Will The Infrastructure Investment And Jobs Act Accelerate Transmission Development?

• Published date: 05 January 2022
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law
• Law Firm: Winston & Strawn LLP
• Author: Mr Jonathan D. Brightbill, Madalyn G. Brown and Raymond B. Wuslich

On November 15, 2021, President Biden signed into law the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA).¹ Among the changes and funding set out in the IIJA, a provision granted FERC authority to supersede state siting decisions for electric transmission projects. The Energy Policy Act of 2005 (EPAct of 2005) first authorized the Federal Energy Regulatory Commission (FERC) to approve, if a state withheld its approval, interstate transmission projects in "national interest electric transmission corridors" identified by the Department of Energy. The new statute clarifies and expands FERC's authority.

In this alert, we first examine whether such superseding approval by FERC would be subject to the National Environmental Policy Act (NEPA) and require an environmental impact statement (EIS). Second, we explore how such backstop siting authority is likely to affect state Public Utility Commissions (PUCs) permitting decisions. Overall, it is unlikely that the new IIJA will lead to a sudden acceleration of the siting of transmission lines.

Existing Siting Authority under Section 216 of the Federal Power Act

The sufficiency and capabilities of the interstate transmission grid have presented obstacles to wholesale power market competition ever since FERC mandated open access transmission in the mid-1990s. The reason is simple: the power grid was built by local utilities to move power from generators to customers in nearby load centers. The grid was not designed to facilitate wholesale competition among generators widely scattered across the country. Shifting from local to regional usage patterns exposed deficiencies in the capability of the transmission grid to meet the new demands reliably and economically. Billions of dollars have been invested in new transmission projects to alleviate these conditions. But the recent explosion of investment in remotely located renewable energy projects has added new strains to the grid. These projects need to move energy across ever-greater distances.

A major impediment to building new transmission projects has often been the need to obtain certificates of public convenience and necessity from state regulatory agencies. These "CPCNs" can take up to ten years of contentious proceedings. They commonly involve litigation before the state agencies and in the courts. Projects to move electricity across states can fare even worse. The benefits flow to remote consumers in other markets. Proposals for major interstate tie lines like the Palo Verde-Devers No. 2 line to serve California (opposed in Arizona) and the Trans-Allegheny Line to serve the Mid-Atlantic region (opposed in Pennsylvania, Virginia, and West Virginia) failed in significant part because of local opposition.

To address these problems, FERC and Congress have made numerous attempts to spur new transmission investment. FERC, for example, has issued several major rulemaking orders. These change the way public utilities plan for future transmission needs, including the obligation to plan for "public policy" projects (i.e., those needed to accommodate state renewable energy mandates). Congress passed landmark legislation in the EPAct of 2005. This incentivizes new transmission investment through more favorable rate treatment. Section 1241 of the EPAct of 2005 (Section 216 of the Federal Power Act) also gave FERC "backstop" siting authority for the construction or modification of electric transmission facilities located within "National Interest Electric Transmission Corridors" (NIETCs). NIETCs are geographic areas experiencing electric energy transmission capacity constraints or congestion adversely impacting consumers. NIETCs...