Energy Legal Blog

Federal-State Tension Accompanies FERC's Final Rule on Backstop Transmission Siting

FERC has issued a Final Rule establishing procedures that it will use for permitting construction of transmission lines in National Interest Electric Transmission Corridors (NIET) corridors.  In EPAct 2005, Congress authorized the Department of Energy to designate NIET corridors in congested areas of the high-voltage power grid.  Congress, in turn, granted FERC new authority to permit construction of transmission lines within designated NIET corridors in instances when a state permitting authority either has not acted or is unable to act on an application for siting authority.  The federal permit is controversial because it confers on the permit recipient a new federal right of eminent domain to condemn private property for rights of way ― a right previously available only from state and local authorities.   

Most elements of the Final Rule track an earlier proposed rule.  FERC must find that the proposed facilities would meet five basic criteria, including reducing congestion and enhancing energy independence.  Applicants for permits must file Participation Plans to maximize stakeholder contributions, and engage in a prefiling process at FERC.  The Final Rule does change this prefiling process.  Under the proposed rule, while an applicant was required to wait one year after applying to state or local authorities before filing its permit application at FERC, it could nevertheless begin the prefiling activities at FERC earlier, concurrent with ongoing state siting proceedings.  In response to loud outcry from state regulatory agencies concerned that FERC would effectively commandeer ongoing state review of transmission projects in NIET corridors, the Final Rule now prohibits both filing an application and initiating prefiling activities at FERC before one year following the beginning of state proceedings.   

Another controversial provision related to the states was resolved in favor of a stronger FERC authority.  EPAct allows FERC to grant a permit where a state has "withheld approval" of transmission facilities.  FERC determined that "withheld approval" applies both to where states deny permits and where states fail to act on permits.  While FERC Chair Kelliher supported this decision, calling it a reasonable interpretation, Commissioner Kelly disagreed, arguing that the interpretation leaves states with little choice: either permit the facilities or FERC will do it for you.  Kelliher pointed out that FERC could have legally implemented a process that ran simultaneously with state processes, but did not do so.  The practical result of this middle ground, however, is a lengthier permitting process – Kelliher admitted that projects that fail to win state siting approval face another 20 months of regulatory review at FERC.