CASES ADJUDGED
IN THE
SUPREME COURT OF THE UNITED STATES
AT
OCTOBER TERM, 2001
Syllabus
NEW YORK ET AL. v. FEDERAL ENERGY REGULATORY COMMISSION
ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
DISTRICT OF COLUMBIA CIRCUIT
No. 00-568. Argued October 3, 200l-Decided March 4, 2002*
When the Federal Power Act (FPA) became law in 1935, most
electric utilities operated as separate, local monopolies subject
to state or local regulation; their sales were "bundled," meaning
that consumers paid a single charge for both the cost of the
electricity and the cost of its delivery; and there was little
competition among utility companies. Section 201(b) of the FPA gave
the Federal Power Commission (predecessor to respondent Federal
Energy Regulatory Commission (FERC)) jurisdiction over "the
transmission of electric energy in interstate commerce and the sale
of such energy at wholesale in interstate commerce"; § 205
prohibited, among other things, unreasonable rates and undue
discrimination "with respect to any transmission or sale subject to
the [Commission's] jurisdiction"; and § 206 gave the Commission the
power to correct such unlawful practices. Since 1935, the number of
electricity suppliers has increased dramatically and technological
advances have allowed electricity to be delivered over three major
"grids" in the continental United States. In all but three States,
any electricity entering a grid becomes part of a vast pool of
energy moving in interstate commerce. As a result, power companies
can transmit electricity over long dis-
*Together with No. 00-809, Enron Power Marketing, Inc. v.
Federal Energy Regulatory Commission et al., also on certiorari to
the same court.
2
Syllabus
tances at a low cost. However, public utilities retain ownership
of the transmission lines that their competitors must use to
deliver electricity to wholesale and retail customers and thus can
refuse to deliver their competitors' energy or deliver that power
on terms and conditions less favorable than those they apply to
their own transmissions. In Order No. 888, FERC found such
practices discriminatory under § 205. Invoking its § 206 authority,
FERC (1) ordered "functional unbundling" of wholesale generation
and transmission services, which means that each utility must state
separate rates for its wholesale generation, transmission, and
ancillary services, and must take transmission of its own wholesale
sales and purchases under a single general tariff applicable
equally to itself and others; (2) imposed a similar open access
requirement on unbundled
retail transmissions in interstate
commerce; and (3) declined to extend the open access requirement to
the transmission component of bundled retail sales, concluding that
unbundling such transmissions was unnecessary and would raise
difficult jurisdictional issues that could be more appropriately
considered in other proceedings. After consolidating a number of
review petitions, the District of Columbia Circuit upheld most of
Order No. 888. Here, the petition of New York et al. (collectively
New York) questions FERC's assertion of jurisdiction over unbundled
retail transmissions, and the petition of Enron Power Marketing,
Inc. (Enron), questions FERC's refusal to assert jurisdiction over
bundled retail transmissions.
Held:
1. FERC did not exceed its jurisdiction by including unbundled
retail transmissions within the scope of Order No. 888's open
access requirements. New York insists that retail transactions are
subject only to state regulation, but the electric industry has
changed since the FPA was enacted, at which time the electricity
universe was neatly divided into spheres ofretail versus wholesale
sales. The FPA's plain language readily supports FERC's
jurisdiction claim. Section 201(b) gives FERC jurisdiction over
"electric energy in interstate commerce," and the unbundled
transmissions that FERC has targeted are made such transmissions by
the national grid's nature. No statutory language limits FERC's
transmission jurisdiction to the wholesale market, although
the statute does limit FERC's
sales jurisdiction to that
market. In the face of this clear statutory language, New York's
arguments supporting its contention that the statute draws a bright
jurisdictional line between wholesale and retail transactions are
unpersuasive. Its argument that the Court of Appeals applied an
erroneous standard of review because it ignored the presumption
against federal pre-emption of state law focuses on the wrong legal
question. The type of pre-emption at issue
3
here concerns the rule that a federal agency may pre-empt state
law only when it is acting within the scope of congressionally
delegated authority. Because the FPA unambiguously gives FERC
jurisdiction over the "transmission of electric energy in
interstate commerce," without regard to whether the transmissions
are sold to a reseller or directly to a consumer, FERC's exercise
of this power is valid. New York's attempts to discredit this
straightforward statutory analysis by reference to the FPA's
legislative history are unavailing. And its arguments that FERC
jurisdiction over unbundled retail transmissions will impede sound
energy policy are properly addressed to FERC or to the Congress.
Pp. 16-24.
2. FERC's decision not to regulate bundled retail transmissions
was a statutorily permissible policy choice. Contrary to Enron's
argument, FERC chose not to assert jurisdiction over such
transmissions, but it did not hold itself powerless to claim
jurisdiction. Indeed, FERC explicitly reserved decision on that
jurisdictional issue, and the reasons FERC supplied for doing so
provide valid support for that decision. Having determined that the
remedy it ordered constituted a sufficient response to the problems
it had identified in the wholesale market, FERC had no § 206
obligation to regulate bundled retail transmissions or to order
universal unbundling. This Court also agrees with FERC's conclusion
that regulating bundled retail transmissions raises difficult
jurisdictional issues. Pp. 25-28.
225 F.3d
667, affirmed.
STEVENS, J., delivered the opinion of the Court, Parts II and
III of which were unanimous, and Parts I and IV of which were
joined by REHNQUIST, C. J., and O'CONNOR, SOUTER, GINSBURG, and
BREYER, JJ. THOMAS, J., filed an opinion concurring in part and
dissenting in part, in which SCALIA and KENNEDY, JJ., joined,
post, p. 28.
Lawrence G.
Malone argued the cause and filed
briefs for petitioners State of New York et al. in No. 00-568 and a
brief for respondents State Public Service Commissions in No.
00-809. With him on the briefs were
Jonathan D. Feinberg and
Carl F. Patka.
Louis R. Cohen argued the cause and filed briefs for
petitioner in No. 00-809 and a brief for respondent Enron Power
Marketing, Inc., in No. 00-568. With him on the briefs were
Joseph E. Killory, Jr., Jonathan J. Frankel,
1.
Jay Palansky, Jeffrey D. Watkiss, and
Joseph R.
Hartsoe. Briefs for re-
4
spondents under this Court's Rule 12.6 in support of petitioner
in No. 00-809 were filed by
James van R. Springer and
Steven L. Miller for the Electric Power Supply Association;
and by
Sara D. Schotland for the Electricity Consumers
Resource Council et al. Briefs for respondents under this Court's
Rule 12.6 in support of petitioners in No. 00-568 were filed by
Robert C.
McDiarmid, Cynthia S.
Bogorad, and
Peter J. Hopkins for the Transmission Access
Policy Study Group; and by
Michael A. Mullett for Citizens
Action Coalition of Indiana, Inc.
Deputy Solicitor General Kneedler argued the cause for
respondents in both cases. With him on the brief for respondent
Federal Energy Regulatory Commission were
Acting Solicitor
General Underwood, Austin C.
Schlick, Cynthia A.
Marlette, and
Timm L. Abendroth. Charles G.
Cole,
Alice E. Loughran, Edward H. Comer, and
Barbara A.
Hindin filed a brief for the Edison Electric Institute,
respondent in both cases. t
JUSTICE STEVENS delivered the opinion of the Court. These cases
raise two important questions concerning the jurisdiction of the
Federal Energy Regulatory Commission (FERC or Commission) over the
transmission of electricity. First, if a public utility
"unbundles"-i.
e., separates-the cost of transmission from
the cost of electrical energy when billing its retail customers,
may FERC require the utility to transmit competitors' electricity
over its lines on the same terms that the utility applies to its
own energy transmis-
t
Bohdan R. Pankiw and
John A. Levin filed a brief
for the Pennsylvania Public Utility Commission as
amicus
curiae urging affirmance.
Briefs of
amici curiae were filed for the State of
California et al. by
Bill Lockyer, Attorney General,
Peter Siggins, Chief Deputy Attorney General,
Rick
Frank, Chief Assistant Attorney General,
Morris Beatus,
Senior Assistant Attorney General,
Gary M. Cohen, and
William Julian II; and for Electrical Engineers et al. by
Charles J. Cooper.
5
sions? Second, must FERC impose that requirement on utilities
that continue to offer only "bundled" retail sales?
In Order No. 888, issued in 1996 with the stated purpose of
"Promoting Wholesale Competition Through Open Access
Non-Discriminatory Transmission Services by Public Utilities," 1
FERC answered yes to the first question and no to the second. It
based its answers on provisions of the Federal Power Act (FPA), as
added by § 213, 49 Stat. 847, and as amended, 16 U. S. C. § 824
et seq., enacted in 1935. Whether or not the 1935 Congress
foresaw the dramatic changes in the power industry that have
occurred in recent decades, we are persuaded, as was the Court of
Appeals, that FERC properly construed its statutory authority.
I
In 1935, when the FP A became law, most electricity was sold by
vertically integrated utilities that had constructed their own
power plants, transmission lines, and local delivery systems.
Although there were some interconnections among utilities, most
operated as separate, local monopolies subject to state or local
regulation. Their sales were "bundled," meaning that consumers paid
a single charge that included both the cost of the electric energy
and the cost of its delivery. Competition among utilities was not
prevalent.
Prior to 1935, the States possessed broad authority to regulate
public utilities, but this power was limited by our cases holding
that the negative impact of the Commerce Clause prohibits state
regulation that directly burdens interstate commerce.2 When
confronted with an attempt by Rhode Is-
1 FERC Stats. & Regs., Regs. Preambles, Jan. 1991-June 1996,
~ 31,036, p. 31,632, 61 Fed. Reg. 21540 (1996). Order No. 888 also
deals with the recovery of "stranded costs" by utilities, but this
aspect of the order is not before us.
2 For example, in cases involving the interstate transmission of
natural gas, we held that a State could regulate direct sales to
consumers even when the gas was drawn from interstate mains,
Pennsylvania Gas Co. v.
Public Servo Comm'n of N. Y.,
252 U. S. 23
(1920);
Public Util. Comm'n of
6
land to regulate the rates charged by a Rhode Island plant
selling electricity to a Massachusetts company, which resold the
electricity to the city of Attleboro, Massachusetts, we invalidated
the regulation because it imposed a "direct burden upon interstate
commerce."
Public Util. Comm'n of R. 1. v.
Attleboro
Steam &
Elec. Co., 273 U. S. 83, 89 (1927).
Creating what has become known as the
"Attleboro gap," we
held that this interstate transaction was not subject to regulation
by either Rhode Island or Massachusetts, but only "by the exercise
of the power vested in Congress."
Id., at 90.
When it enacted the FPA in 1935,3 Congress authorized federal
regulation of electricity in areas beyond the reach of state power,
such as the gap identified in
Attleboro, but it also
extended federal coverage to some areas that previously had been
state regulated, see,
e. g., id., at 87-88
(explaining, prior to the FP A's enactment, that state regulations
affecting interstate utility transactions were permissible if they
did not directly burden interstate commerce). The FPA charged the
Federal Power Commission (FPC), the predecessor of FERC, "to
provide effective federal regulation of the expanding business of
transmitting and selling electric power in interstate commerce."
Gulf States Util. Co. v.
FPC, 411 U. S. 747, 758
(1973). Specifically, in § 201(b) of the FP A, Congress recognized
the FPC's jurisdiction as including "the transmission of electric
energy in interstate commerce" and "the sale of electric energy at
wholesale in inter-
Kan. v.
Landon, 249 U. S. 236 (1919), but
that a State could not regulate the rate at which gas from
out-of-state producers was sold to independent distributing
companies for resale to local consumers,
Missouri ex rel.
Barrett v.
Kansas Natural Gas Co., 265 U. S. 298, 309
(1924).
3The FPA was enacted as Title II of the Public Utility Act of
1935, 49 Stat. 847. Title I of the Public Utility Act-not at issue
here-regulated financial practices of interstate holding companies
that controlled a large number of public utilities.
7
state commerce." 16 U. S. C. § 824(b). Furthermore, § 205 of the
FPA prohibited, among other things, unreasonable rates and undue
discrimination "with respect to any transmission or sale subject to
the jurisdiction of the Commission," 16 U. S. C. §§ 824d(a)-(b),
and § 206 gave the FPC the power to correct such unlawful
practices, 16 U. S. C. § 824e(a).
Since 1935, and especially beginning in the 1970's and 1980's,
the number of electricity suppliers has increased dramatically.
Technological advances have made it possible to generate
electricity efficiently in different ways and in smaller plants.4
In addition, unlike the local power networks of the past,
electricity is now delivered over three major networks, or "grids,"
in the continental United States. Two of these grids-the "Eastern
Interconnect" and the "Western Interconnect"-are connected to each
other. It is only in Hawaii and Alaska and on the "Texas
Interconnect"which covers most of that State-that electricity is
distributed entirely within a single State. In the rest of the
country, any electricity that enters the grid immediately becomes a
part of a vast pool of energy that is constantly moving in
interstate commerce.5 As a result, it is now possible for
4 In Order No. 888, FERC noted that the optimum size of electric
generation plants has shifted from the larger, 500 megawatt plants
(with 10-year lead time) of the past to the smaller, 50-to-150
megawatt plants (with I-year lead time) of the present. These
smaller plants can produce energy at a cost of 3-to-5 cents per
kilowatt-hour, as opposed to the older plants' production cost of
4-to-15 cents per kilowatt-hour. Order No. 888, at 31,641.
5 See Brief for Respondent FERC 4-5. Over the years, FERC has
described the interconnected grids in a number of proceedings. For
example, in 1967, the FPC considered whether Florida Power &
Light Co. (FPL)-a utility attached to what was then the regional
grid for the southeastern United States-transmitted energy in
interstate commerce as a result of that attachment. The FPC
concluded that FPUs transmissions were in interstate commerce:
"[S]ince electric energy can be delivered virtually instantaneously
when needed on a system at a speed of 186,000
8
power companies to transmit electric energy over long distances
at a low cost. As FERC has explained, "the nature and magnitude of
coordination transactions" have enabled utilities to operate more
efficiently by transferring substantial amounts of electricity not
only from plant to plant in one area, but also from region to
region, as market conditions fluctuate. Order No. 888, at
31,641.
Despite these advances in technology that have increased the
number of electricity providers and have made it possible for a
"customer in Vermont [to] purchase electricity from an
environmentally friendly power producer in California or a
cogeneration facility in Oklahoma,"
Transmission Access Policy
Study Group v.
FERC, 225 F.3d
667, 681
(CADC 2000) (case below), public utilities
retain ownership of the transmission lines that must be used by
their competitors to deliver electric energy to wholesale and
retail customers. The utilities' control of transmission facilities
gives them the power either to refuse to deliver energy produced by
competitors or to deliver competitors' power on terms and
condi-
miles per second, such energy can be and is transmitted to FPL
when needed from out-of-state generators, and in turn can be and is
transmitted from FPL to help meet out-of-state demands; ... there
is a cause and effect relationship in electric energy occurring
throughout every generator and point on the FPL, Corp, Georgia, and
Southern systems which constitutes interstate transmission of
electric energy by, to, and from FPL."
In re Florida Power
&
Light Co., 37 F. P. C. 544,549 (1967). This Court
found the FPC's findings sufficient to establish the FPC's
jurisdiction.
FPC v.
Florida Power &
Light
Co., 404 U. S.
453, 469 (1972).
As
amici explain in less technical terms, "[e]nergy
flowing onto a power network or grid
energizes the entire
grid, and consumers then draw undifferentiated energy from that
grid." Brief for Electrical Engineers et al. as
Amici Curiae
2. As a result, explain
amici, any activity on the
interstate grid affects the rest of the grid.
Ibid. Amici
dispute the States' contentions that electricity functions "the way
water flows through a pipe or blood cells flow through a vein" and
"can be controlled, directed and traced" as these substances can
be, calling such metaphors "inaccurate and highly misleading."
Id., at 2,5.
9
tions less favorable than those they apply to their own
transmissions.
E. g., Order No. 888, at 31,643-31,644.6
Congress has addressed these evolving conditions in the
electricity market on two primary occasions since 1935. First,
Congress enacted the Public Utility Regulatory Policies Act of 1978
(PURP A), 92 Stat. 3117, 16 U. S. C. § 2601
et seq., to
promote the development of new generating facilities and to
conserve the use of fossil fuels. Because the traditional utilities
controlled the transmission lines and were reluctant to purchase
power from "nontraditional facilities," PURPA directed FERC to
promulgate rules requiring utilities to purchase electricity from
"qualifying cogeneration and small power production facilities."
FERC v.
Mississippi, 456 U. S. 742, 751
(1982); see 16 U. S. C. § 824a-3(a).
Over a decade later, Congress enacted the Energy Policy Act of
1992 (EPAct), 106 Stat. 2776. This law authorized FERC to order
individual utilities to provide transmission services to
unaffiliated wholesale generators (i.
e., to "wheel" power)
on a case-by-case basis. See 16 U. S. C. §§ 824j-824k. Exercising
its authority under the EPAct, FERC ordered a utility to "wheel"
power for a complaining wholesale competitor 12 times, in 12
separate proceedings. Order No. 888, at 31,646. FERC soon
concluded, however, that these individual proceedings were too
costly and time consuming to provide an adequate remedy for undue
discrimination throughout the market.
Ibid.
6 In addition to policing utilities' anticompetitive behavior
through the various statutory provisions that explicitly address
the electric industry, discussed in more detail below, the
Government has also used the antitrust laws to this end. For
example, in
Otter Tail Power Co. v.
United States,
410 U. S. 366
(1973), the Court permitted the Government to seek antitrust
remedies against a utility company which, among other things,
refused to sell power at wholesale to some municipalities and
refused to transfer competitors' power over its lines.
Id.,
at 368. The Court concluded that the FP A's existence did not
preclude the applicability of the antitrust laws.
Id., at
372.
10
Thus, in 1995, FERC initiated the rulemaking proceeding that led
to the adoption of the order presently under review. FERC proposed
a rule that would "require that public utilities owning and/or
controlling facilities used for the transmission of electric energy
in interstate commerce have on file tariffs providing for
nondiscriminatory openaccess transmission services." Notice of
Proposed Rulemaking, FERC Stats. & Regs., Proposed Regs.,
1988-1999, ~ 32,514, p. 33,047, 60 Fed. Reg. 17662 (hereinafter
NPRM). The stated purpose of the proposed rule was "to encourage
lower electricity rates by structuring an orderly transition to
competitive bulk power markets." NPRM 33,048. The NPRM stated:
"The key to competitive bulk power markets is opening up
transmission services. Transmission is the vital link between
sellers and buyers. To achieve the benefits of robust, competitive
bulk power markets, all wholesale buyers and sellers must have
equal access to the transmission grid. Otherwise, efficient trades
cannot take place and ratepayers will bear unnecessary costs. Thus,
market power through control of transmission is the single greatest
impediment to competition. Unquestionably, this market power is
still being used today, or can be used, discriminatorily to block
competition." 7 Id., at 33,049.
7 Later in the NPRM, FERC explained that §206 of the FPA
authorizes FERC to remedy unduly discriminatory practices, and
found: "that utilities owning or controlling transmission
facilities possess substantial market power; that, as profit
maximizing firms, they have and will continue to exercise that
market power in order to maintain and increase market share, and
will thus deny their wholesale customers access to competitively
priced electric generation; and that these unduly discriminatory
practices will deny consumers the substantial benefits of lower
electricity prices." NPRM 33,052.
11
Rather than grounding its legal authority in Congress' more
recent electricity legislation, FERC cited §§ 205-206 of the 1935
FPA-the provisions concerning FERC's power to remedy unduly
discriminatory practices-as providing the authority for its
rulemaking. See 16 U. S. C. §§ 824d824e.
In 1996, after receiving comments on the NPRM, FERC issued Order
No. 888. It found that electric utilities were discriminating in
the "bulk power markets," in violation of § 205 of the FP A, by
providing either inferior access to their transmission networks or
no access at all to third-party wholesalers of power. Order No.
888, at 31,682-31,684. Invoking its authority under § 206, it
prescribed a remedy containing three parts that are presently
relevant.
First, FERC ordered "functional unbundling" of wholesale
generation and transmission services.
Id., at 31,654. FERC
defined "functional unbundling" as requiring each utility to state
separate rates for its wholesale generation, transmission, and
ancillary services, and to take transmission of its own wholesale
sales and purchases under a single general tariff applicable
equally to itself and to others.
Second, FERC imposed a similar open access requirement on
unbundled
retail transmissions in interstate commerce.
Although the NPRM had not envisioned applying the open access
requirements to retail transmissions, but rather "would have
limited eligibility to wholesale transmission customers," FERC
ultimately concluded that it was "irrelevant to the Commission's
jurisdiction whether the customer receiving the unbundled
transmission service in interstate commerce is a wholesale or
retail customer."
Id., at 31,689. Thus, "if a public utility
voluntarily offers unbundled retail access," or if a State requires
unbundled retail access, "the affected retail customer
must
obtain its unbundled transmis-
12
sion service under a non-discriminatory transmission tariff on
file with the Commission."
Ibid.s
Third, FERC rejected a proposal that the open access requirement
should apply to "the transmission component of bundled retail
sales."
Id., at 31,699. Although FERC noted that "the
unbundling of retail transmission and generation ... would be
helpful in achieving comparability," it concluded that such
unbundling was not "necessary" and would raise "difficult
jurisdictional issues" that could be "more appropriately
considered" in other proceedings.
Ibid.
In its analysis of the jurisdictional issues, FERC distin-
guished between transmissions and sales. It explained:
"[Our statutory jurisdiction] over sales of electric energy
extends only to wholesale sales. However, when a retail transaction
is broken into two products that are sold separately (perhaps by
two different suppliers: an electric energy supplier and a
transmission supplier), we believe the jurisdictional lines change.
In this situation, the state clearly retains jurisdiction over the
sale of power. However, the unbundled transmission service involves
only the provision of 'transmission in interstate commerce'
which, under the FP A, is exclusively within the jurisdiction of
the Commission. Therefore, when a bundled retail sale is unbundled
and becomes separate transmission and power sales transactions, the
resulting transmission transaction falls within the Federal sphere
of regulation." Id., at 31,781.9
8While it concluded that "the rates, terms, and conditions of
all unbundled transmission service" were subject to its
jurisdiction, FERC stated that it would "give deference to state
recommendations" regarding the regulation of retail transmissions
"when state recommendations are consistent with our open access
policies." Order No. 888, at 31,689.
9 FERC also explained that it did not assert "jurisdiction to
order retail transmission directly to an ultimate consumer,"
id., at 31,781, and that States had "authority over the
service of delivering electric energy to
13
In 1997, in response to numerous petitions for rehearing and
clarification, FERC issued Order No. 888-A, FERC Stats. &
Regs., Regs. Preambles, July 1996-Dec. 2001, ~ 31,048, p. 30,172,
62 Fed. Reg. 12274. With respect to various challenges to its
jurisdiction, FERC acknowledged that it did not have the "authority
to order,
sua sponte, openaccess transmission services by
public utilities," but explained that § 206 of the FP A explicitly
required it to remedy the undue discrimination that it had found.
Order No. 888-A, at 30,202; see 16 U. S. C. § 824e(a). FERC also
rejected the argument that its failure to assert jurisdiction over
bundled retail transmissions was inconsistent with its assertion of
jurisdiction over unbundled retail transmissions. FERC repeated its
explanation that it did not believe that regulation of bundled
retail transmissions (i.
e., the "functional unbundling" of
retail transmissions) "was necessary," and again stated that such
unbundling would raise serious jurisdictional questions. Order No.
888-A, at 30,225. FERC did not, however, state that it had no power
to regu-
end users .... State regulation of most power production and
virtually all distribution and consumption of electric energy is
clearly distinguishable from this Commission's responsibility to
ensure open and nondiscriminatory interstate transmission service.
Nothing adopted by the Commission today, including its
interpretation of its authority over retail transmission or how the
separate distribution and transmission nmctions and assets are
discerned when retail service is unbundled, is inconsistent with
traditional state regulatory authority in this area."
Id.,
at 31,782-31,783.
With respect to distinguishing "Commission-jurisdictional
facilities used for transmission in interstate commerce" from
"state-jurisdictional local distribution facilities,"
id.,
at 31,783, FERC identified seven relevant factors,
id., at
31,771, 31,783-31,784. Recognizing the state interest in
maintaining control of local distribution facilities, FERC further
explained that, "in instances of unbundled retail wheeling that
occurs as a result of a state retail access program, we will defer
to recommendations by state regulatory authorities concerning where
to draw the jurisdictional line under the Commission's technical
test for local distribution facilities .... "
Id., at
31,783-31,785.
14
late the transmission component of bundled retail sales.
Id., at 30,225-30,226. Rather, FERC reiterated that States
have jurisdiction over the retail
sale of power, and stated
that, as a result, "[o]ur assertion of jurisdiction ... arises only
if the [unbundled] retail transmission in interstate commerce by a
public utility occurs voluntarily or as a result of a state retail
program."
Id., at 30,226.
II
A number of petitions for review of Order No. 888 were
consolidated for hearing in the Court of Appeals for the District
of Columbia. After considering a host of objections, the Court of
Appeals upheld most provisions of the order. Specifically, it
affirmed FERC's jurisdictional rulings that are at issue in the
present cases. 225 F. 3d, at 681.
The Court of Appeals first explained that the open access
requirements in the orders-for both retail and wholesale
transmissions-were "premised not on individualized findings of
discrimination by specific transmission providers, but on FERC's
identification of a fundamental systemic problem in the industry."
Id., at 683. It held that FERC's factual determinations were
reasonable and that §§ 205 and 206 of the FPA gave the Commission
authority to prescribe a marketwide remedy for a marketwide
problem. Interpreting Circuit precedent-primarily cases involving
the transmission of natural gas,
e. g., Associated
Gas Distributors v.
FERC, 824 F.2d
981 (CADC 1987)-the Court of Appeals concluded that even
though FERC's general authority to order open access was "limited,"
the statute made an exception "where FERC finds undue
discrimination." 225 F. 3d, at 687-688.
In its discussion of "Federal Versus State Jurisdiction over
Transmission Services,"
id., at 690-696, the Court of
Appeals also endorsed FERC's reasoning. The Court of Appeals first
addressed the complaints of the state regulatory commissions that
Order No. 888 "went too far" by going beyond
15
the regulation of wholesale transactions and "assert[ing]
jurisdiction over all unbundled retail transmissions."
Id.,
at 691, 692. The Court of Appeals concluded that the plain language
of §201 of the FPA, which this Court has construed broadly,lO
supported FERC's regulation of transmissions in interstate commerce
that were part of unbundled retail sales, as § 201 gives FERC
jurisdiction over the "transmission of electric energy in
interstate commerce." 16 U. s. C. § 824(b)(1). Even if the FPA were
ambiguous, the Court of Appeals explained that, given the
technological complexities of the national grids, it would have
deferred to the Commission's interpretation of § 201 "as giving it
jurisdiction over both wholesale and retail transmissions." 225 F.
3d, at 694.
The Court of Appeals next addressed the complaints of
transmission-dependent producers and wholesalers that Order No. 888
did not "go far enough."
Id., at 692. The Court of Appeals
was not persuaded that FERC's assertion of jurisdiction over
unbundled retail transmission required FERC to assert jurisdiction
over bundled retail transmissions or to mandate unbundling of
retail transmissions.
Id., at 694. Noting that the FPA
"clearly contemplates state jurisdiction over local distribution
facilities and retail sales," the Court of Appeals held:
"A regulator could reasonably construe transmissions bundled
with generation and delivery services and sold to a consumer for a
single charge as either transmission services in interstate
commerce or as an integral component of a retail sale. Yet FERC has
jurisdiction over one, while the states have jurisdiction over the
other. FERC's decision to characterize bundled transmissions as
part of retail sales subject to state jurisdiction therefore
represents a statutorily permissible policy choice to which we must
also defer under Chevron [0. S. A. Inc.
10 See FPC v. Florida Power & Light Co.,
404 U. S. 453 (1972);
Jersey Central Power & Light Co. v. FPC,
319 U. S. 61 (1943).
16
v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842-843
(1984)]." Id., at 694-695.
Because of the importance of the proceeding, we granted both the
petition of the State of New York et al. (collectively New York)
questioning FERC's assertion of jurisdiction over unbundled retail
transmissions and the petition of Enron Power Marketing, Inc.
(Enron), questioning FERC's refusal to assert jurisdiction over
bundled retail transmissions. 531 U. S. 1189 (2001). We address
these two questions separately. At the outset, however, we note
that no petitioner questions the validity of the order insofar as
it applies to wholesale transactions: The parties dispute only the
proper scope of FERC's jurisdiction over
retail
transmissions. Furthermore, we are not confronted with any factual
issues. Finally, we agree with FERC that transmissions on the
interconnected national grids constitute transmissions in
interstate commerce. See,
e. g., FPC v.
Florida Power
& Light Co.,
404
U. S. 453, 466-467 (1972); n. 5,
supra.
III
The first question is whether FERC exceeded its jurisdiction by
including unbundled retail transmissions within the scope of its
open access requirements in Order No. 888. New York argues that
FERC overstepped in this regard, and that such
transmissions-because they are part of retail transactions-are
properly the subject of state regulation. New York insists that the
jurisdictional line between the States and FERC falls between the
wholesale and retail markets.
As the Court of Appeals explained, however, the landscape of the
electric industry has changed since the enactment of the FPA, when
the electricity universe was "neatly divided into spheres of retail
versus wholesale sales." 225 F. 3d, at 691. As the Court of Appeals
also explained, the plain language of the FPA readily supports
FERC's claim of jurisdiction. Section 201(b) of the FPA states that
FERC's
17
jurisdiction includes "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). The unbundled retail
transmissions targeted by FERC are indeed transmissions of
"electric energy in interstate commerce," because of the nature of
the national grid. There is no language in the statute limiting
FERC's
transmission jurisdiction to the wholesale market,
although the statute does limit FERC's
sale jurisdiction to
that at wholesale. See
ibid.; cf.
FPC v.
Louisiana
Power &
Light Co., 406 U. S. 621, 636 (1972)
(interpreting similar provisions of the Natural Gas Act, 15 U. S.
C. § 717(b), to mean that FPC jurisdiction "applies to interstate
'transportation' regardless of whether the gas transported is
ultimately sold retail or wholesale").
In the face of this clear statutory language, New York advances
three arguments in support of its submission that the statute draws
a bright jurisdictional line between wholesale transactions and
retail transactions. First, New York contends that the Court of
Appeals applied an erroneous standard of review because it ignored
the presumption against federal pre-emption of state law; second,
New York claims that other statutory language and legislative
history shows a congressional intent to safeguard pre-existing
state regulation of the delivery of electricity to retail
customers; and third, New York argues that FERC jurisdiction over
retail transmissions would impede sound energy policy. These
arguments are unpersuasive.
The Presumption against Pre-emption
Pre-emption of state law by federal law can raise two quite
different legal questions. The Court has most often stated a
"presumption against pre-emption" when a controversy concerned not
the scope of the Federal Government's authority to displace state
action, but rather whether a given state authority conflicts with,
and thus has been displaced by,
18
the existence of Federal Government authority. See,
e.
g., Hillsborough County v.
Automated Medical
Laboratories, Inc., 471 U. S. 707, 715 (1985)
(citing cases); see also
Medtronic, Inc. v.
Lohr,
518 U. S. 470,
485 (1996);
Cipollone v.
Liggett Group, Inc.,
505 U. S. 504,
518 (1992). In such a situation, the Court "'start[s] with the
assumption that the historic police powers of the States were not
to be superseded ... unless that was the clear and manifest purpose
of Congress.'"
Hillsborough County, 471 U. S., at 715
(quoting
Jones v.
Rath Packing Co., 430 U. S. 519, 525
(1977)). These are not such cases, however, because the question
presented does not concern the validity of a conflicting state law
or regulation.
The other context in which "pre-emption" arises concerns the
rule "that a federal agency may pre-empt state law only when and if
it is acting within the scope of its congressionally delegated
authority[,] ... [for] an agency literally has no power to act, let
alone pre-empt the validly enacted legislation of a sovereign
State, unless and until Congress confers power upon it."
Louisiana Pub. Servo Comm'n v.
FCC, 476 U. S. 355,
374 (1986). This is the sort of case we confront here-defining the
proper scope of the federal power. Such a case does not involve a
"presumption against pre-emption," as New York argues, but rather
requires us to be certain that Congress has conferred authority on
the agency. As we have explained, the best way to answer such a
questioni.
e., whether federal power may be exercised in an
area of pre-existing state regulation-"is to examine the nature and
scope of the authority granted by Congress to the agency."
Ibid. In other words, we must interpret the statute to
determine whether Congress has given FERC the power to act as it
has, and we do so without any presumption one way or the other.
As noted above, the text of the FPA gives FERC jurisdiction over
the "transmission of electric energy in interstate commerce and ...
the sale of electric energy at wholesale in
19
interstate commerce." 16 U. S. C. § 824(b). The references to
"transmission" in commerce and "sale" at wholesale were made part
of § 201 of the statute when it was enacted in 1935.11 Subsections
(c) and (d) of § 201 explain, respectively, the meaning of the
terms "transmission" and "sale of electric energy at wholesale." 12
This statutory text thus unambiguously authorizes FERC to assert
jurisdiction over two sepa-
11 This reference is found twice in §201 of the FPA. Section
201(a), as codified in 16 U. S. C. § 824(a), states in full: "It is
declared that the business of transmitting and selling electric
energy for ultimate distribution to the public is affected with a
public interest, and that Federal regulation of matters relating to
generation to the extent provided in this subchapter and subchapter
III of this chapter and of that part of such business which
consists of
the transmission of electric energy in interstate
commerce and the sale of such energy at wholesale in interstate
commerce is necessary in the public interest, such Federal
regulation, however, to extend only to those matters which are not
subject to regulation by the States." (Emphasis added.)
Section 201(b)(1), as codified in 16 U. S. C. § 824(b)(1),
states in full: "The provisions of this subchapter shall apply to
the transmission of electric energy in interstate commerce and
to the sale of electric energy at wholesale in interstate
commerce, but except as provided in paragraph (2) shall not
apply to any other sale of electric energy or deprive a State or
State commission of its lawful authority now exercised over the
exportation of hydroelectric energy which is transmitted across a
State line. The Commission shall have jurisdiction over all
facilities for such transmission or sale of electric energy, but
shall not have jurisdiction, except as specifically provided in
this subchapter and subchapter III of this chapter, over facilities
used for the generation of electric energy or over facilities used
in local distribution or only for the transmission of electric
energy in intrastate commerce, or over facilities for the
transmission of electric energy consumed wholly by the
transmitter." (Emphasis added.)
12 Section 201(c) of the FPA, as codified in 16 U. S. C. §
824(c), explains that "[f]or the purpose of this subchapter,
electric energy shall be held to be transmitted in interstate
commerce if transmitted from a State and consumed at any point
outside thereof; but only insofar as such transmission takes place
within the United States." Finally, § 201(d), as codified in 16 U.
S. C. § 824(d), states that the "term 'sale of electric energy at
wholesale' when used in this subchapter, means a sale of electric
energy to any person for resale."
20
rate activities-transmitting and selling. It is true that FERC's
jurisdiction over the
sale of power has been specifically
confined to the wholesale market. However, FERC's jurisdiction over
electricity
transmissions contains no such limitation.
Because the FPA authorizes FERC's jurisdiction over interstate
transmissions, without regard to whether the transmissions are sold
to a reseller or directly to a consumer, FERC's exercise of this
power is valid.
Legislative History
Attempting to discredit this straightforward analysis of the
statutory language, New York calls our attention to numerous
statements in the legislative history indicating that the 1935
Congress intended to do no more than close the
"Attleboro
gap," by providing for federal regulation of wholesale, interstate
electricity transactions that the Court had held to be beyond the
reach of state authority in
Attleboro, 273 U. S., at 89. To
support this argument, and to demonstrate that the 1935 Congress
did not intend to supplant any traditionally state-held
jurisdiction, New York points to language added to the FP A in the
course of the legislative process that evidences a clear intent to
preserve state jurisdiction over local facilities. For example, §
201(a) provides that federal regulation is "to extend only to those
matters which are not subject to regulation by the States." 16 U.
S. C. § 824(a). And § 201(b) states that FERC has no jurisdiction
"over facilities used for the generation of electric energy or over
facilities used in local distribution or only for the transmission
of electric energy in intrastate commerce, or over facilities for
the transmission of electric energy consumed wholly by the
transmitter." 16 U. S. C. § 824(b).
It is clear that the enactment of the FP A in 1935 closed the
"Attleboro gap" by authorizing federal regulation of
interstate, wholesale sales of electricity-the precise subject
matter beyond the jurisdiction of the States in
Attleboro.
And it is true that the above-quoted language from § 201(a)
concerning the States' reserved powers is consistent with
21
the view that the FP A was no more than a gap-closing statute.
It is, however, perfectly clear that the original FP A did a good
deal more than close the gap in state power identified in
Attleboro. The FP A authorized federal regulation not only
of wholesale sales that had been beyond the reach of state power,
but also the regulation of wholesale sales that had been
previously subject to state regulation. See,
e. g.,
Attleboro, 273 U. S., at 85-86 (noting, prior to the enactment
of the FP A, that States could regulate aspects of interstate
wholesale sales, as long as such regulation did not directly burden
interstate commerce). More importantly, as discussed above, the FP
A authorized federal regulation of interstate
transmissions
as well as of interstate wholesale sales, and such transmissions
were not of concern in
Attleboro. Thus, even if
Attleboro catalyzed the enactment of the FP A,
Attleboro does not define the outer limits of the statute's
coverage.
Furthermore, the portion of §201(a) cited by New York concerning
the preservation of existing state jurisdiction is actually
consistent with Order No. 888, because unbundled interstate
transmissions of electric energy have never been "subject to
regulation by the States," 16 U. S. C. § 824(a). Indeed, unbundled
transmissions have been a recent development. As FERC explained, at
the time that the FPA was enacted, transmissions were bundled with
the energy itself, and electricity was delivered to both wholesale
and retail customers as a complete, bundled package. Order No. 888,
at 31,639. Thus, in 1935, there was neither state nor federal
regulation of what did not exist.13
13 FERC recognized this point in reaching its jurisdictional
conclusion:
"Rather than claiming 'new' jurisdiction, the Commission is
applying the same statutory framework to a business environment in
which ... retail sales and transmission service are provided in
separate transactions .... Because these types of products and
transactions were not prevalent in the past, the jurisdictional
issue before us did not arise and ... the Commission cannot be
viewed as 'disturbing' the jurisdiction of state regulators prior
to and after the
Attleboro case." Order No. 888-A, at
30,339-30,340.
22
Moreover, we have described the precise reserved state powers
language in § 201(a) as a mere" 'policy declaration'" that" 'cannot
nullify a clear and specific grant of jurisdiction, even if the
particular grant seems inconsistent with the broadly expressed
purpose.'"
FPC v.
Southern Cal. Edison Co., 376 U. S. 205, 215 (1964)
(quoting
Connecticut Light &
Power Co. v.
FPC, 324 U. S.
515, 527 (1945)); see also
United States v.
Public
Util. Comm'n of Cal., 345 U. S. 295, 311
(1953). Because the FP A contains such "a clear and specific grant
of jurisdiction" to FERC over interstate transmissions, as
discussed above, the prefatory language cited by New York does not
undermine FERC's jurisdiction.
New York is correct to point out that the legislative history is
replete with statements describing Congress' intent to preserve
state jurisdiction over local facilities. The sentiment expressed
in those statements is incorporated in the second sentence of §
201(b) of the FPA, as codified in 16 U. S. C. § 824(b), which
provides:
"The Commission shall have jurisdiction over all facilities for
such transmission or sale of electric energy, but shall not have
jurisdiction, except as specifically provided in this subchapter
and subchapter III of this chapter, over facilities used for the
generation of electric energy or over facilities used in local
distribution or only for the transmission of electric energy in
intrastate commerce, or over facilities for the transmission of
electric energy consumed wholly by the transmitter."
Yet, Order No. 888 does not even arguably affect the States'
jurisdiction over three of these subjects: generation facilities,
transmissions in intrastate commerce, or transmissions consumed by
the transmitter. Order No. 888 does discuss local distribution
facilities, and New York argues that, as a result, FERC has
improperly invaded the States' authority "over facilities used in
local distribution," 16 U. S. C. § 824(b). However, FERC has not
attempted to control local distri-
23
bution facilities through Order No. 888. To the contrary, FERC
has made clear that it does not have jurisdiction over such
facilities, Order No. 888, at 31,969, and has merely set forth a
seven-factor test for identifying these facilities, without
purporting to regulate them,
id., at 31,770-31,771.
New York also correctly states that the legislative history
demonstrates Congress' interest in retaining state jurisdiction
over retail sales. But again, FERC has carefully avoided assuming
such jurisdiction, noting repeatedly that "the FP A does not give
the Commission jurisdiction over sales of electric energy at
retail."
Id., at 31,969. Because federal authority has been
asserted only over unbundled
transmissions, New York retains
jurisdiction of the ultimate sale of the
energy. And, as
discussed below, FERC did not assert jurisdiction over bundled
retail transmissions, leaving New York with control over even the
transmission component of bundled retail sales.
Our evaluation of the extensive legislative history reviewed in
New York's brief is affected by the importance of the changes in
the electricity industry that have occurred since the FPA was
enacted in 1935. No party to these cases has presented evidence
that Congress foresaw the industry's transition from one of local,
self-sufficient monopolies to one of nationwide competition and
electricity transmission. Nor is there evidence that the 1935
Congress foresaw the possibility of unbundling electricity
transmissions from sales. More importantly, there is no evidence
that if Congress had foreseen the developments to which FERC has
responded, Congress would have objected to FERC's interpretation of
the FPA. Whatever persuasive effect legislative history may have in
other contexts, here it is not particularly helpful because of the
interim developments in the electric industry. Thus, we are left
with the statutory text as the clearest guidance. That text
unquestionably supports FERC's jurisdiction to order unbundling of
wholesale transactions (which
24
none of the parties before us questions), as well as to regulate
the unbundled transmissions of electricity retailers.
Sound Energy Policy
New York argues that FERC jurisdiction over unbundled retail
transmission will impede sound energy policy. Specifically, New
York cites the States' interest in overseeing the maintenance of
transmission lines and the siting of new lines. It is difficult for
us to evaluate the force of these arguments because New York has
not separately analyzed the impact of the loss of control over
unbundled retail transmissions, as opposed to the loss of control
over retail transmissions generally, and FERC has only regulated
unbundled transactions. Moreover, FERC has recognized that the
States retain significant control over local matters even when
retail transmissions are unbundled. See,
e. g., Order
No. 888, at 31,782, n. 543 ("Among other things, Congress left to
the States authority to regulate generation and transmission
siting");
id., at 31,782, n. 544 ("This Final Rule will not
affect or encroach upon state authority in such traditional areas
as the authority over local service issues, including reliability
of local service; administration of integrated resource planning
and utility buy-side and demand-side decisions, including DSM
[demand-side management]; authority over utility generation and
resource portfolios; and authority to impose nonbypassable
distribution or retail stranded cost charges"). We do note that the
Edison Electric Institute, which is a party to these cases, and
which represents that its members own approximately 70% of the
transmission facilities in the country, does not endorse New York's
objections to Order No. 888. And, regardless of their
persuasiveness, the sort of policy arguments forwarded by New York
are properly addressed to the Commission or to the Congress, not to
this Court.
E. g., Chemehuevi Tribe v.
FPC, 420 U. S. 395, 423
(1975).
25
IV
Objecting to FERC's order from the opposite direction, Enron
argues that the FPA gives FERC the power to apply its open access
remedy to
bundled retail transmissions of electricity, and,
given FERC's findings of undue discrimination, that FERC had a duty
to do so. In making this argument, Enron persistently claims that
FERC held that it had no jurisdiction to grant the relief that
Enron seeks.14 That assumption is incorrect: FERC chose not to
assert such jurisdiction, but it did not hold itself powerless to
claim jurisdiction. Indeed, FERC explicitly reserved decision on
the jurisdictional issue that Enron claims FERC decided. See Order
No. 888, at 31,699 (explaining that Enron's position raises
"numerous difficult jurisdictional issues that we believe are more
appropriately considered when the Commission reviews unbundled
retail transmission tariffs that may come before us in the context
of a state retail wheeling program"). Absent Enron's flawed
assumption, FERC's ruling is clearly acceptable.
14 See,
e. g., Brief for Petitioner in No. 00-809,
p. 12 ("FERC ... held itself powerless to address the vast majority
of the problem");
id., at 14 ("FERC determined, however,
that it did not have authority to extend its functional unbundling
remedy to transmissions for bundled retail sales");
id., at
18 ("FERC's decision that it did not have jurisdiction to apply [an
open access transmission tariff] to transmissions for bundled
retail sales was contrary to law");
id., at 20 ("[FERC
found] no jurisdiction when the cost of the transmission is bundled
with the cost of power at retail").
Surprisingly, FERC seemed to agree with Enron's characterization
of its holding at some places in its own brief.
E.
g., Brief for Respondent FERC 44-45 ("The Commission
reasonably concluded that
Congress has not authorized
federal regulation of the transmission component of bundled retail
sales of electric energy" (emphasis added)). Yet, FERC's brief also
stated more accurately that FERC had decided not to assert
jurisdiction, rather than concluded that it lacked the power to do
so.
E. g., id., at 15 ("[FERC] was not asserting
jurisdiction to order utilities to unbundle their retail services
... ");
id., at 49 (citing "the Commission's reasonable
decision not to override the States' historical regulation of
transmission that is bundled with a retail sale of energy").
26
As noted above, in both Order No. 888 and rehearing Order No.
888-A, FERC gave two reasons for refusing to extend its open access
remedy to bundled retail transmissions. First, FERC explained that
such relief was not "necessary." Order No. 888, at 31,699; see also
Order No. 888-A, at 30,225. Second, FERC noted that the regulation
of bundled retail transmissions "raises numerous difficult
jurisdictional issues" that did not need to be resolved in the
present context. Order No. 888, at 31,699; see also Order No.
888-A, at 30,225-30,226. Both of these reasons provide valid
support for FERC's decision not to regulate bundled retail
transmissions.
First, with respect to FERC's determination that it was not
"necessary" to include bundled retail transmissions in its remedy,
it must be kept in mind exactly what it was that FERC sought to
remedy in the first place: a problem with the
wholesale
power market. FERC's findings, as Enron itself recognizes,
concerned electric utilities' use of their market power to" 'deny
their
wholesale customers access to competitively priced
electric generation,'" thereby "'deny[ing] consumers the
substantial benefits of lower electricity prices.'" Brief for
Petitioner in No. 00-809, pp. 12-13 (quoting NPRM 33,052) (emphasis
added). The title of Order No. 888 confirms FERC's focus:
"Promoting
Wholesale Competition Through Open Access
Non-Discriminatory Transmission Services .... " Order No. 888, at
31,632 (emphasis added). Indeed, FERC has, from the outset,
identified its goal as "facilitat[ing] competitive
wholesale
electric power markets." NPRM 33,049 (emphasis added).
To remedy the wholesale discrimination it found, FERC chose to
regulate all wholesale transmissions. It also regulated unbundled
retail transmissions, as was within its power to do. See Part III,
supra. However, merely because FERC believed that those
steps were appropriate to remedy discrimination in the wholesale
electricity market does not, as Enron alleges, lead to the
conclusion that the regulation
27
of
bundled retail transmissions was "necessary" as well.
Because FERC determined that the remedy it ordered constituted a
sufficient response to the problems FERC had identified in the
wholesale market, FERC had no § 206 obligation to regulate bundled
retail transmissions or to order universal unbundling.15
Of course, it may be true that FERC's findings concerning
discrimination in the wholesale electricity market suggest that
such discrimination exists in the retail electricity market as
well, as Enron alleges. Were FERC to investigate this alleged
discrimination and make findings concerning undue discrimination in
the retail electricity market, § 206 of the FPA would require FERC
to provide a remedy for that discrimination. See 16 U. S. C. §
824e(a) (upon a finding of undue discrimination, "the Commission
shall determine the just and reasonable ... regulation, practice,
or contract ... and shall fix the same by order"). And such a
remedy could very well involve FERC's decision to regulate bundled
retail transmissions-Enron's desired outcome. However, because the
scope of the order presently under review did not concern
discrimination in the retail market, Enron is wrong to argue that §
206 requires FERC to provide a full array of retail-market
remedies.
Second, we can agree with FERC's conclusion that Enron's desired
remedy "raises numerous difficult jurisdictional issues," Order No.
888, at 31,699, without deciding whether Enron's ultimate position
on those issues is correct. The issues raised by New York
concerning FERC's jurisdiction over unbundled retail transmissions
are themselves serious.
15 Indeed, given FERC's acknowledgment "that recovery of
legitimate stranded costs is critical to the successful transition
of the electric utility industry from a tightly regulated,
cost-of-service utility industry to an open access, competitively
priced power industry," NPRM 33,052, it was appropriate for FERC to
confine the scope of its remedy to what was truly "necessary": the
broader the remedy, the more complicated FERC's already challenging
goal of permitting utilities to recover stranded costs.
28
Opinion of THOMAS, J.
See Part III,
supra. It is obvious that a federal order
claiming jurisdiction over
all retail transmissions would
have even greater implications for the States' regulation of retail
sales-a state regulatory power recognized by the same statutory
provision that authorizes FERC's transmission jurisdiction. See 16
U. S. C. § 824(b) (giving FERC jurisdiction over "transmission of
electric energy," but recognizing state jurisdiction over "any ...
sale of electric energy" other than "sale of electric energy at
wholesale"). But even if we assume, for present purposes, that
Enron is
correct in its claim that the FPA gives FERC the
authority to regulate the transmission component of a bundled
retail sale, we nevertheless conclude that the agency had
discretion to decline to assert such jurisdiction in this
proceeding in part because of the complicated nature of the
jurisdictional issues. Like the Court of Appeals, we are satisfied
that FERC's choice not to assert jurisdiction over bundled retail
transmissions in a rulemaking proceeding focusing on the wholesale
market "represents a statutorily permissible policy choice." 225 F.
3d, at 694-695.
Accordingly, the judgment of the Court of Appeals is
affirmed.
It is so ordered.
JUSTICE THOMAS, with whom JUSTICE SCALIA and JusTICE KENNEDY
join, concurring in part and dissenting in part.
Today the Court finds that the Federal Energy Regulatory
Commission (FERC or Commission) properly construed its statutory
authority when it determined that: (1) it may require a utility
that "unbundles" the cost of transmission from the cost of electric
energy to transmit competitors' electricity over its lines on the
same terms that the utility applies to its own energy
transmissions; and (2) it need not impose that requirement on
utilities that continue to offer only "bundled" retail sales. Under
the Federal Power Act (FPA), 16
29
u. S. C. § 824
et seq., FERC has jurisdiction over all
interstate transmission, regardless of the type of transaction with
which it is associated, and I concur in the Court's holding with
respect to transmission used for unbundled retail sales and join
Parts II and III of its opinion. I dissent, however, from the
Court's resolution of the question concerning transmission used for
bundled retail sales because I believe that the Court fails to
properly assess both the Commission's jurisdictional analysis and
its justification for excluding bundled retail transmission from
the Open Access Transmission Tariff (OATT). FERC's explanations are
inadequate and do not warrant our deference.
I
While the Court does not foreclose the possibility that FERC's
jurisdiction extends to transmission associated with bundled retail
sales, the Court defers to FERC's decision not to apply the OATT to
such transmission on the ground that the Commission made a
permissible policy choice,
ante, at 28 (quoting
Transmission Access Policy Study Group v.
FERC,
225 F.3d
667, 694-695
(CADC 2000)), and by reference to FERC's
assertions that: (1) such relief was not "necessary,"
ante,
at 26 (citing Order No. 888, FERC Stats. & Regs., Regs.
Preambles, Jan. 1991-June 1996, ~ 31,036, p. 31,699; Order No.
888-A, FERC Stats. & Regs., Regs. Preambles, July 1996-Dec.
2001, ~ 31,048, p. 30,225); and (2) "the regulation of bundled
retail transmissions 'raises numerous difficult jurisdictional
issues' that did not need to be resolved in the present context."
Ante, at 26 (citing Order No. 888, at 31,699; Order No.
888-A, at 30,225-30,226). The Court concludes that both reasons
"provide valid support for FERC's decision not to regulate bundled
retail transmissions."
Ante, at 26.1
1 I note that the "reasons" upon which the Court relies were
made only in the specific context of FERC's explanation of its
decision not to unbundle retail transmission and distribution.
Order No. 888, at 31,698-31,699. The comments were not given as a
general explanation for FERC's
30
Opinion of THOMAS, J.
I disagree. The Court defers to the Court of Appeals'
characterization of FERC's decision as a "policy choice," rather
than to any such characterization made by FERC itself.2 But a
post-hoc rationalization offered by the Court of Appeals is
an insufficient basis for deference. "[A]n agency's action must be
upheld, if at all,
on the basis articulated by the agency
itself" Motor Vehicle Mfrs. Assn. of United States, Inc. v.
State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 50 (1983)
(emphasis added).
Therefore, in order to properly assess FERC's decision not to
apply the OATT to transmission connected to bundled retail sales,
we must carefully evaluate the two justifications that the Court
points to and relies on. Neither is sufficient. As I discuss below,
FERC failed to explain why regulating such transmission is not
"necessary," and FERC's inconclusive jurisdictional analysis does
not provide a sound basis for our deference.
A
I cannot support the Court's reliance on FERC's explanation that
"[a]lthough the unbundling of retail transmission and generation,
as well as wholesale transmission and generation, would be helpful
in achieving comparability, we do not believe it is necessary."
Order No. 888, at 31,699. Aside from this conclusory statement,
FERC provides no explanation as to why such regulation is
unnecessary and attaches no findings to support this single
statement. As such, we
decision not to apply the OATT to transmission associated with
bundled retail sales, and FERC did not rely on the second
explanation in Order No. 888-A. See
infra, at 41.
2 Specifically, the Court of Appeals stated that, in light of
the fact that a regulator could reasonably construe the
transmission component of bundled retail sales as either part of a
retail sale or a transmission service in interstate commerce,
"FERC's decision to characterize bundled transmissions as part of
retail sales subject to state jurisdiction therefore represents a
statutorily permissible policy choice to which we must also defer
under
Chevron [u. S.
A. Inc. v.
Natural
Resources Defense Council, Inc., 467 U. S. 837, 842-843
(1984)]."
225 F.3d
667, 694-695 (CADC 2000).
31
have no basis for determining whether FERC's decision is
justified. A brief review of the electric industry, and the nature
of transmission in particular, further calls into question both
FERC's conclusory statement and its logical inference: That
regulation of transmission is not necessary when used in connection
with one type of transaction but is necessary when used for
another.
An electric power system consists of three divisions:
generation, transmission, and local distribution. Electricity is
generated at power plants where "a fuel such as coal, gas, oil,
uranium or hydro power is used to spin a turbine which turns a
generator to generate electricity." Brief for Electrical Engineers
et al. as
Amici Curiae 12 (hereinafter Brief for Electrical
Engineers). "[GJenerating stations continuously feed electric
energy into a web of transmission lines (loosely referred to as
'the grid') at very high voltages." P. Fox-Penner, Electric Utility
Restructuring: A Guide to the Competitive Era 5 (1997) (hereinafter
Fox-Penner). The transmission lines in turn feed
"substations (essentially transformers) that reduce voltage
and spread the power from each transmission line to many
successively smaller
distribution lines, culminating at the
retail user."
Id., at 23.3
Unlike the other electricity components-and with the exception
of transmission in Alaska, Hawaii, and parts of Texas-transmission
is inherently interstate.4 It takes place over a network or grid,
which consists of a configura-
3 At the local distribution centers, "the power flow is split to
send power to a number of primary feeder lines that lead to other
transformers that again step down and feed the power to secondary
service lines that in turn deliver the power to the utility's
customers." Brief for Electrical Engineers 13.
4 In the contiguous United States, this system is composed of
three major grids: the Eastern Interconnection, the Western
Interconnection, and the Texas Interconnection. Restructuring of
the Electric Power Industry: A Capsule of Issues and Events, Energy
Information Administration 6 (DOE/EIA-X037, Jan. 2000).
32
Opinion of THOMAS, J.
tion of interconnected transmission lines that cross state
lines. Brief for Electrical Engineers 13. These lines are owned and
operated by the Nation's larger utilities. No individual utility,
however, has" 'control over the actual transfers of electric power
and energy with any particular electric system with which it is
interconnected.'"
Id., at 15 (quoting
Florida Power
&
Light Co., 37 F. P. C. 544, 549 (1967)). Electricity
flows at extremely high voltages across the network in
uncontrollable ways and cannot be easily directed through a
particular path from a specific generator to a consumer. Fox-Penner
26-27. The "[t]ransfer of electricity from one point to another
will, to some extent, flow over all transmission lines in the
interconnection, not just those in the direct path of the
transfer." Van Nostrand's Scientific Encyclopedia 1096 (D.
Considine ed., 8th ed. 1995). The energy flow depends on "where the
load (demand for electricity) and generation are at any given
moment, with the energy always following the path (or paths) of
least resistance." Brief for Electrical Engineers 13. The paths,
however, "change moment by moment." Fox-Penner 27. And "[t]rying to
predict the flow of electrons is akin to putting a drop of ink into
a water pipe flowing into a pool, and then trying to predict how
the ink drop will diffuse into the pool, and which combination of
outflow pipes will eventually contain ink."
Ibid.
Nonetheless, buyers and sellers do negotiate particular contract
paths, "route[s]
nominally specified in an agreement to have
electricity transmitted between two points." T. Brennan, Shock to
the System 76 (1996) (emphasis added).5
5 FERC notes that whether transmission is in interstate commerce
"does not turn on whether the contract path for a particular power
or transmission sale crosses state lines, but rather follows the
physical flow of electricity." Order No. 888, Appendix G, at
31,968. FERC states that "[b]ecause of the highly integrated nature
of the electric system, this results in most transmission of
electric energy being 'in interstate commerce.' "
Ibid.
33
In practice, however, it is quite possible that most of the
power will never flow over the negotiated transmission lines. The
transactional arrangements, therefore, bear little resemblance to
the physical behavior of electricity transmitted on a power grid
and, as such, it is impossible for either a utility or FERC to
isolate or distinguish between the transmission used for bundled or
unbundled wholesale or retail sales.
Given that it is impossible to identify which utility's lines
are used for any given transmission, FERC's decision to exclude
transmission because it is associated with a particular type of
transaction appears to make little sense. And this decision may
conflict with FERC's statutory mandate to regulate when it finds
unjust, unreasonable, unduly discriminatory, or preferential
treatment with respect to any transmission subject to its
jurisdiction. See 16 U. S. C. §§ 824d, 824e.6 FERC clearly
recognizes the statute's mandate, stating in Order No. 888-A that
"our authorities under the FPA not only permit us to adapt to
changing economic realities in the electric industry, but also
require us to do so, as necessary to eliminate undue discrimination
and protect electric-
6 Section 824d(b), for example, provides:
"No public utility shall, with respect to any transmission or
sale subject to the jurisdiction of the Commission, (1) make or
grant any undue preference or advantage to any person or subject
any person to any undue prejudice or disadvantage, or (2) maintain
any unreasonable difference in rates, charges, service, facilities,
or in any other respect, either as between localities or as between
classes of service."
Section 824e(a) further provides that whenever FERC, after
conducting a hearing, finds that "any rate, charge, or
classification, demanded, observed, charged, or collected by any
public utility for any transmission or sale subject to the
jurisdiction of the Commission, or that any rule, regulation,
practice, or contract affect[ing] such rate, charge, or
classification is unjust, unreasonable, unduly discriminatory or
preferential,
the Commission shall determine the just and
reasonable rate, charge, classification, ... practice, or contract
to be thereafter observed and in force, and shall fix the same by
order." (Emphasis added.)
34
Opinion of THOMAS, J.
ity customers." Order No. 888-A, at 30,176.7 And it is certainly
possible that utilities that own or control lines on the grid
discriminate against entities that seek to use their transmission
lines regardless of whether the utilities themselves bundle or
unbundle their transactions.8 The fact that FERC found undue
discrimination with respect to transmission used in connection with
both bundled and unbundled wholesale sales and unbundled retail
sales indicates that such discrimination exists regardless of
whether the transmission is used in bundled or unbundled sales.
Without more, FERC's conclusory statement that "unbundling of
retail transmission" is not "necessary" lends little support to its
decision not to regulate such transmission. And it sim-
7FERC likewise states in Order No. 888, at 31,634, that the
"legal and policy cornerstone of these rules is to remedy undue
discrimination in access to the monopoly owned transmission wires
that control whether and to whom electricity can be transported in
interstate commerce." FERC also recognized that to comply with the
statute's mandate, it "must eliminate the remaining patchwork of
closed and open jurisdictional transmission systems and ensure that
all these systems, including those that already provide some form
of open access, cannot use monopoly power over transmission to
unduly discriminate against others."
Id., at 31,635.
8 For example, the Electric Power Supply Association explains
that transmission owning utilities may discriminate against
entities that seek to use their transmission systems, thereby
preventing the entities from using their lines, in the following
ways: (1) They may block available transfer capacity-the capability
of the physical transmission network to facilitate activity over
and above its committed uses-by over scheduling transmission for
their own retail loads across "valuable" transmission paths; (2)
they may improperly avoid certain costs that other entities would
be subject to; or (3) they may fail to make accurate disclosure of
available transfer capability, causing "serious difficulties for
suppliers attempting to schedule electricity sales across their
transmission facilities." Brief for Respondent Electric Power
Supply Association 7-9. Similarly, petitioner Enron explains that a
"utility can reserve superior transmission capacity for its own
bundled retail sales, at times even closing its facilities to other
transmissions ... forcing competitors of the utility to scramble
for less direct, less predictable and more expensive transmission
options." Brief for Petitioner in No. 00-809, pp. 41-42.
35
ply cannot be the case that the nature of the commercial
transaction controls the scope of FERC's jurisdiction.
To be sure, I would not prejudge whether FERC
must
require that transmission used for bundled retail sales be subject
to FERC's open access tariff. At a minimum, however, FERC should
have determined whether regulating transmission used in connection
with bundled retail sales was in fact "necessary to eliminate undue
discrimination and protect electricity customers."
Ibid.
FERC's conclusory statement instills little confidence that it
either made this determination or that it complied with the
unambiguous dictates of the statute. While the Court essentially
ignores the statute's mandatory prescription by approving of FERC's
decision as a permissible "policy choice," the FPA simply does not
give FERC discretion to base its decision not to remedy undue
discrimination on a "policy choice."
The Court itself struggles to find support for FERC's conclusion
that it was not "necessary" to regulate bundled retail transmission
in order to remedy discrimination. First, the Court points to the
fact that FERC's findings concerned electric utilities' use of
their market power to "'deny their
wholesale customers
access to competitively priced electric generation,' thereby
'deny[ing] consumers the substantial benefits of lower electricity
prices.'"
Ante, at 26 (quoting Brief for Petitioner in No.
00-809, pp. 12-13). Second, the Court notes that the title of Order
No. 888 confirms FERC's focus because it references promoting
wholesale competition.
Ante, at 26. Finally, the Court
relies on the fact that FERC has identified its goal as
"'facilitat[ing] competitive
wholesale electric power
markets.'"
Ibid. (quoting Notice of Proposed Rulemaking,
FERC Stats. & Regs., Proposed Regs., 1988-1999, ~ 32,514, p.
33,049; 60 Fed. Reg. 17662).
I fail to understand how these statements support FERC's
determination that it was not "necessary" to regulate bundled
retail transmission. Utilities that bundle may use their market
power to discriminate against those seeking access
36
Opinion of THOMAS, J.
to the lines in connection with
either retail or
wholesale sales. It is certainly possible, perhaps even likely,
that the only way to remedy undue discrimination and ensure open
access to transmission services is to regulate
all utilities
that operate transmission facilities, and not just those that use
their own lines for the purpose of wholesale sales or in connection
with unbundled retail transactions. FERC does not suggest that the
only entities that engage in discriminatory behavior are those that
use their transmission facilities for wholesale sales or unbundled
retail sales. And relying on FERC's reference to wholesale markets
makes little sense when FERC regulates transmission connected to
retail sales so long as the transmission is in a State that
unbundles retail sales or where the utility voluntarily unbundles.
See
infra, at 41-42.
"We have frequently reiterated that an agency must cogently
explain why it has exercised its discretion in a given manner ....
"
Motor Vehicle Mfrs. Assn., 463 U. S., at 48. Here, FERC's
failure to do so prevents us from evaluating whether or not the
agency engaged in reasoned decisionmaking when it determined that
it was not "necessary" to regulate bundled retail transmission.
B
The Court also relies on FERC's explanation that the prospect of
unbundling retail transmission and generation "raises numerous
difficult jurisdictional issues that we believe are more
appropriately considered when the Commission reviews unbundled
retail transmission tariffs that may come before us in the context
of a state retail wheeling program." Order No. 888, at 31,699. The
Court provides the following explanation for its decision to rely
on this statement:
"But even if we assume, for present purposes, that Enron is
correct in its claim that the FPA gives FERC the authority
to regulate the transmission component of
37
a bundled retail sale, we nevertheless conclude that the agency
had discretion to decline to assert such jurisdiction in this
proceeding in part because of the complicated nature of the
jurisdictional issues." Ante, at 28.
This explanation is wholly unsatisfying, both because the
Court's reliance on FERC's statement fails to take into account the
unambiguous language of the statute and because FERC has given
various inconsistent explanations of its jurisdiction.
1
FERC's statement implies that its decision not to regulate was
based, at least in part, both on a determination that the statute
is ambiguous and on a determination that certain interstate
transmission may fall outside of its jurisdiction. The FPA,
however, unambiguously grants FERC jurisdiction over the interstate
transmission of electric energy in interstate commerce. 16 U. S. C.
§ 824(b)(1). As the Court notes, "[t]here is no language in the
statute limiting FERC's
transmission jurisdiction to the
wholesale market."
Ante, at 17. The Court correctly
recognizes that "the FPA authorizes FERC's jurisdiction over
interstate transmissions, without regard to whether the
transmissions are sold to a reseller or directly to a consumer."
Ante, at 20.
Similarly, although FERC draws a jurisdictional line between
transmission used in connection with bundled and unbundled retail
sales, the statute makes no such distinction. The terms "bundled"
and "unbundled" are not found in the statute.9 The only
jurisdictional line that the statute draws with regard to
transmission is between interstate and intrastate. See § 824(b)(1).
Congress does not qualify its grant
9 The difference between the two types of sales is that with an
unbundled retail sale, a utility, either voluntarily or pursuant to
state law, presents separate charges for the electricity, the
transmission service, and the delivery service. In a bundled sale,
all components are combined as one charge. See Brief for Petitioner
in No. 00-809, at 4-5.
38
Opinion of THOMAS, J.
to FERC of jurisdiction over interstate transmission. Nor does
the Court explain how the statute grants FERC jurisdiction over
unbundled retail transmission, yet is ambiguous with respect to the
question of bundled retail transmission.
Even if I agreed that the statute is ambiguous, FERC did not
purport to resolve an ambiguity in the passage upon which the Court
relies. Instead, FERC
refused to resolve what it considered
to be a statutory ambiguity, in part because it determined that
resolving this question was too difficult. Thus, while under
Chevron U. S.
A. Inc. v.
Natural Resources Defense
Council, Inc., 467 U. S. 837, 842-843
(1984), the Court will defer to an agency's reasonable
interpretation of an ambiguous statute, this passage does
not provide an interpretation to which the Court can defer.
2
FERC does provide more explicit interpretations of its
jurisdiction elsewhere. It is difficult, however, to isolate FERC's
position on this matter because FERC presents different
interpretations in its orders, its brief, and at oral argument. At
certain points, FERC affirmatively states that it lacks
jurisdiction to regulate this transmission; at other times, FERC is
noncommittal. The Court's heavy reliance on
one statement,
therefore, is misplaced. And while the Court recognizes in a
footnote that FERC made conflicting representations, see
ante, at 25, n. 14, in deciding to defer to the agency the
Court fails to place any weight on the fact that the agency
presented inconsistent positions. See
United States v.
Mead Corp., 533 U. S. 218, 228 (2001)
("The fair measure of deference to an agency administering its own
statute has been understood to vary with circumstances, and courts
have looked to the degree of the agency's care, its consistency,
formality, and relative expertness, and to the persuasiveness of
the agency's position ... "). These inconsistencies alone, however,
convince me that the Court should neither defer to the
aforementioned statement of FERC's
39
jurisdiction nor rely on any other explanation provided by
FERC.
For example, in its brief FERC argues that because the statute
is ambiguous, the Court of Appeals properly deferred under
Chevron to FERC's reasonable decision not to regulate. Brief
for Respondent FERC 49. FERC then contends that it made a
reasonable finding that it
lacked jurisdiction over the
transmission component of bundled retail sales and that it was
therefore not required to regulate the transmission component.
Id., at 49-50; see also
id., at 44 ("The Commission
reasonably concluded that Congress has not authorized federal
regulation of the transmission component of bundled retail sales of
electric energy"). The brief also notes, however, that FERC
has attempted to regulate transmission connected to retail
bundled sales and maintains that it continues to believe that it
has authority to require public utilities to treat customers of
unbundled interstate transmission in a manner comparable to the
treatment afforded bundled transmission users.
Id., at
48.10
At oral argument, FERC proposed a different explanation.
It stated that the agency was not disclaiming its authority to
order the unbundling of the transmission component of a
10 FERC earlier rejected the proposed curtailment provisions of
a public utility's federal OATT that favored the utility's bundled
retail customers over its wholesale transmission customers. It
asserted that, in compliance with Order No. 888 and in order to
enforce the OATT, it could regulate transmission curtailment in a
manner that had an indirect effect upon the utility's services to
its retail customers. Brief for Respondent FERC 48; see
Northern
States Power Co. v.
FERC, 176 F.3d
1090, 1095
(CA8 1999). The United States Court of
Appeals for the Eighth Circuit, noting that "FERC concede[d] that
it has no jurisdiction whatsoever over the state's regulation of
[the utility's] bundled retail sales activities," held that FERC
exceeded its authority under the FPA.
Id., at 1096. While I
do not endorse the court's conclusion with respect to FERC's
jurisdiction, I note that the Court of Appeals pointed to the
inconsistencies in FERC's position, explaining that "FERC's
observation that no inherent conflict exists between its mandates
and practical application is viewed through an adversarial bias."
Id., at 1094.
40
Opinion of THOMAS, J.
retail sale. Tr. of Oral Arg. 42-43. FERC explained that it
lacks jurisdiction over the transmission
"as long as the
State hasn't unbundled [the retail sale], the utility has not
unbundled it, and FERC has not exercised whatever authority it
would have to unbundle it."
Id., at 50 (emphasis added).
FERC's orders present still more views of its jurisdiction.
As already noted, when considering whether FERC should unbundle
retail transmission and generation, FERC asserts that this
particular question "raises numerous difficult jurisdictional
issues" more appropriately considered at a later time. Order No.
888, at 31,699. FERC, at other points, however, makes clear its
belief that there
is a jurisdictional line between unbundled
and bundled retail transmission. Explaining its "legal
determination" that it has exclusive jurisdiction over unbundled
retail transmission in interstate commerce, FERC notes that it
found "compelling the fact that section 201 of the FPA,
on its
face, gives the Commission jurisdiction over transmission in
interstate commerce (by public utilities) without qualification."
Id., at 31,781. Nonetheless, when addressing why "its
authority attaches only to unbundled, but not bundled, retail
transmission in interstate commerce," FERC affirmatively states
that "we believe that when transmission is sold at retail as part
and parcel of the delivered product called electric energy, the
transaction is a sale of electric energy at retail" and that
"[u]nder the FPA, the Commission's jurisdiction over sales of
electric energy extends only to wholesale sales."
Ibid.
By contrast, when the "retail transaction is broken into two
products that are sold separately," FERC "believe[s] the
jurisdictional lines change."
Ibid. FERC explains:
"In this situation, the state clearly retains jurisdiction over
the sale of the power. However, the unbundled transmission service
involves only the provision of 'transmission in interstate
commerce' which, under the FPA, is exclusively within the
jurisdiction of the Com-
41
mISSIOn. Therefore, when a bundled retail sale is unbundled and
becomes separate transmission and power sales transactions, the
resulting transmission transaction falls within the Federal sphere
of regulation." Ibid.
FERC here concludes that the
act of unbundling itself
changes its jurisdictional lines. Unbundling, FERC notes, may occur
in one of two ways: (1) voluntarily by a public utility or (2) as a
result of a state retail access program that orders unbundling.
Ibid. Either action brings the transmission within the scope
of FERC's jurisdiction.
Subsequently, in Order No. 888-A, FERC responded to rehearing
requests by supplanting its earlier conclusion that "the matter
raises numerous difficult jurisdictional issues" with the
explanation quoted above from Order No. 888, at 31,781. See Order
No. 888-A, at 30,225. It is possible, therefore, that FERC
abandoned its "difficult jurisdictional issues" explanation
altogether. Thus, while it is true that FERC, at one point, evades
the jurisdictional question by deeming it too "difficult" to
resolve, more often than not FERC affirmatively concludes that it
in fact does not have jurisdiction over the transmission at issue
here. From this survey of FERC's positions, I can only conclude
that the Court's singular reliance on the one statement is
misguided.
3
Finally, to the extent that FERC has concluded that it
lacks jurisdiction over transmission connected to bundled
retail sales, it ignores the clear statutory mandate. By refusing
to regulate the transmission associated with retail sales in States
that have chosen not to unbundle retail sales, FERC has set up a
system under which: (a) each State's internal policy decisions
concerning whether to require unbundling controls the nature of
federal jurisdiction; (b) a utility's voluntary decision to
unbundle determines whether FERC has jurisdiction; and (c)
utilities that are allowed to
42
Opinion of THOMAS, J.
continue bundling may discriminate against other companies
attempting to use their transmission lines. The statute neither
draws these distinctions nor provides that the jurisdictional lines
shift based on actions taken by the States, the public utilities,
or FERC itself. While Congress understood that transmission is a
necessary component of all energy sales, it granted FERC
jurisdiction over all interstate transmission, without
qualification. As such, these distinctions belie the statutory
text.
II
As the foregoing demonstrates, I disagree with the deference the
Court gives to FERC's decision not to regulate transmission
connected to bundled retail sales. Because the statute
unambiguously grants FERC jurisdiction over all interstate
transmission and § 824e mandates that FERC remedy undue
discrimination with respect to all transmission within its
jurisdiction, at a minimum the statute required FERC to consider
whether there was discrimination in the marketplace warranting
application of either the OATT or some other remedy.
I would not, as petitioner Enron requests, compel FERC to apply
the OATT to bundled retail transmissions. I would vacate the Court
of Appeals' judgment and require FERC on remand to engage in
reasoned decisionmaking to determine whether there is undue
discrimination with respect to transmission associated with retail
bundled sales, and if so, what remedy is appropriate.
For all of these reasons, I respectfully dissent from Part IV of
the Court's opinion.
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