FERC issues a rule amending its review of a gearbox application

On May 13, 2024, the Federal Energy Regulatory Commission (“FERC” or the Commission) issued a final rule amending its regulations governing FERC’s consideration of applications for permits to locate transmission facilities under Section 216 of the Federal Power Act (“FPA”), commonly referred to as the FERC Emergency Transmission Location Authority (the “Transmission Location Rule”). Order No. 1977 is intended to revitalize FERC’s limited transmission siting authority for interstate electric transmission projects and provides FERC with the ability to exercise its jurisdiction under Section 216 of the FPA to grant siting permits to developers of transmission projects located in certain designated geographic regions of the country ( National Electric Transmission Corridors (“NIETC”), even if the developer has been unable to obtain site permits from the appropriate state or local government. Permits issued pursuant to Art. 216 grant eminent domain rights to the project creator.

FERC approved the Transmission Location Rule unanimously, in contrast to FERC’s approval of Order No. 1920 (related to Regional Transmission Planning Cost Allocation), which was approved the same day by a 2-to-1 majority over the objections of Commissioner Mark Christie. One of the major changes between the transmission siting regulations and the underlying notice of proposed rulemaking (“NOPR”) is that the Commission has denied applicants the ability to simultaneously submit state and federal transmission siting applications in order to expedite the federal permitting process. Instead, applicants will first have to go through the appropriate state process and then, only after they are denied the state process or after a delay of more than one year, will they be able to submit applications to FERC. It is possible that this change between the NOPR and the Transmission Location Rules will help to at least partially explain the lack of any discrepancies.

Background

The transmission localization rule is part of a broader set of federal government efforts to promote transmission system development and investment in the United States, which includes a range of legislative and administrative actions. The transmission siting provisions themselves are a continuation of Congress’s intent in the Infrastructure Investment and Jobs Act of 2021 (“IIJA”) to revitalize FERC’s emergency transmission siting authority. Moreover, the Transmission Location Rule directly addresses the U.S. Department of Energy’s (“DOE”) recent publication of preliminary NIETCs for public comment. These are the first NIETC designations issued since 2007 (previous DOE NIETC designations were later invalidated by a federal appeals court).

Section 216 of the FPA

Congress established Section 216 of the Energy Policy Act of 2005 (“EPAct 2005”), but subsequent federal court opinions have sharply limited its application, including the 2009 Act. Piedmont decision in which the U.S. Court of Appeals for the Fourth Circuit found that FERC did not have the authority to establish a containment location where a state had affirmatively denied a project permit application.⁽¹⁾ The IIJA expressly “repeals” the statutory interpretation on which Art Piedmont the court resisted and authorizes FERC to exercise federal jurisdiction over the siting of certain power transmission projects, even if such siting authority has been expressly denied by the state agency.

The role of the DOE

The basic framework of Section 216 begins with DOE being required to complete studies every three years to identify geographic regions of the country where there is an urgent need to develop additional transmission facilities, called NIETCs. On May 8, 2024, DOE announced an initial list of 10 NIETCs located throughout the country. Before finalizing NIETC assessments, DOE must conduct an environmental impact analysis of DOE NIETC designations under the National Environmental Policy Act (“NEPA”). This analysis is separate and distinct from FERC’s project-specific NEPA process under transmission siting regulations. Once finalized, FERC may exercise siting jurisdiction over proposed interstate transmission projects located in the NIETC, provided that the project proponent meets certain requirements and that its state-level siting application has been denied or has been pending for more than one year.

DOE NIETC Preliminary Designation Map, as of May 8, 2024

Source

Following the passage of EPAct 2005, FERC announced regulations implementing Section 216, which had largely remained dormant. In the Transmission Location Rule, FERC proposes to retain many of these provisions. The transmission siting regulations amend their provisions by (1) expressly specifying that a state’s denial of a transmission siting application may give rise to FERC’s jurisdiction over a proposed transmission project, and (2) requiring additional information regarding the landowner’s involvement to be submitted to FERC, including the submission of evidence working with environmental justice communities.

Summary of changes to existing FERC regulations implementing Section 216

Pursuant to IIJA, FERC is amending its regulations to reflect its jurisdiction over projects located in NIETCs that have been denied state siting privileges.

Departing from the NOPR proposal, FERC declines to change its regulations to allow simultaneous processing of federal and state siting requests. Instead, FERC’s current policy requiring applicants to wait one year after submitting a state siting application before submitting an application to FERC will remain in effect.(2) In short, applicants seeking to take advantage of FERC’s Section 216 regulations will first need to proceed solely at state and if after one year they are unable to obtain a site permit from the appropriate state authority, they may proceed to submit an application to FERC.

In terms of application procedures, at a high level, the transmission siting rules establish a federal energy transmission siting process that mirrors some of the same rules and application requirements that FERC applies to interstate natural gas certificate projects under Section 7 of the Natural Gas Act. For example, FERC recommends that applicants seeking transmission siting include in their applications:

• Evidence of stakeholder involvement in the form of a Project Participation Plan.
• Environmental Justice Public Engagement Plan, which must describe the applicant’s collaboration with “environmental justice communities.”
• Notification of the project to affected landowners within a specified period after submission of an application to FERC.
• Fourteen resource reports that are largely consistent with FERC’s NEPA regulations, but also add three new resource reports related to Tribal Resources (Resource Report 6), Environmental Justice (Resource Report 7), and Environmental Air Quality and Noise (Resource Report 11). At a high level, asset reporting totals will require information related to: among others: :
  • Estimated emissions from the proposed project, as well as associated impacts on air quality and the surrounding acoustic environment (Resource Report 11);
  • Impacts on visual features of surrounding lands and waters affected by the project (Resource Report 10); AND
  • Alternatives to the proposed project, including alternatives other than new transmission lines (Resource Report 12).

In addition, under a recently promulgated rule in the context of natural gas certificates (Order No. 871 and its derivatives), transmission siting rules limit the ability of applicants to continue construction of an approved project if an application for reconsideration of a permit order is pending before the Commission. However, as with Order No. 871, a qualifying request for reconsideration must reflect an objection to the construction, operation, or need of the project, so not all requests for reconsideration will prevent the applicant from proceeding with construction.

From a practical standpoint, it is difficult to predict how state regulators would view a transmission contractor that proceeds with a project after receiving a FERC ruling following a state denial of its siting application (i.ehow public officials would treat such a developer on an ongoing basis after the facility was put into use). This may be of particular concern for transmission and distribution companies that are subject to extensive government regulation.

Footnotes

(1) Piedmont Env’t Council v. FERC558 F.3d 304 (4th Cir. 2009) (holding that FERC lacks transmission siting jurisdiction in the event of a state agency denial and waiving FERC’s NEPA provisions with respect to section 216 applications due to lack of consultation with the Board in on Environmental Quality in their announcement); Feces. Wild coal. v. US Department of Energy631 F.3d 1072 (9th Cir. 2011) (exemption of certain DOE national corridor designations).

(2) This policy was originally promulgated in FERC Order No. 689. Regulations for submitting applications for permits for the construction of interstate electricity transmission facilitiesOrder No. 689, 117 FERC ¶ 61.202, at P 21 (2006).

Theodore F. Duver, Tyler S. Johnson, and Deanna E. King also contributed to this article.