Much ink has been spilled regarding inadequacy of the high voltage transmission grid in the U.S. vis-à-vis various ambitious plans to increase domestic windpower production.  The New York Times and Wall Street Journal have covered this issue fairly recently and highlighted what has been known for some time — that without significant development of the backbone of the nation’s electric transmission grid, the significant windpower generation that is anticipated to come online will not be able to be delivered from the low population centers where the power most often is generated to the high population centers where it is most needed.  Often the expense of expanding the existing electric transmission grid has been cited as the largest obstacle to transmitting the power generated by renewable energy sources located in remote locations to load centers.  Another formidable obstacle to the development of the domestic transmission grid is the patchwork nature of the regulatory regimes governing the siting and construction of transmission facilities in the U.S.

The best sites for land-based windpower generation facilities generally are located in geographic areas that are located far from high demand load centers.  Currently, there is not a single statutory or regulatory framework for the siting of transmission facilities necessary to bring windpower to the population centers where the power is needed.  By contrast, the Natural Gas Act (NGA), which is administered by the Federal Energy Regulatory Commission (FERC), provides a single regulatory regime pursuant to which developers of interstate natural gas pipelines can site such facilities.  Importantly, pursuant to the NGA, interstate natural gas pipeline developers can take, through the right of eminent domain, land required to construct gas pipelines determined by the FERC to be in the public convenience and necessity. 

While there is a unitary regulatory regime for the development of interstate natural gas pipelines, including those that originate at the natural gas production sources and terminate at the local distribution facilities that serve end users, no such regime exists for the development of electric transmission facilities.  The Federal Power Act (FPA) generally does not provide the right of eminent domain for developers of electric transmission facilities.  The Energy Policy Act of 2005 (EPAct 2005) revised the FPA to carve out a limited exception to this general rule by providing federal siting authority over certain transmission lines in limited circumstances.  Specifically, that exception allows the federal government through the Department of Energy (DOE) to assist in reducing transmission congestion in high traffic transmission corridors, known as National Interest Electric Transmission Corridors, or National Corridors, identified by the DOE.   Projects that are sited within the National Corridors, which the DOE has identified the Mid-Atlantic and Southwest Areas, can take advantage of federally mandated rights to take land through eminent domain to site transmission facilities in congested areas, but only if the states in which such facilities fail to approve the siting of such facilities because, for example, they fail to consider the national importance of such facilities. 

This provision of the FPA, as revised by EPAct 2005 and administered by the DOE and the FERC, does not assist in promoting the siting of the transmission facilities necessary to wheel power from windpower facilities, typically located in remote areas, to the load centers that would benefit from the power generated by such renewable generation sources.  Instead, developers of electric transmission facilities that propose the construction of such transmission lines for the delivery of power in interstate commerce from windpower facilities must contend with the various regulations imposed by the relevant state agencies responsible for siting decisions in each state that the transmission facilities may cross. 

For example, a windpower facility located in State A, which does not have significant load, generates power needed to serve the significant load in State B, and the windpower facility in State A is not interconnected through the existing electric transmission system to the load center in State B.  Under the current regulatory regime with respect to siting issues (environmental issues are governed by a variety of federal, state and local agencies and are not addressed here), the developer of the new transmission line from the windpower facility in State A would need to obtain authorization from state regulatory agencies that govern the siting of electric transmission facilities in State A, State B, and any states traversed by the transmission line to reach State B before it could begin construction of the transmission line.   By contrast, under the NGA, a similarly situated developer of an interstate natural gas pipeline need only obtain a certificate of public convenience and necessity (again, only with respect to siting, and not environmental issues) from the FERC before it commences construction of the pipeline facility.  To the extent any affected landowners do not grant the developer rights-of-way over their land for the construction of a FERC-approved natural gas pipeline, the pipeline developer can pursue an action in court for eminent domain rights.  Therefore, in essence, the FERC-issued certificate allows the developer of an interstate natural gas facility to construct a pipeline project that crosses multiple state lines to deliver natural gas from where it is produced to where it is consumed.

In contrast, developers of electric transmission lines, to the extent such lines do not lie within a National Corridor, do not have eminent domain rights pursuant to the FPA.  Instead, a developer of the electric transmission line, from the example above, must fulfill the requirements of the regulatory siting agencies of State A, State B and all of the states traversed by the transmission line from State A in reaching State B.  In addition, the developer must meet the demands of each landowner whose land the transmission line may traverse, and the need to meet such demands depends upon the eminent domain rights granted by each state that the transmission line traverses.  This patchwork regulatory regime leads to uncertainty regarding the ability to develop interstate electric transmission lines as well as to increased costs for any entity attempting to develop a transmission line from a windpower facility to the load center that needs such power. 

For further information about this topic, please contact Akin Gump.