Consistent with this principle, the Commission required PJM Interconnection, L.L.C. (PJM), Midcontinent Independent System Operator (MISO), and South Carolina Electric & Gas Co. (SCE&G) to remove language in their Commission-jurisdictional tariffs and agreements requiring an incumbent transmission owner to build a transmission project when required by state law to do so. Some parties argued on rehearing that, rather than creating a prohibited federal ROFR, these provisions instead merely acknowledged state law. These parties noted that Order No. 1000 does not “limit, preempt, or otherwise affect state or local laws or regulations with respect to construction of transmission facilities.”3
After reconsidering the issue, the Commission decided that it would not prohibit these entities from recognizing state and local laws in FERC-jurisdictional tariffs and agreements when selecting the developer for a transmission project. Regardless of what the Commission-jurisdictional tariffs and agreements provide, the Commission reasoned that some state or local laws may independently prohibit non-incumbent developers from developing a transmission project. The Commission stated that failure to recognize these state preferences in the FERC tariff could delay the completion of needed transmission infrastructure. The orders did not alter the existing prohibition on federal ROFRs.
Commissioner Norris issued a partial dissent, arguing that the majority’s holding undermines the policy goals of Order No. 1000 by tilting the playing field in favor of incumbent transmission providers. Commissioner Norris argued that by favoring incumbents, the majority was impeding the innovation in transmission solutions that Order No. 1000 was intended to foster. Commissioner Norris also asserted that the majority’s holding contradicts the plain language of Order No. 1000, which states that requiring a developer to demonstrate that it has or can obtain state approvals necessary to be eligible to propose a transmission facility would be an “impermissible barrier to entry.”4