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Federal Register / Vol. 86, No. 59 / Tuesday, March 30, 2021 / Rules and Regulations
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arbitrary and capricious decision making.
8. According to the Kansas Commission, the Commission previously found that no federal court has stated that the Commission has exclusive jurisdiction over rules or practices that directly affect a jurisdictional rate. 23 The Kansas Commission contends, however, that in Order No. 2222, the Commission relied on EPSA and Hughes to support its assertion of exclusive jurisdiction over rules governing wholesale market participation.24 The Kansas Commission states that, in the August 2020 Tri-State Rehearing Order,25 the Commission declined an opportunity to address the impact of NARUC on the findings from the March 2020 Tri-State Order, which has created uncertainty regarding the Commissions view of its exclusive jurisdiction over rules and practices that directly affect Commissionjurisdictional rates, as well as its interpretation of EPSA and Hughes on that issue.26 The Kansas Commission therefore asks the Commission to grant clarification to resolve that alleged inconsistency and to clearly articulate the Commissions views on the scope of its exclusive jurisdiction.
9. Alternatively, the Kansas Commission seeks rehearing on the basis that the Commission acted in an arbitrary and capricious manner, and failed to engage in reasoned decision making, when it held that EPSA and Hughes support a finding that the Commission has exclusive jurisdiction over rules and practices that directly affect Commission-jurisdictional rates.27
The Kansas Commission argues that Order No. 2222 does not acknowledge the Commissions findings in the March 2020 Tri-State Order to the contrary or provide any explanation for the Commissions conflicting interpretations of the Commissions exclusive authority over rules and practices that directly affect Commission-jurisdictional rates, and therefore, rehearing is warranted to 23 Id. at 23 quoting Tri-State Generation &
Transmission Assn, Inc., 170 FERC 61,224, at P
121 March 2020 Tri-State Order, order on rehg, 172 FERC 61,173 August 2020 Tri-State Rehearing Order, order on rehg, 173 FERC
61,097 2020.
24 Id. at 34 citing Order No. 2222, 172 FERC
61,247 at PP 57 nn.137138, 58 nn.139 & 141, 59
n.143.
25 We note that the Kansas Commission states that the August 2020 Tri-State Rehearing Order was issued 11 days after Order No. 2222. However, Order No. 2222 was issued on September 17, 2020, 20 days after the issuance of the August 2020 TriState Rehearing Order.
26 Kansas Commission Request for Rehearing at 4.
27 Id. at 5.

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address these material omissions and inconsistencies.28
b. Commission Determination 10. We disagree with the Kansas Commission that the Commission in Order No. 2222 created uncertainty about its view on its jurisdiction over rules and practices that directly affect Commission-jurisdictional rates.29 We also disagree with the Kansas Commissions argument that the Commission acted arbitrarily and capriciously by failing to acknowledge the Tri-State proceeding in Order No.
2222.
11. In the March 2020 Tri-State Order, the Commission found that Tri-States exit charges are not a rate or charge for a jurisdictional service itself but fall within the Commissions jurisdiction as a rule or practice directly affecting TriStates jurisdictional wholesale rates.30
The Commission stated that neither the Supreme Court nor the appellate courts have expressly found that the Commission has exclusive jurisdiction over rules or practices that directly affect jurisdictional rates. 31 The Commission therefore declined to find that it had exclusive jurisdiction over Tri-States exit charges and, as a result, found that the Colorado Public Utility Commissions jurisdiction over complaints before it regarding TriStates exit charges were not currently preempted.32
12. However, on rehearing of that order and prior to the issuance of Order No. 2222, the Commission modified that discussion in the underlying order, set aside the finding that Tri-States exit charge is not a rate or charge for a jurisdictional service, and instead found that Tri-States assessment of an exit charge constitutes a Commissionjurisdictional rate.33 The Commission stated that it therefore need not address Tri-States and Wheat Belts argument that the Commission has exclusive jurisdiction over Tri-States assessment of exit charges as a practice directly affecting wholesale rates.34 Therefore, contrary to the Kansas Commissions 28 Id.

at 6.
16 U.S.C. 824da, 824ea providing the Commission with authority to ensure that rules or practices affecting Commission-jurisdictional rates are just and reasonable; EPSA, 136 S.Ct. at 774 approving a construction of the FPA limiting the Commissions affecting jurisdiction to rules or practices that directly affect the wholesale rate emphasis in original internal quotation marks omitted.
30 March 2020 Tri-State Order, 170 FERC 61,224
at PP 118119.
31 Id. P 117 emphasis in original.
32 Id. P 121.
33 August 2020 Tri-State Rehearing Order, 172
FERC 61,173 at PP 3132.
34 Id. P 34 n.75.
29 See
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argument, the Commission did not make any findings in the Tri-State proceeding regarding its jurisdiction with respect to practices that directly affect Commission-jurisdictional rates that could be inconsistent with Order No.
2222. We continue to find, as the Commission did in Order No. 2222, the AEE Declaratory Order, and Order No.
841, that the Commission has exclusive jurisdiction over wholesale markets and the criteria for participation in those markets, including the wholesale market rules for participation of resources connected at or below distribution-level voltages.35 This view is consistent with the D.C. Circuits holding in NARUC
that Congress gives the Commission exclusive authority over the regulation of the sale of electric energy at wholesale in interstate commerce, including both wholesale electricity rates and any rule or practice affecting such rates and that the Commission has the exclusive authority to determine who may participate in the wholesale markets. 36
2. Order No. 719 Demand Response OptOut 13. In Order No. 2222, the Commission stated that the final rule 35 See Order No. 2222, 172 FERC 61,247 at P 57
n.137 citing, e.g., Order No. 841, 162 FERC
61,127 at P 35 citing EPSA, 136 S.Ct. 760; Order No. 841A, 167 FERC 61,154 at P 38; AEE
Declaratory Order, 161 FERC 61,245 at PP 5960.
36 NARUC, 964 F.3d at 1181, 1187 internal citations omitted emphasis added. In response to Commissioner Danlys suggestion that we are obstructing the states from asserting their own authority over distributed energy resource aggregations, Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, Order No. 2222A, 174 FERC 61,198, at P 2 Danly, Commr, dissenting, we reiterate that Order No. 2222 and this order on rehearing address the rules governing wholesale market participation, a matter under the Commissions exclusive jurisdiction. See NARUC, 964 F.3d at 118788. For similar reasons, we disagree with Commissioner Christies suggestion that the Commission is undermining the FPAs jurisdictional framework. See Order No. 2222A, 174 FERC 61,198 at P 5 Christie, Commr, dissenting. Because the terms of wholesale market participation are a matter under exclusive Commission jurisdiction, todays order does not infringe upon or otherwise diminish state authority.
NARUC, 964 F.3d at 1181, 118788; see id. at 1188
noting that Order No. 841 does not usurp state power because States continue to operate and manage their facilities with the same authority they possessed prior to Order No. 841 internal quotation marks and alterations omitted; see also EPSA, 136 S. Ct. at 77677 holding that Order No.
745 was a valid exercise of Commission jurisdiction because it regulated only wholesale market rules and did not aim at matters within state jurisdiction. To the contrary, rather than upending the FPAs jurisdictional framework, this order fulfills the Commissions statutory responsibility to ensure that the matters subject to its exclusive jurisdiction are just and reasonable and not unduly discriminatory or preferential. See NARUC, 964
F.3d at 1190.

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