Federal Agencies Issue MOU to Speed Siting of Electric Transmission Lines on Federal Land; Congress Still Debating Siting Legislation

The Obama Administration recently released a Memorandum of Understanding (“MOU”) that sets out an ambitious goal of streamlining the often lengthy process for siting electric transmission lines on federal lands. Nine federal agencies signed the MOU, which is one of several administrative initiatives to support development of alternative energy projects. In a related action, the Department of Interior has issued policies to promote fast-track development of solar energy projects on federal lands.[1] In addition, federal economic stimulus funding is being directed to qualified renewable energy projects that begin construction by December 1, 2010. Questions remain as to whether these administrative actions are enough to jump start the many alternative energy projects that have been mired in delay due to financing, permitting, and environmental review. Many developers believe that a legislative overhaul of the siting system is needed to support development at the scale the administration is seeking.

Streamlining Environmental Review

BLM has already fast-tracked 32 renewable energy projects, as well as issued two right-of-way grants for transmission projects and is reviewing five more. But some members of Congress believe that the process is still too slow, given that no permits have actually been granted. Doug Lamborn (R-Colo.) and Jim Costa (D-Calif.) have requested a timeline for DOE and DOI to complete environments assessments and permits.[2] Further, renewable energy developers, while buoyed by federal grants and tax credits, recognize that challenges to renewable energy projects and the transmission lines that serve them are becoming more sophisticated. Challenges to renewable energy projects have typically involved siting turbines, solar arrays, or powerlines on protected public lands. However, a county zoning law in Kansas, recently upheld by that state’s Supreme Court, targeted renewable energy development on private lands.[3] The county’s move was criticized by energy companies and advocacy groups, asserting that by rejecting clean energy development, communities risk undermining their long-term economic stability.[4]

Environmental groups and some members of Congress have voiced concerns over the size and permanence of transmission lines and the energy facilities that they serve, as well the potential for incomplete environmental review. For instance, Senator Lamar Alexander (R-Tenn) has warned against “renewable energy sprawl.”[5] Nancy Sutley, Chair of the Council on Environmental Quality, has tried to provide these groups with assurances that the MOU does not alter the authority of any participating agencies, and that all existing environmental reviews and safeguards will be maintained.[6] Because the MOU does not change any substantive environmental laws, projects may still be stalled by challenges under NEPA, the Clean Air Act and the ESA, particularly (and somewhat ironically) with emerging requirements to consider projects’ GHG emissions. See e.g., Border Power Working Group v. Dept. of Energy, 260 F. Supp. 2d 997 (S.D. Cal. 2003) (finding that the DOE failed to assess GHG emissions associated with a proposal to connect the California power grid with two coal-fired plants in Mexico); see also Center for Biological Diversity v. National Highway Traffic Safety Administration, 538 F.3d 1172 (9th Cir. 2008) (finding that the “impact of greenhouse gas emissions on climate change is precisely the kind of cumulative impact analysis that NEPA requires agencies to conduct”); see also Massachusetts v. EPA, 549 U.S. 497, 127 S. Ct. 1438 (2007) (clarifying the federal government’s authority to regulate GHGs under the Clean Air Act).

The MOU

The MOU just signed was required by the Energy Policy Act of 2005.[7] The goal is to create a single point of contact to coordinate all of the necessary federal approvals and create deadlines for project approval.

The agencies signing the MOU are the departments of Agriculture, Commerce, Defense, Energy, and Interior, the Environmental Protection Agency, the Council on Environmental Quality, the Federal Energy Regulatory Commission, and the Advisory Council on Historic Preservation (the “Participating Agencies).[8] “Qualifying Projects” under the MOU are high voltage transmission lines or regionally or nationally significant transmission lines that cross jurisdictions administered by more than one federal agency.[9]

The MOU creates a “Lead Agency” designated by the Department of Energy (“DOE”). The Lead Agency is to coordinate with all of the concerned stakeholders—the applicant, the Participating Agencies, Indian Tribes, and others. In designating the Lead Agency, DOE may designate the agency with the “most significant land management interests” implicated by the project or it may appoint on the agency recommended by the other Participating Agencies.[10] The MOU provides that the Lead Agency will: (1) coordinate with the Participating Agencies to prepare “unified environmental documentation” that will serve as the basis for all federal decisions regarding the project;[11] (2) coordinate all federal agency reviews necessary for project development and siting under the various environmental statutes;[12] and (3) maintain a “consolidated administrative record” of all federal actions taken with respect to the siting of the transmission line.[13]

The Lead Agency has the duty to notify Participating Agencies of proposed Qualifying Projects, to facilitate a pre-application meeting with all concerned stakeholders, and to establish a binding permitting schedule.[14] Under the MOU, the Participating Agencies must make all decisions regarding the necessary federal approvals within one year from the acceptance of a completed application for a project with a National Environmental Policy Act (“NEPA”) determination of no significant impact.[15] For projects requiring an Environmental Impact Statement (“EIS”) under NEPA, the deadline for all decisions regarding the project is one year and thirty days from the close of the public comment period for a draft EIS.[16] If a participating agency is unable to meet an applicable deadline, it must notify all participants and the Lead Agency and propose a new completion date. The Lead Agency must then notify DOE of any changes to the project schedule, and justify substantial changes to DOE in writing.[17]

The Exceptions

The MOU contains several exceptions. First, the MOU does not include transmission projects that are proposed to be sited in designated National Interest Electric Transmission Corridors (“NIETC”).[18] The 2005 Energy Policy Act authorized the Secretary of Energy to designate NIETCs to address concerns over a transmission grid that is an interconnected patchwork of state-authorized facilities.[19] The Act delegated the Federal Energy Regulatory Commission (“FERC”) the authority to condemn private property for the acquisition of rights of way within such transmission corridors.[20] Importantly, the MOU does not take this authority away from FERC nor does it remove FERC’s backstop siting authority to override a state’s rejection of a project.[21] The breadth of this authority, however, remains up in the air in light of the 4th Circuit’s decision earlier this year that found that if states turn down transmission projects on reasonable grounds, they cannot be overruled by FERC.[22]

The MOU does not apply to transmission lines that cross the U.S. international border, federal submerged lands, or national marine sanctuaries. [23] The MOU does not apply to the facilities constructed by federal Power Marketing Administrations, such as the Bonneville Power Administration or the Western Area Power Administration.[24] Moreover, the MOU does not apply to transmission lines crossing private lands; applicants will still need to coordinate with the applicable state regulatory authorities to obtain those authorizations.

Siting Legislation Pending in Congress

As previously reported in this newsletter, the House climate change bill addresses the siting process for electric transmission lines.[25] Under the House bill, the federal government is given an expanded role in siting, but not one that completely replaces the states’ authority. The climate bill introduced in the Senate, S. 1733 – the American Clean Energy and Security Act – does not contain similar provisions, but an energy bill reported out of the Senate Energy and Natural Resources Committee earlier this year, S. 1462 – the American Clean Energy Leadership Act (“ACELA”) – contains provisions related to the siting of electric transmission lines.

ACELA adopts a similar approach to transmission siting as the House bill, with some noted exceptions.[26] Both bills would expand the Federal Energy Regulatory Commission’s (“FERC”) “backstop” permitting authority to situations where a state has either been unable to site the facility within one year, has denied the application, or has imposed permit conditions that unreasonably interfere with the project. The House bill, however, would only expand backstop permitting authority within the Western Interconnection, while ACELA would expand FERC’s jurisdiction coast-to-coast, encompassing both the Eastern and Western Interconnections.[27] ACELA mandates that FERC create a national interconnection standard to coordinate planning for the siting of “high-priority” national transmission projects. ACELA provides that the states will take the initial lead in planning where “high-priority” national transmission projects should be sited. High-priority transmission projects include major electric transmission lines (340kV) and transmission lines carrying electricity from renewable energy projects.[28] FERC, however, would retain authority to modify the states’ plans to ensure nationwide consistency. One important difference between the Senate and House bills is that ACELA requires FERC to establish, by rule, appropriate methodologies for allocation of costs of high priority national transmission projects.[29] Environmental groups and power companies have criticized this provision, arguing that it would add further delay to much needed transmission capacity.[30]

Conclusion

New transmission capacity is necessary to support growth in renewable energy.[31] The goal of energy independence, however, runs straight into multiple environmental laws enacted precisely to assure careful consideration of the environmental impacts of the type of infrastructure that new alternative energy facilities need. The challenge for the administration and the Congress is how to strike that balance.

For more information on transmission siting, please contact Russell Prugh or any member of any other member of Marten Law Group’s Permitting and Environmental Review practice group.