivalently—that is, to pay the same price to demand response providers for conserving energy as to generators for making more of it.

Two issues are presented here. First, and fundamentally, does the FPA permit FERC to regulate these demand response transactions at all, or does any such rule impinge on the States' authority? Second, even if FERC has the requisite statutory power, did the Commission fail to justify adequately why demand response providers and electricity producers should receive the same compensation? The court below ruled against FERC on both scores. We disagree.

I

A

Federal regulation of electricity owes its beginnings to one of this Court's decisions. In the early 20th century, state

577 U.S. 266

and local agencies oversaw nearly all generation, transmission, and distribution of electricity. But this Court held in Public Util. Comm'n of R.I. v. Attleboro Steam & Elec. Co., 273 U.S. 83, 89–90, 47 S.Ct. 294, 71 L.Ed. 549 (1927), that the Commerce Clause bars the States from regulating certain interstate electricity transactions, including wholesale sales (i.e., sales for resale) across state lines. That ruling created what became known as the "Attleboro gap"—a regulatory void which, the Court pointedly noted, only Congress could fill. See id., at 90, 47 S.Ct. 294.

Congress responded to that invitation by passing the FPA in 1935. The Act charged FERC's predecessor agency with undertaking "effective federal regulation of the expanding business of transmitting and selling electric power in interstate commerce." New York v. FERC, 535 U.S. 1, 6, 122 S.Ct. 1012, 152 L.Ed.2d 47 (2002) (quoting Gulf States Util. Co. v. FPC, 411 U.S. 747, 758, 93 S.Ct. 1870, 36 L.Ed.2d 635 (1973) ). Under the statute, the Commission has authority to regulate "the transmission of electric energy in interstate commerce" and "the sale of electric energy at wholesale in interstate commerce." 16 U.S.C. § 824(b)(1).

In particular, the FPA obligates FERC to oversee all prices for those interstate transactions and all rules and practices affecting such prices. The statute provides that "[a]ll rates and charges made, demanded, or received by any public utility for or in connection with" interstate transmissions or wholesale sales—as well as "all rules and regulations affecting or pertaining to such rates or charges"—must be "just and reasonable." § 824d(a). And if "any rate [or] charge," or "any rule, regulation, practice, or contract affecting such rate [or] charge[,]" falls short of that standard, the Commission must rectify the problem: It then shall determine what is "just and reasonable" and impose "the same by order." § 824e(a).

Alongside those grants of power, however, the Act also limits FERC's regulatory reach, and thereby maintains a zone of exclusive state jurisdiction. As pertinent here,

577 U.S. 267

§ 824(b)(1) —the same provision that gives FERC authority over wholesale sales—states that "this subchapter," including

136 S.Ct. 768

its delegation to FERC, "shall not apply to any other sale of electric energy." Accordingly, the Commission may not regulate either within-state wholesale sales or, more pertinent here, retail sales of electricity (i.e., sales directly to users). See New York, 535...

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45 practice notes
  • Dist. of Columbia v. U.S. Dep't of Agric., Civil Action No. 20-cv-00119 (BAH)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • October 18, 2020
    ...the "undoubtedly serious" reliance interests of the States, id. at 20, the Court applied the test from Encino Motorcars LLC v. Navarro , 577 U.S. 260, 136 S. Ct. 2117, 195 L.Ed.2d 382 (2016), which permits agencies to make policy changes adverse to affected parties’ reliance interests " ‘as......
  • Teva Pharm. USA, Inc. v. U.S. Food & Drug Admin., Civil Action No. 20-808 (BAH)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • December 31, 2020
    ...substitute [its] own judgment for that’ of the agency." Am. Bankers Ass'n , 934 F.3d at 663 (quoting FERC v. Elec. Power Supply Ass'n , 577 U.S. 260, 136 S. Ct. 760, 782, 193 L.Ed.2d 661 (2016) ). Of particular relevance here, "[i]n the context of a challenge to the FDA's decisionmaking, [c......
  • Energy Mich., Inc. v. Scripps, Case Number 20-12521
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • July 15, 2021
    ...power market (with some exceptions), and state governments regulate the retail markets. See F.E.R.C. v. Elec. Power Supply Ass'n , 577 U.S. 260, 264, 136 S.Ct. 760, 193 L.Ed.2d 661 (2016) (citing the Federal Power Act, 41 Stat. 1063, as amended, 16 U.S.C. § 791a et seq. ).549 F.Supp.3d 651 ......
  • W. Coal Traffic League v. Surface Transp. Bd., No. 20-1058
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • May 28, 2021
    ...choice made." Int'l Longshore & Warehouse Union v. NLRB , 971 F.3d 356, 360 (D.C. Cir. 2020) (quoting FERC v. Elec. Power Supply Ass'n , 577 U.S. 260, 292, 136 S.Ct. 760, 193 L.Ed.2d 661 (2016) ).When reviewing an agency's discontinuation of proceedings under an ANPR, we are more deferentia......
  • Request a trial to view additional results
42 cases
  • Dist. of Columbia v. U.S. Dep't of Agric., Civil Action No. 20-cv-00119 (BAH)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • October 18, 2020
    ...the "undoubtedly serious" reliance interests of the States, id. at 20, the Court applied the test from Encino Motorcars LLC v. Navarro , 577 U.S. 260, 136 S. Ct. 2117, 195 L.Ed.2d 382 (2016), which permits agencies to make policy changes adverse to affected parties’ reliance interests " ‘as......
  • Teva Pharm. USA, Inc. v. U.S. Food & Drug Admin., Civil Action No. 20-808 (BAH)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • December 31, 2020
    ...substitute [its] own judgment for that’ of the agency." Am. Bankers Ass'n , 934 F.3d at 663 (quoting FERC v. Elec. Power Supply Ass'n , 577 U.S. 260, 136 S. Ct. 760, 782, 193 L.Ed.2d 661 (2016) ). Of particular relevance here, "[i]n the context of a challenge to the FDA's decisionmaking, [c......
  • Energy Mich., Inc. v. Scripps, Case Number 20-12521
    • United States
    • United States District Courts. 6th Circuit. United States District Court (Eastern District of Michigan)
    • July 15, 2021
    ...power market (with some exceptions), and state governments regulate the retail markets. See F.E.R.C. v. Elec. Power Supply Ass'n , 577 U.S. 260, 264, 136 S.Ct. 760, 193 L.Ed.2d 661 (2016) (citing the Federal Power Act, 41 Stat. 1063, as amended, 16 U.S.C. § 791a et seq. ).549 F.Supp.3d 651 ......
  • W. Coal Traffic League v. Surface Transp. Bd., No. 20-1058
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • May 28, 2021
    ...choice made." Int'l Longshore & Warehouse Union v. NLRB , 971 F.3d 356, 360 (D.C. Cir. 2020) (quoting FERC v. Elec. Power Supply Ass'n , 577 U.S. 260, 292, 136 S.Ct. 760, 193 L.Ed.2d 661 (2016) ).When reviewing an agency's discontinuation of proceedings under an ANPR, we are more deferentia......
  • Request a trial to view additional results
2 books & journal articles
  • Grid Reliability Through Clean Energy.
    • United States
    • Stanford Law Review Vol. 74 Nbr. 5, May 2022
    • May 1, 2022
    ...that a state program designed to incentivize new generation capacity was preempted under the FPA); FERC v. Elec. Power Supply Ass'n, 577 U.S. 260, 276-77 (2016) (finding that FERC had the authority to regulate demand-response resources-which also operate in the state-regulated retail space-......
  • ZAP THE SLEEPING GIANT: REVAMPING ORDER 1000 TO FACILITATE DECARBONIZATION ACROSS THE WESTERN UNITED STATES.
    • United States
    • Environmental Law Vol. 51 Nbr. 4, September 2021
    • September 22, 2021
    ...including both wholesale electricity rates and any rule or practice 'affecting such rate[s]."' FERC v. Elec. Power Supply Ass'n (EPSA), 577 U.S. 260, 260 (2016) (quoting 16 U.S.C. [section][section] 824(b), 824e(a)). FERC also has "jurisdiction over all facilities for such transmission or s......

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