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States Balk at Permitting Plan’s ‘National Interest’ Power Lines

Sept. 16, 2022, 9:30 AM

The Biden administration’s efforts to speed permitting of some electric transmission lines by declaring “national interest” corridors—and unlocking $2 billion in the new climate law—face opposition from state utility officials who want to retain authority to make final decisions.

The federal-state tension is amplified under a permitting overhaul coming before Congress soon. That legislation would grant the energy secretary authority to declare national interest and allow the Federal Energy Regulatory Commission to issue a construction permit, according to a one-page summary and draft bill text circulated in July.

Sen. Joe Manchin (D-W.Va.), chair of the Senate Energy and Natural Resources Committee and the deal’s broker, hasn’t released final bill text. Democratic leaders want to attach the permitting language to a must-pass government funding bill this month.

“We don’t think that removing the states is actually going to reduce the time frames,” said Greg White, executive director of the National Association of Regulatory Utility Commissioners, which represents state officials.

He called the permitting proposal “draconian,” arguing it does nothing to solve delays stemming from federal environmental reviews. NARUC has pressed the department to scrap the proposal and bring states to the table.

“The sense is, if they can remove the state authority on siting these, that these projects will proceed quicker—and we disagree with that,” White said.

The Energy Department, which didn’t make someone available for an interview by this story’s deadline, has pledged to work closely with states throughout the corridor process.

Tripling of Transmission

The debate over federal permitting rules on transmission projects comes as clean energy advocates say changes are needed to connect renewable energy to the power grid. Major transmission lines can take more than a decade to obtain permits at a time more wind, solar, and energy storage are sprouting up to meet U.S. climate goals of net-zero power sector greenhouse gas emissions by 2035.

Unlike interstate natural gas pipelines, state utility commissions issue permits for electric transmission under the Federal Power Act. FERC has oversight over regional transmission planning, the allocation of costs, generator interconnection rules, and extreme weather protections—all of which are the focus of a series of commission rulemakings this year that have drawn input from a joint task force on transmission with NARUC.

The corridors could have the biggest benefit without siting ever being invoked, said Jason Stanek, chairman of the Maryland Public Service Commission who serves on the task force.

The threat of federal siting may “motivate states to work more closely with various constituencies to ensure needed transmission is actually developed,” Stanek said. “Ideally, it will never be used.”

Resurrected Authority

Federal transmission siting authority dates back to the Energy Policy Act of 2005, which required the Energy Department to study electric grid constraints and declare National Interest Electric Transmission Corridors where customers are impacted.

Along those designated routes, the law designated FERC as the “backstop” siting authority if a state doesn’t approve permits for a line.

In 2011, the Ninth Circuit struck down two broad corridors the department designated in the Mid-Atlantic and Southwest regions, siding with a coalition of environmental and historic preservation organizations and state and local agencies. The department and FERC haven’t attempted to site transmission since then.

In last year’s infrastructure bill (Public Law 117-58), Congress resurrected the authority and backed transmission with $20 billion in federal financing tools. The new climate law (Public Law 117-169) included a $2 billion loan program for lines located in corridors and $760 million for states to aid the siting process.

This time, the department is seeking a “route-specific, applicant-driven basis” rather than a broader approach, according to a notice of intent this year.

That means the department could gather evidence that a project is in the national interest, and then FERC conducts its review to approve it, said Liza Reed, electricity transmission research manager for the Niskanen Center, a pro-free market Washington research group.

‘This is All About Speed’

The process may still take too long and contain too much uncertainty for the developer, Reed said. Giving greater authority to the energy secretary, as the Democrats’ permitting overhaul proposes, moves in the right direction, Reed said.

“The ideal is a single-step process,” she said.

Separate permitting bill text backed by Republicans, unveiled this week by Sen. Shelley Moore Capito (R-W.Va.), doesn’t include any changes to transmission authorities.

The department, being slow to act on transmission studies over the years, is “really inviting Congress to try to get more involved in this,” said William Ball, public affairs director with Foley & Lardner LLP in Washington who spent a decade working with House and Senate committees on infrastructure issues.

“They seem to be in a bit of a paralysis by analysis where it’s unclear when they’re going to get these things off the ground,” Ball said.

State officials and transmission developers say the real source of delays come from legal challenges under the National Environmental Policy Act, which would be triggered along corridor routes.

Federal officials should fast-track permits and limit challenges to projects that serve clean energy or run along existing rights-of-way, said Krista Tanner, senior vice president and chief business officer for ITC Holdings Corp., a Michigan-based transmission company.

“This is all about speed—if we’re going to meet our climate goals by 2035, we need transmission in the ground now,” Tanner said.

To contact the reporter on this story: Daniel Moore in Washington at dmoore1@bloombergindustry.com

To contact the editor responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com