PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT


                       No. 13-4330


PPL ENERGYPLUS, LLC; PPL BRUNNER ISLAND, LLC;
  PPL HOLTWOOD, LLC; PPL MARTINS CREEK, LLC;
   PPL MONTOUR, LLC; PPL SUSQUEHANNA, LLC;
  LOWER MOUNT BETHEL ENERGY, LLC; PPL NEW
JERSEY SOLAR, LLC; PPL NEW JERSEY BIOGAS, LLC;
 PPL RENEWABLE ENERGY, LLC; CALPINE ENERGY
      SERVICES L.P.; CALPINE MID-ATLANTIC
     GENERATION, LLC; CALPINE NEW JERSEY
   GENERATION, LLC; CALPINE BETHLEHEM, LLC;
   CALPINE MID-MERIT, LLC; CALPINE VINELAND
SOLAR, LLC; CALPINE MID-ATLANTIC MARKETING,
LLC; CALPINE NEWARK, LLC;EXELON GENERATION
       COMPANY, LLC; GENON ENERGY, INC.;
 NAEA OCEAN PEAKING POWER, LLC; PSEG POWER,
LLC; ATLANTIC CITY ELECTRIC COMPANY; PUBLIC
        SERVICE ELECTRIC & GAS COMPANY
                            v.
LEE A. SOLOMON, in his official capacity as President of
the New Jersey Board of Public Utilities; JEANNE M. FOX,
in her official capacity as Commissioner of the New Jersey
Board of Public Utilities; JOSEPH L. FIORDALISO, in his
official capacity as Commission of the New Jersey Board of
Public Utilities; NICHOLAS V. ASSELTA, in his official
capacity as Commissioner of the New Jersey Board of Public
Utilities;


             CPV POWER Development, Inc.;
                                Appellant

       *HESS NEWARK, LLC, Intervenor in USCA
  *(Pursuant to Courts order entered Novenmber 14, 2013)

                     ______________

                       No. 13-4501
                     ______________

PPL ENERGYPLUS, LLC; PPL BRUNNER ISLAND, LLC;
  PPL HOLTWOOD, LLC; PPL MARTINS CREEK, LLC;
   PPL MONTOUR, LLC; PPL SUSQUEHANNA, LLC;
  LOWER MOUNT BETHEL ENERGY, LLC; PPL NEW
JERSEY SOLAR, LLC; PPL NEW JERSEY BIOGAS, LLC;
 PPL RENEWABLE ENERGY, LLC; CALPINE ENERGY
      SERVICES L.P.; CALPINE MID-ATLANTIC
     GENERATION, LLC; CALPINE NEW JERSEY
   GENERATION, LLC; CALPINE BETHLEHEM, LLC;
   CALPINE MID-MERIT, LLC; CALPINE VINELAND
SOLAR, LLC; CALPINE MID-ATLANTIC MARKETING,
LLC; CALPINE NEWARK, LLC;EXELON GENERATION
       COMPANY, LLC; GENON ENERGY, INC.;
 NAEA OCEAN PEAKING POWER, LLC; PSEG POWER,
LLC; ATLANTIC CITY ELECTRIC COMPANY; PUBLIC
        SERVICE ELECTRIC & GAS COMPANY

                            v.




                                 2
 LEE A. SOLOMON, in his official capacity as President of
the New Jersey Board of Public Utilities; JEANNE M. FOX,
 in her official capacity as Commissioner of the New Jersey
 Board of Public Utilities; JOSEPH L. FIORDALISO, in his
official capacity as Commission of the New Jersey Board of
  Public Utilities; NICHOLAS V. ASSELTA, in his official
capacity as Commissioner of the New Jersey Board of Public
                            Utilities;

 CPV POWER DEVELOPMENT INC.; HESS NEWARK,
                  LLC.

                   LEE A. SOLOMON,
                    JEANNE M. FOX,
                 JOSEPH FIORDALISO,
                 NICHOLAS ASSELTA,
                       Apellants

                     _____________

      On Appeal from the United States District Court
             for the District of New Jersey
                (D.C. No. 3-11-cv-00745)
        District Judge: Honorable Peter G. Sheridan
                      _____________
                 Argued: March 27, 2014




                              3
    Before: FUENTES and SHWARTZ, Circuit Judges, and
               ROSENTHAL, District Judge.*
            (Opinion Filed: September 11, 2014)
Richard F. Engel [Argued]
Lisa J. Morelli
Jennifer S. Hsia
Office of Attorney General of New Jersey
Department of Law & Public Safety
Division of Law
Richard J. Hughes Justice Complex
25 Market Street, P.O. Box 093
Trenton, NJ 08625

Alex Moreau
Office of Attorney General of New Jersey
124 Halsey Street
P.O. Box 45029
Newark, NJ 07102
Counsel for Appellants Lee A. Solomon, Jeanne M. Fox,
Joseph Fiordaliso, and Nicholas V. Asselta in No. 13-4501

Larry F. Eisenstat
Clifton S. Elgarten [Argued]
Richard Lehfeldt
Jennifer N. Waters
Crowell & Moring LLP



*
 Honorable Lee H. Rosenthal, U.S. District Judge for the
Southern District of Texas, sitting by designation.




                               4
1001 Pennsylvania Avenue, N.W.
Washington, DC 20004
Counsel for Intervenor-Appellant CPV Power Development

Justin N. Kattan
Richard M. Zuckerman [Argued]
Dentons US
1221 Avenue of the Americas
New York, NY 10020

Brian J. Molloy
Wilentz, Goldman & Spitzer
90 Woodbridge Center Drive, 8th Floor
Woodbridge, NJ 07095
Counsel for Intervenor Hess Newark LLC


Paul D. Clement [Argued]
Erin E. Murphy
Candice Wong
Bancroft PLLC
1919 M Street N.W., Suite 470
Washington, DC 20036
Counsel for Appellees

Philip J. Passanante
Pepco Holdings, Inc./Atlantic City Electric Co.
500 North Wakefield Drive
Newark, DE 19714
Counsel for Atlantic City Electric Co.




                                5
David Musselman
Essential Power, LLC
150 College Road West
Princeton, NJ 08540
Counsel for Essential Power, LLC

Robert C. Brady
William P. Deni, Jr.
Lawrence S. Lustberg
Justin T. Quinn
Gibbons
One Gateway Center
Newark, NJ 07102
Counsel for Calpine Energy Services

Sarah G. Novosel
Calpine Corporation
875 15th Street N.W., Suite 700
Washington, DC 20005
Counsel for the Calpine Companies

Darryl M. Bradford
Verónica Gómez
Exelon Corporation
10 South Dearborn Street, 49th Floor
Chicago, IL 60603

David W. DeBruin
Matthew E. Price
Jenner & Block LLP
1099 New York Avenue N.W., Suite 900
Washington, DC 20001




                               6
Counsel for Exelon Generation Co., LLC

Jesse A. Dillon
PPL Services Corp.
Two North Ninth Street
Allentown, PA 18101

David L. Meyer
Morrison & Foerster
2000 Pennsylvania Avenue N.W., Suite 6000
Washington, DC 20006
Counsel for the PPL Companies

Tamara Linde
Vaughn L. McKoy
PSEG Services Corp.
80 Park Plaza
Newark, NJ 07102

Shannen W. Coffin
Steptoe & Johnson LLP
1330 Connecticut Avenue N.W.
Washington, DC 20036
Counsel for PSEG Power, LLC and Public Service Electric &
Gas Co.

John P. Coyle
Duncan & Allen
1575 Eye Street, N.W., Suite 300
Washington, DC 20005




                              7
Pamela M. Silberstein
National Rural Electric Cooperative Association
4301 Wilson Boulevard
Arlington, VA 22203
Counsel for Amici Appellants National Rural Electric
Cooperative Association and American Public Power
Association

Delia D. Patterson
American Public Power Association
1875 Connecticut Avenue, N. W.
Suite 1200
Washington, DC 20009
Counsel for Amicus Appellant American Public Power
Association

Susanna Chu
Kaye Scholer
901 15th Street, N.W.
Washington, DC 20005
Counsel for Amici Curiae Vermont Public Service Board,
Vermont Department of Public Service, Rhode Island Public
Utilities Commission, New England Conference of Public
Utilities Commissioners Inc., Maine Public Utilities
Commission, Connecticut Public Utilities Regulatory
Authority, Connecticut Officer of Consumer Counsel,
Connecticut Department of Energy and Environmental
Protection, California Public Utilities Commission, and
Attorney General of Connecticut

Clare E. Kindall [Argued]
Office of Attorney General




                               8
10 Franklin Square
New Britain, CT 06051
Counsel to Amicus Connecticut Public Utilities Regulatory
Authority

Jeffrey A. Lamken
Martin Totaro
MoloLamken
600 New Hampshire Avenue, N.W.,
The Watergate
Washington, DC 20037
Counsel to Amicus Curiae NRG Energy Inc.

Eugene Grace
American Wind Energy Association
1501 M Street
Washington, DC 20005
Counsel to Amicus Appellant American Wind Energy
Association

Ashley C. Parrish
David G. Tewksbury
King & Spalding
1700 Pennsylvania Avenue, N.W., Suite 200
Washington, DC 20006
Counsel to Amici Curiae Electric Power Supply Association
& Edison Electric Institute

Stefanie A. Brand
Office of Public Defender
Division of the Ratepayer Advocate
140 East Front Street




                               9
4th Floor, P.O. Box 003
Trenton, NJ 08625
Counsel to New Jersey Division of Rate Counsel

Karis A. Gong
John L. Shepherd, Jr.
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue, N.W., Room 10-6
Washington, DC 20005
Counsel to Amicus Curiae PJM Power Providers Group

Adam D. Chandler
U.S. Department of Justice
Appellate Section
950 Pennsylvania Avenue, N.W., Room 3312
Washington, DC 20530
Robert H. Solomon [Argued]
Federal Energy Regulatory Commission
888 1st Street, N.E.
Washington, DC 20426
Counsel to Amici Curiae Federal Energy Regulatory
Commission and the United States of America

James P. Melia
Aspassia V. Staevska
Kenneth R. Stark
Pennsylvania Public Utilities Commission
400 North Street
Keystone Building
Harrisburg, PA 17120
Counsel to Amicus Appellee Pennsylvania Public Utility
Commission




                              10
                 OPINION OF THE COURT


FUENTES, Circuit Judge.
    Dissatisfied with the stock and reliability of power-
generating facilities in New Jersey, the state adopted the Long
Term Capacity Pilot Program Act. The Act—known as
LCAPP—instructed New Jersey’s Board of Public Utilities to
promote the construction of new power-generating facilities
in the state. Rather than pay for the construction of these
plants directly, the Board of Public Utilities crafted a set of
contracts, called Standard Offer Capacity Agreements, that
assured new electric energy generators fifteen years of
revenue from local utilities and, ultimately, New Jersey
ratepayers. LCAPP guaranteed revenue to new generators by
fixing the rates those generators would receive for supplying
electrical capacity, that is, the ability to make energy when
called upon.
    The federal government, however, has exclusive control
over interstate rates for wholesales of electric capacity. So
when New Jersey arranged for LCAPP generators to receive
preferential capacity rates, the state entered into a field of
regulation beyond its authority. Accordingly, federal law
preempts, and thereby invalidates, LCAPP and the related
Standard Offer Capacity Agreements. We, therefore, affirm
the District Court’s judgment.
    Although we affirm, we address our opinion to the field of
interstate rates, and not to electric energy markets generally.
Moreover, because we determine that LCAPP has been field
preempted, we do not reach the conflict preemption and
dormant Commerce Clause arguments raised by the parties.




                                11
I. Background of the Case
    This case concerns New Jersey’s authority to arrange for
the construction of new electric generators through a scheme
focused on capacity prices. New Jersey’s legislation, and its
reasons for pursuing it, make sense only in the broader
context of the regional energy market. Our analysis begins
there.

      A. Regulatory framework
    Electric energy generation and transmission occur in a
complex regulatory environment populated with multiple
private and public actors operating under the supervision of
both state and federal agencies. The Federal Power Act
embodies Congress’s attempt “to reconcile the claims of
federal and of local authorities and to apportion federal and
state jurisdiction over the industry.” Conn. Light & Power
Co. v. Fed. Power Comm’n, 

, 531 (1945).
      1. Both the federal government and the states regulate
         aspects of the electric energy system.
    With the Federal Power Act, Congress placed “the
transmission of electric energy in interstate commerce and the
sale of such energy at wholesale in interstate commerce”
under federal control. 16 U.S.C. § 824(a). Through the Act,
Congress exercised its Commerce Clause prerogative to
regulate matters of interstate commerce that the states could
not. Cf. Public Util. Comm’n of R.I. v. Attleboro Steam &
Elec. Co., 

, 89-90 (1927) (holding that the
regulation of wholesale energy transactions that are
“fundamentally interstate from beginning to end” may come
only from the “exercise of the power vested in Congress.”).
And Congress further extended federal authority to those




                               12
electric energy matters indirectly related to interstate
commerce that had previously been subject to state
regulation. See New York v. F.E.R.C., 

, 6 (2002).
    But Congress preserved state authority over many aspects
of the electric energy industry. The Federal Power Act
disclaimed any attempt to regulate “any other sale of electric
energy” and declared that federal regulators “shall not have
jurisdiction, except as specifically provided . . . over facilities
used for the generation of electric energy or over facilities
used in local distribution or only for the transmission of
electric energy in intrastate commerce.” 16 U.S.C. §
824(b)(1). So while the federal government has exclusive
control over interstate rates and transmission, the “[n]eed for
new power facilities, their economic feasibility, and rates and
services, are areas that have been characteristically governed
by the States.” Pac. Gas & Elec. Co. v. State Energy Res.
Conservation & Dev. Comm’n, 

, 205 (1983).
       2. FERC has exclusive authority over interstate
          capacity sales and transmissions, and it has
          exercised that authority through regional
          transmission organizations.
   With respect to electric energy sales and transmissions,
the federal government has placed one agency in charge of
implementing the Federal Power Act, the Federal Energy
Regulatory Commission. This agency, known as FERC,
“regulates the sale of electricity at wholesale in interstate
commerce.” Entergy La., Inc. v. La. Pub. Serv. Comm’n, 

, 41 (2003). FERC’s jurisdiction over interstate
wholesale rates is exclusive. Nantahala Power & Light Co. v.
Thornburg, 

, 966 (1986). Accordingly, FERC
alone has the responsibility to “ensure that wholesale rates are




                                  13
just and reasonable.” Entergy La., 

(quotation marks omitted); 16 U.S.C. § 824d(a).
    While FERC once directly considered whether the
wholesale rates submitted to it were “just and reasonable,” the
agency has since moved away from this approach. Now
FERC favors using market mechanisms to produce
competitive rates for interstate sales and transmissions of
energy. As part of this approach, FERC oversees regional
transmission organizations that facilitate market operations.
    PJM Interconnection LLC operates as the federally
regulated regional transmission organization for the PJM
region. PJM takes its name from “Pennsylvania,” “Jersey,”
and “Maryland,” the home states of the first utilities to pool
their excess power and capacity in 1927. Today, the PJM
region encompasses all or part of thirteen states and the
District of Columbia, including the entirety of New Jersey.
PJM operates the largest centrally dispatched power market in
the world.
   As a regional transmission organization, PJM has two
responsibilities of significance to this case. First, PJM
manages the flow of electric energy throughout the regional
power grid, “dispatching” energy in real time to where it is
needed. App’x 32. Second, PJM facilitates the interstate sales
of electricity products, including energy and capacity, by
managing marketplaces where those products may be
exchanged. Electric energy is “the actual electricity that
electric generators produce and which residential and
business customers ultimately use.” App’x 35 (quotation
marks omitted). By contrast, electric capacity is “the ability to
produce [energy] when called upon.” App’x 36 (quotation
marks omitted). In a system, such as PJM, where multiple
power generators pool their power, capacity describes the




                                14
total amount of electricity-generating resources available for
use. In other words, capacity is to energy what parking spaces
are to cars—a measure of how much traffic the system can
accommodate.
      3. New Jersey has moved away from a monopoly
         model for electric power generation and toward a
         market-based model approach.
    New Jersey once followed a traditional utility model,
regulating local monopolies that both generated and
distributed power to an exclusive service area. In 1999,
however, New Jersey enacted the Electric Discount and
Energy Competition Act, N.J. Stat. § 48:3-49 et seq. The Act
restructured New Jersey’s electric energy system so
“customers would have the right to choose their electricity
suppliers” and so that energy suppliers could obtain their
energy from wholesale energy markets. App’x 44; see also
N.J. Stat. § 48.3-50. To this end, New Jersey divorced the
entities that generate electricity from those that supply it.
    The change produced a delicate circuitry of
interdependence between private entities and public utilities,
and between New Jersey and federally-regulated wholesale
energy markets. Generators, such as coal-fired or natural gas
power plants, sell their capacity and energy to PJM through
various PJM auctions. Load-serving entities pay PJM for
furnishing capacity and energy, and, in turn, sell energy to
consumers.1 Electricity distribution companies, acting as


1
  In New Jersey, customers may choose between numerous
energy suppliers. The major electricity suppliers include
Atlantic City Electric, Jersey Central Power & Light,
Rockland Electric, and Public Service Electric & Gas.




                               15
common carriers, use their network of power lines to transfer
energy from generators to consumers.
    Although New Jersey restructured its approach to electric
energy regulation, it did not cede its “authority over the siting
and construction of power plants.” App’x 44. New Jersey’s
state utility regulator, the Board of Public Utilities, retained
statutory authority for “general supervision and regulation of
and jurisdiction and control over all public utilities.” N.J. Stat.
§ 48:2-13(a). Pursuant to this authority, New Jersey has, for
example, asserted jurisdiction over “[t]he charges assessed to
customers for basic generation service,” 

and the licensing of electric power suppliers, 

      B. New Jersey passed LCAPP to encourage the
construction of new power plants.
    Roughly a decade after New Jersey restructured its
electric power industry, New Jersey’s legislature foresaw
crisis. The legislature found that “New Jersey is experiencing
an electric power capacity deficit and high power prices.”
N.J. Stat. § 48:3-98.2(e). The legislature warned that, “[a]s a
result of a lack of new, efficient electric generation facilities,
New Jersey has become more reliant on coal-fired power
plants.” 

And the legislature specifically
found that PJM’s capacity market “has not resulted in large
additions of peaking facilities or any additions of intermediate
or base load resources available to the region and the State.”
N.J. Stat. § 48:3-98.2(b). New Jersey concluded that it needed
more electric energy generators.
    New Jersey’s legislature enacted LCAPP in January 2011
to address its concerns. See 

LCAPP aimed to
encourage power generation companies to construct new
power plants in New Jersey in order to add a cumulative




                                  16
2,000 megawatts of capacity to the regional power grid from
which New Jersey obtained its electrical energy. 

98.3(c)(1).
   The legislature fostered additional electric generation in
New Jersey by furnishing new generators with fifteen-year
contracts to supply a predetermined amount of capacity at a
predetermined rate. LCAPP authorized the Board of Public
Utilities to compel electricity distribution companies to sign
these contracts. Broadly speaking, these contracts, known as
Standard Offer Capacity Agreements, guaranteed new
generators a fixed level of revenue over a fifteen-year
contract term.
    Pursuant to LCAPP, the Board of Public Utilities solicited
bids from power generation companies willing and able to
construct new electric power generation facilities. N.J. Stat.
§ 48:3-98.3(a)-(b). The Board received bids from thirty-four
companies to participate in LCAPP, and it selected the
proposals of appellant CPV Power Development, Inc.,
intervenor-appellant Hess Newark LLC, and amicus NRG
Energy, Inc. The Board then exercised its authority to compel
the New Jersey electricity distribution companies to sign
Standard Offer Capacity Agreements with the LCAPP
generators. Since then, Hess’s and CPV’s projects have
moved forward; NRG’s project has not.

      C. Proceedings to date
   After New Jersey enacted LCAPP, several existing
electrical energy generators and two electricity distribution
companies filed suit against the Commissioners of the Board
of Public Utilities. They sought both a declaration that the
Federal Power Act preempted LCAPP and an injunction
prohibiting New Jersey authorities from enforcing LCAPP.




                               17
   CPV intervened to defend the law a few months later. The
District Court denied both sides’ motions for summary
judgment. Over thirteen days, the parties tried their case to
the bench. Witnesses included experts on the electric energy
industry, including former regulators and corporate
executives. The trial concluded with a lengthy written opinion
and a judgment in favor of the plaintiffs. See PPL
EnergyPlus, LLC v. Hana, 

(D.N.J.
2013); App’x 92-94.
    The District Court determined that the Federal Power Act
preempted LCAPP. The Court concluded that LCAPP
infringed on FERC’s exclusive control over the price received
for interstate sales of capacity. Thus, LCAPP had been field
preempted. The District Court further determined that LCAPP
interfered with PJM’s method of determining the price of
capacity. Thus, LCAPP had been conflict preempted. Finally,
the District Court rejected the plaintiffs’ dormant Commerce
Clause attack on the grounds that they had not met their
burden of proof. Based on its conclusions, the District Court
declared LCAPP unconstitutional, invalidated the Standard
Offer Capacity Agreements, and enjoined New Jersey from
enforcing the statute.
  The Board of Public Utilities and CPV appealed. Hess
Newark has since intervened in CPV’s appeal.2 Each side has


2
  This Court granted Hess Newark’s motion to intervene and
consolidated the various proceedings. See Order dated Nov.
14, 2013, Case No. 13-4330 (granting Hess Newark’s motion
to intervene); Order dated Dec. 13, 2013, Case No. 13-4330
(consolidating Cases No. 13-4394 and No. 13-4501 with Case
No. 13-4330)




                               18
been joined on appeal by numerous amici. At the Court’s
invitation, the United States and FERC, acting amicus curiae,
also briefed the preemption questions in support of the
appellees.

II.           Jurisdiction and Standard of Review
    Because of the Constitutional claims presented in the case,
the District Court properly exercised subject matter
jurisdiction pursuant to 28 U.S.C. § 1331. Because the
District Court entered final judgment, we exercise appellate
jurisdiction pursuant to 28 U.S.C. § 1291.
    “When the district court decides a constitutional claim
based on a developed factual record, we exercise plenary
review of the district court’s legal conclusion. We defer to the
factual findings supporting that conclusion unless they are
clearly erroneous.” United States v. Voigt, 

, 1064
(3d Cir. 1996) (citation omitted).

III.   Discussion
    Congress has distinguished between those matters that
belong exclusively to the federal government, such as
regulation of interstate sales and transmissions of energy, and
those matters that remain within the regulatory authority of
the states, such as the regulation of energy generators. See 16
U.S.C. § 824(b).
    In the American system of federalism, federal law
commands primacy over state law. The “Constitution, and the
Laws of the United States which shall be made in Pursuance
thereof . . . shall be the supreme Law of the Land; and the
Judges in every State shall be bound thereby, any Thing in the
Constitution or Laws of any State to the Contrary
notwithstanding.” U.S. Const. art. VI, cl. 2. As between state




                                19
and federal law, therefore, any state law that “interferes with
or is contrary to federal law . . . must yield.” Free v. Bland,

, 666 (1962) (citing Gibbons v. Ogden, 22 U.S.
(9 Wheat.) 1, 210 (1824)).
    Accordingly, if LCAPP intrudes into the exclusively
federal field or conflicts with valid federal regulation, federal
law preempts its effect and renders it invalid. See Farina v.
Nokia Inc., 

, 115 (3d Cir. 2010). If, on the other
hand, LCAPP addresses a local matter and leaves federal law
unimpaired, it remains valid. See 

requires us to compare federal and state law.” PLIVA, Inc. v.
Mensing, 

, 2573 (2011). We do so with “the
basic assumption that Congress did not intend to displace
state law.” 

(alteration omitted)
(quoting Maryland v. Louisiana, 

, 746 (1981)).
Only a clear and manifest conflict with federal law, or clear
and manifest Congressional intent to override state choices,
will overcome the presumption against preemption. 

      A. Comparing LCAPP’s subject matter to the
federal regulation of interstate sales and transmissions of
energy
   The core of this case concerns field preemption,
specifically whether LCAPP has strayed into the exclusive
federal area of interstate wholesale rates. This begs the
question of what the federal government and New Jersey have
each regulated. Accordingly, within the broader framework
described in Part I, we must fill in some of the details of
PJM’s FERC-approved approach to setting market prices and
LCAPP’s design to incentivize the construction of new




                                20
electric generators.3 In practice, FERC, through PJM,
regulates aspects of interstate wholesale rates through a
capacity auction, while LCAPP encourages the construction
of new generators by arranging for a capacity price
supplement. We determine that LCAPP effectively sets
capacity prices and therefore regulates the same field
occupied by FERC.
      1. Through regional transmission organizations,
         FERC uses market mechanisms to price and sell
         electric capacity.
    Although the Federal Power Act speaks to interstate
wholesales of electric energy, “the wholesale price for
capacity . . . is squarely, and indeed exclusively, within
FERC’s jurisdiction.” N.J. Bd. of Pub. Utils. v. F.E.R.C., 

, 97 (3d Cir. 2014). FERC has determined that
“maintaining adequate resources” bears “a significant and
direct effect on” wholesale rates. PJM Interconnection,
L.L.C., 119 FERC ¶ 61318, at 40 (2007). Therefore, FERC
regulates interstate sales of electric capacity as part of its
approach to regulating electric energy rates. See
Utilimax.com, Inc. v. PPL Energy Plus, LLC, 

,
305 (3d Cir. 2004).




3
   We recite the factual details necessary to decide the
preemption question before us, resting on the careful factual
findings of the District Court. In a related case, our Court
described the federal and state regulatory schemes in greater
detail. See generally N.J. Bd. of Pub. Utils. v. F.E.R.C., 

(3d Cir. 2014).




                               21
    FERC has approved PJM’s Reliability Pricing Model as
the means to set the interstate wholesale price for electric
capacity in the PJM region. The Reliability Pricing Model
attempts to match supply of capacity to demand for capacity.
To calculate demand, PJM uses data from market participants
and sophisticated computer models. To calculate supply, PJM
uses two mechanisms. First, PJM tabulates all generation
capacity within the PJM region that has been prearranged
between suppliers and users of energy. This includes, for
example, capacity associated with state-run monopolies or
capacity privately exchanged between load-serving entities
and energy generators. Second, PJM uses an auction to obtain
the additional capacity needed to meet projected demand. The
winners of the auction agree to provide capacity to PJM. See
generally PJM Capacity Market Operations, PJM Manual 18:
PJM Capacity Market §§ 3 (“Demand in the Reliability
Pricing Model”), 4 (“Supply Resources in the Reliability
Pricing Model”) (21st ed. 2014).
    The Reliability Pricing Model is a forward market and
focuses on the capacity to be demanded and supplied for a
one-year period beginning three years in the future. For
example, the 2014-2015 Model settled capacity obligations
for 2017-2018. And if the model has functioned properly, in
three-years’ time PJM will have contracted with enough
capacity providers to satisfy the peak demand for capacity
during 2017-2018.
    Within the Reliability Pricing Model, the Base Residual
Auction establishes the price capacity providers will receive
for residual capacity supplied to PJM. Providers propose an
amount of capacity they will offer to PJM, say 1,000
megawatt-hours per day, and the price at which they will
offer that capacity, say $500 per megawatt per day. PJM




                              22
orders these bids from lowest in price to highest in price. PJM
then accepts bids, starting with the lowest-price bid, until the
cumulative capacity it has accepted satisfies PJM’s auction
goal. At that point, PJM rejects all other bids. The price of the
last accepted bid becomes the price PJM will pay for all
accepted auction bids. For example, if the $500 bid is the last
one needed to satisfy demand, for example, $500 becomes the
auction “clearing price.” App’x 48.
       2. New Jersey, through LCAPP and the Standard
          Offer Capacity Agreements, has legislated what
          rates LCAPP generators will receive for their sales
          of capacity.
    By design, LCAPP focuses on capacity and capacity
prices. Recall that the contracts here are standard offer
capacity agreements contemplated by the Long Term
Capacity Agreement Pilot Program. See N.J. Stat. § 48:3-51.
And the Standard Offer Capacity Agreement price—referred
to as the Standard Offer Capacity Price—is “the capacity
price that is fixed for the term of the [agreement] and which is
the price to be received by eligible generators under a board-
approved [agreement].” 

legislature charged the Board of Public
Utilities with implementing LCAPP to achieve New Jersey’s
stated policy goal of providing long-term price assurance to
new energy generators. See 

The Board
did so by focusing on capacity and capacity prices:
    First, the Board “awarded” each generator a specific
     amount of capacity to transact through its Standard
     Offer Capacity Agreement.
    Second, the Board required generators to “participate
     in and clear” PJM’s annual capacity auction. N.J. Stat.




                                 23
      § 48:3-98.3(c)(12). Thus, when NRG’s bid failed to
      clear the PJM auction, its LCAPP participation ended.
    Third, the Board guaranteed each generator a fixed
     price for its cleared capacity. The Board achieved this
     by attempting to structure the Standard Offer Capacity
     Agreements as contracts-for-differences between the
     price of capacity received by a generator from the PJM
     auction and a price fixed by the Agreement itself. If the
     Agreement price exceeded the auction price, the
     Agreement required the electricity distribution
     companies to pay the difference in price, multiplied by
     the amount of capacity, to the LCAPP generators. If
     the auction price exceeded the Agreement price, the
     Agreement obliged the LCAPP generators to pay the
     difference in price, multiplied by the amount of
     capacity, to the electricity distribution companies.
   In practice, the Standard Offer Capacity Agreements
offered financial assurance to LCAPP generators: for a fixed
amount of capacity, generators would receive a fixed price.
And the Agreements extended these assurances for a fifteen-
year term, with the price increasing each year.
      3. Both FERC, through PJM, and New Jersey attempt
         to regulate electric capacity prices and sales.
    FERC, acting through PJM, uses the Base Residual
Auction to fix the capacity price electric generators will
receive for the capacity they sell through PJM. At the same
time, New Jersey, through LCAPP, has legislated that LCAPP
generators will both receive the federal price for interstate
capacity sales and also receive an additional amount fixed by
the BPU. Both efforts regulate electric capacity prices and
sales.




                               24
    We determine that LCAPP, through the Standard Offer
Capacity Agreements, attempts to regulate the same subject
matter that FERC has regulated through PJM’s Reliability
Pricing Model. The Agreements guarantee LCAPP generators
a “multiyear pricing supplement” to raise the prevailing
capacity price to an amount of New Jersey’s liking. App’x 59.
Indeed, New Jersey regulated the Standard Offer Capacity
Rates precisely because the legislature believed that PJM’s
market-based incentives had failed to encourage new electric
generators to construct adequate electric generation facilities.
N.J. Stat. § 48:3-98.2(b). LCAPP builds on PJM’s capacity
prices.
    Accordingly, New Jersey misses the mark when it argues
that each Standard Offer Capacity Agreement represents “a
contract for differences, functioning like a hedge” and,
therefore, does not transact in capacity. See, e.g., CPV Br. 39.
True, LCAPP’s price assurance insulates LCAPP generators
from market volatility and thus eliminates their risk. But the
Agreements provide more than risk-hedging; they provide for
the supply and sale of capacity, as well. LCAPP commands
generators to sell capacity to PJM. In return, New Jersey’s
statute ensures that the generators will receive the Standard
Offer Capacity Rate for each quantity of capacity offered at
auction and not solely the auction price they would have
otherwise received. Accordingly, we agree with the District
Court that “the Board essentially sets a price for wholesale
energy sales” for LCAPP generators. App’x 78; accord PPL
EnergyPlus, LLC v. Nazarian, 

, 476 (4th Cir.
2014) (determining that a Maryland initiative similar to
LCAPP “functionally sets the rate that [a generator] receives
for its sales in the PJM auction”).




                                25
    Anticipating this result, LCAPP’s defenders contend that
if the Standard Offer Capacity Agreements set capacity prices
then the law would not be preempted because the
reasonableness of the Agreement’s rates would be within
FERC’s exclusive jurisdiction to review. True, FERC has
jurisdiction over certain contracts that set rates between
market participants. See NRG Power Mktg., LLC v. Me. Pub.
Utils. Comm’n, 

, 171 (2010). But this argument
conflates the inquiry into LCAPP’s field of regulation with an
inquiry into the reasonableness of the Standard Offer
Capacity Rates. Here, whether the Standard Offer Capacity
Agreements pick “just and reasonable” capacity prices is
beside the point. What matters is that the Agreements have set
capacity prices in the first place.

       B. Because New Jersey has legislated in an
exclusively federal field, its law must give way.
    Because FERC has exercised control over the field of
interstate capacity prices, and because FERC’s control is
exclusive, New Jersey’s efforts to regulate the same subject
matter cannot stand. “Where Congress has delegated the
authority to regulate a particular field to an administrative
agency, the agency’s regulations issued pursuant to that
authority have no less preemptive effect than federal statutes,
assuming those regulations are a valid exercise of the
agency’s delegated authority.” Fellner v. Tri–Union Seafoods,
L.L.C., 

, 243 (3d Cir. 2008). Here, FERC’s use
of the Base Residual Auction to set interstate capacity prices
is a lawful exercise of its authority. See N.J. Bd. of Pub.

. Indeed, only FERC has the authority to
set interstate capacity prices. 

Federal Power Act, as
administered by FERC, preempts and, therefore, invalidates,
state intrusions into the field. Cf. Fid. Fed. Sav. & Loan Ass’n




                                26
v. de la Cuesta, 

, 153 (1982). New Jersey’s
regulations must yield.
    LCAPP’s defenders respond that New Jersey’s
interference with capacity prices does not trigger preemption
because it is a lawful exercise of the state’s authority to
promote new generation resources. New Jersey does have
authority over local energy matters, including the
construction of power plants. See, e.g., So. Cal. Edison Co. &
San Diego Gas & Elec. Co., 71 FERC ¶ 61,269, at 3 (1995).
But LCAPP incentivizes the construction of new power plants
by regulating the rates new electric generators will receive for
their capacity. New Jersey could have used other means to
achieve its policy goals.4 Because Congress has evinced its
intent to occupy the entire field of interstate capacity rates,
however, New Jersey’s reasons for regulating in the federal
field cannot save its effort: “any state law falling within that
[federal] field is preempted.” Silkwood v. Kerr-McGee Corp.,

, 248 (1984).
   That New Jersey has attempted to regulate federal matters
for local purposes also distinguishes its situation from
Northwest Central Pipeline v. State Corp. Commission of
Kansas, 

, 512-13 (1989). There, the U.S.


4
  For example, permissible means may include “utilization of
tax exempt bonding authority, the granting of property tax
relief, the ability to enter into favorable site lease agreements
on public lands, the gifting of environmentally damaged
properties for brownfield development, and the relaxing or
acceleration of permit approvals.” App’x 74. New Jersey may
also directly subsidize generators so long as the subsidies do
not essentially set wholesale prices.




                                 27
Supreme Court rejected the argument that Kansas
overstepped its authority to regulate the gathering of natural
gas by promulgating rules that, if enforced, would indirectly
affect interstate rates. 

By contrast, LCAPP does
not regulate the construction of new power plants, causing an
incidental effect on the interstate price of capacity. Rather,
LCAPP sets a price of capacity that will lead to the
construction of new power plants. New Jersey cannot excuse
LCAPP’s interference with capacity prices as incidental to its
scheme because the statute’s explicit objective is to
supplement capacity prices.
    Nor can the statute be saved by the fact that its design
incorporates, rather than repudiates, PJM’s capacity auction
clearing price. Recall that PJM pays generators for the
capacity they supply to PJM, and it charges load-serving
entities for the proportional share of the capacity they obtain
though PJM. LCAPP supplements what the generators
receive from PJM with an additional payment financed by
payments from electric distribution companies, the public
utilities that own local transmission lines. Because electricity
distribution companies do not participate in PJM’s capacity
auction, and because PJM still pays generators the auction
clearing price, LCAPP artfully steps around the capacity
transactions facilitated by PJM. The arrangement does not
save the law. “[I]f FERC has jurisdiction over a subject, the
States cannot have jurisdiction over the same subject.” See
Miss. Power & Light Co. v Miss. ex rel. Moore, 

,
377 (1988) (Scalia, J., concurring). Thus, we agree with the
Fourth Circuit that “[t]he fact that [these sorts of payments]
do[] not formally upset the terms of a federal transaction is no
defense, since the functional results are precisely the same.”

. The generators receive a different




                                28
price for the capacity they clear through PJM than what
FERC intended.

IV.   The Federal Field has Limits
  Counsel to various state amici describe the District
Court’s preemption decision as unprecedented:
              This is the first time we
              have a state law to address
              state long-term energy
              needs under a state
              procurement paid for by
              state rate payers, [that] is
              nonetheless deemed to be
              field preempted under the
              Federal Power Act as well
              as conflict preempted
              because it might have an
              effect on the market when
              anything a state does for
              generation will have [an]
              effect.
Tr. of Oral Argument at 32:02-09 (March 27, 2014). In
particular, LCAPP’s defenders fret that a decision in favor of
preemption will hamstring state-led efforts to develop
renewable and reliable electric energy resources.
   However broadly we might have decided this case, our
holding today focuses instead on the field of interstate rates
and, in particular, on capacity prices. Because we agree with
the District Court that LCAPP and the Standard Offer
Capacity Agreements attempt to regulate an exclusively
federal field, we do not decide whether the District Court also
correctly determined that LCAPP “poses as an obstacle” to




                               29
PJM’s markets and has been conflict preempted. See App’x
86. Thus, we have no occasion to conclude that PJM’s
markets preempt any state act that might intersect a market
rule.
    Nor do we endorse the argument that LCAPP has been
field preempted because it affects the market clearing price by
increasing the supply of electric capacity. Cf. FERC & United
States Amicus Br. 11-17. Holding all else constant, an
increase in capacity resources will cause supply to satisfy
demand at a lower price. So LCAPP has the theoretical ability
to influence the wholesale price of energy and capacity in
PJM by enlarging the supply of capacity. If any effect on
interstate markets could trigger preemption, LCAPP would be
irredeemably flawed.
    But the law of supply-and-demand is not the law of
preemption. When a state regulates within its sphere of
authority, the regulation’s incidental effect on interstate
commerce does not render the regulation invalid. Nw. Cent.
Pipeline 

. Accordingly, we do not view
LCAPP’s incidental effects on the interstate wholesale price
of electric capacity as the basis of its preemption problem.
Indeed, were we to determine otherwise, the states might be
left with no authority whatsoever to regulate power plants
because every conceivable regulation would have some effect
on operating costs or available supply. That is not the law.
The states may select the type of generation to be built—wind
or solar, gas or coal—and where to build the facility. Or states
may elect to build no electric generation facilities at all. See
Conn. Dep’t of Pub. Util. Control v. F.E.R.C., 

,
481 (D.C. Cir. 2009). The states’ regulatory choices
accumulate into the available supply transacted through the
interstate market. The Federal Power Act grants FERC




                                30
exclusive control over whether interstate rates are “just and
reasonable,” but FERC’s authority over interstate rates does
not carry with it exclusive control over any and every force
that influences interstate rates. Unless and until Congress
determines otherwise, the states maintain a regulatory role in
the nation’s electric energy markets. Today’s decision does
not diminish that important responsibility.

V. Conclusion
    We affirm the District Court’s judgment. LCAPP compels
participants in a federally-regulated marketplace to transact
capacity at prices other than the price fixed by the
marketplace. By legislating capacity prices, New Jersey has
intruded into an area reserved exclusively for the federal
government. Accordingly, federal statutory and regulatory
law preempts and, thereby, invalidates LCAPP and the
Standard Offer Capacity Agreements.
    In deciding that LCAPP has been field preempted because
it sets capacity rates, we do not accept the argument that field
preemption will occur whenever a state’s legislation
indirectly affects matters within FERC’s jurisdiction. By
statute and tradition, states have a role to play in energy
markets.




                                31