Yesterday I discussed the Energy Policy Act of 2005 and how it permits the Department of Energy to declare large swaths of the country as national interest electric transmission corridors (NIETCs) with little or no justification. Today I’ll discuss how the process of granting transmission line construction permits works in the aforementioned NIETCs.

Construction Permitting in National Interest Electric Transmission Corridors

In the state of Colorado, the Public Utilities Commission (PUC) is responsible for reviewing applications for construction of new transmission lines or the extension of existing lines. The PUC rules are basically as follows (from Part 3 of CCR 723-3, “Rules Regulating Electric Utilities, Rule 3206):

Every year, by April 30, the utilities must file documentation about each new and in-process transmission line construction project that they’d like to build for the next three years. The documentation must include location and purpose of the project, estimated cost and financing method, a project schedule, and a status update for any projects that are already in progress. The documentation must include descriptions of how the utility is going to reasonably limit exposure to EM fields, such as via larger rights-of-way, burying transmission lines, or making transmission line towers taller. The filing also has to include information about how the noise of construction and operation of the lines (such as wind through the wires and the towers) can be mitigated. Once the documentation is filed, the PUC informs all expected interested parties and gives them until May 15 to comment on the filing. The PUC staff then reviews all the documentation and makes recommendations to the Commission itself. The Commission makes its decision to approve or reject the various proposals no later than June 30 for projects scheduled to start that calendar year or October 31 for projects due to start the next calendar year. If a local government or the utility doesn’t like the PUC’s decision, either party may appeal the decision. This process starts with an application for appeal, then goes through a public comment period and public hearings, and then a decision by the PUC.

This example is from the state of Colorado, but the basic process described above is the same in other states. Until the Energy Policy Act of 2005 (the EPAct) came along, however, this was the end of it – if a state’s utilities commission refused to overrule a county or city’s rejection of a proposed transmission line, there was very little a utility could do besides continue to win over opponents and work through the courts to get the rulings overruled.

Now, though, the EPAct gives utilities in designated “national interest electric transmission corridors” (NIETCs) another path to pursue if they can’t get their construction permits approved: apply to the Federal Electric Regulatory Commission (FERC) for authority to build transmission lines over the objections of local and state regulators. And on the surface, the FERC permitting process isn’t significantly different from the state processes.

Prior to filing its application for federal authority to build, the FERC recommends that the utility gather comment from the public, state and local officials, and the FERC staff in order to refine the application and proposal. The utility and FERC enter the pre-filing process during which the utility develops a plan to keep the interested parties informed and the FERC’s staff begins working with the utility and the various interested parties to understand the impacts of the project. Finally, once all the necessary information has been gathered and, the application is submitted. The FERC performs a project review during which hearings and technical reviews may be held. The project is either approved or rejected within a year from the receipt of the application.

However, there are a few interesting differences. The first difference is that most states require a period of public comment and notification of interested parties. This is only strongly recommended by the FERC prior to submitting an application. A second difference is that once the application is received, the state’s utilities commission is required to hold public hearings – the FERC may choose to do so but is under no legal requirement to do so (NOTE: The FERC “citizens guide” appears to contradict the language of the EPAct itself in this regard, which says that the FERC “shall” afford all affected parties a “reasonable opportunity to present their views and recommendations….” I suspect a careful regulatory lawyer could tie up a FERC permit for a while using this contradiction.). Finally, there is an appeals process within the states that goes to a theoretically neutral arbiter, the courts – the only choice of appeal under the EPAct is directly to the President of the United States, and since the President controls the FERC via the Department of Energy, the President isn’t exactly a neutral arbiter.

According to the EPAct, the FERC is permitted to issue permits under the following situations, described starting on page 355 of the EPAct:

The Commission may… issue one or more permits… if the Commission finds that –

(1)(A) a State in which the transmission facilities are to be constructed or modified does not have authority to – (i) approve the siting of the facilities; or (ii) consider the interstate benefits expected to be achieved by the proposed construction or modification of transmission facilities in the State;

(B) the applicant for a permit is a transmitting utility under this Act but does not qualify to apply for a permit or siting approval for the proposed project in a State because the applicant does not serve end-use customers in the State; or

(C) a State commission or other entity that has authority to approve the siting of the facilities has – (i) withheld approval for more than 1 year after the filing of an application seeking approval pursuant to applicable law or 1 year after the designation or the relevant national interest electric transmission corridor, whichever is later; or (ii) conditioned its approval in such a manner that the proposed construction or modification will not significantly reduce transmission congestion in interstate commerce or is not economically feasible;

(2) the facilities to be authorized by the permit will be used for the transmission of electric energy in interstate commerce;

(3) the proposed construction or modification is consistent with the public interest;

(4) the proposed construction or modification will significantly reduce transmission congestion in interstate commerce and protects or benefits consumers;

(5) the proposed construction or modification is consistent with sound national energy policy and will enhance energy independence; and

(6) the proposed modification will maximize, to the extent reasonable and economical, the transmission capabilities of existing towers or structures.

That’s a lot to digest, so let’s take it subparagraph by subparagraph.

The FERC may grant construction permits if a given state lacks the legal authority to approve siting of transmission lines or to consider the “interstate benefits” from building new or modifying existing transmission lines. In other words, if the state government cannot require it’s counties allow new transmission lines to be built due to state laws, the FERC now has the authority to force the issue.

The FERC can also grant construction permits if the utility is licensed to deliver electricity in one state but not in the state where the transmission line project would be located. This could be an Arizona utility who wants to sell electricity to Los Angeles but is prevented from selling power to a California county that its transmission lines must run through. Or, as representatives from the mid-Atlantic states have claimed, an Ohio utility could apply for permits to build transmission lines across West Virginia and Pennsylvania to sell electricity to Washington D.C. and Newark respectively.

In addition, the FERC can overrule state and local objections to permitting a project simply because the state utilities commission has rejected a project or has imposed expensive restrictions on the project. The problem is that the FERC now has the authority to grant a construction permit even if the state PUC’s reasons for rejecting a proposal are scientifically, economically, culturally, or technologically valid. In addition, the EPAct says that the FERC itself decides whether restrictions impose sufficient burdens on the project such that it becomes “not economically feasible.” This essentially has the FERC regulating itself, something that’s never a good idea.

The FERC can also issue permits for transmission project that benefit “interstate commerce,” i.e. any project that crosses state lines. Given that more and more electricity is being generated tens or hundreds of miles from where it’s being used, this represents a significant number of potential permits.

But the FERC may also issue permits if the project “protects of benefits consumers,” “is consistent with sound national energy policy,” or “enhance[s] energy independence.” Who defines what protects or benefits me as a consumer? Does the consumer benefit more from cheap coal power generated two states away, or from expensive wind and solar generated one county over? Coal is economically cheaper, but the indirect benefits of clean(er) energy from reduced carbon emissions, lower pollution, and reduced health care costs are also a form of consumer benefit. Given that the direct and indirect benefits of new transmission lines are difficult to quantify, this criteria is so broad that it grants blanket powers to the FERC. The same is true of “consistent with sound national energy policy” and “enhance[s] energy independence,” especially when it’s the President and/or his appointees in the FERC who get to make these decisions.

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Construction Permitting in National Interest Electric Transmission Corridors

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Rights-of-Way and Exercising Eminent Domain

The Way Out – Regional Transmission Siting Agencies; Conclusions