United States v. 2023-09-05 | 20-72788 | SEIA V. FERC | precedential | opinion |

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SOLAR ENERGY INDUSTRIES
ASSOCIATION,
Petitioner,
NEWSUN ENERGY LLC; ONE
ENERGY ENTERPRISES LLC,
Petitioners-Intervenors,
v.
FEDERAL ENERGY
REGULATORY COMMISSION,
Respondent,
NATIONAL RURAL ELECTRIC
COOPERATIVE ASSOCIATION
[NRECA]; AMERICAN PUBLIC
POWER ASSOCIATION; LARGE
PUBLIC POWER COUNCIL;
EDISON ELECTRIC INSTITUTE
INC.,
Respondents-Intervenors,
No. 20-72788
FERC Nos.
RM19-15-000
AD16-16-000
OPINION

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2 SEIA V. FERC
AMERICAN FOREST & PAPER
ASSOCIATION,
Intervenor.
MONTANA ENVIRONMENTAL
INFORMATION CENTER; SIERRA
CLUB; CENTER FOR BIOLOGICAL
DIVERSITY; VOTE SOLAR;
COMMUNITY RENEWABLE
ENERGY ASSOCIATION;
APPALACHIAN VOICES;
ALABAMA CENTER FOR
SUSTAINABLE ENERGY, d/b/a
Energy Alabama; GEORGIA
INTERFAITH POWER & LIGHT
INC.; NORTH CAROLINA
SUSTAINABLE ENERGY
ASSOCIATION; UPSTATE
FOREVER,
Petitioners,
ONE ENERGY ENTERPRISES LLC,
Petitioner-Intervenor,
v.
FEDERAL ENERGY
REGULATORY COMMISSION,
No. 20-73375
FERC No.
RM19-15-000

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SEIA V. FERC 3
Respondent,
NATIONAL RURAL ELECTRIC
COOPERATIVE ASSOCIATION
[NRECA]; EDISON ELECTRIC
INSTITUTE INC.; AMERICAN
PUBLIC POWER ASSOCIATION;
LARGE PUBLIC POWER
COUNCIL,
Respondents-Intervenors,
______________________________
AMERICAN FOREST & PAPER
ASSOCIATION,
Intervenor.
MONTANA ENVIRONMENTAL
INFORMATION CENTER; SIERRA
CLUB; CENTER FOR BIOLOGICAL
DIVERSITY; VOTE SOLAR;
COMMUNITY RENEWABLE
ENERGY ASSOCIATION;
APPALACHIAN VOICES;
ALABAMA CENTER FOR
SUSTAINABLE ENERGY, d/b/a
Energy Alabama; GEORGIA
INTERFAITH POWER & LIGHT
INC.; NORTH CAROLINA
SUSTAINABLE ENERGY
ASSOCIATION; UPSTATE
No. 21-70083
FERC No.
RM19-15-001

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4 SEIA V. FERC
FOREVER,
Petitioners,
ONE ENERGY ENTERPRISES LLC,
Petitioner-Intervenor,
v.
FEDERAL ENERGY
REGULATORY COMMISSION,
Respondent,
NATIONAL RURAL ELECTRIC
COOPERATIVE ASSOCIATION
[NRECA]; AMERICAN PUBLIC
POWER ASSOCIATION; EDISON
ELECTRIC INSTITUTE INC.;
LARGE PUBLIC POWER
COUNCIL,
Respondents-Intervenors.
SOLAR ENERGY INDUSTRIES
ASSOCIATION,
Petitioner,
ONE ENERGY ENTERPRISES LLC,
No. 21-70113
FERC Nos.
RM19-15-001
AD16-16-001

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SEIA V. FERC 5
Petitioner-Intervenor,
v.
FEDERAL ENERGY
REGULATORY COMMISSION,
Respondent,
NATIONAL RURAL ELECTRIC
COOPERATIVE ASSOCIATION
[NRECA]; AMERICAN PUBLIC
POWER ASSOCIATION; EDISON
ELECTRIC INSTITUTE INC.;
LARGE PUBLIC POWER
COUNCIL,
Respondents-Intervenors.
On Petition for Review of an Order of the
Federal Energy Regulatory Commission
Argued and Submitted March 8, 2022
Seattle, Washington
Filed September 5, 2023
Before: Jacqueline H. Nguyen, Eric D. Miller, and Patrick
J. Bumatay, Circuit Judges.
Opinion by Judge Miller;
Concurrence by Judge Miller;
Partial Concurrence and Partial Dissent by Judge Bumatay

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6 SEIA V. FERC
SUMMARY*
Federal Energy Regulatory Commission /
Environmental Law
The panel granted in part and denied in part a petition for
review brought by the Solar Energy Industries Association
and several environmental organizations challenging Orders
872 and 872-A (collectively, “Order 872”), rules adopted by
the Federal Energy Regulatory Commission (FERC) that
alter which facilities qualify for benefits under the Public
Utility Regulatory Policy Act (PURPA) and how those
facilities are compensated.
Congress enacted PURPA to encourage the development
of a new class of independent, non-utility-owned energy
producers known as “Qualifying Facilities,” or
“QFs.” Order 872 makes it more difficult for a facility to
qualify for treatment as a QF, and makes QF status less
advantageous.
The panel rejected petitioners’ argument that Order 872
as a whole is inconsistent with PURPA’s directive that
FERC “encourage” the development of QFs. Applying the
two-step framework of Chevron U.S.A. Inc. v. NRDC, Inc.,
467 U.S. 837 (1984), the panel held that (1) PURPA on its
face gives FERC broad discretion to evaluate which rules are
necessary to encourage QFs and which are not, and (2)
FERC’s interpretation was not unreasonable.
* This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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SEIA V. FERC 7
Next, the panel rejected petitioners’ challenges to four
specific provisions of Order 872. First, the panel held that
the modified Site Rule—which modified the rules for
determining when facilities are deemed to be located at the
same or separate sites—survives Chevron, is not arbitrary
and capricious under the Administrative Procedure Act
(APA), and is not unlawfully retroactive. Second, the panel
held that the modified Fixed-Rate Rule—which modified the
rates paid to QFs—survives Chevron and is not arbitrary or
capricious under the APA. Third, the panel held that the
provision allowing States to adopt a rebuttable presumption
that, for utilities located within certain organized energy
markets, the locational market price represents the
purchasing utility’s avoided costs, is not arbitrary or
capricious under the APA. Fourth, the panel held that the
provision reducing the threshold that terminates an electric
utility’s obligation to purchase from a QF if the QF has
nondiscriminatory access to certain organized markets is not
arbitrary or capricious under the APA.
Finally, the panel addressed the environmental
organizations’ claim that FERC violated the National
Environmental Policy Act (NEPA) by failing to prepare an
environmental assessment (EA) before issuing Order
872. The panel held that the environmental organizations
had Article III standing because they adequately
documented the concrete harms that Order 872 could cause
their members, and had prudential standing because they
demonstrated that the harms they fear fall within NEPA’s
zone of interests.
On the merits, the panel held that FERC violated NEPA
by failing to prepare, at minimum, an EA. First, the panel
held that the more substantive elements of Order 872 fall
outside NEPA’s categorical exclusion for rules that do not

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8 SEIA V. FERC
substantially change the effect of the rules being
amended. Second, the panel rejected FERC’s argument that
it was not required to prepare an EA because any potential
environmental impacts from Order 872 are not reasonably
foreseeable. The panel stated that it was not aware of any
case approving an agency’s decision not to engage in any
environmental analysis for rulemaking of the magnitude of
Order 872, and held that the lack of reasonably foreseeable
environmental impacts cannot relieve an agency of its
obligation to prepare an EA.
The panel determined that the appropriate remedy for
FERC’s NEPA violation was to remand to the agency
without vacatur. Although FERC’s failure to prepare an EA
is a serious violation, Order 872 does not suffer from
fundamental flaws making it unlikely that FERC could adopt
the same rule on remand, and the disruptive consequences of
vacatur would be significant.
Concurring, Judge Miller, joined by Judge Nguyen,
joined the court’s opinion in full and wrote separately to
respond to Judge Bumatay’s discussion of Chevron in his
concurrence and dissent.
Concurring in part and dissenting in part, Judge Bumatay
concurred with denying the petition challenging the
enactment of FERC’s revised rules, but would rely on the
text of PURPA instead of on Chevron deference. With
respect to the NEPA claim, he would hold that the
environmental organizations lack standing because they
have not alleged that they will suffer an environmental harm
sufficient to confer NEPA standing.

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SEIA V. FERC 9
COUNSEL
Fred A. Rowley, Jr (argued), Wilson Sonsini Goodrich &
Rosati, Los Angeles, California; John B. Kenney, Wilson
Sonsini Goodrich & Rosati PC, Washington, D.C.; Heather
Curlee and Todd G. Glass, Wilson Sonsini Goodrich &
Rosati PC, Seattle, Washington; for Petitioner Solar Energy
Industries Association.
David C. Bender (argued), Earthjustice, Washington, D.C
for Petitioners Montana Environmental Information Center,
Sierra Club, Center for Biological Diversity, and Vote Solar.
Matthew W.S. Estes (argued), Senior Attorney; Susanna Y.
Chu, Attorney; Joshua A. Kirstein, Attorney Advisor;
Robert H. Solomon, Solicitor; Matthew Christiansen,
General Counsel; Federal Energy Regulatory Commission,
Washington, D.C.; for Respondent Federal Energy
Regulatory Commission.
Jeremy C. Marwell (argued), Margaret E. Peloso, and James
T. Dawson, Vinson & Elkins LLP, Washington, D.C.; Emily
S. Fisher and Adam Benshoff, Edison Electric Institute,
Washington, D.C.; for Respondents-Intervenor Edison
Electric Institute.
Gregory M. Adams and Peter J. Richardson, Richardson
Adams PLLC, Boise, Idaho, for Petitioner Community and
Renewable Energy Association.
Lauren J. Bowen, Nicholas Jimenez, and Jillian Kysor,
Southern Environmental Law Center, Chapel Hill, North
Carolina, for Petitioners Appalachian Voices, Alabama
Center for Sustainable Energy, Georgia Interfaith Power &
Light, North Carolina Sustainable Energy Association, and
Upstate Forever.

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10 SEIA V. FERC
Marie P. Barlow and Max Yoklic, NewSun Energy LLC,
Bend, Oregon, for Petitioner-Intervenor NewSun Energy
LLC.
Elizabeth W. Whittle, Nixon Peabody LLP, Washington,
D.C., for Petitioner-Intervenor One Energy Enterprises
LLC.
Randolph L. Elliot, McCarter & English LLP, Washington,
D.C., for Respondent-Intervenor, National Rural Electric
Cooperative Association.
John E. McCaffrey III, Stinson LLP, Washington, D.C., for
Respondent-Intervenor American Public Power Association.
Jonathan D. Schneider, Harvey Reiter, and Marie D. Zosa,
Stinson LLP, Washington, D.C., for Respondent-Intervenor
Large Public Power Counsel.
Robert A. Weishaar Jr., McNees Wallace & Nurick,
Harrisburg, Pennsylvania, for Intervenor (def/res)-
Intervenor American Forest & Paper Association.
Sarah N. Norcott, NorthWestern Corporation d/b/a
NorthWestern Energy, Helena, Montana, for Amicus Curiae
NorthWestern Corporation d/b/a NorthWestern Energy.
Andrew R. Varcoe and Stephanie A. Maloney, U.S.
Chamber Litigation Center, Washington, D.C.; Elbert Lin,
Hunton Andrews Kurth LLP, Richmond, Virginia; for
Amicus Curiae Chamber of Commerce of the United States
of America.

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SEIA V. FERC 11
OPINION
MILLER, Circuit Judge:
This case involves rules adopted by the Federal Energy
Regulatory Commission to implement the Public Utility
Regulatory Policies Act of 1978 (PURPA), Pub. L. No. 95-
617, 92 Stat. 3117. Congress enacted PURPA to encourage
the development of a new class of independent, non-utility-
owned energy producers known as “Qualifying Facilities,”
or “QFs.” PURPA tasks FERC with promulgating rules to
implement the statute. In 2020, FERC revised its rules to
alter which facilities qualify for PURPA’s benefits and how
those facilities are compensated. The new rules make it more
difficult to qualify for treatment as a QF, and they also make
QF status less advantageous.
We are asked to decide whether FERC’s new rules are
consistent with PURPA and satisfy the requirements of the
Administrative Procedure Act. In resolving those questions,
we address challenges to discrete components of the new
rules as well as challenges to the lawfulness of the rules as a
whole. We must also decide whether FERC violated the
National Environmental Policy Act of 1969 (NEPA), Pub.
L. No. 91-190, 83 Stat. 852 (1970), by failing to prepare an
environmental assessment or environmental impact
statement. We hold that FERC’s revised rules are consistent
with both PURPA and the APA, but that FERC violated
NEPA by failing to prepare, at minimum, an environmental
assessment. In light of the extraordinary disruptive
consequences that would accompany vacatur, we decline to
vacate the rules. We grant the petition for review in part and
remand without vacatur.

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12 SEIA V. FERC
I
A
In response to the energy crises of the 1970s, Congress
enacted PURPA to promote energy conservation, improve
energy efficiency, lower consumer costs, and decrease
reliance on foreign oil. See FERC v. Mississippi, 456 U.S.
742, 745–46, 756–57 (1982); Independent Energy
Producers Ass’n, Inc. v. California Pub. Utils. Comm’n, 36
F.3d 848, 850 (9th Cir. 1994). In enacting PURPA,
“Congress sought to eliminate two significant barriers to the
development of alternative energy sources: (1) the
reluctance of traditional electric utilities to purchase power
from and sell power to non-traditional facilities, and (2) the
financial burdens imposed upon alternative energy sources
by state and federal utility authorities.” Independent Energy
Producers Ass’n, 36 F.3d at 850.
PURPA directs FERC to “prescribe, and from time to
time thereafter revise, such rules as it determines necessary
to encourage” the development of Qualifying Facilities. 16
U.S.C. § 824a-3(a). There are two types of QFs. First, a
“small power production facility” uses an alternative energy
source—often a renewable source like solar or wind—to
produce electricity. 16 U.S.C. § 796(17). As its name
suggests, such a facility must be “small”: It cannot have a
power production capacity that, “together with any other
facilities located at the same site (as determined by the
Commission),” exceeds 80 megawatts. Id. § 796(17)(A)(ii).
Second, a “cogeneration facility” typically uses traditional
fossil fuels to produce both electric energy and a useful form
of thermal energy (like steam) in a manner that is more
efficient than producing each kind of energy separately. Id.

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SEIA V. FERC 13
§ 796(18); 18 C.F.R. § 292.205; S. Rep. No. 95-442, at 21
(1977).
PURPA provides QFs with certain benefits. Of particular
relevance here, PURPA imposes a mandatory-purchase
obligation on electric utilities, which must purchase
electricity from QFs at rates established by FERC. 16 U.S.C.
§ 824a-3(a)(2), (b). Those rates must be “just and reasonable
to the electric consumers,” must be “in the public interest,”
and may not “discriminate against” QFs. Id. § 824a-3(b).
PURPA also sets an upper bound on rates: No rule “shall
provide for a rate which exceeds the incremental cost to the
electric utility of alternative electric energy.” Id. A utility’s
“incremental cost”—commonly referred to as its “avoided
cost”—is defined as “the cost to the electric utility of the
electric energy which, but for the purchase from [a QF], such
utility would generate or purchase from another source.” Id.
§ 824a-3(d); see also American Paper Inst., Inc. v. American
Elec. Power Serv. Corp., 461 U.S. 402, 406 (1983).
While PURPA tasks FERC with the development of
national rules and standards, States play a prominent role in
PURPA’s regulatory structure. Under PURPA, state
regulatory authorities are primarily responsible for
implementing FERC’s rules. 16 U.S.C. § 824a-3(f)(1). For
example, while FERC establishes, in broad terms, the rate to
be used in the mandatory transactions described above,
States are responsible for calculating and applying that rate
for individual utilities and QFs.
Some utilities are not subject to a state regulatory
authority, and PURPA requires those “nonregulated electric
utilit[ies]” to implement and apply FERC’s rules in the same
manner as States. 16 U.S.C. § 824a-3(f)(2). For our

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14 SEIA V. FERC
purposes, the distinction does not matter, so we refer to
States and nonregulated utilities collectively as “States.”
B
In 1980, in accordance with its statutory mandate to
promulgate rules implementing PURPA, see 16 U.S.C.
§ 824a-3(a), FERC issued Orders 69 and 70 (collectively,
the 1980 Orders or 1980 Rules). Small Power Production
and Cogeneration Facilities; Regulations Implementing
Section 210 of the Public Utility Regulatory Policies Act of
1978, Order 69, 45 Fed. Reg. 12,214 (Feb. 25, 1980); Small
Power Production and Cogeneration Facilities—Qualifying
Status, Order 70, 45 Fed. Reg. 17,959 (Mar. 20, 1980).
The 1980 Orders clarified which facilities qualify as
“small power production facilit[ies],” which, together with
“any other facilities located at the same site (as determined
by the Commission),” may not have a power production
capacity of more than 80 megawatts. 16 U.S.C.
§ 796(17)(A). To determine whether two facilities were
“located at the same site,” FERC developed a one-mile rule.
If two facilities were “located within one mile of each other,”
“use[d] the same energy resource,” and were “owned by the
same person,” they were considered to be “located at the
same site.” Order 70, 45 Fed. Reg. at 17,965. And if two
facilities were located at the same site, their power outputs
had to be added together for purposes of the 80-megawatt
size cap. Id. By contrast, facilities located more than one
mile apart were considered separate sites, and thus did not
need to add together their power capacities. We refer to this
as the “1980 Site Rule.”
The 1980 Orders also established the rate that a utility
would pay a QF when purchasing energy under its
mandatory-purchase obligation. See 16 U.S.C. § 824a-3(b).

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SEIA V. FERC 15
FERC set the rate for sales by QFs equal to the purchasing
utility’s full avoided costs—the maximum rate permitted by
PURPA. Order 69, 45 Fed. Reg. at 12,222–23; American
Paper, 461 U.S. at 406–07. FERC explained that a rate based
on a utility’s full avoided costs was appropriate to provide
adequate incentives for the development of QFs, and that any
lower rate would not provide significant savings for the
utilities’ ratepayers. See American Paper, 461 U.S. at 406–
07, 412–18 (upholding FERC’s avoided-cost rule); Order
69, 45 Fed. Reg. at 12,222–23.
The 1980 Orders offered QFs the choice of two rate-
calculation methods. See Winding Creek Solar LLC v.
Peterman, 932 F.3d 861, 863 (9th Cir. 2019). First, a QF
could elect to sell its energy at a rate calculated at the time
the energy was delivered (often referred to as the “as-
available” rate). Order 69, 45 Fed. Reg. at 12,224. Second, a
QF could elect to sell its energy using a rate based on the
utility’s avoided costs calculated and fixed at the time the
contractual obligation was incurred (commonly referred to
as the “Fixed-Rate Rule”). Id. Under the Fixed-Rate Rule, a
QF could receive a fixed rate for both the utility’s energy
costs (the variable costs associated with the production of
energy, such as the cost of fuel) as well as the utility’s
capacity costs (the “costs associated with providing the
capacity to deliver energy,” consisting “primarily of the
capital costs of facilities”). Order 69, 45 Fed. Reg. at 12,216.
In 2005, Congress enacted the Energy Policy Act of
2005, Pub. L. No. 109-58, 119 Stat. 594. In the Energy
Policy Act, “Congress acknowledged that QFs no longer
faced the same barriers that prompted PURPA.”
Californians for Renewable Energy v. California Pub. Utils.
Comm’n, 922 F.3d 929, 933 (9th Cir. 2019). It therefore
amended PURPA by limiting the scope of PURPA’s

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16 SEIA V. FERC
mandatory-purchase requirement. Under the amended
statute, a utility is not required to purchase energy from a
given QF if the Commission finds that the QF has
“nondiscriminatory access” to one of several specified
energy markets. 16 U.S.C. § 824a-3(m)(1). Those markets
generally correspond to the markets operated by regional
transmission organizations and independent system
operators (known as “regional markets” or “organized
markets”).
To implement this new statutory language, FERC issued
Order 688. New PURPA Section 210(m) Regulations
Available to Small Power Production and Cogeneration
Facilities, Order 688, 71 Fed. Reg. 64,342 (Nov. 1, 2006);
New PURPA Section 210(m) Regulations Applicable to
Small Power Production and Cogeneration Facilities, Order
688-A, 72 Fed. Reg. 35,872 (June 29, 2007). Order 688
established a rebuttable presumption that “small”
facilities—defined as those with a power capacity less than
or equal to 20 megawatts—lack non-discriminatory market
access, whereas “large” facilities with a capacity exceeding
20 megawatts have adequate market access. Order 688, 71
Fed. Reg. at 64,343–44, 64,352–54. The Commission
acknowledged that no single threshold would perfectly
distinguish between those facilities with nondiscriminatory
access to markets and those without such access, but it
determined that a 20-megawatt threshold would be
“reasonable and administratively workable.” Id. at 64,352–
53; see also American Forest & Paper Ass’n v. FERC, 550
F.3d 1179, 1183 (D.C. Cir. 2008) (upholding Order 688’s
interpretation of the 2005 statutory amendment).

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SEIA V. FERC 17
C
In 2016, FERC began to consider revising the PURPA
regulations. In 2019, after holding a technical conference
and soliciting public comments, it issued a notice of
proposed rulemaking. Qualifying Facility Rates and
Requirements; Implementation Issues Under the Public
Utility Regulatory Policies Act of 1978, 84 Fed. Reg. 53,246
(proposed Oct. 4, 2019) (2019 NPRM). The next year, a
divided Commission issued Order 872. Qualifying Facility
Rates and Requirements Implementation Issues Under the
Public Utility Regulatory Policies Act of 1978, Order 872,
85 Fed. Reg. 54,638 (Sept. 2, 2020). In response to requests
for rehearing, the Commission issued Order 872-A, largely
reaffirming the conclusions and reasoning of Order 872.
Qualifying Facility Rates and Requirements Implementation
Issues Under the Public Utility Regulatory Policies Act of
1978, Order 872-A, 85 Fed. Reg. 86,656 (Dec. 30, 2020)
(We refer to both orders collectively as “Order 872”). Then-
Commissioner Glick dissented in part, arguing that the
revised PURPA rules “gutted” PURPA and defied
Congress’s intent to encourage QFs. Order 872-A, 85 Fed.
Reg. at 86,750 (Glick, Cmm’r, dissenting in part).
FERC explained that revision of its PURPA regulations
was appropriate considering the dramatic changes that have
reshaped the energy industry since the Commission first
issued its regulations in 1980. Order 872, 85 Fed. Reg. at
54,647–48. For example, FERC found that technological
advances and the declining cost of facility development have
transformed the once-nascent renewable-energy sector into
a mature and growing industry. Id. The Commission also
observed that energy markets have become more
competitive and efficient, driven by the creation of new
market structures and the rise of competitive independent

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18 SEIA V. FERC
power facilities. Id. at 54,648; see also FERC v. Electric
Power Supply Ass’n, 577 U.S. 260, 267 (2016) (observing
that market conditions have changed dramatically in the past
several decades, moving from a market dominated by local,
vertically integrated monopolies to a market where
“[i]ndependent power plants . . . abound” and energy flows
“through an interconnected ‘grid’ of near-nationwide scope”
(quoting New York v. FERC, 535 U.S. 1, 7 (2002))). In light
of those changes, the Commission concluded that the revised
regulations would better comply with PURPA’s statutory
requirements. Order 872, 85 Fed. Reg. at 54,643. And so,
consistent with PURPA’s requirement that FERC revise its
regulations “from time to time,” 16 U.S.C. § 824a-3(a), the
Commission amended its PURPA regulations. Order 872, 85
Fed. Reg. at 54,648.
Order 872 makes several significant changes to the
PURPA regulations, four of which are relevant here.
First, Order 872 modifies the 1980 Site Rule. Order 872
does not change the rule for affiliated facilities located
within one mile of each other: As before, there is an
irrebuttable presumption that affiliated facilities that are
within one mile of each other and that use the same energy
resource are “located at the same site.” 18 C.F.R.
§ 292.204(a)(2)(i)(A); Order 872, 85 Fed. Reg. at 54,696.
But Order 872 modifies the rule for facilities located more
than one mile apart. Under the new site rule, there is an
irrebuttable presumption of separateness only when
affiliated facilities using the same energy resource are
located ten miles or more apart. 18 C.F.R.
§ 292.204(a)(2)(i)(B); Order 872, 85 Fed. Reg. at 54,696.
When affiliated facilities using the same energy resource are
located more than one mile but less than ten miles apart,
there is a rebuttable presumption that those facilities are

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SEIA V. FERC 19
located at separate sites. 18 C.F.R. § 292.204(a)(2)(i)(C);
Order 872, 85 Fed. Reg. at 54,696. The Commission
summarized its new rule as follows: Under the new rule,
“electric utilities, state regulatory authorities, and other
interested parties” may now demonstrate that “affiliated
small power production facilities that use the same energy
resource and are more than one mile apart and less than 10
miles apart actually are at the same site (with distances one
mile or less apart still irrebuttably at the same site and
distances 10 miles or more apart irrebuttably at separate
sites).” Order 872, 85 Fed. Reg. at 54,696.
The rule sets out a non-exhaustive list of factors that may
be used to rebut the presumption of separateness, such as
whether the facilities share common physical characteristics,
common ownership and control, and shared contracts. Order
872, 85 Fed. Reg. at 54,701. The new site rule applies to all
QFs that seek certification or recertification on or after
December 31, 2020, 18 C.F.R. § 292.204(a)(2), but an
existing QF’s recertification is not subject to protest unless
the QF undergoes “substantive changes,” Order 872, 85 Fed.
Reg. at 54,706–07. We refer to the new site requirements as
the “2020 Site Rule.”
Second, Order 872 modifies the Fixed-Rate Rule
applicable to power-sales contracts between QFs and electric
utilities. Under the 1980 Rules, a QF was entitled to receive
a rate equal to the electric utility’s full avoided costs, and it
could choose to receive either an as-available rate calculated
at the time of delivery, or a rate calculated and fixed at the
time that a contractual obligation was incurred. See Winding
Creek Solar, 932 F.3d at 863. Order 872 retains the
requirement that QFs receive a rate equal to the utility’s full
avoided costs. Order 872, 85 Fed. Reg. at 54,650. But Order
872 grants States the option, if they deem it appropriate, to

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20 SEIA V. FERC
eliminate the Fixed-Rate Rule and instead require that the
avoided energy cost portion of a QF’s contract vary based on
the as-available rate calculated at the time of delivery. 18
C.F.R. § 292.304(d)(2); Order 872, 85 Fed. Reg. at 54,648.
Order 872 still requires that QFs be given the option to
receive avoided capacity costs at fixed rates. Id. These
capacity rates compensate a QF for the fact that its existence
spares the utility certain fixed costs, such as the cost of
building and financing generating plants of its own. Id. at
54,645–46, 54,655–56.
Third, Order 872 provides States additional flexibility to
use various market prices when calculating a utility’s
avoided costs. As relevant here, Order 872 allows States to
adopt a rebuttable presumption that, for utilities located
within certain organized energy markets, the “locational
marginal price,” or “LMP,” reflects the purchasing utility’s
avoided costs. See 18 C.F.R. § 292.304(b)(6). Within those
organized energy markets, LMP represents “the least-cost of
meeting an incremental megawatt-hour of demand at each
location on the grid, and thus prices vary based on location
and time.” Sacramento Mun. Util. Dist. v. FERC, 616 F.3d
520, 524 (D.C. Cir. 2010) (per curiam); see also Electric
Power Supply Ass’n, 577 U.S. at 268–69 (explaining how
LMP is calculated). The Commission concluded that LMP
“reflect[s] the true marginal cost of production of energy,
taking into account all physical system constraints,” and that
LMP “accurately represents the purchasing electric utility’s
avoided energy cost at the time the energy is delivered.”
Order 872, 85 Fed. Reg. at 54,660–61. But the Commission
also recognized that LMP may sometimes deviate from
actual avoided costs. Order 872 therefore rejects the
categorical rule that the Commission had considered in the
notice of proposed rulemaking—which would have allowed

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SEIA V. FERC 21
States to use LMP as a per se appropriate measure of avoided
costs—and instead allows States to adopt a rebuttable
presumption that LMP reflects a utility’s avoided costs. Id.
at 54,659.
Fourth, Order 872 revises the provision of Order 688 that
terminates an electric utility’s obligation to purchase from a
QF if the QF has nondiscriminatory access to certain
organized markets. 16 U.S.C. § 824a-3(m). Order 688
established a rebuttable presumption that QFs with a net
power capacity of less than or equal to 20 megawatts do not
have adequate, nondiscriminatory access to markets. In the
2019 notice of proposed rulemaking, the Commission
considered reducing that threshold to one megawatt, but it
decided not to do so, noting that commenters had
demonstrated that market-access barriers are “more acute for
smaller QFs at or near the 1 MW threshold.” Order 872, 85
Fed. Reg. at 54,716. Instead, the Commission reduced the
threshold to five megawatts. 18 C.F.R. § 292.309(d)(2);
Order 872, 85 Fed. Reg. at 54,715. Under the new rule,
“small power production facilities with a net power
production capacity at or below 5 MW will be presumed not
to have nondiscriminatory access to markets, and,
conversely, small power production facilities with a net
power production capacity over 5 MW will be presumed to
have nondiscriminatory access to markets.” Order 872, 85
Fed. Reg. at 54,715.
FERC determined that it was not required to conduct an
environmental analysis of Order 872 under NEPA. Order
872, 85 Fed. Reg. at 54,725. It gave two justifications for its
conclusion. First, FERC determined that Order 872 fell
within a “categorical exclusion” to NEPA for rules that are
“clarifying, corrective, or procedural” in nature. Id. at 54,727
n.1090 (quoting 18 C.F.R. § 380.4(a)(2)(ii)). Second, FERC

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22 SEIA V. FERC
stated that any downstream environmental effects of Order
872 were too uncertain and speculative to trigger NEPA
review. Id. at 54,727. For those reasons, FERC determined
that neither an environmental assessment nor an
environmental impact statement was required.
D
The Solar Energy Industries Association (Solar
Association) and a group of environmental organizations
(Environmental Organizations) petition for review of Order
872. Each party presents slightly different challenges, but for
the sake of simplicity, we refer to them collectively as
“petitioners” unless otherwise noted. FERC opposes the
petitions for review, and a group of electric utilities and
utility-related interest groups (Utility-Intervenors) have
intervened in support of FERC.
A renewable facility developer, NewSun Energy, LLC,
has also intervened in support of the petitioners. Utility-
Intervenors urge us not to consider several arguments raised
by NewSun. Utility-Intervenors correctly observe that we
typically will not consider issues raised exclusively by an
intervenor. See Washington Utils. & Transp. Comm’n v.
FERC, 26 F.3d 935, 941–42 (9th Cir. 1994). But here, the
issues raised in NewSun’s brief are, with just one exception,
coextensive with those addressed by the petitioners. The
exception is NewSun’s argument that it was arbitrary and
capricious for FERC to decline to establish a minimum
contract length for agreements between QFs and electric
utilities. Because no petitioner raised that issue, we strike
that portion of NewSun’s brief. See id.
We have jurisdiction to review the petitions under 16
U.S.C. § 825l(b). Although that provision gives us
jurisdiction to review final orders of the Commission, it

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SEIA V. FERC 23
prohibits us from considering any objection “unless such
objection shall have been urged before the Commission in
the application for rehearing.” Id. Both the Environmental
Organizations and the Solar Association filed petitions for
rehearing, and although Utility-Intervenors (but not FERC)
question the sufficiency of those petitions, we conclude that
the petitions adequately raised the challenges to Order 872
that petitioners now advance. See Bangor Hydro-Elec. Co.
v. FERC, 925 F.2d 465, 467 n.* (D.C. Cir. 1991) (per
curiam).
II
Before addressing petitioners’ challenges to individual
provisions of Order 872, we consider their argument that the
order as a whole is inconsistent with PURPA’s directive that
FERC “encourage” the development of QFs.
We review an agency’s interpretation of a statute under
the framework of Chevron U.S.A. Inc. v. NRDC, Inc., 467
U.S. 837 (1984); see Pacific Choice Seafood Co. v. Ross,
976 F.3d 932, 940 (9th Cir. 2020). “[W]hen an agency is
authorized by Congress to issue regulations and promulgates
a regulation interpreting a statute it enforces, the
interpretation receives deference if the statute is ambiguous
and if the agency’s interpretation is reasonable.” Encino
Motorcars, LLC v. Navarro, 579 U.S. 211, 220 (2016).
Petitioners argue that Order 872 fails at step one of Chevron
because it is contrary to the unambiguous terms of PURPA
and at step two because it reflects an unreasonable
interpretation of the statute.
PURPA provides that FERC “shall prescribe, and from
time to time thereafter revise, such rules as it determines
necessary to encourage cogeneration and small power
production.” 16 U.S.C. § 824a-3(a). According to

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24 SEIA V. FERC
petitioners, Order 872 “rescinded longstanding policies that
had enabled the development of Qualifying Facilities,”
replacing them with “new policies that were not designed to
encourage the development of Qualifying Facilities.”
Because Order 872 provides less support to QFs than the
status quo under the 1980 Rules—“discouraging” them
relative to that baseline—petitioners contend that Order 872
violates the statute.
The principal flaw in petitioners’ argument is that
PURPA does not simply task FERC with prescribing rules
“to encourage” QFs. Rather, it requires FERC to prescribe
“such rules as it determines necessary to encourage” QFs,
and it directs FERC to “from time to time thereafter revise”
those rules. 16 U.S.C. § 824a-3(a) (emphasis added). On its
face, the statute gives FERC broad discretion to evaluate
which rules are necessary to encourage QFs and which are
not. It also gives FERC discretion to reevaluate its rules and
alter them in light of experience. The encouragement
provision represents an “express delegation of authority to
the agency to elucidate a specific provision of the statute by
regulation.” Chevron, 467 U.S. at 843–44. It does not impose
a ratchet under which every FERC rule must encourage QFs
to a greater extent than the rule that came before it.
Nor is FERC’s interpretation unreasonable under step
two. FERC determined that the encouragement provision is
satisfied so long as FERC’s regulations—viewed as a
whole—continue to encourage QFs. Order 872, 85 Fed. Reg.
at 54,650. In Order 872, FERC found that that is exactly
what the regulations do. The Commission explained that
Order 872 “may end up encouraging QF development
differently from the current PURPA Regulations, but the
Commission’s regulations continue to encourage QF
development, as contemplated by PURPA.” Id. Most

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SEIA V. FERC 25
importantly, the revised PURPA regulations “continue to
require that QF rates be set at full avoided costs, a provision
the Supreme Court described as ‘provid[ing] the maximum
incentive for the development of cogeneration and small
power production.’” Id. (quoting American Paper, 461 U.S.
at 418). FERC also observed that its new rules retain many
elements of the 1980 Rules that provided support for QFs
(such as the requirement that utilities provide
interconnection) and that Order 872 supports QFs in new
ways (by adding, for example, the competitive-solicitation
rules that renewable resource developers, like the Solar
Association, suggested). Id. at 54,644, 54,650–51.
Of course, it is easy to imagine ways in which FERC
could have provided even more encouragement to QFs. But
PURPA does not require FERC to encourage QFs to the
maximum extent possible, regardless of any countervailing
interests. To the contrary, the statute makes clear that FERC
must take into account at least some other considerations. To
take just one example, PURPA prohibits FERC from setting
a rate for power from QFs “which exceeds the incremental
cost to the electric utility of alternative electric energy.” 16
U.S.C. § 824a-3(b). The Commission’s exercise of
discretion was not unreasonable simply because it balanced
the need to encourage QFs against other competing interests.
III
We now turn to petitioners’ challenges to specific
provisions of Order 872. Petitioners challenge four
components of the order: (1) the modified Site Rule, (2) the
modified Fixed-Rate Rule, (3) the creation of the LMP
rebuttable presumption, and (4) the revised market-access
presumption. Petitioners argue that those components of

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26 SEIA V. FERC
Order 872 conflict with PURPA or are arbitrary and
capricious, or both.
A
Under PURPA, a “small power production facility” (one
of the two types of QFs) must have a power production
capacity “which, together with any other facilities located at
the same site (as determined by the Commission), is not
greater than 80 megawatts.” 16 U.S.C. § 796(17)(A)(ii). The
1980 Site Rule provided that facilities were “located at the
same site” if they were within one mile of each other, “use[d]
the same energy resource,” and were “owned by the same
person.” Order 70, 45 Fed. Reg. at 17,965. Facilities that
were more than one mile apart were deemed to be located at
separate sites.
The 2020 Site Rule kept in place the rule for facilities
within one mile of each other, but it adopted a new approach
for facilities located more than one mile apart. Under the
new rule, there is an irrebuttable presumption that facilities
more than ten miles apart are located at separate sites, but
only a rebuttable presumption that affiliated facilities that
use the same energy resource and are located between one
and ten miles apart are at separate sites. Order 872, 85 Fed.
Reg. at 54,696. The presumption of separateness may be
rebutted using a non-exhaustive list of factors, such as
whether the facilities share common physical characteristics,
common ownership and control, and shared contracts. Id. at
54,701. The new rule makes it more likely that two facilities
will be deemed to be at the same site, and, accordingly, that
their production capacity will exceed the 80-megawatt
threshold, making them ineligible for QF status. Petitioners
advance several different challenges to the 2020 Site Rule,
but we find none persuasive.

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SEIA V. FERC 27
1
Petitioners argue that Order 872’s new definition of “at
the same site” defies the plain meaning of the statutory text.
In their view, the term “site” is clear and unambiguous:
“Site” is a geographic term that refers to “[a] place or
location; esp., a piece of property set aside for a specific
use.” Black’s Law Dictionary 1667 (11th ed. 2019). The
geographic nature of the term is reinforced, they say, by the
prepositional phrase “located at.” Petitioners argue that by
relying on non-geographic factors (such as shared physical
characteristics and common ownership) to determine
whether facilities between one and ten miles apart are
located at the same site, the Commission adopted an
unreasonable interpretation of the statute.
Petitioners’ argument under Chevron step one fails
because Congress did not “directly address[] the precise
question” of how the Commission should determine whether
two facilities are located at the same site. Chevron, 467 U.S.
at 843. To the contrary, Congress expressly delegated that
task to FERC by requiring aggregation of power production
capacity for facilities “located at the same site (as
determined by the Commission).” 16 U.S.C. § 796(17)(A)(ii)
(emphasis added). That language gives FERC broad
discretion to define the meaning of the phrase “located at the
same site.” See Lindeen v. SEC, 825 F.3d 646, 653 (D.C. Cir.
2016) (“The explicit grant of definitional authority manifests
that the Congress intended the [agency] to enjoy broad
discretion.”). Accordingly, we move to step two to
determine whether the agency employed that discretion to
adopt a reasonable definition.
Congress’s use of the word “site” does not prohibit
FERC from considering factors other than location and

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28 SEIA V. FERC
physical proximity. See Rush Univ. Med. Ctr. v. Burwell,
763 F.3d 754, 760 (7th Cir. 2014) (“When a statute
specifically authorizes an agency to define a term, there is
no need to consider whether the term is ambiguous and thus
left to agency delegation.”). Although we agree that the word
“site” typically carries some location-based connotation,
ordinary usage of the word often takes account of non-
locational factors as well. For example, one would not
normally refer to a zoo and a reservoir that are just over a
mile apart as being located at the same site. But if one were
referring to the Central Park Zoo and the Central Park
Reservoir in New York City, it would be natural to describe
them as located at a single site: Central Park. What
constitutes a “site” depends on more than simply physical
distance.
Because Congress did not unambiguously foreclose
FERC’s interpretation, we must defer to that interpretation
as long as it is reasonable. National Cable & Telecomms.
Ass’n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005).
Petitioners emphasize that the new rule disqualifies more
facilities than the prior rule, but the approach reflected in the
1980 Site Rule was not the only permissible interpretation of
the statute. In any event, even the 1980 Site Rule took
account of non-locational factors. Under the 1980 Site Rule,
FERC considered not only physical proximity, but also
whether the facilities were “owned by the same person” and
“use[d] the same energy resource,” to determine whether
two facilities within one mile of each other were located at
the same site. Order 70, 45 Fed. Reg. at 17,965. The 2020
Site Rule relies on similar non-locational factors to guide the
Commission’s classification of facilities between one and
ten miles apart. Although facilities located between one and
ten miles apart are presumed to be separate, the presumption

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SEIA V. FERC 29
may be rebutted by showing, for example, that two facilities
share common physical characteristics, common ownership
and control, and shared contracts. Order 872, 85 Fed. Reg.
at 54,701. That is a permissible exercise of the discretion that
Congress granted the Commission.
2
Petitioners also challenge the 2020 Site Rule under the
APA. We will set aside the agency’s action if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A). For an agency’s
decision to survive review, “the agency must examine the
relevant data and articulate a satisfactory explanation for its
action including a ‘rational connection between the facts
found and the choice made.’” Motor Vehicle Mfrs. Ass’n of
U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983) (quoting Burlington Truck Lines v. United States, 371
U.S. 156, 168 (1962)). A “satisfactory explanation” need not
be the best possible explanation. Whether or not we would
have made the same choice as the agency, we must uphold
the agency’s action so long as it is “reasonable and
reasonably explained.” FCC v. Prometheus Radio Project,
141 S. Ct. 1150, 1158 (2021).
In Order 872, the Commission found “that some large
facilities were disaggregating into smaller facilities and
strategically spacing themselves slightly more than one mile
apart in order to be able to qualify as separate small power
production facilities.” Order 872-A, 85 Fed. Reg. at 86,690.
The Commission determined that this practice of strategic
disaggregation “contradict[ed] the spirit and purpose of
PURPA” because it allowed large facilities to skirt PURPA’s
80-megawatt size cap, and that the revised rule would help
combat this practice. Id. at 86,691. FERC recognized that

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30 SEIA V. FERC
strategic circumvention of the prior site rule was not
necessarily an everyday occurrence. Order 872, 85 Fed. Reg.
at 54,697. But it provided specific examples of projects that,
in its view, had improperly taken advantage of the 1980 Site
Rule in order to avoid PURPA’s size limitation. Order 872-
A, 85 Fed. Reg. at 86,690. The revised rule addresses that
problem. Because FERC’s decision to modify the Site Rule
was “reasonable and reasonably explained,” it satisfies our
“deferential” standard of review under the APA. Prometheus
Radio Project, 141 S. Ct. at 1158.
Petitioners argue that the rule is nevertheless arbitrary
and capricious in three different ways.
First, petitioners argue that the choice of a ten-mile
threshold is arbitrary because FERC might just as well have
promulgated a three-mile rule, a five-mile rule, or a
seventeen-mile rule. In some sense of the word “arbitrary,”
petitioners have a point: As FERC acknowledged when
initially implementing its 1980 Site Rule, even the one-mile
rule was “essentially arbitrary.” Windfarms, Ltd., 13
F.E.R.C. ¶ 61,017, 61,032 (1980). But that does not make
the rule arbitrary in the sense contemplated by the APA.
The problem that FERC confronted is one that arises
frequently in administrative rulemaking. In order to design a
clear, manageable regulation, agencies often must select a
single quantitative threshold from among a range of
reasonable options. We have explained that when an agency
“‘had to choose some number from a broad range’ and
selected a ‘reasonable figure,’” its choice satisfies the
arbitrary-and-capricious standard even if there are other
reasonable values that the agency could have chosen. Pacific
Choice Seafood Co., 976 F.3d at 943 (quoting San Luis &
Delta-Mendota Water Auth. v. Jewell, 747 F.3d 581, 616

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SEIA V. FERC 31
(9th Cir. 2014)). A 55-mile-per-hour speed limit is not
“arbitrary” just because 50 miles per hour, or 60 miles per
hour, would work equally well. See Air N. Am. v.
Department of Transp., 937 F.2d 1427, 1431–32 (9th Cir.
1991) (“[W]hen the language and policy of a statute permit
a range of alternative approaches to a particular problem, the
courts must allow the agency charged with implementing the
statute to choose the alternative that the agency prefers.”).
Here, FERC determined that a one-mile threshold
allowed large facilities to skirt PURPA’s size limitation. To
combat that practice, FERC needed to pick a greater
threshold. As FERC recognized, “[t]en miles need not be the
only possible choice under the statute in order for it to be
considered reasonable.” Order 872-A, 85 Fed. Reg. at
86,692. But FERC nevertheless concluded that a ten-mile
cutoff is “qualitatively a large enough distance to serve as
the inflection point beyond which it is safe to irrebuttably
presume separate sites.” Id. We see no reason to conclude
that its choice of a ten-mile threshold was arbitrary or
capricious.
Second, petitioners argue that the revised site rule
disregards FERC’s long-held preference for a bright-line
rule. Whereas the 1980 Site Rule relied on a bright-line, one-
mile threshold, the new rule relies on a rebuttable
presumption and case-by-case evaluation, which petitioners
say represents an unjustified departure from FERC’s
historical practice.
That argument misunderstands an administrative
agency’s authority to change policies over time. The APA
does not require “regulatory agencies [to] establish rules of
conduct to last forever,” and agencies may “adapt their rules
and policies to the demands of changing circumstances.’”

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32 SEIA V. FERC
State Farm, 463 U.S. at 43 (first quoting American Trucking
Ass’ns v. Atchison, Topeka, & Santa Fe Ry. Co., 387 U.S.
397, 416 (1967); and then quoting Permian Basin Area Rate
Cases, 390 U.S. 747, 784 (1968)). An agency may change
its position for any number of reasons, such as a change in
factual circumstances or a shift in its policy priorities. See
Organized Vill. of Kake v. USDA, 795 F.3d 956, 968 (9th
Cir. 2015) (en banc). And when an agency changes course,
“it need not demonstrate to a court’s satisfaction that the
reasons for the new policy are better than the reasons for the
old one.” FCC v. Fox Television Stations, Inc., 556 U.S. 502,
515 (2009). Rather, as long as the agency “display[s]
awareness that it is changing position,” then “it suffices that
the new policy is permissible under the statute, that there are
good reasons for it, and that the agency believes it to be
better.” Id. (emphasis omitted).
Petitioners are correct that when it adopted the one-mile
rule, FERC stated that a rebuttable presumption would be
“burdensome and confusing.” Order 70, 45 Fed. Reg. at
17,965. And FERC repeatedly rejected proposals to modify
the rule, explaining that “[c]onstruing the one-mile rule as
merely a rebuttable presumption . . . and the litigation that
would inevitably follow, would hardly be consistent” with
the intent of Congress to encourage the development of QFs.
Northern Laramie Range All., 139 F.E.R.C. ¶ 61,190, 62,316
n.56 (2012).
But FERC was not required to maintain that position
forever. In Order 872, FERC provided “good reasons” for its
decision to abandon the bright-line, one-mile rule. Fox, 556
U.S. at 515. FERC recognized that the new site rule and
related certification procedures could produce additional
administrative burden and litigation risk for QFs. Order 872,
85 Fed. Reg. at 54,706. Nevertheless, it reasonably

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SEIA V. FERC 33
concluded that the benefits of the new rule—ensuring that
PURPA’s benefits flow only to small facilities, not to large
facilities masquerading as small ones through strategic
facility placement—outweighed those costs. Id. FERC
determined that the revised site rule and its accompanying
regulatory requirements struck “an appropriate balance
between the need to address improper circumvention and the
need to avoid unduly burdening small power production
QFs.” Order 872-A, 85 Fed. Reg. at 86,701.
That explanation satisfies the APA. Even though FERC
had rejected this calculus when it opted to keep in place the
previous bright-line rule, FERC was entitled to prioritize its
concerns about improper aggregation over concerns about
administrative uncertainty, even if doing so represented a
departure from a long-held determination by the agency. See
Organized Vill. of Kake, 795 F.3d at 968 (explaining that an
agency may reprioritize some concerns over others it
previously deemed more important, “even on precisely the
same record”); State Farm, 463 U.S. at 57 (“An agency’s
view of what is in the public interest may change, either with
or without a change in circumstances.” (quoting Greater
Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C.
Cir. 1970))); accord National Ass’n of Home Builders v.
EPA, 682 F.3d 1032, 1038 (D.C. Cir. 2012).
Third, petitioners argue that FERC failed to consider the
reliance interests engendered by the prior rule. Since 1980,
developers relied on the prior one-mile rule when deciding
where to build a given facility—so long as the facility was
more than one mile apart from another affiliated facility,
developers could safely assume that the facilities would be
deemed separate sites. But under the new site rule, there is
no longer such a guarantee. And because the new rules apply
to recertifications filed by existing facilities, an existing QF

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34 SEIA V. FERC
faces the risk that it will lose its eligibility for PURPA’s
benefits if it is deemed to be at the same site as another
facility.
As we have explained, an agency is generally free to
change policy without offering a more substantial
explanation than would be required if it were writing on a
blank slate. Sometimes, however, “a more detailed
justification” is required. Fox, 556 U.S. at 515. In particular,
when the prior policy “has engendered serious reliance
interests,” then “[i]t would be arbitrary or capricious to
ignore such matters.” Id.; accord Encino Motorcars, 579
U.S. at 221–22. In that situation, a “reasoned explanation is
needed” for disregarding the interests “engendered by the
prior policy.” Fox, 556 U.S. at 515. An agency must “assess
whether there were reliance interests” in the prior rule,
determine whether those interests “were significant,” and
weigh them “against competing policy concerns.”
Department of Homeland Sec. v. Regents of the Univ. of
Cal., 140 S. Ct. 1891, 1915 (2020).
In Order 872, FERC acknowledged the reliance interests
engendered by the 1980 Site Rule, recognizing that some
parties had relied on the prior rule when developing QFs.
See, e.g., Order 872-A, 85 Fed. Reg. at 86,698–99, 86,701–
03. But an agency “may determine, in the particular context
before it, that other interests and policy concerns outweigh
any reliance interests.” Regents of the Univ. of Cal., 140 S.
Ct. at 1914; see Encino Motorcars, 579 U.S. at 226
(Ginsburg, J., concurring) (“[R]eliance does not overwhelm
good reasons for a policy change.”). FERC reasoned that
preventing strategic circumvention of the site rule was more
important than any reliance interests, particularly when
many of the facilities that adversely relied on the old rule had

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SEIA V. FERC 35
engaged in the very disaggregation practices that FERC now
seeks to prevent. Order 872-A, 85 Fed. Reg. at 86,702.
Importantly, FERC not only recognized the existence of
reliance interests but also took at least some measures to
mitigate the harm to relying parties. FERC emphasized that
“the new regulations do not apply to an existing facility
unless and until it makes substantive changes.” Order 872-
A, 85 Fed. Reg. at 86,702. FERC reasoned that “[w]hen the
existing QF makes a substantive change, it is no longer the
same facility it was before,” justifying application of the new
rule. Id. Order 872 provided examples of the kind of changes
that the Commission considers substantive: If, for example,
a facility’s power production capacity changes by at least
one megawatt or five percent, or its ownership changes by at
least ten percent, the new rules would apply. Order 872, 85
Fed. Reg. at 54,706. By acknowledging the existence of
reliance interests and incorporating measures to limit the
harm to the relying parties, FERC satisfied the APA.
3
Finally, petitioners contend that the 2020 Site Rule is
unlawfully retroactive. An administrative agency generally
may not promulgate retroactive regulations “unless that
power is conveyed by Congress in express terms.” Bowen v.
Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). No
party contends that FERC is authorized by statute to engage
in retroactive rulemaking. The only question, then, is
whether FERC’s new site rule is retroactive.
A provision operates retroactively when it would “impair
rights a party possessed when he acted, increase a party’s
liability for past conduct, or impose new duties with respect
to transactions already completed.” Landgraf v. USI Film
Prods., 511 U.S. 244, 280 (1994); see Bahr v. Regan, 6 F.4th

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36 SEIA V. FERC
1059, 1072 (9th Cir. 2021) (applying the principles of
Landgraf to the analysis of regulatory retroactivity);
National Mining Ass’n v. Department of Labor, 292 F.3d
849, 859 (D.C. Cir. 2002) (same). The critical question is
“whether the new provision attaches new legal consequences
to events completed before its enactment.” Landgraf, 511
U.S. at 270; see also Bowen, 488 U.S. at 219 (Scalia, J.,
concurring) (explaining that an administrative rule is
impermissible when it “alter[s] the past legal consequences
of past actions”).
The new site rule does not operate retroactively. It
applies to new facilities seeking initial certification and to
existing facilities seeking recertification, but only if that
certification or recertification is sought after the rule’s
effective date of December 31, 2020. 18 C.F.R.
§ 292.204(a)(2)(B)–(C); Order 872, 85 Fed. Reg. at 54,649.
The rule applies to recertification of an existing QF only
when there have been “substantive changes” to that facility,
such as when a facility’s power production capacity changes
by at least five percent, or its ownership changes by at least
ten percent. Order 872, 85 Fed. Reg. at 54,706. In other
words, so long as an already-certified facility does not
undergo a substantive change, the old rule applies, and the
new rule poses no threat to its qualifying status.
Petitioners do not take issue with the rule’s application
to initial certifications of new facilities. Instead, they focus
on the application of the rule to recertifications of already-
existing facilities. They argue that the new rule is retroactive
because it threatens to strip an already-qualified facility of
its PURPA eligibility based on what they consider to be
“minor” changes to the facility. But even if the triggering
event requiring recertification is “minor,” a previously
certified QF does not possess any sort of “vested rights” to

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SEIA V. FERC 37
PURPA eligibility in perpetuity. Landgraf, 511 U.S. at 269
(quoting Society for the Propagation of the Gospel v.
Wheeler, 22 F. Cas. 756, 767 (C.C.N.H. 1814) (No. 13,156)).
Thus, even if a facility were to lose its PURPA eligibility in
the future under the new site rule, the rule would not “impair
rights a party possessed when [it] acted.” Id. at 280. Nor does
the rule “attach[] new legal consequences to events
completed before its enactment.” Id. at 270. Rather, it
potentially creates new legal consequences—the loss of
qualifying status—only for “events” that occur in the future:
recertifications that take place after the rule’s effective date,
and only if the facility undergoes a substantive change.
At bottom, petitioners’ theory is that the rule is
retroactive because QFs were built in reliance on the old site
rule, and the new rule could result in the loss of qualifying
status. But a rule is not retroactive merely because it “upsets
expectations based in prior law” or “is applied in a case
arising from conduct antedating the statute’s enactment.”
Landgraf, 511 U.S. at 269. “Even uncontroversially
prospective statutes” can do that. Id. at 269 n.24. For
example, “a new property tax or zoning regulation may upset
the reasonable expectations that prompted those affected to
acquire property; a new law banning gambling harms the
person who had begun to construct a casino before the law’s
enactment or spent his life learning to count cards.” Id. The
2020 Site Rule is not unlawfully retroactive under the APA.
B
We now turn to petitioners’ challenges to Order 872’s
revision of the Fixed-Rate Rule.
PURPA requires that the rates paid to QFs (1) “shall be
just and reasonable to the electric consumers of the electric
utility,” (2) shall be “in the public interest,” and (3) “shall

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38 SEIA V. FERC
not discriminate against” QFs. 16 U.S.C. § 824a-3(b). Of
particular relevance here, it also states that no rule “shall
provide for a rate which exceeds the incremental cost to the
electric utility of alternative electric energy.” Id. Under that
provision, the rate paid to a QF may not exceed the cost to
the utility “of the electric energy which, but for the purchase
from [the QF], such utility would generate or purchase from
another source.” Id. § 824a-3(d).
In its 1980 Rules, FERC set the rate at the utility’s full
avoided cost. Order 69, 45 Fed. Reg. at 12,222–23. The 1980
Rules provided two methods for calculating avoided cost.
QFs could choose a rate determined by the utility’s avoided
cost calculated at the time of delivery, or, alternatively, a rate
calculated and fixed based on an estimate of the utility’s
avoided cost over the life of the contract. See Winding Creek
Solar, 932 F.3d at 863. FERC recognized in 1980 that “a
contract with avoided costs calculated at the time a [contract]
is incurred could exceed the electric utility’s avoided costs
at the time of delivery in the future, thereby seemingly
violating PURPA’s requirement that QFs not be paid more
than an electric utility’s avoided costs.” Order 872-A, 85
Fed. Reg. at 86,664. Nevertheless, FERC determined that
PURPA’s rate cap did not require a “minute-by-minute
evaluation of costs which would be checked against rates
established in long term contracts.” Order 69, 45 Fed. Reg.
at 12,224. FERC explained that “in the long run,
‘overestimations’ and ‘underestimations’ of avoided costs
will balance out,” and that allowing rates to be fixed in long-
term contracts was necessary to provide enough certainty to
allow QFs to obtain financing. Id.
Order 872 modifies the Fixed-Rate Rule by allowing (but
not requiring) States to eliminate fixed-contract energy rates.
18 C.F.R. § 292.304(d)(2). The rules require that States

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SEIA V. FERC 39
maintain the right of QFs to elect fixed-contract capacity
rates. Id. § 292.304(d)(1)(ii).
Petitioners argue that FERC unreasonably interpreted
PURPA’s rate-related provisions and that the revised rule
violates PURPA’s “non-discrimination” provision. They
also argue that the new rule is arbitrary and capricious. We
find neither theory persuasive.
1
Petitioners argue that FERC’s modification of the Fixed-
Rate Rule reflects a misreading of PURPA. Petitioners
acknowledge, and FERC agrees, that Congress did not speak
to the precise question of how “avoided costs” should be
calculated, instead granting FERC broad discretion to set
rates, subject to the statute’s avoided-cost limitation. See 16
U.S.C. § 824a-3(b). And they correctly observe that PURPA
does not require that avoided cost be measured by reference
to short-run costs calculated at the time of delivery. The
Commission did not suggest otherwise. To the contrary, it
recognized that PURPA does not demand any particular
avoided-cost calculation method; as the Commission
observed, it “could have imposed a variable energy contract
requirement when it promulgated the PURPA Regulations in
1980 instead of requiring fixed energy contract rates.” Order
872-A, 85 Fed. Reg. at 86,672.
FERC’s position thus survives Chevron step one. Under
Chevron step two, it is a reasonable interpretation of the
statute. FERC determined that States should have the option
to require measurement of avoided costs at the time of
delivery because—in the Commission’s view—that
approach better comports with the principles of PURPA’s
avoided-cost provision: “[A] variable energy avoided cost
approach is a more accurate way to ensure that payments to

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40 SEIA V. FERC
QFs equal, but do not exceed, avoided costs.” Order 872, 85
Fed. Reg. at 54,672. FERC was entitled to “justify its policy
choice by explaining why that policy ‘is more consistent
with statutory language’ than alternative policies.” Encino
Motorcars, 579 U.S. at 223 (quoting Long Island Care at
Home, Ltd. v. Coke, 551 U.S. 158, 175 (2007)).
Petitioners argue that the new rate rule violates PURPA’s
requirement that rates “shall not discriminate against” QFs.
16 U.S.C. § 824a-3(b)(2). They point out that QFs now must
accept a variable, uncertain rate (at least in those States that
choose to eliminate fixed rates), whereas utilities are
guaranteed the long-term recovery of their costs and a return
on investment, even when their costs exceed short-term
energy prices. Because QFs now face financial risks that
utilities do not, petitioners believe that the new rule sets a
rate that violates PURPA’s nondiscrimination requirement.
PURPA’s nondiscrimination provision cannot support
that interpretation. Under PURPA, the compensation regime
for QFs is fundamentally different from that used for
utilities. See American Paper, 461 U.S. at 414 (“Congress
did not intend to impose traditional ratemaking concepts
[used by utilities] on sales by qualifying facilities to
utilities.”). The Supreme Court explained in American Paper
that “the full-avoided-cost rule plainly satisfies the
nondiscrimination requirement.” Id. at 413; see Order 872,
85 Fed. Reg. at 54,651 (“If the purchasing utility is paying
the same rate to a QF for power that it otherwise would have
paid for incremental power, by definition such a rate could
not be discriminatory.”). Nothing in the Court’s analysis
suggests that the nondiscrimination requirement demands
fixed-rate, rather than variable-rate, assessment of avoided
costs. After all, the statute requires that “rates . . . shall not
discriminate” against QFs; it does not require that they be set

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SEIA V. FERC 41
in such a way as to offset any other disadvantages that QFs
might face in the market. 16 U.S.C. § 824a-3(b)(2). Order
872 requires that QFs receive a rate equal to full avoided
costs, and that is sufficient to satisfy the nondiscrimination
requirement.
2
Petitioners argue that the Fixed-Rate Rule is arbitrary
and capricious for two reasons. First, they claim that FERC
changed its interpretation of PURPA without “display[ing]
awareness that it [was] changing position.” Fox, 556 U.S. at
515. Second, they argue that FERC lacked data to support its
conclusions and failed to recognize important elements of
the problem.
The parties debate whether FERC has changed its
interpretation of the statute to justify its rule change, but we
need not resolve that debate because FERC expressly and
unambiguously acknowledged that it was changing its policy
in partially eliminating the Fixed-Rate Rule. FERC stated
that “because the Commission’s revision to the fixed energy
rate requirement is based on changed circumstances since
the issuance of the PURPA Regulations in 1980, we must
provide ‘a reasoned explanation . . . for disregarding facts
and circumstances that underlay or were engendered by the
policy.’” Order 872-A, 85 Fed. Reg. at 86,672 (quoting Fox,
556 U.S. at 516). That satisfies the concern in Fox Television
that agencies not “depart from a prior policy sub silentio or
simply disregard rules that are still on the books.” 556 U.S.
at 515.
FERC also explained why it was changing policy. FERC
had initially justified the Fixed-Rate Rule on the theory that
“in the long run, ‘overestimations’ and ‘underestimations’ of
avoided costs will balance out.” Order 69, 45 Fed. Reg. at

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42 SEIA V. FERC
12,224. But in Order 872, it determined, based on new
evidence, that “it is not necessarily the case that
overestimations and underestimations of avoided energy
costs will balance out.” Order 872, 85 Fed. Reg. at 54,677.
More specifically, it found that “[b]road price declines over
time throughout the energy industry show that long-term
fixed price QF contracts likely exceeded the avoided energy
costs at the time of delivery for extended periods of time.”
Order 872-A, 85 Fed. Reg. at 86,672. A finding of regular,
routine overestimations not balanced out by
underestimations would fully justify a change in policy.
Petitioners argue that there is no record evidence
suggesting that the prior Fixed-Rate Rule actually resulted
in contracts above market prices. They say that FERC
analyzed only a relatively short period during which energy
prices precipitously declined, calling into question the
conclusion that over- and under-estimations will not balance
out over time. Petitioners further argue that FERC relied on
unreliable reports of over-cost contracts—often from utility
companies themselves—without assessing the underlying
data.
But reliance on imperfect data is “not unusual in day-to-
day agency decisionmaking,” and an agency does not err by
making reasonable judgments “based on the evidence it
had.” Prometheus Radio Project, 141 S. Ct. at 1160; see
Myersville Citizens for a Rural Cmty., Inc. v. FERC, 783
F.3d 1301, 1308 (D.C. Cir. 2015) (recognizing that courts
must “afford FERC ‘an extreme degree of deference’” when
it makes judgments “within its technical expertise” (quoting
Washington Gas Light Co. v. FERC, 532 F.3d 928, 930
(D.C. Cir. 2008))). FERC reasonably relied on several
comments suggesting that PURPA contracts exceed avoided
costs somewhat often and by large margins. Order 872-A, 85

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SEIA V. FERC 43
Fed. Reg. at 86,668 n.147. Those comments were not
facially unreliable, and even if the drop in prices represented
an anomalous circumstance, the anomaly supports the
Commission’s finding that, “at least in some circumstances,
long-term fixed avoided cost energy rates have been well
above the purchasing utility’s avoided costs for energy.”
Order 872, 85 Fed. Reg. at 54,676. The Commission could
reasonably conclude that the problem called for a remedy.
Petitioners object that FERC ignored concerns that state
commissions—which are granted new flexibility under the
new Fixed-Rate Rule—have previously violated the due
process rights of QFs in their implementation of PURPA
regulations. FERC did not ignore the concern; it explained
that the rule reflected “the expectation that the states will
fulfill their legal obligation to implement the Commission’s
PURPA Regulations as revised.” Order 872, 85 Fed. Reg. at
54,647. To the extent that any State fails to do so, the
Commission explained, Congress has provided a remedy in
16 U.S.C. § 824a-3(h). Id.
Petitioners also argue that FERC minimized concerns
about the ability of QFs to secure financing without the
certainty of a fixed rate, especially outside of organized
markets. FERC acknowledged that “fixed rates are
beneficial for obtaining financing for QF projects,” but it
determined that its reforms would not “materially affect[] the
ability of QFs to obtain financing.” Order 872, 85 Fed. Reg.
at 54,670. That determination was not arbitrary and
capricious.
First, FERC explained that because QFs are still entitled
to a fixed capacity rate, it believed that the potential receipt
of some steady cashflows will typically be sufficient to
encourage financing. As the Commission observed, “the

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44 SEIA V. FERC
variable energy rate/fixed capacity rate construct . . . is the
standard rate structure used throughout the electric industry
for power sales agreements that include the sale of capacity.”
Order 872, 85 Fed. Reg. at 54,645. And it concluded that a
“fixed capacity rate . . . should typically be sufficient to
recover the QF’s financing costs and should therefore
continue to facilitate QF financing.” Id.
Second, FERC relied on data that non-PURPA
independent facilities have been successful—as
demonstrated by an almost 700 percent increase in
independent renewable generation between 2005 and 2018,
most of it outside of PURPA—and received adequate
financing without PURPA’s mandatory fixed rate. Order
872, 85 Fed. Reg. at 54,682. From this, FERC concluded that
QFs will similarly be able to obtain financing. FERC
reasonably relied on non-PURPA data to make “a reasonable
predictive judgment based on the evidence it had.”
Prometheus, 141 S. Ct. at 1160.
More importantly, FERC determined that the benefits of
its new approach—better compliance with the statutory
requirement that rates not exceed avoided costs—exceed the
harms that it may inflict on QFs. Order 872-A, 85 Fed. Reg.
at 86,672–73; see Encino Motorcars, 579 U.S. at 223–24
(“[A]n agency may justify its policy choice by explaining
why that policy ‘is more consistent with statutory language’
than alternative policies.” (quoting Long Island Care, 551
U.S. at 175)). Given the broad discretion that PURPA
provides FERC in setting rates, that was a permissible
judgment.
C
Order 872 permits (but does not require) States to adopt
a rebuttable presumption that locational marginal price

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SEIA V. FERC 45
represents a utility’s avoided costs in certain organized
markets. 18 C.F.R. § 292.304(b)(6). Petitioners contend that
the LMP rebuttable presumption is arbitrary and capricious.
Relying on the two-part test articulated by the D.C. Circuit
in Cablevision Sys. Corp. v. FCC, 649 F.3d 695 (D.C. Cir.
2011), petitioners argue that the APA permits an agency to
adopt an evidentiary presumption only if the presumption
(1) is “rational,” and (2) “shift[s] the burden of production
and not the burden of persuasion.” Id. at 716. Petitioners
contend that the LMP presumption satisfies neither element
of the Cablevision test.
By its terms, the Cablevision test governs presumptions
adopted by a federal agency to govern its own proceedings.
But the LMP presumption does not govern proceedings
before the Commission; it is a presumption that States may
choose to apply (or not) in proceedings that they conduct.
We have not previously held that Cablevision applies in that
context. We need not explore that question further because
the parties agree that Cablevision applies, so we will assume,
without deciding, that they are correct. Under that test,
petitioners’ argument fails because the LMP presumption is
rational and does not impermissibly shift the burden of
persuasion.
First, the LMP presumption is rational. “[A]n evidentiary
presumption is only permissible if there is a sound and
rational connection between the proved and inferred facts,
and when proof of one fact renders the existence of another
fact so probable that it is sensible and timesaving to assume
the truth of [the inferred] fact . . . until the adversary
disproves it.” Cablevision, 649 F.3d at 716 (second
alteration in original) (quoting National Mining Ass’n v.
Department of Interior, 177 F.3d 1, 6 (D.C. Cir. 1999)). In
assessing that “rational connection,” we “defer to the

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46 SEIA V. FERC
agency’s judgment.” Id. (quoting National Mining Ass’n,
177 F.3d at 6).
Petitioners argue that electric utilities purchasing from
QFs may have avoided costs that exceed LMP. For example,
utilities that obtain energy outside of the market auction—
whether from their own plants or through bilateral
contracts—might incur costs that exceed LMP. As
petitioners put it, LMP reflects a utility’s costs only “if the
utility’s own generation is bid at its full cost of production
and the utility’s marginal (most expensive) energy is
purchased through the market.”
Granting the point that LMP does not always describe
avoided costs, there is nevertheless a “sound and rational
connection” between the LMP presumption and a utility’s
avoided costs. Cablevision, 649 F.3d at 716. In an organized
market, LMP reflects the marginal cost of providing an
additional megawatt-hour of energy at a given time and
location within the grid, as determined by competitive
auctions. Order 872, 85 Fed. Reg. at 54,656; Federal Energy
Regulatory Comm’n, Energy Primer 60 (Nov. 2015);
Electric Power Supply Ass’n, 577 U.S. at 267–68. FERC
explained that this price often provides a reasonable proxy
for a utility’s avoided costs. LMP takes into account “all
physical system constraints” and thus “reflect[s] the true
marginal cost of production of energy.” Order 872, 85 Fed.
Reg. at 54,660. For a utility that purchases its marginal
energy through the market, then, LMP will, by definition,
equal the utility’s avoided energy costs. And because LMP
is location-specific, it more accurately measures a utility’s
avoided energy costs than would a system-wide cost
measure. Id. “Because LMP is likely to reflect the true
marginal cost of energy in the vast majority of cases,” FERC
said, “it is ‘so probable that it is sensible and timesaving to

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SEIA V. FERC 47
assume’ that LMP for a particular utility is an appropriate
measure of the utility’s avoided costs for as-available
energy.” Order 872-A, 85 Fed. Reg. at 86,666 (footnote
omitted) (quoting National Mining Ass’n, 177 F.3d at 6).
FERC nevertheless recognized that LMP might “not
always reflect a purchasing utility’s actual avoided energy
costs.” Order 872, 85 Fed. Reg. at 54,659. For that reason,
FERC built flexibility into the rule. FERC’s notice of
proposed rulemaking had suggested adopting a per se rule,
which would have allowed States to adopt LMP as a measure
of avoided costs without providing QFs the opportunity to
demonstrate why LMP is inappropriate in a particular case.
2019 NPRM, 84 Fed. Reg. at 53,253. In response to
comments, FERC abandoned that approach and instead
adopted a rebuttable presumption. Order 872, 85 Fed. Reg.
at 54,659. If a utility’s actual avoided costs exceed LMP for
any of the reasons identified by petitioners, a QF can rebut
the presumption; at the end of the day, the QF is still entitled
to receive the utility’s full avoided costs. Moreover, no State
is obligated to adopt the rebuttable presumption if it
determines that LMP does not reflect actual avoided costs.
This alleviates concerns about the accuracy of LMP in
regional markets that are not sufficiently competitive.
Second, FERC did not impermissibly shift the burden of
persuasion. See Cablevision, 649 F.3d at 716. After a State
establishes a rate, that rate can be challenged before a state
regulatory authority, and then before the Commission or in
federal court. Order 872, 85 Fed. Reg. at 54,659–60; Pioneer
Wind Park I, LLC, 145 F.E.R.C. ¶ 61,215, 62,169 (2013)
(noting that if the QF objects to the State’s avoided-cost
rates, “it should first pursue such concerns at the [state]
Commission,” and then can file a petition before FERC or in
federal court); 16 U.S.C. § 824a-3(g), (h)(2). But in those

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48 SEIA V. FERC
proceedings, the challenger always bears the burden of
persuasion—just as it did before the issuance of Order 872—
to demonstrate that the State’s rate choice does not
accurately reflect a utility’s actual avoided costs. As FERC
explained, nothing in Order 872 shifts the burden of
persuasion in that proceeding: “Requiring an entity
challenging the state’s use of the presumption in the first
instance to show why the state was wrong does not negate
the legal requirement that, unless the parties agree to another
rate, the rates for purchases in a QF contract must equal a
purchasing utility’s avoided costs.” Order 872-A, 85 Fed.
Reg. at 86,666. In such a proceeding, “a state would need to
address the challenging entity’s arguments in order to
demonstrate that LMP represents the purchasing utility’s
avoided costs,” and Order 872 does “not shift the burden of
persuasion, only the burden of production.” Id.
D
Petitioners argue that FERC’s adjustment of the market-
access presumption from 20 megawatts to five megawatts
was arbitrary and capricious.
As we have already explained, the APA ordinarily does
not demand that an agency justify a policy change with
reasons more substantial than would be required to adopt
that same policy in the first instance. See Fox, 556 U.S. at
514–15. But when a “new policy rests upon factual findings
that contradict those which underlay its prior policy,” an
agency must provide “a more detailed justification than what
would suffice for a new policy created on a blank slate.” Id.
at 515. In such cases, the agency must give a “reasoned
explanation” for “disregarding facts and circumstances that
underlay . . . the prior policy.” Id. at 516.

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SEIA V. FERC 49
In Order 688, the Commission concluded that, as a
product of their size, “small” QFs may have difficulty
accessing markets. Order 688, 71 Fed. Reg. at 64,352; Order
688-A, 72 Fed. Reg. at 35,884. It therefore determined that
it was reasonable to adopt a rebuttable presumption that
small QFs lack nondiscriminatory market access. Faced with
competing comments about how to define a “small” QF, the
Commission acknowledged that “there is no unique and
distinct megawatt size that uniquely determines if a
generator is small.” Order 688-A, 72 Fed. Reg. at 35,884;
see Order 688, 71 Fed. Reg. at 64,353 (“[N]o single per-MW
demarcation is perfect.”). Nevertheless, the Commission
concluded that a 20-megawatt threshold would be
“reasonable and administratively workable.” Order 688, 71
Fed. Reg. at 64,352. The Commission noted that it had used
a 20-megawatt threshold in other rulemaking contexts, such
as its interconnection rules, which subjected small
generators of less than 20 megawatts to different rules than
large generators. Id. at 64,352–53. But because the
Commission recognized that there was no perfect
demarcation, it emphasized that it was creating only a
rebuttable presumption rather than a per se rule. Id.
In Order 872, FERC cited changed circumstances since
the issuance of Order 688 to justify its downward revision of
the market-access presumption from 20 megawatts to five
megawatts. Order 872, 85 Fed. Reg. at 54,715. Because
FERC’s revision of the presumption was based on “factual
findings that contradict those which underlay its prior
policy,” it was required to provide a “reasoned explanation”
for its policy change. Fox, 556 U.S. at 515–16.
The Commission did so by explaining that at the time it
issued Order 688, organized markets had been in existence
for only a few years. Order 872, 85 Fed. Reg. at 54,712. But

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50 SEIA V. FERC
in the years since then, “markets have matured,” and “market
participants have gained a better understanding of the
mechanics of such markets,” enabling facilities with
capacities of less than 20 megawatts to participate in those
markets in ways that they could not before. Id. at 54,716.
Indeed, as FERC noted, the Commission’s own rules have
enabled greater market access for small QFs, such as its rule
requiring that regional markets use tariff schedules that
accommodate resources as small as 100 kilowatts. Order
872-A, 85 Fed. Reg. at 86,707. These rules “provide greater
opportunities for small power production facilities to
participate in wholesale organized markets” than were
available when FERC issued Order 688. Id. And in the years
since it issued Order 688, FERC observed “multiple
examples of small power production facilities under 20 MW
participating in . . . energy markets.” Order 872, 85 Fed. Reg.
at 54,715.
Taking this evidence into account, FERC found that it
was “reasonable to presume that access to the [regional
markets] has improved and that it is appropriate to update
the presumption for smaller production facilities.” Order
872, 85 Fed. Reg. at 54,716. As in Order 688, FERC
acknowledged in Order 872 that no single size threshold
would perfectly distinguish facilities that lack adequate
market access from those that have adequate market access.
Id. And just as it did when issuing Order 688, FERC looked
to the cutoffs used in other rules to guide its revision to the
market-access presumption, such as its rules requiring that
utilities increase the availability of “Fast-Track”
interconnection procedures for projects up to five megawatts
in size. Id. In the end, after considering an even lower
threshold of one megawatt, FERC settled on a five-megawatt
threshold. It concluded that “5 MW represents a reasonable

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SEIA V. FERC 51
new threshold that accounts for the change of circumstances
indicating that 20 MW no longer is appropriate but also
accommodates commenters’ concerns that a 1 MW
threshold would be too low.” Id.
FERC provided a “reasoned explanation” for its revision
of the rebuttable presumption, and its decision survives
review under the APA. Fox, 556 U.S. at 516. The
Commission’s determination that market conditions have
improved considerably for small facilities since the issuance
of Order 688 implicates its “technical understanding and
policy judgment” about the state and operation of energy
markets, and thus we are particularly careful not to
“substitute our own judgment for that of the Commission.”
Electric Power Supply Ass’n, 577 U.S. at 295, 292. Given
FERC’s reasonable determination that market conditions
had changed, FERC’s choice of a five-megawatt threshold
was not arbitrary and capricious.
IV
That leaves the NEPA challenge, which is asserted only
by the Environmental Organizations. FERC provided two
independent grounds for its conclusion that it was not
required to prepare an environmental assessment (EA) or
environmental impact statement (EIS). First, FERC claimed
that Order 872 falls within a “categorical exclusion” to
NEPA. Order 872, 85 Fed. Reg. at 54,725–27. Second,
FERC asserted that any downstream environmental impacts
of Order 872 are too uncertain and unforeseeable to trigger
NEPA review. Id. Reviewing FERC’s NEPA conclusions
under the APA’s arbitrary-and-capricious standard, see
Environmental Def. Ctr. v. Bureau of Ocean Energy Mgmt.,
36 F.4th 850, 871–72 (9th Cir. 2022), we reject both
justifications. FERC was required to prepare an EA before

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52 SEIA V. FERC
issuing Order 872. But because of the extraordinary
disruptive consequences of vacating the rules, we decline to
order vacatur.
A
Before we turn to the merits of the NEPA claims, we
consider whether we have jurisdiction. Utility-Intervenors
(but not FERC) contend that the Environmental
Organizations lack both Article III and prudential standing.
We disagree.
In order to establish Article III standing, “a plaintiff must
show (1) it has suffered an ‘injury in fact’ that is (a) concrete
and particularized and (b) actual or imminent, not
conjectural or hypothetical; (2) the injury is fairly traceable
to the challenged action of the defendant; and (3) it is likely,
as opposed to merely speculative, that the injury will be
redressed by a favorable decision.” Association of Irritated
Residents v. EPA, 10 F.4th 937, 943 (9th Cir. 2021) (quoting
Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC),
Inc., 528 U.S. 167, 180–81 (2000)). We have explained that
when a plaintiff alleges a “procedural injury”—such as the
failure to comply with NEPA—the “‘normal standards for
. . . [the] immediacy’ of the injury are relaxed.” Navajo
Nation v. Department of the Interior, 876 F.3d 1144, 1160
(9th Cir. 2017) (alterations in original) (quoting Lujan v.
Defenders of Wildlife, 504 U.S. 555, 572 n.7 (1992)).
Although “injury in fact requires a likelihood that the
challenged action, if ultimately taken, would threaten a
plaintiff’s interests,” id. at 1161, we do not require the
plaintiff to show that the agency would necessarily have
reached a different decision had it complied with NEPA.
Lujan, 504 U.S. at 572 n.7.

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SEIA V. FERC 53
The Environmental Organizations have Article III
standing. In their briefing and supplemental declarations, the
Organizations adequately document the concrete harms that
Order 872 could cause their members. According to the
Organizations, Order 872 will reduce the incentives
provided to QFs, many of which use renewable energy
sources. This, in turn, could shift the mix of power
generation in the United States away from renewable
generation and toward fossil-fuel generation. This
undeniably harms the economic interests of the
Organizations’ members, many of which own QFs, and the
environmental interests of the Organizations’ members,
many of whose missions involve the promotion of renewable
energy development. The Organizations’ members also live
near facilities that burn fossil fuels, and if those facilities
burn more fossil fuels, members will suffer greater air
pollution. The threat of those concrete harms confers Article
III standing.
Utility-Intervenors suggest that the alleged harms “rest[]
on a speculative chain of future possibilities,” depriving the
Organizations of standing. (quoting Center for Biological
Diversity v. Bernhardt, 946 F.3d 553, 560 (9th Cir. 2019)).
But although Utility-Intervenors argue that the alleged
environmental harms of Order 872 are not foreseeable
because they depend on the subsequent, independent choices
made by each State, even “a contingent ‘chain of events’ can
create a ‘reasonably probable’ threat to a plaintiff’s
interests.” Navajo Nation, 876 F.3d at 1161; cf. California
ex rel. Lockyer v. United States Dep’t of Agric., 575 F.3d
999, 1010–11 (9th Cir. 2009) (concluding that a NEPA
challenge was ripe for adjudication, even though any alleged
harms from the challenged rule would not materialize
without subsequent action by individual States). And state

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54 SEIA V. FERC
implementation of Order 872 is far from speculative. To the
contrary, multiple States in which the Organizations’
members live have already begun to implement the order.
We conclude that there is at least a “reasonable probability”
that FERC’s alleged NEPA violation will lead to concrete
harm to the Organizations’ members. Navajo Nation, 876
F.3d at 1161 (citation omitted).
To be sure, the harm will be caused by third parties rather
than directly by FERC itself. But that does not defeat the
Organizations’ standing. Although “speculation about the
decisions of independent actors” is not an adequate basis for
standing, the relevant actors here are not genuinely
independent. Clapper v. Amnesty Int’l, USA, 568 U.S. 398,
414 (2013). Rather, they are the entities directly regulated by
the regime established in Order 872, and as we have already
explained, their responses to that order are hardly a matter of
speculation. In the NEPA context, we have repeatedly held
that predictable “third-party responses to agency action [are]
sufficient to confer standing.” Idaho Conservation League v.
Mumma, 956 F.2d 1508, 1515 (9th Cir. 1992).
In addition to Article III standing, a plaintiff challenging
an agency’s compliance with NEPA must establish
prudential standing by demonstrating that its injury falls
“within the zone of interests to be protected by the statute.”
Ranchers Cattlemen Action Legal Fund United
Stockgrowers of Am. v. United States Dep’t of Agric., 415
F.3d 1078, 1103 (9th Cir. 2005) (quoting Nevada Land
Action Ass’n v. United States Forest Serv., 8 F.3d 713, 715–
16 (9th Cir. 1993)). As its name makes clear, NEPA is an
environmental statute, and thus “to assert a claim under
NEPA, a plaintiff must allege injury to the environment;
economic injury will not suffice.” Id. But although a purely
economic injury does not fall within NEPA’s zone of

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SEIA V. FERC 55
interests, a plaintiff can nevertheless satisfy NEPA’s zone-
of-interests requirement even “if his or her interest is
primarily economic, as long as he or she also alleges an
environmental interest or economic injuries that are
‘causally related to an act within NEPA’s embrace.’” Id.
(quoting Port of Astoria, Or. v. Hodel, 595 F.2d 467, 476
(9th Cir. 1979)).
The Environmental Organizations satisfy NEPA’s zone-
of-interests test. The environmental harms that they fear—
namely, an increase in pollution and greenhouse-gas
emissions resulting from reduced incentives provided to
renewable sources—undoubtedly fall within NEPA’s zone
of interests. Given the specific renewable-energy-promoting
purposes of the Organizations, their interest is also clearly
“distinct from the interest held by the public at large.”
Navajo Nation, 876 F.3d at 1164 (quoting Cantrell v. City of
Long Beach, 241 F.3d 674, 681 (9th Cir. 2001)). Further, the
Organizations have expressly environmental missions, and
thus they have a “direct interest” in ensuring that FERC
complies with NEPA’s requirements. See Western
Watersheds Project, 632 F.3d at 485–86 (concluding that a
non-profit organization with a “direct interest” in seeing that
the agency adequately evaluates the environmental effects of
a proposed action fell within NEPA’s zone of interests).
Because that interest is sufficient for prudential standing, we
need not consider whether the economic harms that the
Organizations’ members fear also fall within NEPA’s zone
of interests.
B
NEPA “imposes procedural requirements designed to
force agencies to take a ‘hard look’ at environmental
consequences” of their actions. Center for Cmty. Action &

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56 SEIA V. FERC
Env’t Just. v. FAA, 18 F.4th 592, 598 (9th Cir. 2021)
(quoting Earth Island Inst. v. United States Forest Serv., 351
F.3d 1291, 1300 (9th Cir. 2003)). To that end, NEPA
requires agencies to prepare a detailed EIS for any “major
Federal actions significantly affecting the quality of the
human environment.” 42 U.S.C. § 4332(C). The threshold
for NEPA analysis “is relatively low: ‘It is enough for the
plaintiff to raise substantial questions whether a project may
have a significant effect on the environment.’” Lockyer, 575
F.3d at 1012 (citation omitted).
Under NEPA’s implementing regulations, before an
agency decides to prepare an EIS, it may prepare an EA,
which is a “concise public document” designed to “provide
sufficient evidence and analysis for determining whether to
prepare an environmental impact statement or a finding of
no significant impact.” 40 C.F.R. § 1508.9(a) (2020). An EA
“is intended to help an agency decide if an EIS is warranted.”
Environmental Def. Ctr., 36 F.4th 850, 872 (9th Cir. 2022).
If, after the completion of an EA, there remain “‘substantial
questions’ about whether an agency action will have a
significant effect,” an EIS is required. Bark v. United States
Forest Serv., 958 F.3d 865, 868 (9th Cir. 2020) (citation
omitted). Otherwise, the agency “may issue a finding of no
significant impact (‘FONSI’) in lieu of preparing an EIS.”
Id. (citation omitted).
But an agency is not required to prepare an EA or EIS if
the proposed action falls within a “categorical exclusion.” 40
C.F.R. § 1508.4; see Save Our Skies LA v. FAA, 50 F.4th
854, 859–60 (9th Cir. 2022). Agencies may establish
categorical exclusions for “actions which do not individually
or cumulatively have a significant effect on the human
environment.” 40 C.F.R. § 1508.4; see id. § 1507.3(e)(2)(ii).
When a categorical exclusion applies, “neither an

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SEIA V. FERC 57
environmental assessment nor an environmental impact
statement is required” unless “extraordinary circumstances”
are present. Id. § 1508.4.
C
We start with FERC’s contention that Order 872 falls
within a categorical exclusion to NEPA. FERC established a
categorical exclusion for rules that are “clarifying,
corrective, or procedural, or that do not substantially change
the effect of . . . regulations being amended.” 18 C.F.R.
§ 380.4(a)(2)(ii). When that categorical exclusion applies,
“neither an environmental assessment nor an environmental
impact statement” is required. Id. § 380.4(a).
We agree with FERC that some elements of Order 872,
considered on their own, might fall into the categorical
exclusion for clarifying, corrective, or procedural rules. For
example, Order 872’s update to Form 556—used by QFs
when applying for certification—can reasonably be
described as a “procedural” change. Order 872, 85 Fed. Reg.
at 54,728. Likewise, its revision to the definition of the term
“electrical generating equipment” can reasonably be
characterized as “clarifying” whether particular kinds of
equipment (such as wind turbines or solar panels) fall within
the term’s scope. Id. at 54,703.
We reject FERC’s contention, however, that the more
substantive elements of Order 872 fall within the categorical
exclusion. FERC interpreted the “corrective” portion of its
categorical exclusion as “including changes needed in order
to ensure that a regulation conforms to the requirements of
the statutory provisions being implemented by the
regulation.” Order 872, 85 Fed. Reg. at 54,728. FERC
characterized three of Order 872’s rule changes as
“corrective”: (1) modification of the Site Rule, (2)

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modification of the Fixed-Rate Rule, and (3) modification of
the presumption of non-discriminatory access. Id. In FERC’s
view, because it adopted those changes in order to better
conform to PURPA’s statutory text, the revisions were
corrective in nature and thus fit within the categorical
exclusion. Id.
Although we owe some deference to FERC’s
interpretation of its own regulation, see Kisor v. Wilkie, 139
S. Ct. 2400 (2019), the “corrective” component of the
categorical exclusion cannot reasonably be read so broadly.
Agencies regularly adjust their policies to better comply with
a statute. See Encino Motorcars, 579 U.S. at 222–24. That is
especially so where, as here, a statute provides an agency
with broad discretion to fulfill its obligations in any number
of reasonable and permissible ways. See 16 U.S.C. § 824a-
3(a). But when an agency adopts broad, transformative, and
substantive changes to its regulations, it cannot sidestep
NEPA’s requirements by claiming that it was motivated by
its desire to better conform to the statute and then applying a
“corrective” label. A regulatory change as significant as
Order 872 is not corrective merely because the agency
expresses some interest in better statutory compliance. If it
were, nearly any regulatory change could evade NEPA
review. See Order 872-A, 85 Fed. Reg. at 86,754 (Glick,
Comm’r, dissenting in part).
FERC’s own NEPA implementing regulations provide
additional support for our conclusion. Even if Order 872
could reasonably be characterized as creating “corrective”
rules, and therefore as falling within a categorical exclusion,
FERC’s regulations state that when a rule would otherwise
fall within a categorical exclusion but “the environmental
effects are uncertain,” the Commission will generally

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SEIA V. FERC 59
prepare an EA or EIS regardless. 18 C.F.R.
§§ 380.4(b)(1)(ii), (b)(2)(vii).
In support of its application of the categorical exclusion,
FERC relies on Department of Transportation v. Public
Citizen, 541 U.S. 752 (2004). In that case, the Supreme
Court rejected an argument that the Federal Motor Carrier
Safety Administration had violated NEPA because the EA
accompanying certain regulations failed to consider the
potential environmental effects of increased cross-border
travel by Mexican motor carriers. Id. at 755. The Court
observed that only the President, not the agency, “could
authorize (or not authorize) cross-border operations from
Mexican motor carriers.” Id. at 770. Thus, because the
agency had “no discretion to prevent the entry of Mexican
trucks, its EA did not need to consider the environmental
effects arising from the entry.” Id.
Drawing on Public Citizen, FERC argues that it had “no
discretion” to keep the prior rules in effect once it
determined that “certain of the 1980 PURPA Regulations
conflicted with PURPA’s statutory mandates.” And, FERC
says, because it had no option but to issue the “corrective”
rules of Order 872, it “did not need to consider the
environmental effects arising from” its revisions and could
therefore apply the categorical exclusion. Public Citizen,
541 U.S. at 770. In fact, as FERC emphasized throughout the
rulemaking process, PURPA provides FERC with broad
discretion. For example, as explained above, FERC
reasonably determined that its new Site Rule better served
the “spirit and purpose of PURPA.” Order 872-A, 85 Fed.
Reg. at 86,691. But that does not mean that the 2020 Site
Rule was the only permissible implementation of FERC’s
authority to define whether two facilities are located “at the
same the site,” or that such a change was mandated by the

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60 SEIA V. FERC
statute. The same is true of FERC’s modification of the
market-access presumption. While FERC reasonably
concluded in Order 872 that facilities with a power
production capacity exceeding five megawatts could be
rebuttably presumed to possess non-discriminatory market
access, 85 Fed. Reg. at 54,716, we cannot say that this was
the only threshold that FERC could have chosen. Even if
FERC issued Order 872, in part, to better conform to its
interpretation of PURPA’s statutory language, FERC
nevertheless retained discretion in carrying out its statutory
mandate. That discretion distinguishes this case from Public
Citizen and makes FERC’s reliance on the categorical
exclusion unreasonable.
D
FERC also concluded that it was not required to prepare
an EA or EIS because “any potential environmental impacts
from the final rule are not reasonably foreseeable.” Order
872-A, 85 Fed. Reg. at 86,716. According to FERC, Order
872 “does not involve a particular project that define[s]
fairly precisely the scope and limits of the proposed
development.” Id. (citation and quotation marks omitted).
Rather, its rules merely provide state regulatory authorities
with expanded discretion in administering PURPA. Id. at
86,717. Thus, it was “impossible to know what the states
may choose to do in response to the final rule, whether they
will make changes in their current practices or not, and how
those state choices would impact QF development and the
environment.” Id.
FERC misunderstands NEPA’s requirements. Both the
applicable regulations and our case law make clear that, in
the ordinary course, an agency “shall . . . prepare an
environmental assessment” for a major agency action unless

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SEIA V. FERC 61
the proposed action is one that “normally . . . do[es] not have
a significant effect on the human environment” and therefore
falls within a categorical exclusion. 40 C.F.R. § 1501.4
(emphasis added); see Klamath Siskiyou Wildlands Ctr. v.
Boody, 468 F.3d 549, 562 (9th Cir. 2006) (“[I]f the proposed
action does not categorically require the preparation of an
EIS, the agency must prepare an EA to determine whether
the action will have a significant effect on the
environment.”) (alteration in original) (emphasis added)
(quoting Kern v. Bureau of Land Mgmt., 284 F.3d 1062,
1066 (9th Cir. 2002)); Lockyer, 575 F.3d at 1012 (requiring
an EIS, EA, or categorical exclusion to comply with NEPA);
Steamboaters v. FERC, 759 F.2d 1382, 1393 (9th Cir. 1985)
(noting that the “only exception” to the requirement that an
agency prepare at least an EA is when the proposed action
falls within a categorical exclusion). And FERC’s own
regulations state that “[a]n environmental assessment will
normally be prepared” for regulations not covered by a
categorical exclusion. 18 C.F.R. §§ 380.5(a), (b)(12).
Relying on Center for Biological Diversity v. Ilano, 928
F.3d 774 (9th Cir. 2019), FERC argues that Order 872 did
not authorize “a particular project” requiring environmental
analysis. Id. at 780. In Ilano, we upheld the United States
Forest Service’s determination that no EA or EIS was
required before the Service designated forest land as a
“landscape-scale area” under the Healthy Forests
Restoration Act because such a designation did not “‘change
the status quo,’” authorize a “particular project,” or
“foreseeably impact the environment,” but instead merely
identified forest areas suffering from threats like insect
infestation and disease. Id. at 774, 780–81 (quoting
Northcoast Env’t Ctr. v. Glickman, 136 F.3d 660, 668 (9th
Cir. 1998)). We explained that no NEPA analysis was

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62 SEIA V. FERC
necessary because NEPA does not require an agency to
“consider the environmental effects that speculative or
future projects might have.” Id. at 781 (quoting Northcoast
Env’t Ctr., 136 F.3d at 668).
FERC suggests that any environmental assessment of
Order 872 would be similarly speculative. Order 872, it says,
merely provides States with new policy options, which they
can choose to embrace or not; it does not authorize any
particular project. But while the designation in Ilano did not
“change the status quo” or “foreseeably impact the
environment,” the same cannot be said of FERC’s overhaul
of its longstanding PURPA regulations. Even if Order 872
did not authorize any particular project, it was eminently
foreseeable that a regulatory change of this magnitude could
produce significant environmental effects. It was a near-
certainty, for example, that at least some QFs could lose their
status under the 2020 Site Rule, or that at least some States
would eliminate the fixed-rate option for the calculation of
avoided costs. Cf. Lockyer, 575 F.3d 999 (requiring NEPA
analysis when replacing a nationwide rule with a varied,
state-by-state rule).
The effects of those actions differ from the
environmental harms in Ilano, which were necessarily
location- and project-specific. At the designation stage, it
was impossible for the Forest Service to predict the relevant
environmental concerns—for instance, the effect of the
designation on the California spotted owl—without knowing
the location and type of the forest-treatment projects that
would later be implemented. We agree with FERC that it
could not reasonably consider the local effects of Order 872
on, say, vegetation, water quality, and wildlife because it
could not predict which States would adopt which
components of Order 872. Order 872-A, 85 Fed. Reg. at

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SEIA V. FERC 63
86,717. But unlike in Ilano, the most significant
environmental impact of Order 872 is the possible effect on
greenhouse-gas emissions, which does not require any
location- or project-specific analysis.
FERC also contends that it had no meaningful way to
model or predict the effects of Order 872. Order 872, 85 Fed.
Reg. at 54,728–29. As FERC put it in the order, “any
consideration of whether the final rule could potentially have
significant environmental impacts would be so speculative
as to render meaningless any environmental analysis of these
hypothetical impacts.” Order 872-A, 85 Fed. Reg. at 86,718.
We acknowledge that NEPA does not require an agency
to “peer into a crystal ball,” “engage in speculative analysis,”
or “‘do the impractical, if not enough information is
available to permit meaningful consideration.’” Northern
Plains Res. Council v. Surface Transp. Bd., 668 F.3d 1067,
1078–79 (9th Cir. 2011) (quoting Environmental Prot. Info.
Ctr. v. United States Forest Serv., 451 F.3d 1005, 1014 (9th
Cir. 2006)). At the same time, we have recognized that the
“effects [of a proposed action] may be difficult to measure
and may be determined ultimately to be too imprecise to
influence the [action], but this is precisely the type of
determination that only can be intelligently made after the
preparation of at least an EA.” California Wilderness Coal.
v. United States Dep’t of Energy, 631 F.3d 1072, 1103 (9th
Cir. 2011). Thus, when an agency is uncertain about the
possible environmental effects of a proposed action, the
proper course is to prepare an EA to the best of the agency’s
ability, not to avoid environmental analysis altogether.
Because at least some degree of “speculation . . . is implicit
in NEPA,” agencies may not “shirk their responsibilities
under NEPA by labeling any and all discussion of future
environmental effects as crystal ball inquiry.” Northern

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64 SEIA V. FERC
Plains Res. Council, 668 F.3d at 1079 (quoting Selkirk
Conservation All. v. Forsgren, 336 F.3d 944, 962 (9th Cir.
2003) (omission in original)); see also Sierra Club v. FERC,
867 F.3d 1357, 1374 (D.C. Cir. 2017) (“NEPA analysis
necessarily involves some ‘reasonable forecasting,’ and . . .
agencies may sometimes need to make educated
assumptions about an uncertain future.” (quoting Delaware
Riverkeeper Network v. FERC, 753 F.3d 1304, 1310 (D.C.
Cir. 2014))).
Here, the public raised “substantial questions” as to
whether Order 872 would produce significant environmental
impacts. Lockyer, 575 F.3d at 1018. Commenters pointed out
that FERC’s sweeping overhaul of its PURPA rules would
reduce the incentives provided to QFs—a consequence of
Order 872 that no one seriously disputes. See, e.g., Order
872-A, 85 Fed. Reg. at 86,753 (Glick, Comm’r, dissenting
in part). And because many QFs rely on renewable power
sources, it takes little imagination to see that a reduction in
the incentives provided to QFs could, in turn, alter the mix
of energy production, shifting production away from
renewable production and toward fossil-fuel production. See
2019 NPRM, 84 Fed. Reg. at 53,249 (noting that even after
the expanded development of non-PURPA renewable
facilities since 2005, QFs have accounted for “10 to 20
percent of all renewable resource capacity in service in the
United States”).
Those effects were “reasonably foreseeable” in that they
were “sufficiently likely to occur that a person of ordinary
prudence would take [them] into account in reaching a
decision.” Sierra Club, 867 F.3d at 1371 (alteration in
original) (quoting EarthReports, Inc. v. FERC, 828 F.3d 949,
955 (D.C. Cir. 2016)). They were enough to trigger FERC’s
obligation to conduct, or at least attempt to conduct,

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SEIA V. FERC 65
environmental analysis in the form of an EA. The possibility
of environmental effects was not so remote that the
Commission was entitled to throw up its hands and forgo
environmental analysis altogether. Cf. California Wilderness
Coal., 631 F.3d at 1097 (“[A]n agency cannot merely assert
that its decision will have an insignificant effect on the
environment, but ‘must adequately explain its decision.’”
(quoting Alaska Ctr. for Env’t v. United States Forest Serv.,
189 F.3d 851, 859 (9th Cir. 1999))).
Significantly, FERC has previously modeled the
potential environmental effects of other major rules affecting
electricity markets. See, e.g., Promoting Wholesale
Competition Through Open Access Non-Discriminatory
Transmission Services by Public Utilities, Order 888, 61
Fed. Reg. 21,540, 21,542 (May 10, 1996) (noting that the
Commission prepared an EIS). Most relevantly, before it
adopted its original PURPA rules in 1980, the Commission
produced an EA using “market penetration analyses.” Order
70, 45 Fed. Reg. at 17,964. Even though the EA concluded
that the 1980 Rules, as a whole, would not significantly
affect the environment, FERC nevertheless prepared a full
EIS to evaluate the effects of certain diesel cogeneration
QFs. Id. at 17,965. In preparing its 1980 NEPA review, the
Commission confronted—and overcame—the very same
analytical obstacles that it now claims prevent it from
conducting environmental review. The 1980 NEPA analysis,
for example, noted that the Commission’s rules did not
“authorize or fund any particular projects” or “authorize or
forbid the use of certain fuels,” but rather “provide[d] certain
economic incentives to, and remove[d] other disincentives,
. . . from certain classes of technologies.” Id. at 17,964.
FERC also observed that “identifying the levels of the
environmental effects associated with the programmatic

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66 SEIA V. FERC
encouragement and deregulation of various types of
technologies” is difficult, and that any environmental
analysis would necessarily contain “a great number of
uncertainties.” Id. at 17,965.
FERC argues that the simplifying assumptions that
enabled the 1980 EA are not replicable here. For example,
the 1980 analysis could assume a simpler market structure
than could be used today (because there was virtually no
independent power development in 1980), and could assume
that the States would implement the 1980 Rules uniformly
(without the many optional elements provided by Order
872). Order 872-A, 85 Fed. Reg. at 86,722–23. We share the
dissenting Commissioner’s skepticism that FERC’s
modeling capabilities “have not improved dramatically over
the course of the last four decades” such that at least some
environmental review would nevertheless be possible. Id. at
86,753 (Glick, Comm’r, dissenting in part); see also Sierra
Club, 867 F.3d at 1374 (noting that an agency’s inability to
provide precise quantitative estimates of downstream
greenhouse-gas emissions did not excuse its wholesale
failure to discuss them, even though any such analysis
“depend[ed] on several uncertain variables”).
But we need not evaluate FERC’s various explanations
for its inability to model the environmental impacts of Order
872. When an agency has concerns about its technical ability
to evaluate the environmental effects of a rule, it must fully
explore those concerns in an EA. See California Wilderness
Coal., 631 F.3d at 1103. Perhaps more fundamentally,
FERC’s explanation in Order 872 is flawed because it does
not indicate that the agency took the “hard look” that NEPA
requires. Whatever can be said of FERC’s various
arguments, the dissenting Commissioner was correct to
observe that “the Commission’s assertion that Order No.

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SEIA V. FERC 67
872’s effects are overly speculative is tough to square with
the fact that it has not undertaken any effort whatsoever to
assess those effects.” Order 872-A, 85 Fed. Reg. at 86,753
(Glick, Comm’r, dissenting in part). FERC did not produce
a single sentence of environmental analysis before issuing
sweeping changes to its PURPA regulations. Nor did FERC
attempt—in even the most rudimentary or non-quantitative
manner—to predict the environmental consequences of
Order 872.
This is not a case in which the agency “engaged in
significant environmental analysis before reaching a
decision but failed to comply precisely with NEPA
procedures.” See Nevada v. Department of Energy, 457 F.3d
78, 90 (D.C. Cir. 2006) (noting that the court had previously
excused an agency’s failure to prepare an EA because the
agency had thoroughly considered the environmental
consequences during the rulemaking). Indeed, we are aware
of no case approving an agency’s decision not to engage in
any environmental analysis for a rulemaking of this
magnitude. And while the lack of reasonably foreseeable
environmental impacts may justify an agency’s decision not
to complete an EIS, it cannot relieve an agency of its
obligation to produce an EA.
E
Having concluded that FERC violated NEPA by failing
to prepare an EA, we must determine the appropriate
remedy. When an agency violates NEPA, the presumptive
remedy is vacatur of the deficient action. Alliance for the
Wild Rockies v. United States Forest Serv., 907 F.3d 1105,
1121 (9th Cir. 2018). But we are not without discretion:
“When equity demands,” we may leave the action in place
on remand while the agency reconsiders the action or cures

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68 SEIA V. FERC
a procedural defect. Id.; see California Cmtys. Against
Toxics v. EPA, 688 F.3d 989, 992 (9th Cir. 2012) (per
curiam) (“A flawed rule need not be vacated.”).
In deciding whether to vacate a defective agency action,
we apply the two-factor balancing test prescribed in Allied-
Signal, Inc. v. United States Nuclear Regulatory
Commission, 988 F.2d 146 (D.C. Cir. 1993). Under that test,
“[w]e weigh the seriousness of the agency’s errors against
‘the disruptive consequences of an interim change that may
itself be changed.’” Center for Food Safety v. Regan, 56
F.4th 648, 663 (9th Cir. 2022) (quoting Allied-Signal, 988
F.2d at 150–51). Here, although the agency’s errors are
significant, the disruptive consequences are great enough to
warrant remand without vacatur.
As to the seriousness of the error, we recognize that the
failure to produce an EA is a serious omission. NEPA makes
producing an EA “fundamental” to the decision-making
process because an EA helps the agency determine whether
an EIS is necessary. Klamath Siskiyou Wildlands Ctr., 468
F.3d at 562 (quoting Metcalf v. Daley, 214 F.3d 1135, 1143
(9th Cir. 2000)). But when considering whether to vacate an
order, we do not evaluate the seriousness of the agency’s
error in the abstract. Instead, we ask “whether the agency
would likely be able to offer better reasoning or whether by
complying with procedural rules, it could adopt the same
rule on remand, or whether such fundamental flaws in the
agency’s decision make it unlikely that the same rule would
be adopted on remand.” Pollinator Stewardship Council v.
EPA, 806 F.3d 520, 532 (9th Cir. 2015).
We do not believe that Order 872 suffers from
“fundamental flaws” making it unlikely that FERC could
adopt the same rule on remand. While FERC’s

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SEIA V. FERC 69
environmental analysis was deficient, we have been given
no reason to believe that the agency would be unable to cure
those deficiencies on remand. Although we hold that FERC
should have conducted an EA—and must do so on remand—
we acknowledge that, given the manner in which Order 872
operates, any environmental analysis may well determine
that the effects of the order are difficult to forecast and
subject to considerable uncertainty. And if FERC were to
conduct an EA, its understanding of its own modeling
capability would be entitled to deference. See Sierra Club,
867 F.3d at 199 (D.C. Cir. 2017). So while we are skeptical
of FERC’s current unsupported claim that the impacts of
Order 872 are impossible to forecast, it is possible that FERC
could reach the same conclusion about its forecasting
limitations in a NEPA-compliant EA.
On the other hand, the disruptive consequences of
vacatur would be significant. See California Cmtys. Against
Toxics, 688 F.3d at 993 (remanding without vacatur because
the “delay and trouble vacatur would cause are severe”).
Order 872 has been in effect since December 31, 2020. Since
then, FERC, various States, and regulated parties have all
begun to implement it. For example, the Commission has
already relied upon Order 872 to determine whether a given
facility qualifies as a small power production facility under
the revised site rule. Several States have initiated
proceedings to modify their PURPA rules in response to
Order 872. And using the revised market-access
presumption, several utilities have already applied for—and
received—relief from their mandatory-purchase obligations
when dealing with facilities between five and 20 megawatts
in size. Were we to vacate Order 872, the investments that
States and the regulated community have made in complying
with the rules could not easily be undone—and if they were,

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70 SEIA V. FERC
they might then need to be repeated if FERC were to readopt
the rules after completing its NEPA analysis. Our decision
not to vacate the rules thus avoids “the disruptive
consequences of an interim change that may itself be
changed.” Center for Food Safety, 56 F.4th at 663 (quoting
California Cmtys. Against Toxics, 688 F.3d at 992); see also
American Great Lakes Ports Ass’n v. Schultz, 962 F.3d 510,
519 (D.C. Cir. 2020) (“[A] quintessential disruptive
consequence arises when an agency cannot easily unravel a
past transaction in order to impose a new outcome.”); Sugar
Cane Growers Co-op. of Fla. v. Veneman, 289 F.3d 89, 97
(D.C. Cir. 2002) (“The egg has been scrambled and there is
no apparent way to restore the status quo ante.”).
We recognize that because NEPA is a “purely procedural
statute,” routinely excusing an agency’s deficient NEPA
analysis would “vitiate” the statute. Oglala Sioux Tribe v.
United States Nuclear Regul. Comm’n, 896 F.3d 520, 536
(D.C. Cir. 2018). In many cases—indeed, in most cases—an
agency’s failure to prepare an EA or attempt environmental
analysis will require vacatur. But in light of the significant
disruptive consequences of vacatur—affecting not only
FERC, but also state agencies and regulated entities—we
remand to FERC without vacating Order 872. See, e.g., id.
at 538 (remanding without vacatur despite a “significant
deficiency” in the agency’s NEPA compliance); Vecinos
para el Bienestar de la Comunidad Costera v. FERC, 6 F.4th
1321, 1332 (D.C. Cir. 2021) (remanding without vacatur).
PETITION GRANTED in part and DENIED in part;
REMANDED.

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SEIA V. FERC 71
MILLER, Circuit Judge, with whom NGUYEN, Circuit
Judge, joins, concurring:
I join the court’s opinion in full and write separately to
respond to Judge Bumatay’s concurrence and dissent.
Judge Bumatay observes that Chevron “has been
criticized”—by critics with whom he evidently agrees—“as
ahistorical and violative of the separation of powers.” The
relevance of that observation to this case is unclear, for as
Judge Bumatay recognizes, “[w]hether the Chevron project
continues is up to the Supreme Court and falls outside of our
court’s purview.” Quite so. The Supreme Court has
repeatedly instructed us that “[i]f a precedent of [the
Supreme] Court has direct application in a case, yet appears
to rest on reasons rejected in some other line of decisions,
the Court of Appeals should follow the case which directly
controls.” Rodriguez de Quijas v. Shearson/Am. Express,
Inc., 490 U.S. 477, 484 (1989); accord Tenet v. Doe, 544
U.S. 1, 10–11 (2005); State Oil Co. v. Khan, 522 U.S. 3, 20
(1997).
According to Judge Bumatay, “[t]his case should not be
about Chevron deference,” and we should instead “rely on
PURPA’s plain language in evaluating whether FERC’s
rules complied with the law.” But that is precisely what the
court’s opinion does. At step one of Chevron, a court must
ask whether Congress “directly addressed the precise
question” presented. Chevron U.S.A. Inc. v. NRDC, Inc., 467
U.S. 837, 843 (1984). With respect to each of the statutory
issues that Judge Bumatay mentions, the court’s opinion
examines the plain text of the statute and concludes that
Congress did not directly address the questions but instead
left their resolution to FERC’s discretion.

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72 SEIA V. FERC
For example, in considering the “encouragement”
provision of 16 U.S.C. § 824a-3(a), the court’s opinion
concludes, at Chevron step one, that “the statute gives FERC
broad discretion to evaluate which rules are necessary to
encourage QFs and which are not.” Judge Bumatay says
almost exactly the same thing: He describes the statute as “a
broad delegation of authority to FERC to make rules that
‘encourage’ Qualifying Facilities as it sees fit.” Then, at
Chevron step two, the court’s opinion confirms that FERC’s
interpretation of that broad discretion is not unreasonable.
Judge Bumatay does the same analysis without naming it,
explaining how FERC’s approach is not “contrary to this
statutory guidance.” So why the complaint that “circuit
courts have been over eager to reach Chevron’s second step”
by “glid[ing] past step one too readily”? Whether or not that
is true in general, on Judge Bumatay’s own view, it does not
seem to be true in this case.
In short, Judge Bumatay would reach the same
conclusion as the court, and for essentially the same reasons.
The only difference in approach is that he would do so
without admitting that he is following Chevron, instead
treating that decision—which, it bears repeating, remains
binding Supreme Court precedent—as the Case-That-Must-
Not-Be-Named. The Supreme Court has “the prerogative of
overruling its own decisions,” whether expressly or sub
silentio. Rodriguez de Quijas, 490 U.S. at 484. We do not.

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SEIA V. FERC 73
BUMATAY, J., concurring in part and dissenting in part:
Because the Federal Energy Regulatory Commission
was well within its statutory authority to revise its rules for
encouraging independent energy producers under the Public
Utility Regulatory Policies Act of 1978 (“PURPA”), I
concur with denying the petition challenging the enactment
of those revised rules. But given PURPA’s clear text, I
would not rely on Chevron deference to reach this
conclusion. I write separately to show why we should have
applied the traditional tools of statutory interpretation to
resolve the challenges to FERC’s rules.
As for the claim that FERC violated the National
Environmental Policy Act of 1969 (“NEPA”) in enacting
these rules without an environmental assessment, I would
hold that no petitioner has standing to bring a NEPA claim.
I thus would deny the petition on NEPA grounds as well.
I join the majority opinion in all other respects.
I.
This case should not be about Chevron deference. By
now, most legal observers are familiar with the Chevron
framework—although not necessarily for positive reasons.
Under that doctrine, courts conduct a two-step inquiry to
determine whether to defer to an agency’s interpretation of a
federal statute. At step one, we ask “whether Congress has
directly spoken to the precise question at issue.” Chevron,
U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 842
(1984). If so, “that is the end of the matter” and we apply
the law as written. Id. If, however, we find that “the statute
is silent or ambiguous with respect to the specific issue,” we
proceed to step two and ask whether the agency’s
interpretation of the text is a “permissible” one. Id. at 843.

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74 SEIA V. FERC
So long as an agency’s reading of a statute is “reasonable,”
we are told that we should defer to the agency’s position. Id.
at 845. At its most extreme, we are even told that Chevron
requires courts to treat the agency as “speak[ing] with the
force of law when it addresses ambiguity in the statute or
fills a space in the enacted law.” United States v. Mead
Corp., 533 U.S. 218, 229 (2001).
In more recent times, the Chevron framework has been
criticized as ahistorical and violative of the separation of
powers. See, e.g., Buffington v. McDonough, 143 S. Ct. 14,
16–22 (2022) (Gorsuch, J., dissenting from the denial of
certiorari); Aditya Bamzai, The Origins of Judicial
Deference to Executive Interpretation, 126 Yale L. J. 908,
987–90 (2017); Douglas H. Ginsburg & Steven Menashi,
Our Illiberal Administrative Law, 10 N.Y.U. J.L. & Liberty
475, 491–95 (2016). Whether the Chevron project continues
is up to the Supreme Court and falls outside of our court’s
purview.
But before resorting to Chevron deference, we should
pay close attention to how the Supreme Court has told us to
apply it. The Court has repeatedly instructed us not to glide
past step one too readily—accepting any hint of possible
ambiguity as a way to defer to an agency. Deference is
“called for only when the devices of judicial construction
have been tried and yield no clear sense of congressional
intent.” Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S.
581, 600 (2004). Thus, “we must ‘exhaust all the traditional
tools of construction’ before we ‘wave the ambiguity flag.’”
Medina Tovar v. Zuchowski, 982 F.3d 631, 634 (9th Cir.
2020) (en banc) (quoting Kisor v. Wilkie, 139 S. Ct. 2400,
2415 (2019)).

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SEIA V. FERC 75
Unfortunately, circuit courts have been over-eager to
reach Chevron’s second step. According to one study, from
2003 to 2013, circuit courts jumped to Chevron step two in
70.0% of cases applying the Chevron framework. Kent H.
Barnett & Christopher J. Walker, Chevron in the Circuit
Courts, 116 Mich. L. Rev. 1, 5–6 (2017). And the
consequence of that interpretive move is significant. The
government prevailed 93.8% of the time at Chevron step
two—compared to the government’s win rate of only 39.0%
at Chevron step one. Id. These numbers, I’m certain, do not
align with the Supreme Court’s percentages over the last few
years. All this suggests that we should pause before
embracing the Chevron framework. If the traditional tools
of statutory interpretation resolve the case, that should end
the analysis.
Here, PURPA’s text is relatively straightforward, and we
need not apply Chevron to decide this case. Instead, under
our Article III authority and our duty under the
Administrative Procedure Act to “decide all relevant
questions of law” and “interpret . . . statutory provisions,” 5
U.S.C. § 706, I would rely on PURPA’s plain language in
evaluating whether FERC’s rules complied with the law.
Because the majority relied on Chevron deference to uphold
(1) Order 872’s compliance with PURPA’s
“encouragement” provision, (2) the 2020 Site Rule, and (3)
the modified Fixed-Rate Rule, I analyze them separately
here.
A.
To start, Petitioners generally challenge the four rules
FERC promulgated through Order 872, claiming that they
conflict with FERC’s statutory obligation to “encourage” the
development of independent energy producers, known as

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76 SEIA V. FERC
“Qualifying Facilities.” 16 U.S.C. § 824a-3(a). Qualifying
Facilities include cogeneration and small power production
facilities. See 16 U.S.C. § 796(17)-(18). Petitioners assert
that Order 872 reduces incentives for Qualifying Facilities
and thus “discourages” them compared to the status quo.
But PURPA’s plain text forecloses this argument. In
PURPA, Congress granted FERC broad authority to
“prescribe . . . rules as it determines necessary to encourage
cogeneration and small power production.” 16 U.S.C.
§ 824a-3(a) (emphasis added). Congress also instructed
FERC to “revise” such rules “from time to time.” Id.
This language is a broad delegation of authority to FERC
to make rules that “encourage” Qualifying Facilities as it
sees fit. In this context, “encourage” is a capacious term.
Around the time of PURPA’s enactment in 1978,
“encourage” was defined to mean “to spur on.” Webster’s
New Collegiate Dictionary 375 (1977); Webster’s Third
New International Dictionary 747 (1971). It also meant “[t]o
stimulate” and “[t]o allow or promote the growth of[.]”
Shorter Oxford English Dictionary 653 (1973). Armed with
express authority to apply this expansive term, FERC may
make any rules that aren’t contrary to this statutory guidance.
Nothing in the plain text of the encouragement provision
requires that FERC “spur on,” “stimulate,” or “promote” the
development of Qualifying Facilities to the maximum extent
possible.
Imagine parents seeking to “encourage” their children to
do their weekly chores. A $10-a-week allowance would be
a good encouragement. But say, after several years, when
the children get older and more responsible, the parents
reduce the weekly allowance to $5 a week. Would anyone
say that the new allowance discourages the children from

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SEIA V. FERC 77
completing their chores? Of course not. While the children
might be accustomed to a $10 reward, any allowance would
be an encouragement compared to the baseline of receiving
nothing.
So too with Qualifying Facilities. A simple statutory
directive to “encourage” the development of Qualifying
Facilities is not a one-way ratchet. That prior FERC rules
might have offered more encouragement than current ones
doesn’t mean that FERC’s new rules violate PURPA. While
FERC may not choose to discourage Qualifying Facilities,
nothing in PURPA’s text prevents FERC from tweaking its
rules in response to changes in the energy sector, as
Congress told them to do.
B.
Next, the plain language of PURPA also authorizes
FERC’s 2020 Site Rule. PURPA specifies that a “small
power production facility” must have a power production
capacity “which, together with any other facilities located at
the same site (as determined by the Commission), is not
greater than 80 megawatts.” 16 U.S.C. § 796(17)(A)(ii).
The 2020 Site Rule modified FERC’s old test for
determining when facilities within close proximity
constitute the “same site” or separate sites. Under the old
approach, facilities located more than one mile apart were
considered separate sites. Small Power Production and
Cogeneration Facilities—Qualifying Status, 45 Fed. Reg.
17959, 17965 (March 20, 1980). The 2020 Site Rule applies
a rebuttable presumption that facilities located more than one
but less than ten miles apart are separate sites. Qualifying
Facility Rates and Requirements Implementation Issues
Under the Public Utility Regulatory Policies Act of 1978, 85
Fed. Reg. 54638, 54696 (Sept. 2, 2020) (“Order 872”). This

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78 SEIA V. FERC
presumption may be overcome based on a list of non-
exhaustive factors that support treating the facilities as part
of the same site. Id. at 54701.
Petitioners argue that the 2020 Site Rule conflicts with
the plain meaning of “site” by allowing FERC to treat
facilities located miles apart as the “same site” based on non-
geographic factors. But once again, Congress expressly
granted FERC the authority to “determine” what counts as
the “same site” for purposes of the 80-megawatt limit. Id.
Indeed, Congress didn’t use “same site” in the ordinary sense
here; otherwise, it would not be necessary to specify that
FERC got to choose what it means. See Am. Bankers Ass’n
v. Nat’l Credit Union Admin., 934 F.3d 649, 663 (D.C. Cir.
2019) (“An express delegation of definitional power
necessarily suggests that Congress did not intend the terms
to be applied in their plain meaning sense[.]”) (simplified)).
And Petitioners haven’t shown that FERC acted
inconsistently with the technical meaning of “same site” in
PURPA, which doesn’t foreclose non-geographic
considerations.
C.
Lastly, PURPA’s plain language authorizes FERC’s
modified Fixed-Rate Rule. PURPA requires utilities to buy
electricity from Qualifying Facilities at FERC’s established
prices. 16 U.S.C. § 824a-3(b). PURPA mandates that the
purchase rate not “exceed[] the incremental cost to the
electric utility of alternative electric energy.” Id. FERC
regulations call this the utility’s “avoided cost”—the cost
that the utility would otherwise pay to produce the power
itself or purchase it from another source. See 18 C.F.R.
§ 292.304. FERC’s old 1980 rule allowed Qualifying
Facilities to choose between two methods of calculating the

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SEIA V. FERC 79
purchase price: a rate calculated at the time of energy
delivery or a rate fixed at the time the contract is signed with
the utility. See Winding Creek Solar LLC v. Peterman, 932
F.3d 861, 863 (9th Cir. 2019). Under the modified rule,
States may eliminate the fixed-rate option. 18 C.F.R.
§ 292.304(d)(2); Order 872, 85 Fed. Reg. at 54648. FERC
contends that this modified rule more closely adheres to
utilities’ actual avoided costs.
Applying traditional tools of statutory construction, I
would hold that the modified Fixed-Rate Rule aligns with
the best reading of PURPA’s text. PURPA defines
“incremental cost of alternative electric energy” to mean
“the cost to the electric utility of the electric energy which,
but for the purchase from such cogenerator or small power
producer, such utility would generate or purchase from
another source.” 16 U.S.C. 824a-3(d). Because PURPA
doesn’t supply a technical meaning for “cost,” the ordinary
meaning of the term applies. See Asgrow Seed Co. v.
Winterboer, 513 U.S. 179, 187 (1995) (“When terms used in
a statute are undefined, we give them their ordinary
meaning.”). At the time of PURPA’s passage, “cost” meant
“the amount or equivalent paid or charged for something.”
Webster’s New Collegiate Dictionary 257 (1977); see also
Webster’s Third New International Dictionary 515 (1971)
(“[T]he amount or equivalent paid or given or charged or
engaged to be paid or given for anything bought or taken in
barter or for service rendered[.]”); The Shorter Oxford
English Dictionary 434 (1973) (“That which must be given
in order to acquire, produce, or effect something; the price
paid for a thing.”).
Putting these definitions together, FERC is correct that
the most natural reading of the text requires that Qualifying
Facilities receive payments that do not exceed the actual cost

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80 SEIA V. FERC
that a utility would otherwise pay for the same quantity of
energy. We’ve already upheld FERC’s interpretation of
“PURPA to require an examination of the costs that a utility
is actually avoiding.” Californians for Renewable Energy v.
Cal. Pub. Util. Comm’n, 922 F.3d 929, 938 (9th Cir. 2019)
(approving rule that established that a Qualifying Facility
“would not be entitled to capacity costs unless it actually
displaced the utility’s need for additional capacity”). And
FERC’s revised rule is more faithful to this statutory
directive than the previous fixed-rate option. A pre-
determined contractual price might approximate what a
utility would pay for energy from another source, but the
most accurate measure of that cost is the price at the time of
delivery.
We also previously acknowledged the shortcomings of
the fixed-rate approach as an estimate of avoided costs.
Nearly thirty years ago, we confronted a case in which the
fixed contractual rates paid to Qualifying Facilities “were
higher than the actual avoided cost rates” because fuel prices
had declined unexpectedly. Indep. Energy Producers Ass’n,
Inc. v. California Pub. Utilities Comm’n, 36 F.3d 848, 852
(9th Cir. 1994). While the disparity between the contractual
rate and the utilities’ actual costs wasn’t enough to justify
unilateral modification of the standard offer contract, we
understood the tension with PURPA’s requirements and
observed that the “proper remedy for such a situation is to
ensure that future . . . contracts contain more flexible pricing
mechanisms.” Id. at 858–59.
Here, FERC’s revisions accomplish just that—affording
States the latitude to require the “more flexible” method of
calculating avoided cost at the time of delivery so that
utilities don’t get locked into overpriced fixed rates. This
change brings the rule into closer alignment with PURPA’s

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SEIA V. FERC 81
text. I would thus uphold the revised rule based on PURPA’s
plain language.
D.
The majority in concurrence faults me for reaching the
same conclusions as they do in approving of FERC’s
regulatory changes without relying on Chevron deference.
It’s true we reach the same conclusions—that’s why this part
of my writing is a concurrence. But our approaches are
fundamentally different—while the majority defers to
FERC’s interpretation, I defer to the words that Congress
wrote.
II.
Moving on to the NEPA claim. Simply, Petitioners
haven’t alleged that they will suffer an environmental harm
sufficient to confer NEPA standing.
“NEPA establishes a ‘national policy [to] encourage
productive and enjoyable harmony between man and his
environment,’ and was intended to reduce or eliminate
environmental damage and to promote ‘the understanding of
the ecological systems and natural resources important to’
the United States.” Dep’t of Transp. v. Pub. Citizen, 541
U.S. 752, 756 (2004) (quoting 42 U.S.C. § 4321). Because
NEPA does not provide a private right of action, petitioners
seeking to enforce its provisions must meet the APA’s
statutory standing requirements. See Ranchers Cattlemen
Action Legal Fund United Stockgrowers of Am. v. U.S. Dep’t
of Agric., 415 F.3d 1078, 1102 (9th Cir. 2005). To do so,
petitioners “must allege that [their] injury is within the zone
of interests protected by NEPA.” Nev. Land Action Ass’n v.
U.S. Forest Serv., 8 F.3d 713, 716 (9th Cir. 1993); see also
Lexmark Int’l, Inc. v. Static Control Components, Inc., 572

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82 SEIA V. FERC
U.S. 118, 126 (2014) (holding that a plaintiff seeking to
bring suit under a federal statute must show not only that he
has standing under Article III, but also that his “complaint
fall[s] within the zone of interests protected by the law”
invoked) (simplified)).
Given that the “purpose of NEPA is to protect the
environment, not the economic interests of those adversely
affected by agency decisions,” a petitioner who asserts only
“purely economic injuries” lacks standing to bring a NEPA
challenge. Nev. Land Ass’n, 8 F.3d at 716 (simplified); see
also Ashley Creek Phosphate Co. v. Norton, 420 F.3d 934,
939–40 (9th Cir. 2005) (“[P]urely economic interests do not
fall within NEPA’s zone of interests.”). Rather, to bring a
NEPA claim, a petitioner “must allege injury to the
environment” that is sufficiently concrete and
individualized. See Ranchers Cattlemen Action, 415 F.3d at
1103. In other words, a petitioner must show by a
“reasonable probability” that the petitioner will personally
suffer an environmental injury from the challenged agency
action. Citizens for Better Forestry v. U.S. Dep’t of Agric.,
341 F.3d 961, 972 (9th Cir. 2003) (simplified). And “mere
speculation or subjective apprehension about future harm
[does not] support [NEPA] standing.” Navajo Nation v.
Dep’t of the Interior, 876 F.3d 1144, 1163 (9th Cir. 2017)
(simplified).
Here, Petitioners are a mix of environmental
organizations, intergovernmental groups, and coalitions of
owners and operators of Qualifying Facilities. Petitioners
readily admit that FERC’s rulemaking may hit their
pocketbooks—reducing revenue from their renewable
energy sales. Perhaps acknowledging that this doesn’t
confer NEPA standing, they also broadly proclaim that they
have “environmental interests [in] transitioning away from

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SEIA V. FERC 83
fossil fuels to less polluting forms of electricity generation.”
Yet NEPA standing requires an interest “distinct from the
interest held by the public at large.” Navajo Nation, 876 F.3d
at 1164 (simplified). Probably realizing that this interest
isn’t particularized enough, Petitioners try to assert a
concrete injury by alleging that FERC’s rule changes “will
reduce renewable generation development, leading to an
increase in fossil-fuel generation that produces pollution that
harms Petitioners’ members.”
But we aren’t obliged to accept speculative injuries to
bring the Petitioners within NEPA’s zone of interests. And
to accept the Petitioners’ claim of injury here requires
stacking speculation upon speculation. Their theory of
injury goes something like this:
To traverse the gap between FERC’s rule changes and
their asserted injury, Petitioners layer conjecture on top of
speculation on top of guesswork about how State

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84 SEIA V. FERC
governments, individual Qualifying Facilities, the broader
energy market, and emissions will react to the rule changes.
To credit their claim, we must accept that FERC’s new rules
will lead to greater fossil-fuel consumption in some
unspecified manner, in some unspecified location, to some
unspecified degree, by the independent actions of third
parties—all leading to an unspecified harm to Petitioners’
members.
One problem is that their theory only considers FERC’s
rules in a vacuum. Energy markets are complex. FERC’s
rules are not the only forces influencing the development of
new renewable facilities. Take Montana’s energy market.
Renewable energy projects are thriving in Montana even
without PURPA’s incentives. As amicus NorthWestern
Corporation notes, out of 40 wind and solar projects
currently underway in Montana, nearly half of them are
larger than 80 megawatts—too big to be Qualifying
Facilities. Br. of Amicus Curiae Nw. Corp. 9–10. One
proposal involves a 750-megawatt wind farm, nearly ten
times PURPA’s upper limit for Qualifying Facility output.
Id. at 9. In other words, a significant swath of the wind and
solar energy boom in Montana is happening without any
direct help from PURPA’s incentives. This shows that
FERC’s regulations are just one component of a much larger
web of market forces influencing the supply and demand of
renewable energy nationwide—making any concrete injury
to Petitioners purely speculative.
Another major weakness in Petitioners’ theory is that
most of FERC’s rule changes are permissive—allowing
independent parties to respond to them as they wish. States
can freely choose whether to adopt the new fixed-rate rule or
locational marginal price presumption. See, e.g., 18 C.F.R.
§§ 292.304(b)(6), 292.304(d)(2). And the new

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SEIA V. FERC 85
nondiscriminatory access presumption only grants utilities
greater flexibility in purchasing energy from Qualifying
Facilities. See 18 C.F.R. § 292.309(d)(2). As the Supreme
Court has warned, we shouldn’t “endorse standing theories
that rest on speculation about the decisions of independent
actors.” Clapper v. Amnesty Int’l, USA, 568 U.S. 398, 414
(2013). Petitioners have identified only Georgia, Idaho, and
Montana as making any moves in response to FERC’s rule
changes. But that doesn’t establish a “reasonable
probability” that this will lead to harm at Petitioners’
members’ homes.
While Petitioners “need not provide smoking-gun
allegations of harm,” Navajo Nation, 876 F.3d at 1163
(simplified), their theory of injury is too speculative to give
rise to NEPA standing. In Navajo Nation, an Indian tribe
brought a NEPA claim against the Department of the
Interior’s guidelines for access to the Colorado River. Id. at
1152. To assert standing, the tribe alleged that the guidelines
would impair their water rights by “creat[ing] a complex and
difficult-to-reverse combination of third-party reliance and
political inertia” that would hamper the tribe’s future efforts
to access water. Id. at 1162. In short, the tribe posited a
“chain of events” by which Interior’s actions would cause
surrounding States to rely on Colorado River water, which
in turn may disincline the federal government from
protecting the tribe’s interest in the river. Id. at 1163. We
held that the tribe’s “realpolitik predictions”—predicated on
a “string of contingencies” and “conjecture,” unsupported by
“facts, figures, or data”—was “too speculative to confer
standing.” Id. (simplified).
We should have done the same here. Much like the
tribe’s theory of injury, Petitioners here assert an
unquantified future harm that will purportedly result from a

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86 SEIA V. FERC
chain reaction of third-party decisions and market forces.
With scant evidence suggesting that the harm will occur or
that it will be attributable to FERC’s modified rules, we
should not have entertained Petitioners’ NEPA claim.
Based on all this, I would hold that Petitioners have
failed to meet their burden of alleging an injury within
NEPA’s zone of interests. I would thus not reach the merits
of their claim nor grant the petition to order an
environmental assessment.
III.
For these reasons, I respectfully dissent in part.

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