New York v. Federal Energy Regulatory Commission
The Supreme Court upheld a federal rule requiring electric utilities that separately bill for transmission and electricity to give competitors equal access to their power lines, while also upholding the government's decision not to force that same requirement on utilities that still bill customers a single combined price.
The ruling settles a major jurisdictional line between federal and state power over the electric grid, confirming that Washington can regulate interstate electricity transmission broadly while states keep control over bundled retail sales.
“It is, however, perfectly clear that the original FPA did a good deal more than close the gap in state power identified in Attleboro.”
Explaining that the 1935 law's reach extends beyond merely filling the regulatory gap identified in an earlier case.
How it got here: The D.C. Circuit upheld the federal agency's transmission-access order after consolidated challenges; the states and a power marketer separately asked the Supreme Court to review the ruling.
The Case in Depth
What happened
Federal regulators adopted a rule requiring utilities to give competing power sellers the same access to transmission lines that the utilities gave themselves, once the cost of moving electricity was billed separately from the cost of the electricity itself. New York and other states challenged the rule as reaching too far into retail markets traditionally regulated by states, while a power marketer, Enron, argued the rule did not go far enough because it let utilities that still charged one combined price keep excluding competitors.
The question before the Court
Could federal energy regulators make power companies open their transmission lines to competitors on equal terms once the company split its transmission charge from its electricity charge—and did regulators have to impose that same rule on companies that still charged customers one combined price?
Why it matters
Electric utilities and companies that want to sell power over utility-owned lines now have federal backing for equal access whenever transmission and energy charges are billed separately, opening the door to more competition in wholesale and unbundled retail markets. States retain authority over utilities that still bundle their rates, meaning consumers in different states may see different competitive options depending on how their state regulates retail electricity.
What changes now
This is a final merits decision resolving the legal question of the agency's jurisdiction; no remand for further proceedings was ordered on the core jurisdictional rulings, and the Court of Appeals' judgment upholding the order stands. The agency's broader regulatory framework for wholesale and unbundled retail transmission remains in effect nationwide, and the door remains open for the agency to later investigate and remedy discrimination connected to bundled retail transmission if it chooses to do so.
What this does not decide
The Court did not decide whether federal regulators actually have the legal authority to regulate the transmission portion of bundled retail electricity sales—it assumed for the sake of argument that such authority might exist and only upheld the agency's discretionary choice not to exercise it in this particular rulemaking.
Concurrences and dissents
Dissent in part — Justice Thomas
Justice Thomas agreed that the agency has jurisdiction over all interstate transmission and joined the parts of the opinion upholding regulation of unbundled retail transmission. But he argued the majority wrongly deferred to a lower-court characterization of the agency's reasoning rather than the agency's own stated justifications, which he found conclusory and internally inconsistent. He would have vacated and sent the case back for the agency to actually determine, with reasoned analysis, whether bundled retail transmission involves undue discrimination requiring a remedy.
How the Court got there
The legal reasoning, step by step
- The Court read the Federal Power Act's text, which gives the federal agency jurisdiction over 'the transmission of electric energy in interstate commerce' without any wholesale-only limitation, unlike the agency's sale jurisdiction, which the statute expressly confines to wholesale transactions.
- Because the statutory grant of transmission jurisdiction contains no retail/wholesale distinction, the Court concluded the agency could regulate interstate transmissions used in unbundled retail sales, even though it could not regulate the retail sale of the electricity itself.
- The Court rejected New York's call for a presumption against preemption, explaining that this doctrine applies only when a specific state law conflicts with existing federal law; here, the question was instead whether Congress had given the agency authority to act at all, a question resolved by examining the statute's text and structure without any thumb on the scale.
- Turning to the legislative history and the reserved-powers language in the statute, the Court found that language to be a mere policy declaration that cannot override the statute's clear and specific grant of transmission jurisdiction, especially since unbundled transmissions were not something states had ever regulated in 1935.
- On the separate question of bundled retail transmissions, the Court applied the deferential standard for agency policy choices, concluding that the agency reasonably found broader regulation unnecessary to fix the wholesale-market discrimination it had actually identified, and that the agency could reasonably decline to resolve difficult jurisdictional questions it had not needed to reach.
- Because the agency's chosen remedy for the wholesale discrimination problem did not require regulating bundled retail transmissions, and because the agency's forbearance reflected a permissible policy judgment rather than an abdication of statutory duty, the Court found both halves of the agency's order to be lawful.
Doctrinal impact
Cases affected by this decision
Limits Attleboro (273 U.S. 83)
The Court said this older case, which closed a regulatory gap, does not mark the outer boundary of the 1935 law's coverage.
Reaffirms Chevron (467 U.S. 837)
The Court relied on this case's framework for deferring to an agency's reasonable policy choices within its authority.