The U.S. Court of Appeals in the Third Circuit has placed increased controls over regional transmission planning by holding that states cannot impose siting authority over federally approved grid undertakings, and this is a big success at the federal level, taking control of the interstate electricity infrastructure structures development and regional planning procedures.
Third Circuit supports federal supremacy
The case of Transource Pennsylvania LLC v. was another precedential case that was handed down by the U.S. Court of Appeals, Third Circuit. According to Holland and Knight, the Pennsylvania Public Utility Commission (Transource) on Sept. 5, 2025. A decision was upheld by the Third Circuit, which was that a district court found that the Supremacy Clause of the U.S Constitution preempts the rejection of siting applications of a regional transmission project by the Pennsylvania Public Utility Commission (PAPUC) that had been approved earlier by PJM Interconnection LLC (PJM).
The case was the result of the decision by PJM to use the project 9A developed by Transource to relieve overcapacity on AP South Reactive Interface, which is a transmission constraint that influences electricity prices in Maryland, Virginia, and the District of Columbia. The project was approved by PJM based on its FERC-approved benefit-cost methodology, as an evaluation of whether the region transmission requirement was met and was economically efficient. The PAPUC rejected the siting applications of Transource, although PJM passed them.
Limits imposed on the transmission siting in a court are discretionary
The Third Circuit found that the ruling of the PAPUC was inconsistent with the federal goals and competitively second-guessed the benefit-cost analysis of PJM, and barred the adoption of federally-mandatory regional transmission planning. The court pointed out that the powers of the FERC over interstate planning of the transmission entail the power to approve the method to be used by the projects to mitigate the congestion, and that the state regulators should not overrule such decisions by developing different determinations.
According to WSGR, Wil Wilson Sonsini partner Matt Christiansen, who served as General Counsel at FERC, said that the ruling enhances the powers of the agency in regional transmission planning and also provides the agency with a stronger legal basis as it seeks to defend its historic Order No. 1920. Although he said that Order 1920 was intended to prompt the states to be part of the planning process, the decision of the Third Circuit, according to him, becomes a stick to ensure states realize that they can not sit as the authority to decide on federally sanctioned planning decisions.
The case brings enlightenment to the federal-state jurisdiction balance
Although it reiterated that states had the power to exercise siting, transmission facility construction, the Third Circuit made it clear that the authority should not be exerted in such a manner that it sabotaged federally-approved regional plans. The court separated reasonable siting issues, e.g., environmental and safety implications, and invalid reexamination of the regional necessity that had been concluded by PJM and FERC.
According to the second point Matt stated, this ruling ensures that in case of a clash between the state authority and the processes of the regional transmission planning of FERC, the latter is the victor. That is significant to FERC, that is significant to transmission planning, and I do believe that will be significant to the 1920 litigation.
This historic decision creates more explicit parameters of federal and state jurisdiction in the transmission planning, which could speed up essential grid infrastructural work required to accommodate renewable energy into the grid and to modernize the grid. The ruling promotes the FERC regulatory framework and does not interfere with the lawful state interests in environmental protection and safety considerations.