The Federal Government’s Role in
Electric Transmission Facility Siting
Adam Vann
Legislative Attorney
October 28, 2010
Congressional Research Service
7-5700
www.crs.gov
R40657
CRS Report for Congress
P
repared for Members and Committees of Congress
The Federal Government’s Role in Electric Transmission Facility Siting
Summary
The location and permitting of electricity transmission lines and facilities have traditionally been
the exclusive province of the states, with only limited exceptions. However, the increasing
complexity of the interstate transmission grid, as well as widespread power outages in recent
history, has resulted in calls for an increased role for the federal government in transmission siting
in an attempt to enhance reliability.
The Energy Policy Act of 2005 (EPAct; P.L. 109-58) established a role for the Department of
Energy (DOE) and the Federal Energy Regulatory Commission (FERC) in making transmission
siting decisions. The act directed DOE to create “transmission corridors” in locations that would
help to ease strain on the interstate electricity transmission grid. The act also granted FERC
secondary authority over transmission siting in the corridors. This new federal role in a decision-
making process that had previously been the province of state governments was predictably met
with resistance from those seeking to protect local and regional interests. However, the process of
creating “transmission corridors” and increasing the federal role in transmission siting has moved
forward. Indeed, there have been calls for further expansion of the federal role in transmission
siting by some policymakers and commentators.
This report looks at the history of transmission siting and the reason behind the movement toward
an increased federal role in siting decisions, explains the new federal role in transmission siting
pursuant to EPAct, and discusses legal issues related to this and any potential future expansions of
the federal role.
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The Federal Government’s Role in Electric Transmission Facility Siting
Contents
Introduction ................................................................................................................................ 1
Background ................................................................................................................................ 1
Analysis...................................................................................................................................... 3
Transmission Siting and the Commerce Clause ..................................................................... 3
Congressional Authority to Regulate Interstate Commerce .............................................. 3
Supreme Court Jurisprudence on the Interstate Nature of the Electricity Industry............. 6
The Energy Policy Act of 2005: National Interest Electric Transmission Corridors ................ 8
The Debate over an Increased Federal Role in Transmission Siting...................................... 12
Transmission Siting on Federal Lands ................................................................................. 13
Conclusion................................................................................................................................ 14
Contacts
Author Contact Information ...................................................................................................... 14
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The Federal Government’s Role in Electric Transmission Facility Siting
Introduction
The location and permitting of facilities used for the transmission of electricity to residential and
commercial customers have been the province of the states (with limited exceptions) for virtually
the entire history of the electricity industry. State and local governments are well positioned to
weigh the local factors that go into siting decisions, including environmental and scenery
concerns, zoning issues, development plans, and safety concerns. Because the grid formerly
consisted of many localized transmission and distribution networks, federal interest in siting of
the transmission system was limited. However, the electricity transmission system in the 48
contiguous states has evolved into a complex continent-spanning network consisting of three
major interconnections.
Although the federal government has recently increased its authority over transmission reliability,
it has, for the most part, left transmission siting decisions in the hands of the states. However, as
concerns over grid congestion and its impact in reliability have grown, the federal government
has carved out a small role in transmission siting as a “backstop” siting authority in designated
transmission corridors. Although this new role has met with some resistance, other policymakers
and commentators, including former Federal Energy Regulatory Commission (FERC) Chair
Joseph Kelliher, have opined that the federal government should increase its role in transmission
siting decisions. Others have advocated an increased federal role in order to encourage
development of renewable energy, which is often located in remote areas that are not easily
connected with the interstate grid.
The increased federal role in transmission siting decisions raises a number of legal and policy
issues. Foremost among these are the concerns over loss of local and regional input and control
that often accompany an expansion of federal power into a process traditionally reserved for the
states. Indeed, the Federal Power Act specifically reserves certain aspects of governance over the
electricity industry to the states, and efforts to expand the federal role in the past have met with
resistance from state public utility commissions and advocates of federalism.
This report provides a review of the history of transmission siting; a summary and analysis of the
recently created federal authority to designate transmission corridors and provide backstop siting
authority for transmission facilities in those corridors; a discussion of the legal issues associated
with this expansion of federal authority and any future expansions of federal transmission siting
authority; and a look at recent developments concerning transmission siting on federal lands.
Background
In order to understand the issues that arise from federal involvement in electricity transmission
siting decisions, it is necessary to briefly review the history of the power industry and the
development of the transmission grid.
Transmission lines connect power generation facilities to distribution systems that make final
delivery of electricity to commercial and residential customers. For most of the 20th century, these
lines were generally constructed and operated by “vertically integrated” electric utilities; that is,
state-authorized and state-regulated monopolies that owned power generation plants, transmission
facilities, and local distribution systems, and ultimately sold electricity to retail customers. While
these transmission lines were almost exclusively intrastate in nature at first, the transmission
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system expanded rapidly to include interstate transmission lines. The Federal Power Act (FPA),
first enacted in 1920 as the Federal Water Power Act and amended to include interstate electricity
transmission in 1935, granted the Federal Power Commission jurisdiction over wholesale electric
power transactions and the interstate transmission of electric power. The states, for the most part,
retained jurisdiction over the siting of generation and transmission facilities as well as the pricing
of most retail electric power transactions.
Over the next several decades, this mostly local electric power system began to interconnect into
larger regional grids. Interconnections were motivated by the reliability benefits of connecting a
utility to its neighbors, opportunities for power sales, and joint ownership of increasingly large
and expensive power plants. The development of higher voltage transmission lines—which made
it possible to transmit electricity long distances with relatively small losses—also spurred
interconnection.
Throughout this expansion, the states continued to be the sole authority for most decisions about
where to site electric power transmission facilities. Federal transmission systems, such as the
Tennessee Valley Authority and some municipal and cooperative utility systems, were able to site
transmission lines independent of state authority. However, the vast majority of transmission
facilities were constructed by investor-owned utilities under state jurisdiction.
This dynamic changed slightly when Congress passed the Energy Policy Act of 2005 (EPAct).1
One section of EPAct authorized the Department of Energy (DOE) to designate “National Interest
Electric Transmission Corridors” based on DOE’s findings after conducting a study of congestion
as directed by EPAct.2 EPAct authorized FERC to permit the construction and operation of
electricity transmission facilities within the boundaries of the National Interest Electric
Transmission Corridors. This authority may not be exercised by FERC unless the state where the
facility would be sited lacks the authority to issue the permit, the applicant does not qualify for
the permit in the state, or the state has “withheld approval” of the permit for more than one year.3
The federal transmission siting authority created in EPAct is a “backstop” authority that is
exercised only if the state cannot authorize the facility or if it has “withheld approval.” This
authority, which is discussed in detail infra, was thought by many to be a response to the
blackouts in August of 2003 that interrupted service, in some cases for days, to many customers
across the northeastern United States and in Canada. EPAct directed the Secretary of Energy to
designate the corridors only in areas in which it finds “electric energy transmission capacity
constraints or congestion that adversely affects consumers.”4 In addition, FERC was authorized to
permit transmission facilities only upon a finding that the proposed construction or modifications
would “significantly reduce transmission congestion in interstate commerce and protects or
benefits consumers.”
Recent events, however, have led some legislators and commentators to push to expand the
federal role in transmission siting. Some have advocated an expanded federal role as a means to
encourage development of green energy technology or for other purposes. Others have suggested
that a recent ruling by the U.S. Court of Appeals for the Fourth Circuit interpreting the
1 P.L. 109-58.
2 Id. at § 1221.
3 Id.
4 Id.
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transmission siting section of EPAct has limited federal siting authority too severely, and that
legislation is needed to expand FERC’s siting authority to guard against future congestion
problems. These concerns, and some of the proposals that address them, are explored further
below.
Analysis
Transmission Siting and the Commerce Clause
Congressional Authority to Regulate Interstate Commerce
Congressional authority for legislation affecting the transmission of electric power, including the
siting of transmission facilities, would likely be dependent upon Congress’s constitutional
authority to “regulate commerce ... among the several states.”5 This constitutional authority to
legislate pursuant to the power to regulate interstate commerce has expanded significantly in the
last 75 years. The plain meaning of this language might indicate a limited power to regulate
commercial trade between persons in one state and persons outside of that state. During the early
1900s, the Supreme Court was confronted with statutes which went beyond regulation of trade
and addressed other related economic activities. At that time, the Court struck down a series of
federal statutes which attempted to extend commerce regulation to activities such as
“production,” “manufacturing,”6 or “mining.”7
Starting in 1937, however, with the decision in NLRB v. Jones & Laughlin Steel Corporation,8 the
Supreme Court held that Congress has the ability to protect interstate commerce from burdens
and obstructions which “affect” commercial transactions. In the NLRB case, the court upheld the
National Labor Relations Act, finding that by controlling industrial labor strife, Congress was
preventing burdens from being placed on interstate commerce.9 Thus, the Court rejected previous
distinctions between the economic activities (such as manufacturing) which led up to interstate
economic transactions, and the interstate transactions themselves. By allowing Congress to
regulate activities which were in the “stream” of commerce, the Court also set the stage for
federal regulation of a variety of other activities which “affect” commerce.
Subsequent Supreme Court decisions found that Congress had considerable discretion in
regulating activities which “affect” interstate commerce, as long as the legislation was
“reasonably” related to achieving its goals of regulating interstate commerce.10 Thus the Court
found that in some cases, events of purely local commerce (such as local working conditions)
might, because of market forces, negatively affect interstate commerce, and thus would be
susceptible to federal regulation.11 The Court has also held that an activity which in itself does not
5 U.S. CONST. Art. I, § 8, cl. 3.
6 United States v. E.C. Knight Co., 156 U.S. 1, 12 (1895).
7 Carter v. Carter Coal Co., 298 U.S. 238, 304 (1936).
8 301 U.S. 1 (1937).
9 301 U.S. at 41.
10 United States v. Darby, 312 U.S. 100 (1941) (approving legislation relating to working conditions).
11 312 U.S. at 121.
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affect interstate commerce could be regulated if all such activities taken together did affect
interstate commerce.12 Under the reasoning of these cases, the Court has upheld many diverse
laws, including laws regulating production of wheat on farms for home consumption,13 racial
discrimination by businesses,14 and loan-sharking.15
In the 1995 case of United States v. Lopez,16 however, the Supreme Court brought into question
the extent to which the Congress can rely on the Commerce Clause as a basis for federal
jurisdiction. Under the Gun-Free School Zone Act of 1990, Congress made it a federal offense for
“any individual knowingly to possess a firearm at a place that the individual knows, or has
reasonable cause to believe, is a school zone.”17 In Lopez, the Court held that, because the act
neither regulated a commercial activity nor contained a requirement that the possession was
connected to interstate commerce, the act exceeded the authority of Congress under the
Commerce Clause. Although the Court did not explicitly overrule any previous rulings upholding
federal statutes passed under the authority of the Commerce Clause, the decision did suggest
limits to Congress’s legislative authority.
In the Lopez case, the Court identified three categories of laws which are authorized by the
Commerce Clause: (1) laws which regulate channels of commerce; (2) laws which regulate
instrumentalities of commerce; and (3) laws which regulate economic activities which affect
commerce.18 Within the third category of activities which affect commerce, the Lopez Court
determined that the power to regulate commerce applies to intrastate activities only when they
“substantially” affect commerce.19 Still, the Court in Lopez spoke approvingly of earlier cases
upholding laws which regulated intrastate credit transactions, restaurants utilizing interstate
supplies, and hotels catering to interstate guests. The Court also recognized that while some
intrastate activities may by themselves have a trivial effect on commerce, regulation of these
activities may be constitutional if, in the aggregate, these activities would have a substantial effect
on a larger regulatory activity.20
Jurisprudence since the Lopez decision has expanded upon the meaning of the three categories of
federal laws which are authorized by the Commerce Clause. The “channels of commerce”
category has been interpreted so as to represent a broad power to regulate. This category is the
12 Wickard v. Filburn, 317 U.S. 111 (1942).
13 Id.
14 Heart of Atlanta Motel v. United States, 370 U.S. 241 (1964); Katzenbach v. McClung, 379 U.S. 241 (1964).
15 Perez v. United States, 402 U.S. 146 (1971).
16 514 U.S. 549 (1995).
17 18 U.S.C. § 922(q)(1)A).
18 The Court failed to note that to some extent, the three categories are intertwined. For instance, the first category, the
regulation of “streams” or “channels” of commerce, allows regulation of the creation, movement, sale and consumption
of merchandise or services. But the initial extension of the “streams” of commerce analysis by the Court to intrastate
trade was justified by the “effect” of these other activities on commerce. See NLRB v. Jones & Laughlin, 301 U.S. 1,
31 (1936). Similarly, the second category, which allows the regulation of such instrumentalities of commerce as planes,
trains or trucks, is also based on the theory that a threat to these instrumentalities “affects” commerce, even if the effect
is local in nature. Southern Railway Company v. United States, 222 U.S. 21, 26-27 (1911) (regulation of intrastate rail
traffic has a substantial effect on interstate rail traffic). Thus, the final category identified by the Court appears to be a
catchall for all other activities which “substantially affect” commerce.
19 514 U.S. at 559.
20 Thus, the Court validated what has been perceived as one of its most expansive rulings, Wickard v. Filburn, 317 U.S.
111 (1942), which allowed the regulation of the production of wheat for home consumption.
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basis for a variety of statutes that directly regulate the movement of persons or goods across state
lines. For instance, the United States Code contains extensive references to mailing or shipping
material in interstate commerce, including regulations or bans on shipping biological agents,21
counterfeit documents,22 explosives,23 or threatening communications.24
Under the “instrumentalities of commerce” category, Congress may properly make whatever
regulations it sees fit for the safety, efficiency, and accessibility for a nationwide enterprise such
as transportation and communications networks. For instance, in Preseault v. I.C.C.,25 the Court
considered whether Congress could prevent the reversion of railroad rights-of-way to property
owners after abandonment in order to create recreational trails. The Interstate Commerce
Commission argued that turning the right-of-ways into recreation trails was preserving the rail
corridors for future railroad use. Despite arguments that the preservation argument was a pretext,
the Court held that it must defer to a congressional finding that a regulated activity affects
interstate commerce “if there is any rational basis for such a finding.”26 Thus, the
instrumentalities of commerce category represents yet another significant basis for expansive
congressional authority.
Finally, the category of activities which “affect” commerce represents perhaps the broadest
authority of Congress under the Commerce Clause. For instance, in the case of Gonzales v.
Raich,27 the Court evaluated an “as applied” challenge to the Controlled Substances Act as
regards obtaining, manufacturing, or possessing marijuana for medical purposes. The case was
brought by two seriously ill residents of California who used marijuana in compliance with the
California Compassionate Use Act of 1996.28 The challenge was based on the argument that the
narrow class of activity being engaged in—the intrastate, noncommercial cultivation and
possession of cannabis for personal medical purposes as recommended by a patient’s physician
pursuant to valid California state law—did not have a substantial impact on commerce, and thus
could not be regulated under the Commerce Clause.29
In upholding the application of the Controlled Substances Act in the Raich case, the Court relied
on its decision in Wickard v. Filburn,30 which held that “even if appellee’s activity be local and
though it may not be regarded as commerce, it may still, whatever its nature, be reached by
Congress if it exerts a substantial economic effect on interstate commerce.”31 The Wickard case
upheld the application of the Agricultural Adjustment Act of 1938,32 which was designed to
control prices by regulating the volume of wheat moving in interstate commerce. The Court in
Wickard held that Congress could regulate not only the wheat sold into commerce, but also wheat
21 18 U.S.C. § 175b.
22 18 U.S.C. § 514.
23 18 U.S.C. § 842.
24 18 U.S.C. § 876.
25 494 U.S. 1 (1990).
26 494 U.S. at 17, citing Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264, 276 (1981).
27 Gonzales v. Raich, 545 U.S. 1 (2005).
28 Cal. Health & Safety Code Ann. § 11362.5 (West Supp. 2005) (providing for the legal possession of medical
marijuana by a patient or primary care-giver, upon the written or oral recommendation of a physician).
29 545 U.S. at 25.
30 317 U.S. 111 (1942).
31 Id. at 125.
32 52 Stat. 31.
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retained for consumption on a farm.33 The Court did so on the theory that the while the impact of
wheat consumed on the farm on interstate commerce might be trivial, it was significant when
combined with wheat from other farmers similarly situated.34 Of even greater concern was that
diversion of marijuana grown for medicinal purposes for other uses would frustrate the federal
interest in eliminating commercial transactions in the interstate market.35 In both cases, the Court
found that the regulation was within Congress’s commerce power because Congress had a
rational basis to determine that production of a commodity meant for home consumption, be it
wheat or marijuana, could have a substantial effect on interstate supply and demand.
Given the Court’s broad application of these three acceptable categories of legislation, it seems
likely that congressional action expanding the federal role in siting of electric transmission
facilities would be found to fall into at least one of the categories. Although an argument can be
made that the contemplated legislation could fall under any of the three categories, it seems
particularly likely that legislation impacting the interstate electricity grid could be considered to
be affecting an “instrumentality” of interstate commerce. The interstate electricity grid has
characteristics similar to other interstate systems previously found to be instrumentalities of
commerce, such as the railroads, the mail delivery, or the telephone network.
In order to rely upon this prong of the “interstate commerce” test, there likely would need to be a
demonstration that the legislation in question is intended to provide for the safety, efficiency, and
accessibility of the electricity grid. Such a demonstration seems plausible with respect to
legislation that could enhance the reliability of electricity service by easing the regulatory path to
obtaining a permit for construction of transmission facilities.
Also, the broadest of the three categories, legislation “affecting” interstate commerce, may be
applicable to legislation. As noted supra, even local activity can be legislated under this category
if the legislation “exerts a substantial economic effect on interstate commerce.”36 There is an
argument that the ability to site electric power transmission facilities in accordance with national
interest and with less pressure from local interests would exert such a substantial economic effect
on interstate commerce. Such an argument would likely be bolstered by any information that may
be available about the aggregate effect of transmission siting denials by state regulatory agencies
on the reliability and efficiency of the interstate grid.
Supreme Court Jurisprudence on the Interstate Nature of the
Electricity Industry
In those instances in which the courts have had opportunity to evaluate other legislation
impacting the electricity industry in areas previously considered the province of state regulatory
agencies, the courts have found such legislation to be within Congress’s Commerce Clause
authority. One relevant Supreme Court decision on this issue is FERC v. Mississippi.37 In that
case, the Court heard challenges to provisions in the Public Utility Regulatory Policies Act of
33 Id. at 128-29.
34 Id. at 127.
35 Id.
36 317 U.S. at 125.
37 456 U.S. 742 (1982).
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1978 (PURPA)38 that directed state utility commissions to consider adoption of certain retail rate
designs and regulatory standards affecting retail rates, and to implement rules designed to
encourage development of certain kinds of generation facilities, known as “qualifying facilities.”
The state of Mississippi alleged that these PURPA requirements for state action exceeded
congressional power under the Commerce Clause.
The Court rejected the state’s challenge, deferring to the congressional findings that:
“the protection of the public health, safety and welfare, the preservation of national security,
and the proper exercise of congressional authority under the Constitution to regulate
interstate commerce require,” ... a program for increased conservation of electric energy,
increased efficiency in the use of facilities and resources by electricity utilities, and equitable
retail rates for electricity consumers ... 39
The Court noted that in accordance with Commerce Clause precedent, it was tasked only with
determining if the congressional findings had a rational basis.40 Citing committee hearings and
their findings, the Court found that the congressional findings were supported.41 In fact, the Court
went further, noting that it “agree[s] with appellants that it is difficult to conceive of a more basic
element of interstate commerce than electric energy, a product that is used in virtually every home
and every commercial or manufacturing facility. No state relies solely on its own resources in this
respect.”42
More recently, the Court reached a similar conclusion with respect to the electricity transmission
in New York v. U.S.43 In that case, the Court reviewed FERC Order No. 888, in which FERC
mandated that utilities offer access to their electricity transmission facilities to other companies
generating electric power. This open access transmission mandate included a requirement for
open access for retail electricity transactions. According to FERC, it was “irrelevant to the
Commission’s jurisdiction whether the customer receiving the unbundled transmission service in
interstate commerce is a wholesale or retail customer.”44 This exercise of FERC’s jurisdiction was
challenged as beyond the scope of the FPA, which limits FERC jurisdiction to “the transmission
of electric energy in interstate commerce.”45 The petitioners claimed that FERC’s jurisdiction
should be limited to wholesale transactions pursuant to the FPA.
The Court rejected these challenges, finding that “[t]he unbundled retail transmissions targeted by
FERC are indeed transactions ‘of electric energy in interstate commerce,’ because of the nature of
the interstate grid.”46 It is important to note that the Court’s analysis focused on the meaning of
“interstate commerce” as the term is used in the FPA, and not the Constitution. However, the
38 P.L. 95-617.
39 456 U.S. at 755, quoting 16 U.S.C. § 2601.
40 Id. at 756.
41 Id.
42 Id. at 757.
43 535 U.S. 1 (2002).
44 Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public
Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, FERC Stats. &
Regs., Regulations Preambles, January 1991-June 1996 ¶ 31,036 at 31,689 (1996).
45 18 U.S.C. § 824(b).
46 535 U.S. at 17.
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Court’s findings may be a useful predictive tool in determining how the Court might view a
congressional exercise of the Commerce power in the electricity marketplace. Interpreting the
impact of the decision, one observer said that “[i]n practical terms, this means the federal
government could assert jurisdiction all the way to a consumer’s toaster if it so chose, excepting
such exclusively intrastate matters as the siting of power plants.”47
This precedent seems to reflect a consistent determination by the Court that legislation that
impacts electricity transmission, even if the direct impact of the legislation is local, necessarily
affects interstate commerce. The Court has, on multiple occasions, acknowledged that the
changing and evolving electricity grid has resulted in an interdependent interstate system. Any
legislation that impacts that system or the commodity that it transmits would likely be considered
legislation pursuant to Congress’s authority to regulate interstate commerce.
The Energy Policy Act of 2005: National Interest Electric
Transmission Corridors
As discussed supra, decisions about where to site electricity transmission facilities have
historically been made almost exclusively by state regulatory agencies. In 2005, EPAct
established for the first time a significant federal role in transmission siting decisions. Section
1221 of EPAct established what is commonly called a “backstop” siting authority for FERC. It
authorized FERC to issue permits for the construction or modification of transmission facilities in
certain circumstances in areas designated by the Secretary of Energy as “National Interest Electric
Transmission Corridors.”48 EPAct directed the Secretary of Energy to “conduct a study of electric
transmission and congestion” and subsequently “issue a report, based on the study, which may
designate any geographic area experiencing electric energy transmission capacity constraints or
congestion that adversely affects consumers as a national interest electric transmission corridor.”49
In making this determination, EPAct provided that the Secretary might consider whether:
(A) the economic vitality and development of the corridor, or the end markets served by the
corridor, may be constrained by lack of adequate or reasonably priced electricity;
(B)(i) economic growth in the corridor, or the end markets served by the corridor, may be
jeopardized by reliance on limited sources of energy; and (ii) a diversification of supply is
warranted;
(C) the energy independence of the United States would be served by the designation;
(D) the designation would be in the interest of national energy policy; and
(E) the designation would enhance national defense and homeland security.50
The establishment of these National Interest Electric Transmission Corridors paves the way for
the first significant federal role in electric transmission facility siting. EPAct gives FERC the
47 Eisen, Joel B., Regulatory Linearity, Commerce Clause Brinksmanship, and Retrenchment in Electric Utility
Deregulation, 40 Wake Forest L. Rev. 545, 572 (2005).
48 P.L. 109-58, at § 1221.
49 Id.
50 Id.
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authority to issue permits for the construction or modification of electric transmission facilities
that are located in a National Interest Electric Transmission Corridor.51 The permit application
must also satisfy the following criteria to be eligible for FERC authorization:
(1) (A) a State in which the transmission facilities are to be constructed or modified does not
have authority to: (i) approve the siting of the facilities; or (ii) consider the interstate benefits
expected to be achieved by the proposed construction or modification of transmission
facilities in the State; (B) the applicant for a permit is a transmitting utility under this Act but
does not qualify to apply for a permit or siting approval for the proposed project in a State
because the applicant does not serve end-use customers in the State; or (C) a State
commission or other entity that has authority to approve the siting of the facilities has—(i)
withheld approval for more than 1 year after the filing of an application seeking approval
pursuant to applicable law or 1 year after the designation of the relevant national interest
electric transmission corridor, whichever is later; or (ii) conditioned its approval in such a
manner that the proposed construction or modification will not significantly reduce
transmission congestion in interstate commerce or is not economically feasible;
(2) the facilities to be authorized by the permit will be used for the transmission of electric
energy in interstate commerce;
(3) the proposed construction or modification is consistent with the public interest;
(4) the proposed construction or modification will significantly reduce transmission
congestion in interstate commerce and protects or benefits consumers
(5) the proposed construction or modification is consistent with sound national energy policy
and will enhance energy independence; and
(6) the proposed modification will maximize, to the extent reasonable and economical, the
transmission capabilities of existing towers or structures.52
The American Recovery and Reinvestment Act of 2009 (ARRA)53 later modified DOE’s mission
for NIETCs, directing DOE to include areas where renewable energy may be hampered by lack of
access to the grid.54
In most instances, FERC’s authority here arises only on those projects for which the state has
“withheld approval for more than one year,” because the other categories listed above in
subsection (1) are rarely applicable. Thus, the FERC transmission siting authority under EPAct
functions as a sort of backstop authority, allowing FERC to permit transmission facilities only
when there is no state authority to do so, or when the relevant state agency has “withheld
approval for more than one year.”
Not surprisingly, this new federal permitting authority in an area previously reserved for state
regulatory agencies has been the source of controversy on more than one occasion. The first
51 Id.
52 Id. (emphasis added).
53 P.L. 111-5.
54 Section 409 of ARRA directs DOE to analyze transmission needs and constraints related to renewable energy in the
2009 study of electric transmission congestion, and make recommendations to achieve “adequate
transmission capacity.”
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controversial action after the legislation was enacted was the Department of Energy’s creation of
the Mid-Atlantic Area and Southwest Area National Interest Electric Transmission Corridors.
Some commentators began protesting the designation soon after the Department of Energy issued
its draft proposal for the corridors in May 2007. One of the more common criticisms was that the
corridors were drawn too broadly, resulting in too significant a role for the federal government in
what had been local decisions.55 The Mid-Atlantic Corridor, for example, covers the entire states
of New Jersey and Delaware and large parts of New York, Pennsylvania, Maryland, Virginia, and
West Virginia. It even reaches into parts of Ohio.56 Despite these concerns, the Department of
Energy approved these corridors in October 2007.57
The other important step in creating a process to administer the national interest electric
transmission corridors was a FERC rulemaking proceeding intended to outline the process for
application for a federal transmission facility construction and operation permit in the corridors.
FERC initiated the rulemaking on June 16, 2006, and issued a final rule on November 16, 2006,
that established the applicable regulations.58 For the most part, the rule was not controversial,
simply establishing filing requirements and procedures for parties seeking to construct electric
transmission facilities in the national interest electric transmission corridors that the Department
of Energy would later establish. However, there was one controversial interpretation of Section
1221 of EPAct.
As mentioned supra, Section 1221 limited federal electric transmission facility permit
applications to, among other criteria, projects for which the state has “withheld approval for more
than one year.”59 There is no dispute that this criterion includes projects for which the state
regulatory agency has failed to take any action on a properly submitted application. However, it is
less clear if a project for which a permit is rejected or denied by the state regulatory agency would
be considered a project for which the state has “withheld approval for more than one year.” That
is to say, does saying “no” to a project amount to withholding approval of a project?
In its final rule, FERC found that rejection was equivalent to “withholding approval,” that
therefore a project would be eligible for a federal permit if the state agency had rejected an
application, so long as more than a year had passed since the permit request was submitted. FERC
found that:
The statute does not explicitly define the full range of State actions that are deemed to be
withholding approval. Nonetheless, to promote regulatory certainty, we believe it is our
responsibility to interpret the statutory language in this proceeding and to give all parties
notice of such interpretation. To this end, we believe that a reasonable interpretation of the
language in the context of the legislation supports a finding that withholding approval
includes denial of an application.60
55 See, e.g., “States v. Feds: National Transmission Corridors Challenged,” EnergyBiz, March/April 2008, p. 88; Letter
from Edward G. Rendell, Governor of Pennsylvania, to Samuel W. Bodman, Secretary of Energy, June 8, 2007.
56 For maps of the corridors, see http://www.oe.energy.gov/nietc.htm.
57 Department of Energy, “National Electric Transmission Congestion Report,” 72 Federal Register 56992, October 5,
2007.
58 Regulations for Filing Applications for Permits to Site Interstate Electric Transmission Facilities (Order No. 689), 71
Fed. Reg. 69,440 (December 1, 2006).
59 P.L. 109-58, at § 1221.
60 Order No. 689, at 69,444.
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Because the statutory language was not clear on this point, and because FERC’s decision resulted
in an expansion of FERC permitting authority, the decision was a topic of considerable debate.
One of the FERC commissioners, Suedeen Kelly, felt so strongly that this interpretation of EPAct
was incorrect that she dissented in part from the Order, stating that she “believe[s] the majority’s
interpretation flies in the face of the plain language of the statute, the purposes of the statute, well
established principles of statutory interpretation and supporting case law, and inappropriately
preempts the States in the process.”61 Commissioner Kelly argued that:
The authority to lawfully deny a permit is critically important to the States for ensuring that
the interests of local communities and their citizens are protected. What the Commission
does today is a significant inroad into traditional state transmission siting authority. It gives
states two options: either issue a permit, or we’ll do it for them. Obviously this is no choice.
This is preemption.
Courts “have long presumed that Congress does not cavalierly pre-empt” state law. Indeed,
courts should not find federal pre-emption “in the absence of persuasive reasons—either that
the nature of the regulated subject matter permits no other conclusion, or that the Congress
has unmistakably so ordained.” In short, courts must start with the “basic assumption that
Congress did not intend to displace state law.”
There is no evidence to counter this “presumption against pre-emption.” To the contrary, I
find it inconceivable that Congress would have specifically listed ... a number of
circumstances that will trigger Commission jurisdiction, yet fail to include on that list denial
of a permit. If Congress had intended to take away the States’ authority to lawfully deny a
permit, surely it would have said so in unmistakable terms.62
The debate over FERC’s interpretation of this provision was not resolved with the issuance of
Order No 689. FERC received a number of requests for rehearing of Order No. 689, many of
which challenged FERC’s interpretation of the “withholding approval” language from Section
1221 of EPAct. FERC, however, denied rehearing of the Order in Order No. 689-A, finding that
the word “withheld,” as used in this EPAct, is “inclusive, comprising ‘denying’ approval as well
as ‘refraining’ or ‘holding back’ from granting approval.”63 FERC concluded that “the most
common sense reading of ‘withheld approval for more than one year’ encompasses any action—
whether it is a failure to act or an outright denial—that results in an applicant not having received
state approval at the end of one year.”64 Commissioner Kelly continued to dissent from this
finding, citing for the most part her reasoning from her previous dissent as reasoning for her
continued rejection of the majority’s interpretation of the statutory language.65
Several organizations petitioned the U.S. Court of Appeals for the Fourth Circuit for review of
Order No. 689 and Order No. 689-A. The petitioners challenged FERC’s interpretation of the
language in EPAct regarding FERC’s transmission siting authority in circumstances where a state
has “withheld approval for more than 1 year.” The petitioners alleged that FERC had improperly
classified a denial of an application as “withholding approval.”
61 Id., Commissioner Kelly dissenting in part, at 69,476.
62 Id.
63 Regulations for Filing Applications for Permits to Site Interstate Electric Transmission Facilities, order denying reh’g
(Order No. 689-A), 119 FERC ¶ 61,154 (May 17, 2007)
64 Id. at *3.
65 Id. at *18-19.
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The court agreed, and reversed FERC’s interpretation of the EPAct language.66 The court held
that FERC’s interpretation was contrary to the plain meaning of the statutory language.67 The
court found that the statutory phrase “without approval for more than one year,” when read as a
whole, “means that action has been held back continuously over a period of time (over one
year).”68 The court stated that “[t]he continuous act of withholding approval for more than a year
cannot include the finite act of denying an application within the one-year deadline. The denial of
an application is a final act that stops the running of time during which approval was withheld on
a pending application.”69 The decision was appealed to the U.S. Supreme Court, and the Court
denied certiorari in January of 2010.70
The Debate over an Increased Federal Role in Transmission Siting
While the scope of the federal government’s ability to site electricity transmission facilities under
Section 1221 of EPAct was being debated in the FERC rulemaking proceedings and before the
U.S. Court of Appeals for the Fourth Circuit, a number of prominent policymakers have opined
on expanding the federal role beyond the “backstop” authority contemplated in EPAct. Some of
these policymakers advocated further expanding the federal role in order to ease grid congestion,
address reliability concerns, and encourage development of “clean” energy resources.
One of the most prominent commentators on transmission siting policy has been former FERC
Chair Joseph Kelliher. Kelliher served as a FERC commissioner for five years and as FERC chair
for three years. In a letter written to Senator Bingaman dated January of 2009, Kelliher, in the
midst of his departure as FERC chair, wrote that Congress should grant FERC “exclusive and
preemptive federal siting for transmission facilities used in interstate commerce.”71 Kelliher
stressed the importance of expanding transmission facilities in order to address reliability
concerns, encourage competitive wholesale markets, and respond to climate change concerns (by
allowing “green” energy sources increased access to the grid).72 Kelliher was critical of the
existing framework for electric transmission facility siting, including the EPAct transmission
corridor scheme, saying that it “promises years of litigation, while diffusing responsibility for
siting electric transmission facilities.”73
The new acting FERC chair, Jon Wellinghoff, has also voiced his opinion that the federal
government should have a more prominent and active role in electricity transmission facility
siting. In March 2009 testimony before the Senate Committee on Energy and Natural Resources,
Wellinghoff testified that in order to meet certain renewable goals outlined by the Obama
administration, “there must be a mechanism to invoke federal authority to site the transmission
facilities necessary to interconnect renewable power to the electric transmission grid and move
that power to customer load.”74 Wellinghoff highlighted FERC’s expertise in making siting
66 Piedmont Environmental Council v. FERC, 558 F. 3d 304, 309-10 (4th Cir. 2009).
67 Id. at 313.
68 Id. (emphasis in original).
69 Id.
70 Edison Electric Institute v. Piedmont Environmental Council, 130 S. Ct 1138 (2010).
71 Letter from Joseph Kelliher to Senator Jeff Bingaman, January 21, 2009.
72 Id.
73 Id.
74 U.S. Congress, Senate Committee on Energy and Natural Resources, Jon Wellinghoff, Acting Chair, FERC, Hearing
(continued...)
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decisions, pointing specifically to FERC’s long-standing authority to authorize construction of
natural gas pipelines. Wellinghoff noted that FERC “has developed comprehensive, efficient
processes that provide for public notice and extensive public participation, including participation
by affected states.”75 Wellinghoff suggested that Congress give FERC a similar role in electric
transmission facility siting, concluding that “[w]ithout broader Federal siting authority to
accommodate high levels of renewable electric energy—authority similar to that which exists for
interstate natural gas pipelines ... it is unlikely that the Nation will be able to achieve energy
security and economic stability.”76
These commentators and others who share their views face opposition from representatives of
state regulatory agencies. The National Association of Regulatory Utility Commissioners
(NARUC) issued a resolution in March 2009 arguing that Congress should limit FERC’s siting
authority under any new legislation.77 The resolution recommended that any legislation allow for
primary siting jurisdiction by the states and that FERC not have any additional authority over
intrastate transmission lines.78 To the extent that Congress might grant FERC additional siting
authority, NARUC recommended that such authorization of interstate transmission require an
agreement concerning regulatory structure be in place to govern cost allocation among the states
where the facilities are to be sited.79
Transmission Siting on Federal Lands
While the federal government’s role in the transmissions siting process on private land is limited
as discussed in this report, it takes a far more extensive role in siting transmission facilities on
federal lands. Under Section 216(h) of the Federal Power Act, DOE is authorized to act as “lead
agency for purposes of coordinating all applicable Federal authorizations and related
environmental reviews of [electricity transmission facilities].”80 This authority was granted as part
of EPAct 2005’s provisions addressing transmission siting.81 DOE delegated this authority to
FERC for transmission facilities on federal lands located in National Interest Electric
Transmission Corridors. For other transmission facilities on federal lands, DOE retains the lead
agency authority.
On October 23, 2009, nine agencies, including DOE, issued a Memorandum of Understanding
Regarding Coordination in Federal Agency Review of Electric Transmission Facilities on Federal
Land (MOU).82 The goal of the MOU, according to its terms, is to improve “coordination among
(...continued)
on Legislation Regarding Electric Transmission Lines, 111th Cong., 1st sess., March 12, 2009.
75 Id.
76 Id.
77 National Association of Regulatory Utility Commissioners, “Resolution Regarding Possible Federal Legislation
Amending the Federal Power Act Addressing Expansion of Transmission Facilities,” March 10, 2009.
78 Id.
79 Id.
80 16 U.S.C. § 824 (h)(2).
81 P.L. 109-58, at § 1221.
82 The following agencies signed the MOU: the U.S. Department of Agriculture, Department of Commerce,
Department of Defense, Department of Energy, Environmental Protection Agency, Council on Environmental Quality,
Advisory Council on Historic Preservation, Department of the Interior, and Federal Energy Regulatory Commission.
The MOU can be viewed at http://www.whitehouse.gov/files/documents/ceq/
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project applicants, federal agencies, and states and tribes involved in the permitting process.” The
MOU also notes that the agreement will provide “a single point of contact ... for coordinating all
federal authorizations required to site electric transmission facilities on federal lands.” That point
of contact is DOE. According to the terms of the MOU, DOE will designate a lead agency for all
proposed transmission projects for which all or part of the proposed transmission line crosses into
areas administered by more than one agency. The lead agency’s duties as set forth in the MOU
include coordination of pre-application activities, consultation among relevant agencies,
establishing a schedule for the project, conducting environmental review in accordance with the
requirements of the National Environmental Policy Act,83 maintaining an administrative record
and making data available electronically, and establishing necessary procedures to implement
responsibilities.
Conclusion
Traditionally, the federal government has had a limited role in electric facility transmission siting,
as siting decisions have in large part been made by state agencies. However, in recent years there
has been a push to expand the federal role in transmission siting. The Energy Policy Act of 2005
created a “backstop” siting authority for FERC in certain instances where grid congestion was a
concern. Recently there have been suggestions and legislative proposals that would further
expand the federal role in electric facility transmission siting. Legal precedent suggests that
federal involvement with transmission siting would likely pass constitutional muster, assuming a
connection to interstate commerce is shown.
Author Contact Information
Adam Vann
Legislative Attorney
avann@crs.loc.gov, 7-6978
(...continued)
Transmission%20Siting%20on%20Federal%20Lands%20MOU.pdf.
83 42 U.S.C. § 4332.
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