During the Federal Energy Regulatory Commission's (FERC) open meeting on April 17, 2025, Chairman Mark Christie vigorously criticized PJM Interconnection LLC (PJM) for arguing that its regional transmission project approval process preempts state authority to approve or deny a certificate of public convenience and necessity (CPCN) for such projects.
The controversy stems from a project proposed by Transource Pennsylvania LLC (Transource) to construct new transmission lines near the Pennsylvania-Maryland border. The project aims to alleviate a transmission bottleneck that PJM found caused price disparities between Pennsylvania and neighboring states. The Pennsylvania Public Utility Commission (PAPUC), however, denied the project a CPCN four years ago, deeming the project unnecessary due to potentially increased utility rates in Pennsylvania.
Transource challenged the PAPUC decision in federal court, arguing that the project's inclusion in PJM's regional transmission plan preempted state CPCN proceedings. Transource maintained that the PAPUC's decision violated the U.S. Constitution's Supremacy Clause and Dormant Commerce Clause. The U.S. District Court for the Middle District of Pennsylvania agreed with Transource, and the matter currently remains pending on appeal before the U.S. Court of Appeals for the Third Circuit.
PJM filed an amicus brief with the Third Circuit in support of Transource, arguing that the PAPUC's decision undermines federally mandated regional transmission planning processes by FERC-approved regional transmission organizations (RTOs). While recognizing a state's authority over siting and permitting transmission facilities within its boundaries, PJM asserted that such authority must yield to PJM's FERC-approved processes for evaluating regional transmission needs. In his open meeting remarks, Chairman Christie described PJM's position as "utterly outrageous" and contrary to historical agreements in which utilities had pledged to respect state laws when joining RTOs such as PJM.
Chairman Christie warned that if PJM's argument prevailed, it could lead to significant changes in state authority over utilities, potentially eroding states' historical authority over the siting and construction of energy facilities within their jurisdictions. This reduced jurisdiction, in turn, could lead states to reevaluate whether to join (or leave) RTOs. Despite Chairman Christie's concerns, the Third Circuit panel of judges seemed skeptical of the PAPUC's oral arguments in December 2024.
Takeaways
The Transource case throws into sharp relief the unique jurisdictional tensions created by the Federal Power Act's (FPA) shared federal/state jurisdiction over the power industry. Unlike the absence of FERC authority over oil pipeline market entry and exit under the Interstate Commerce Act, and its near total control over natural gas pipeline market entry and exit under Section 7 of the Natural Gas Act, the FPA divides jurisdictional responsibilities for transmission matters between FERC and the states.
In that regard, the Transource case presents critical jurisdictional questions concerning state versus federal authority over the planning and construction of electric transmission facilities, with potentially significant ramifications for the ongoing expansion of the nation's grid and the development of power to support load growth for massive data centers needed to respond to artificial intelligence (AI) computing demand. Although there exists overwhelming governmental and market consensus favoring expanded national transmission infrastructure, transmission siting traditionally has been left to the states.
The Transource case demonstrates how rifts can arise between this long-standing state jurisdictional prerogative and transmission planning efforts within FERC-authorized RTOs and independent system operators (ISOs) such as PJM. Given the fundamental importance of the jurisdictional issues involved, the Third Circuit's decision in Transource may well find its way on appeal to the U.S. Supreme Court.
