Divided Court Disconnects DOE Transmission Corridors

On February 1, two members of a three-judge panel of the US Court of Appeals for the Ninth Circuit vacated the Department of Energy's (DOE) October 2007 designation of two National Interest Electric Transmission (NIET) corridors,  within which Congress, in the Energy Policy Act of 2005 (EPAct 2005), authorized the Federal Energy Regulatory Commission (FERC) to approve and expedite the construction of new high-voltage electric transmission lines.  Coupled with a 2009 decision of the Fourth Circuit that circumscribed FERC's new authority in Federal Power Act § 216 to authorize transmission construction in NIET corridors, the Ninth Circuit decision in California Wilderness Coalition v. DOE mostly eviscerates federal siting of electric transmission lines"”at least for now.

Until EPAct 2005, with few exceptions, state regulators wielded exclusive control over the siting of transmission lines.  However, recognizing a national interest in reliable electric supplies following major blackouts, Congress in the 2005 legislation directed DOE, in consultation with affected states, to study congestion on the high voltage grid and to designate those regions experiencing constraints or congestion as NIET corridors.  DOE issued a Congestion Study in August 2006 and asked for public comment, including comments from affected states.  Despite commenters' objections that affected states were not consulted in DOE's development of the Congestion Study and that, before NIET corridors could be designated, DOE was required to prepare an Environmental Assessment (EA) or Impact Statement (EIS), DOE in October 2007 designated a Mid-Atlantic Corridor and a Southwest Corridor based on the Congestion Study.  Thirteen petitions for review, primarily from environmental interests and affected states, ensued. 

The two-judge majority of the Ninth Circuit Panel ruled that Congress had directed DOE to consult with affected states in the preparation of the Congestion Study and that DOE had failed to do so.  The majority also ruled that NIET corridor designation was a major federal action that significantly affects the quality of the human environment and therefore requires an EIS under the National Environmental Protection Act, which DOE failed to prepare.  Lastly, the two judges ruled that petitioners were harmed by both the failure to consult and the failure to prepare an EA or EIS and that the two corridor designations could not be condoned as harmless errors.  They therefore vacated both designations.  Further appeals may follow, including a request that the Ninth Circuit hear the case en banc.

Barring further appeals, however, there are no corridors in which FERC can exercise siting authority.  And, as a result of the 2009 Fourth Circuit decision, even if there were a NIET corridor, FERC could authorize construction of a transmission line in it only insofar as the affected state or states had failed to act for more than one year on a request for construction authority.  Congress had not conferred on FERC, the Fourth Circuit ruled, authority to reverse a timely state decision to deny construction authority.