EPAct: Road to Nowhere?
Congress has acted to enhance the power of the federal government and thus enable transmission projects with multistate importance to be assessed on more broadly based national interests. The Energy Policy Act of 2005 (EPAct) provided the Federal Energy Regulatory Commission (FERC) with "backstop" transmission siting authority. States retain the primary siting responsibility, but if the state has "withheld approval for more than 1 year" for a project in a designated "national interest electric transmission corridor," the applicant may seek siting authority from FERC.
We previously questioned (in "Can FERC Deliver Transmission?" POWER, November 2007) whether EPAct provides a meaningful federal alternative if a state denies a transmission project. Our discussion focused on the then-recent rejection by Arizona regulators of a transmission line to connect Arizona generation with California electric consumers. Almost four years after the filing of the initial application with the California Commission, this transmission project remains suspended. For this project, the question of whether EPAct backstop authority represents meaningful reform or is a road to nowhere remains unanswered.
Court Dilutes FERC’s Backstop Authority
Ironically, within 24 hours after President Obama’s promise of a national "transmission superhighway," a federal court ruling in Piedmont Environmental Council v. FERC effectively negated FERC’s backstop authority. The majority rejected FERC’s interpretation that the state’s denial of a transmission project constitutes its "with[holding] approval for more than 1 year." Thus, this decision enables states to deprive FERC of any backstop siting authority by timely rejection of a transmission project application.
An underlying policy preference for the states’ long-held permitting authority emerges from the majority opinion: "[FERC’s] reading would mean that... state commissions... will lose jurisdiction unless they approve every permit application in a national interest corridor." The dissenting judge found FERC’s interpretation to be the only reasonable interpretation consistent with congressional intent.
Federal Oversight Needed for National Transmission Superhighway
President Obama has offered meaningful responses to the engineering and financial barriers that have impeded the desired development of alternative energy. Now he must build on the political support for this green power agenda to resolve the remaining, but most vexing, barrier: ensuring that transmission infrastructure decisions imperative for national initiatives are not thwarted at the local level. Green power advocates point to construction of the national interstate highway system as a promising precedent for a "coast-to-coast transmission superhighway." The success of the former was its "national interstate" foundation. The lack of such a "national interstate" focus has produced a suboptimal "patchwork" of transmission facilities; preservation of the traditional state-focused paradigm will subject renewable resources available in the "windy plains" and "sunny desserts" to electronic isolation.
Editor’s Note: Davis Wright Tremaine attorneys represented parties supporting the FERC position in the Piedmont Environmental litigation. The views expressed herein are those of the authors and are independent of the firm’s representation of its clients.
--Steven F. Greenwald (stevegreenwald@dwt.com) leads Davis Wright Tremaine's Energy Practice Group. Jeffrey P. Gray (jeffgray@dwt.com) is a partner in the firm's Energy Practice Group.
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