Lead authors: Kathryn Binkley, Tyler Respondek

Legal considerations raised by implementation of the Supergrid involve routing and permitting processes, and ultimately regulatory reform advocacy for a regional transmission organization (RTO)-centered framework for effective operation of the Supergrid.

The NAS (North American Supergrid) may need to utilize private land, public land, or tribal land. For private land, NAS may require negotiations with affected landowners regarding easement and, if necessary, exercise eminent domain. Additionally, the NAS will have to obtain approvals from the necessary federal, state and local government agencies (particularly BLM (Bureau of Land Management) and BIA (Bureau of Indian Affairs)). Tribal land involves complications with the federal trust relationship.

Streamlining the permitting process involves decreasing barriers to using the land for renewable energy transmission. Three potential state-based strategies have been identified to facilitate the streamlining of the permit process: (a) allow states, in determining whether a project is “necessary,” to consider regional and out-of- state benefits, which would allow for construction of NAS in “pass-through” states while also considering in-state and local concerns; (b) expand the definition of “public use” to include specific application for installation of merchant transmission lines and allow state and local government to consider general economic benefits; (c) create new RTOs/independent system operators (ISOs) in those areas of the western and southeastern United States that are not presently incorporated into an existing RTO/ISO.

Rights-of- way through tribal lands add another level of complexity. Tribal lands are governed mainly for the benefit of the tribes, and are held in trust by the Federal Government. While the Federal Government does not maintain eminent domain authority over tribal lands, there is a provision that allotted lands can be commandeered for public purposes, if needed. The Supergrid might significantly improve connectivity to the national energy market for renewable energy developments on tribal land.

Our analysis indicates that the most feasible routing for inter-connected Supergrid links could be mainly along existing rights-of –way, specifically federal and state highways as well as abandoned rail lines. Accomplishing this would require working with the Federal Highway Administration (FHWA) and other federal authorities which retain authority over such routes. The FHWA is authorized to consider whether proposed transmission projects are within the public interest and to grant right-of- way permission.

As evidenced by the complexity in achieving line siting authority across the lower 48 contiguous states, this path would be an approach both costly and vulnerable to roadblocks from state and local regulatory bodies. A nationwide approach with regional decision-making authority would provide the Supergrid with an opportunity to go nationwide, while safeguarding regional considerations of geography, available resources and market conditions. This can be achieved in two ways: 1) Under the EPAct of 2005 a group of three or more contiguous states can enter into an interstate compact establishing regional siting authority, or 2) Congress can grant siting authority through legislation to RTOs or ISOs.

Such a shift in the regulatory structure is supported by changing conditions in the nationwide electricity market as well as the physical nature of the grid itself. The electric grid has expanded beyond its original design into a multi-state network, and RTOs and ISOs now operate regional markets through wholesale purchases and future planning. The market for renewable resources has grown—supported by federal and state energy policies and the U.S. Environmental Protection Agency (EPA) proposed greenhouse gas rule for existing power plants (although the Trump Administration has proposed a rule to repeal the Clean Power Plan emission guidelines). Lastly, the current grid is poorly equipped against modern security challenges, including electromagnetic pulse (EMP), structural integrity and cyber security attacks.

The Climate Institute analysis suggests that a new regulatory framework with consistent, nation-wide structure for interstate transmission projects like NAS would be best provided through Congressional legislation granting line siting authority with regional bodies. With Congressional involvement, the NAS can alleviate the modern problems posed to the current grid, and strike a balance between local area concerns and centralized federal authority.

Introduction

The current regulatory and permitting landscape for interstate electric transmission projects is an impediment to implementing the NAS. While it is important to engage with all stakeholders, including state and local authorities, placing primary siting and eminent domain authority at the state and local level makes it difficult to properly value the regional and national benefits of the NAS. As a result, Congressional action transferring siting and eminent domain authority to a federal or regional permitting entity would streamline the process and more fully consider the federal and regional costs and benefits in addition to state and local costs and benefits. This chapter evaluates the flaw in the current permitting system and proposes some solutions with regard to portions of the NAS on private lands, federal public lands, tribal lands, and highway and railroad rights of way (ROWs).

This section details the local, state, and federal laws governing siting and eminent domain authority for interstate electric transmission line projects like the NAS. State statutes regarding siting vary across the United States. It is important for state and local entities to address their individual needs, but it often results in delaying or completely preventing the transmission projects needed to integrate more renewable energy into the grid.

We go on to discusses the challenges of siting a transmission line on federal land. When using federal land, a project must deal with both the federal government and state governments. A transmission project must comply with strict federal standards when crossing federal land.[1] The BLM within the U.S. Department of Interior has set aside land aimed at developing renewable energy projects on federal land.[2] Federal land use may be an important asset, particularly for projects in the western United States.

This section discusses the responsibilities of a transmission operator when the project crosses tribal lands that are unique, because such land is held in trust by the United States government.[3] Projects on such lands may be expedited by giving the tribes a more central role in allowing siting of renewable energy projects over their land and creating concrete benefits for tribes associated with the NAS projects.

We explore potential issues with transportation rights of way. The U.S. Department of Transportation works in conjunction with the BLM and state transportation departments for siting along highway corridors. Different regulatory requirements in multiple state departments of transportation can impede progress and delay build time. Railroad rights of way may also be an option for NAS projects so long as the projects can create mutual benefits for the railroads.

We recommend Congressional action to transfer some state siting and eminent domain authority for interstate electric transmission line projects in general or the NAS in particular to either the Federal Energy Regulatory Commission (FERC) or RTOs.

 

Public Use, Public Need, Siting Authority, and Eminent Domain

Siting of Interstate Transmission Lines

In order to construct a transmission line, the transmission line operator must generally comply with a siting process in each state through which the line will pass by obtaining a certificate of need or certificate public convenience and necessity from the state public utilities commission or public service commission. Generally, the transmission operator obtains a certificate of need by establishing “the ‘need’ for the line, the effect of the line on reliability, alternatives to the proposed line, and potential environmental impacts of the line.”[4] In most states, the certificate of need allows the operator to exercise eminent domain authority to assemble the necessary property easements to build the line if voluntary contracts with landowners cannot be obtained. In some states, the operator must make a separate application to the commission for eminent domain authority beyond the certificate of need. In many states, the relevant state law does not allow companies other than public utilities to seek a certificate of need or exercise eminent domain and in other states the law is unclear.

The determination of need differs across states, but many states “have some concept of ‘need’ pertaining to the state’s own citizens … .”[5] For example, in Florida, the Public Utilities Commission (PUC) considers the “need for electric system reliability and integrity, the need for abundant, low-cost electrical energy to assure economic well-being of the residents of the state, the…starting and ending point of the line, and other matters…deemed relevant.”[6] On the other hand, Arizona statute urges the state PUC to balance, “in the broad public interest, the need for an adequate, economical and reliable supply of electric power with the desire to minimize the effect…on the environmental and ecology of this state.”[7]

Some states, such as New York, provide detailed regulatory requirements for obtaining a certificate. Title 16, Part 86 of the New York Compilation of Codes, Rules, and Regulations outlines the several requirements for an interstate transmission line. An application is required to “submit detailed maps…[that] shall include” the location of a right-of-way and possible damage to the environment as well as historical areas.[8] Further, the applicant must “submit a statement explaining what consideration, if any, was given to: (1) any alternative route; (2) the expansion of any existing right-of-way…[and] (3) any alternate method which would fulfill the energy requirements with comparable costs” where the applicant may compare the benefits and drawbacks of the alternative.[9] The applicant is also required to “submit a statement describing” economic effects on the “residential, commercial or industrial land-use patterns of any area adjacent to any portion of the proposed facility.”[10]

Other states have arguably limited the ability of transmission lines to obtain a certificate of need by limiting the definition of a public utility. In 2012, Illinois replaced their previous Public Utilities Act with new legislation.[11] The act defines a public utility to include:

every corporation, company, limited liability company, association, joint stock company or association, firm, partnership or individual, their lessees, trustees, or receivers appointed by any court whatsoever that owns, controls, operates or manages, within this State, directly or indirectly, for public use, any plant, equipment or property used or to be used for or in connection with, or owns or controls any franchise, license, permit or right to engage in:

(1) the production, storage, transmission, sale, delivery, or furnishing of…electricity … .[12]

The new bill was interpreted as providing a more restrictive definition of public utility in Illinois Landowners Alliance v. Illinois Commerce Commission. In the case, the Illinois Landowners Alliance challenged an Illinois Commerce Commission order “granting a certificate of public convenience and necessity to Rock Island Clean Line…for construction of a high voltage electric transmission line … .”[13] Rock Island is a merchant transmission project that planned to “construct and manage” the line, but did not “yet own, control, operate, or manage any plants, equipment, property in Illinois … .”[14] The Illinois Landowner’s Alliance argued that Rock Island could not qualify as a public utility since “it did not already have in place the transmission infrastructure that would qualify it as a public utility … .”15] The Illinois Supreme Court, in holding that Rock Island did not qualify as a public utility, focused on the specific language of the Illinois Public Utilities Act. The court noted that section 2-105 requires a company to “own, control, operate or manage…a plant, equipment, or property” for the transmission of electricity.[16] A company that simply sells electricity “does not, in itself, make the enterprise a public utility” since that company could sell the electricity to “a select group of industrial customers” without being a public utility. [17] The Illinois Supreme Court reasoned that Rock Island only held “an option to acquire a parcel of real property,” and “having an option to buy something is not the same as owning or even controlling it.”[18] The court noted that the previous Public Utilities Act’s definition of a public utility contained the language “now or hereafter…may” in regard to controlling or owning transmission infrastructure.[19] The court interpreted the removal of this language as requiring potential projects to own or control “utility-related property or equipment.”[20] The court also challenged an administrative law judge’s (ALJ) argument that “imposing such a requirement would…create an unworkable ‘Catch-22’” in requiring an entity to only apply for a certificate of need until that entity “already owned public utility infrastructure.[21] In other words, such an interpretation would only allow previously established public utilities to qualify as public utilities. The Illinois Supreme Court countered that the statute would allow Rock Island to develop the line “as a purely private project,” and “[o]nce [the] projects are further underway” and own, control, or manage the “utility-related property,” Rock Island could “then seek certification” to operate as a public utility.[22]

he Illinois Supreme Court seems to understate the impact of the statutory interpretation on merchant transmission lines. While it is true that a line could operate a purely private basis, it would not be able to find a customer base to sell to and it may not be able to acquire land through eminent domain. The court also did not specify what stage a transmission infrastructure needs to be in for a merchant transmission line to quality as a public utility. While the Catch-22 is not technically unworkable, it does create significant barriers to any merchant transmission line looking to enter the market. This decision, and any similar decisions, could have significant impact on the NAS. The NAS would have to build transmission infrastructure before knowing whether it would qualify as a public utility. Forcing companies to sink costs into a project without knowing how those costs can be recovered could create a chilling effect on merchant transmission lines hoping to enter the market.

While states differ in their “need” requirements for certificates, each one has some concept of weighing potential benefits against economic or environmental costs. There has been some debate as to how broadly these benefits may be construed. At one extreme, one could consider national benefits to the grid as whole. At the other extreme, one could only consider the in-state benefits. The Illinois Landowners Alliance decision also seems to suggest that a project must significantly invest in a state before the state grants a project with the benefit of being a public utility. The debate focuses on whether a state should sacrifice economic and environmental resource for the benefit of the region or the nation.

 

Federal Siting Authority

Federal siting authority could consider national or regional benefits as opposed to only in-state benefits.[23] A federal approach would streamline permitting, creating a more efficient approach for interstate transmission projects. There has been an effort to expand federal siting authority, but it has been unsuccessful.

In 2005, Congress passed the Energy Policy Act of 2005 (“EPAct 2005”), which amended the Federal Power Act (“FPA”) by adding § 216.[24] The amendment granted FERC authority to override state siting authority under certain circumstances. The law directed the U.S. Department of Energy to  evaluate and identify national interest electric transmission corridors (NIETCs).[25] An NIETC is an “area experiencing electric energy transmission capacity constraints or congestion.[26] Once DOE identifies a NIETC, FERC may issue a permit for a project to relieve congestion if it finds that the potential line (1) is “used for interstate commerce,” (2) is “consistent with the public interest,” (3) will “significantly reduce transmission congestion in interstate commerce,” (4) is also “consistent with national energy policy,” (5) and will “[m]aximize the use of existing towers and structures.”[27]

In order for FERC to grant a siting permit under these circumstances (often called “backstop-siting authority”) the project must also meet one of the following conditions.[28] First, the state must lack authority to site the transmission line or it is unable to “consider the interstate benefits” of the potential line.[29] Second, “the applicant” is unable to obtain a permit, “because the applicant does not serve end-users in the State.”[30] Third, the state has “withheld approval for more than 1 year after the filing of an application.”[31] Fourth, the state has approved the permit, but has “conditioned its approval” in a way that the line will not “significantly reduce transmission congestion in interstate commerce or is not economically feasible.[32] After Congress enacted EPAct 2005, FERC enacted a rule interpreting its authority to allow it to exercise backstop-siting authority after a state denied a siting permit within a NIETC.[33]

In Piedmont Environmental Council v. FERC, some state utility commissions filed suit against FERC’s interpretation of § 216(b)(1)(C)(i) of the FPA.[34] FERC construed “withheld approval for more than 1 year…to include a state’s denial of a permit within the one-year statutory time frame.”[35] The U.S. Court of Appeals for the Fourth Circuit ruled in favor of the plaintiffs and against FERC.

The court noted that § 216(b)(1) contains a “list of five circumstances when FERC may preempt a state and issue a permit.”[36] Since an outright denial of a permit was not a part of the five circumstances, the court found that FERC’s interpretation did not make sense. The court added that, if FERC’s interpretation prevailed, the federal government could overrule any state siting decision.[37] Circuit Judge Michael compared the difference between a state siting authority withholding approval or granting approval “with project-killing conditions,” and a state siting authority that “denies an application outright.”[38] The former “misuses its authority,” while the latter “acts with transparency and engages in a legitimate use of its traditional powers.”[39] The dissenting judge, however, argued that § 216 was intended to override state authority in the interest of national grid security” and would have upheld FERC’s interpretation of its statutory authority.[40]

The Piedmont decision severely limited federal backstop siting authority.[41] As of today, FERC has not exercised its backstop siting authority.”[42] An attempt to pass new legislation on the matter was made in 2009, but it was unsuccessful.[43] Creating more federal siting authority will require enacting new federal legislation, a difficult task in recent decades. Furthermore, federalizing the permitting process would come at the cost of local control. If the federal government is leading the process, there may be some concerns as to where the line is built and which communities bear the cost. It is important to keep a decentralized process while providing some uniform standards for the implementation of the NAS through federal legislation.

 

Eminent Domain Authority 

If negotiations are unsuccessful, a common technique for acquiring land is the power of eminent domain. The Fifth Amendment to the U.S Constitution allows private property to be taken for a “public use upon payment of just compensation”[44]  Most states have similar provisions in their own state constitutions. State constitutions, however, have varying requirement before granting eminent domain authority.

Eminent authority is particularly important because it allows a transmission project to use land if there is a landowner who chooses not to sell or an agreement cannot be reached.[45] While some entities can afford to invest without eminent domain, “siting costs, litigation and construction delays” may increase due to landowner expectations.[46] On the other hand, under a national interstate transmission project, such as the NAS, private buyouts could add up rather quickly.[47]

However, there are problems regarding eminent domain for interstate transmission due to the varying definition of “public use” among the states.[48] Most states include transmission lines as a public use by statute, so long as the operator has received a certificate of need.  But, the question has arisen in many states whether a merchant transmission line designed to carry electricity to customers several states away is a public use with regard to a state where the line passes through but does not provide electricity.[49]

Some states extend eminent domain authority only for projects that are of “use by the public” and provide “electricity immediately to [the] in-state residents.”[50] Some states define “public use” quite literally in that the project must be used by the residents of that state. These states are very restrictive in how they define public use. For example, Article 1, section 16 of the North Dakota Constitution states, “a public use or public purpose does not include public benefits of economic development including…general economic health.”[51] The section also states that private property may not be taken by “any private individual, or entity, unless that property is necessary for conducting a…utility business.”[52]  The North Dakota constitution suggests that, while eminent domain may be used to transfer property between private entities in the context of transmission, general public benefits cannot be used as means of proving a public use. Additionally, the Idaho Constitution defines “public use” as, “[the] necessary use of lands for the constructions of reservoirs…, for the purpose of irrigation, or for the rights-of-ways for the construction of canals…to convey water to the place of use for any useful purpose…, or any other use necessary to the complete development of the material resources of the state … .”[53] Other states can expand or restrict the definition of public use through statute. California statute states that when the legislatures provides that when the power of eminent domain may be exercise, “such action is deemed to be a declaration…that such use…is a public use”[54]Additionally, the California Constitution allows for government taking and conveyance to a private person when it is done “for the purpose of protecting public health and safety … .”[55] California, unlike North Dakota and Idaho, is more permissive in regard to public use and potential exceptions for conveyances made to private entities.

The varying definitions of “public use” can be particularly problematic for merchant transmission lines since in some states they are considered to be for private gain only and not a public use.[56] Merchant transmission lines “are distinguished from traditional public utilities in that the developers of merchant projects assume all of the market risk of a project and have no captive pool from which to recoup the cost of the project.”[57] Merchant transmission projects can be allowed to “charge for transmission service at negotiated rates, unencumbered by traditional cost of service ratemaking principles.”[58] Negotiated rates, as opposed to cost-based rates, could provide a transmission operator with more flexibility when it comes to cost recovery.  The ability to charge higher rates could attract investors. As a result, it has been difficult in many states for merchant lines to seek a siting permit or establish that the line is a public use for purposes of exercising eminent domain. Generally, merchant transmission lines may be hard pressed to prove their use is a public use beyond general economic benefits, especially in states where a line would be passing through. The varying definitions of public use and differing values among states could pose a significant obstacle to the NAS. It could be difficult for the NAS to meet the requirements of North Dakota in proving more than general economic benefits while also developing the natural resources in Idaho and providing in-state benefits. The NAS could benefit from state legislatures revising their eminent domain statutes to include merchant transmission lines as a public use or allow for legislative-made exceptions.

Legislatures will have to consider how expanding the definition of public use under eminent domain statutes to include merchant transmission projects could affect their state.  Perhaps instead of focusing on whether the line provides electricity to citizens of the state, the legislature could focus on the overall economic benefits in the form of jobs.  A state receiving energy could find a way to trade benefits with pass-through state.  It is clear that for the NAS to work legislatures need to think about benefits beyond the form of energy delivery.  States could be creative with how they trade benefits to each other.

An interstate transmission line often provides regional or national benefits in addition to state and local benefits. This may not be considered a public use since it does not directly benefit the people of that state. This is of the most concern in cases where the line merely runs through the state without providing any direct benefits such as allowing exports of renewable energy or reduction in electricity prices through imports of renewable energy. Those states are asked to sacrifice their environmental resources for the benefit of the generation-state and the end-user state. There may be states where the transmission line passes through without providing any power to that state.  It is important to find ways to instill benefits on “pass-through” states.  It would be prudent for the NAS to focus on the broader economic impact of the line in these states.

 

Interstate Transmission Projects on Federal Land

An interstate transmission project is likely to cross some federal land. Federal land use brings new challenges that the NAS must meet. Much of the federal land ownership is located in the West.[59] There are five “source of access” problems for interstate transmission projects hoping to use federal lands.[60] First, there are fragmented parcels of land owned by private and state entities within federal lands.[61] Second, there are many “alleged rights by use, prescription, or ancient statute.”[62] Third, surface and subsurface rights are severed in areas of “known or suspected mineral occurrence.”[63] Fourth, people are often informally allowed to wander onto unsettled lands and this may interfere with land-use projects.[64] Fifth, there are “partial…property interests” held by many users that may get in the way of an interstate transmission project.[65]

 

Federal Land Policy and Management Act

If an interstate transmission project passes through federal land, then the BLM is generally the permitting authority acting pursuant to the Federal Land Policy and Management Act (FLPMA).[66] The relevant sections of the FLPMA are sections 1761 to 1171 which “provide comprehensive guidelines for nearly all rights of way on BLM public lands and national forests … .”[67] Section 1761(a)(4) of the FLPMA grants the Secretary of the Interior “with respect to public lands…are authorized to grant, issue, or renew rights of way over, upon, under, or through such lands for—[4] systems for generation, transmission, and distribution of electric energy.”[68] The act also grants power to the Secretary of Agriculture “with respect to lands within the National Forest System (except for public lands designated as wilderness).”[69] Subsection 4 also requires applicants to “comply with all applicable requirements of the Federal Energy Regulatory Commission under the Federal Power Act.”[70]

An interstate transmission project must then submit the appropriate paper work for a federal right-of-way.[71] If the project is unable to “submit all requisite information,” BLM could “reject…[the] ROWs application.”[72] Additionally, the applicant is encouraged “to make an appointment for a preapplication meeting[.]”[73] The meeting is important because “BLM can: (1) Identify potential routing and other constraints; (2) Determine whether the lands are located inside a designated or existing right-of-way corridor or a designated leasing area; (3) Tentatively schedule the processing of your proposed application; (4) Inform [the applicant] of…financial obligations, such as processing and monitoring costs and rents.”[74] Being apprised of the process and maintaining regular contact with BLM can make the process more efficient. The BLM processes the project application in several ways. First, BLM holds “public meetings” if there is “sufficient public interest…to warrant their time and expense.”[75] BLM has established “17 Solar Energy Zones (SEZ) in Arizona, California, Nevada, New Mexico, and Utah.”[76] SEZ “are deemed priority areas for commercial-scale solar development.”[77] Further, BLM “authorizes commercial solar projects using a FLPMA [ROW] that authorizes…electrical and transmission facilities … .”[78] BLM also allows for transmission lines for wind energy that “may be authorized with a…linear [ROW] authorization.”[79] A solar or wind project must (1) hold a meeting for people “affected by the potential right-of-way,” (2) go through a screening process where applications with “lesser resource conflicts” are prioritized, and (3) the application is evaluated “based on…input from other parties, such as Federal, State, and local government agencies, and tribes, as well as comment received in preliminary application review meetings…and the public meeting[s].”[80] Furthermore, the project must comply with the National Environmental Policy Act (NEPA).[81] The NAS could take advantage of these specialized provisions to help the project move forward.  The FLPMA provides special areas for renewable energy development that fit the NAS goals. It would be in the best interest of the NAS to work with BLM using the specialized provisions of the FLPMA. BLM rules show that the agency has had an eye toward renewable energy development on federal land. If the NAS can get through the stakeholder meeting and screening process, it could use public lands as a way to develop renewable energy transmission.

Bureau of Land Management Segregated Land

43 C.F.R. § 2804.25(f)(1) authorizes the BLM to segregate federal land in a “right-of-way application…for the generation of electrical energy from wind or solar sources.”[82] BLM is also authorized to segregate public lands for potential ROWs for wind or solar energy generation “when initiating a competitive process for solar or wind development on particular lands.”[83] Segregation would be important to the NAS, because it allows BLM to only use the land for renewable energy development.[84] The NAS, however, has to keep in mind the purpose of the public land. If the potential use is contrary to the purpose of the public land, BLM may deny the application.[85] BLM may also deny the application if the potential use is not in the public interest.[86] The NAS would also have to ensure they are qualified to receive the grant for the ROW.[87] To qualify for a grant, an operator must be a business entity “authorized to do business in the state where the right-of-way” is located as well as be able to “[t]echnically and financially [be] able to construct, operate, maintain, and terminate the use of public lands” in the application.[88] The NAS must also make sure that the grant is not contrary with the FLPMA or any other laws or rules. BLM may also deny an application if the project cannot prove technical or financial feasibility.[89] In particular, the application “must…demonstrate technical and financial capability to construct, operate, maintain, and terminate a project throughout the application process and authorization period.”[90] If an applicant is unable to “demonstrate and sustain technical and financial capability,” the application may be denied.[91] Additionally, the project may be denied under 43 C.F.R. § 2804.25(e)(2).[92] If the NAS is unable to meet any of the requirements, the project may ask for a variance.[93] In order to receive the variance, the project must show good reason for not meeting the original requirement, bring forth an appropriate alternative requirement, and send the alternative requirement in writing to BLM.[94] The NAS is allowed to appeal an application denial from BLM.[95] It is not clear if the segregated land would apply to transmission, as opposed to generation, facilities. There needs to be more inquiries as to whether the rule applies to transmission construction. The NAS could ask for a variance for transmission as it advances the goal of renewable energy development

 

Effect of the Executive Order Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure on Federal Lands

On August 15^th, 2017 the Trump administration issued an Executive Order outlining processes for improving environmental review and permitting for infrastructure projects on federal lands. The order aims to “develop infrastructure in an environmentally sensitive manner” and “provide transparency and accountability to the public regarding environmental review and authorization decisions.”[96] The order also calls for conducting environmental reviews and authorizing permits “in a coordinated, consistent, predictable, and timely manner … .”[97]

The Executive Order discusses “Performance Priority Goals” and how the federal government should meet them.[98] “Performance Priority Goals” are met using Cross-Agency Priority  (CAP) Goals. CAP Goals are used to accelerate progress “in priority areas that require active collaboration among multiple agencies … .”[99] The Trump administration creates a time table of not more than an average of two years “from the date of the publication of a notice of intent to prepare an environmental impact statement or other benchmark … .”[100] The administration also implements the One Federal Decision principle where “[e]ach major infrastructure…have a lead [f]ederal agency” to be responsible for getting a project through the federal environmental review and permitting process.[101] The principle allows for one federal agency to be the lead agency of a project while coordinating with other agencies. The idea is that all of the agencies cannot work against each other. The order also authorizes the Department of the Interior and Agriculture to designate “energy [ROW] corridors on [f]ederal lands for [g]overnment-wide expedited environmental review for the development of energy infrastructure projects.[102]

The Executive Order could potentially affect the NAS, if it plans to work with multiple agencies. Working with multiple federal agencies on several fronts could make matters complicated. For example, if the NAS planned had to deal with multiple agencies, there may be some confusion as to which one is in charge. It is also not yet known what is meant by an expedited environmental review for energy ROW corridors. The manner in which the permitting process is accelerated could be beneficial to the NAS, but it may prevent stakeholders from adequately participating in the process. If the expedited review keeps stakeholders from fully participating in the process, there may be delay from stakeholder backlash, possibly in the form of lawsuits. It remains to be seen if the Trump administration can expedite infrastructure projects while also providing transparency and accountability. It will be important to see how the Trump administration implements the Executive Order.

 

Rights-of-Way and Tribal Land

Tribal ROWs add another layer of complexity because the NAS would be dealing with a sovereign entity in a trust relationship with the federal government. The Department of the Interior is charged with granting ROWs on tribal lands held in trust by the federal government.[103] In United States v. Navajo Nation, the Court examined the trust relationship in light of a specific statute.[104] The Court explained that “a general trust relationship between the United States and the Indian people…is insufficient to support jurisdiction under the Indian Tucker Act.”[105] The Court held that a statute must create a “duty-imposing” prescription that would allow a tribe to sue to the federal government. The NAS will have to examine the specific statute under which the land is being used to learn of a particular trust relationship and potential recourse on the part of tribes. While the federal trust relationship is well established, it can also lead to inefficiencies in the transmission ROW process.[106] It is important for an interstate transmission project to understand the tribal legal landscape and possible routes for streamlining the process.

 

Allotted Land and Federal Trust Land

There are several different types of tribal land but among the most basic are allotted lands and federal trust lands. It is important for an interstate transmission project to know the difference because it drastically changes the procedure for acquiring an ROW. Tribal trust lands are for the benefit of the tribe but are held in trust by the federal government.[107] Federal trust lands are the most common among types of tribal land, so an interstate transmission project is likely to run a line across these lands.[108] The distinction between tribal trust land and allotted land is that the federal government has not granted the authority of eminent domain over tribal trust lands.[109] Congress, however, has the power to abrogate treaties and allow condemnation of tribal lands.[110] For example, FERC, under the FPA, is authorized to issue a license for transmission lines on tribal lands subject to federal jurisdiction and sometimes that license will include the power of eminent domain.[111] Before issuing a license, FERC is required to show that the license is consistent with the purpose of the reservation and contains protections for the tribe.[112] On the other hand, allotted lands can be condemned for a public purpose.[113] Federal statute authorizes condemnation of allotted lands under state law.[114] While condemnation is an option, a transmission project is usually required to make an attempt negotiate and purchase the right first.[115]

A significant inefficiency in tribal transmission siting is “the requirement that the Secretary of the Interior (and the Bureau of Indian Affairs (BIA)) approve leases of Indian lands.”[116] Fortunately, there are several avenues to make the process more efficient. Many of the current solutions involve tribes petitioning for a more central role in the decision-making process.

 

The HEARTH Act

Allowing tribes to exercise central authority in land development could open the door to renewable energy development on tribal lands. The Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act aims to reduce the amount of time it takes to obtain a lease on tribal lands.[117] A tribe hoping to benefit from the HEARTH Act must petition the Secretary of the Interior and prove that “the tribe’s leasing regulations meet the enumerated requirements of the HEARTH Act.”[118]

Allowing tribes to play a more pivotal role in the permitting could streamline the process for the NAS. Apart from the tribes playing a more central role, there are other ways for the NAS to gain access to tribal land without a statutory ROW.[119]

The HEARTH Act could be a potential revenue source. Removing obstacles for private entities to obtain a lease on tribal land could incentivize tribal land development as well as partnerships between the tribes and renewable energy developers.

 

Indian Tribal Energy Development and Self-Determination Act of 2005

The Indian Tribal Energy Development and Self-Determination Act of 2005 authorizes tribes to enter into an agreement with the Secretary of the Interior known as a tribal energy resource agreement (TERA).[120] The Secretary must consider the “best interests of the tribe and the Federal policy of promoting tribal self-determination.”[121] Additionally, the Secretary examines several factors to determine if the tribe has proven “sufficient capacity” to use a transmission line.[122] If the Secretary of the Interior approves the TERA, then tribe will be able to grant ROWs without approval from the Secretary.[123] The TERA must specify the procedure for the administration of ROWs for the tribe.[124] There are, however, some limitations to the TERA.[125] The ROW under the TERA may not exceed 30 years.[126] Additionally, the transmission line must serve “an electric generation transmission, or distribution facility located on tribal land or a facility located on tribal land that processes or refines energy resources developed on tribal land.”[127] As of 2014, the Indian Tribal Energy Development and Self-Determination Act of 2005  has not been fully utilized.[128] The Act allows tribes to play a more central role in the siting process. The NAS could partner with a tribe to be one of the first to administer a TERA. This route could help the NAS build a transmission line more efficiently while paving the path for other renewable energy projects. Energy development on tribal land could be a “method to achieve economic diversification, promote tribal sovereignty…, and provide employment and other economic assistance to tribal members.”[129] Former Senator Ben Nighthorse Campbell explained that “[m]ost tribes do not have the financial resources to fund extensive energy projects…, and so must partner with private industry, or other outside entities, by leasing out their energy resources…in return for royalty payments.”[130]

 

Renewable Energy Lease

An interstate transmission project does not necessarily have to obtain a ROW to build a line on tribal lands. Wind and Solar Resource leases (“WSR leases”) are a means of using tribal trust lands for wind and solar energy development.[131] Among the uses allowed under a WSR lease is the transmission of electricity.[132] A WSR lease does not exactly shift the central authority to the tribes, but it does serve as an adequate alternative. BIA must approve a WSR lease before construction can begin.[133] Additionally a potential transmission project must seek authorization from the tribe.[134] The regulation notes other requirements for WSR leases on tribal lands including alternative payments for lease based on income.[135]

 

Highways and Renewable Energy

Along with BLM lands, state and federal highways are a source of public lands that can be helpful to the NAS. A potential obstacle to the NAS is the amount of involvement from state departments of transportation (DOTs). The federal government and State DOTs have been developing ways for utilities to access ROWs with renewable energy.[136] Since the NAS is likely to be a merchant transmission line, it will have to obtain a ROW use agreement.[137] ROW use agreements involve “[a]ny non-highway use of real property interests.”[138] A party seeking such an agreement must obtain approval from the FHWA,[139] authorized to consider whether the proposed project “is in the public interest, is consistent with the continued use, operations, maintenance, and safety of the facility and such use does not impair the highway or interfere with the free and safe flow of traffic … .”[140]

 

Variance of State DOT Statutes and Rules

State DOTs statutes and rules, on the other hand, impose a wider variety of requirements on entities that may wish to construct projects on highway ROWs. A utility must obtain a use and occupancy agreement from state DOTs.[141] The agreement must refer to state DOT standards, which are likely to vary.[142] As of 2012, most states “indicated that their utility accommodation plans (UAPs) do not characterize renewable energy facilities as utilities in regarding to accommodating them in highway ROW.”[143] Other states “do not make distinction between renewable and non-renewable energy facilities” while some states are silent on the matter.[144] Efforts to create uniform state laws can assist interstate transmission projects in streamlining the process. Interstate transmission projects may also find success in looking at routes other than state highways.

Railroads

Use of railway ROWs to construct interstate transmission lines might be important where the highway system does not cover certain important geographic areas and to avoid certain state statutes that vary regarding parts of the highway system.  The NAS project has done a large amount of research regarding areas of the country where use of railway ROWs could help complete the NAS.

The federal government has broad authority to preempt state and local governments when it comes to railroads.[145] Federal preemption was created to ensure that state and local entities did not halt the railroad through varying statutes and rules.[146] The Surface Transportation Board has authority over railroad, including intrastate tracks.[147] There have been many unsuccessful challenges to federal authority of railway from state and local entities.[148] The NAS could use federal preemption of railroads as a way to bypass a highway system that is subject to more state and local control.

However, at present, federal law says nothing about what railroads should do with property it owns, including the granting of easements or rights of way to other private parties.  Thus, there must be a reason and incentive for a railroad to permit an existing railway right-of-way to be used as part of the NAS.

Solutionary Rail is a proposal from a team of “rail experts, economists, and public interest advocates” that advances the idea of transmitting electricity through rail lines.[149] Railroads have been linked to energy sources. When the national highway system was built, coal distribution kept railroads afloat.[150] With coal gradually being phased out, it may be time to supplant the railroad industry with renewable energy transportation.[151]

The cost of building a transmission line on a railway right-of-way may be an obstacle. Solutionary Rail has proposed the Steel Interstate Development Authorities as a means to finance its project.  The Authorities would be comprised of several government agencies that could collectively fund the project along with the federal government.  Perhaps the NAS could partner with Solutionary Rail for transmitting renewable energy.

However, it is unknown whether a railroad would want to be involved in an interstate transmission project.  There is the question of how the benefits would go to the railroads.  It might be necessary for the designation of the NAS as a national project with incentives to achieve that goal.  Thus it might be seen as a follow-on to the Inter-Continental Railway of the 19^th century for which so much federal land was originally given to railroads.

Another possibility is to explore the use of abandoned railway corridors for the NAS.  Where the railroad received federal granted rights of way (FGROW), there are long established rules regarding the nature of the interest granted and the disposition of FGROW upon cessation of railroad use.[152]  In addition, there are special rules for rail banking under Surface Transportation Board (STB) jurisdiction for abandonment under more recent legislation.  These rules have been primarily used for the rails to trails program established by the non-profit Rails to Trails Conservancy.  These latter rules for actions immediately upon abandonment by a railway do not appear to fit the necessities of the NAS as discussed below but might be adjusted as part of a legislative package for the implementation of the NAS.  We plan to work with the Rails to Trails Conservancy to explore this possibility as part of the next stage of this Project.

Regarding FGROW, 43 U.S.C. section 912 provides that such a right-of-way continues to exist as a railway right-of-way usable for railroad or other public highway purposes until either Congress adopts a statute transferring title or until there is a judicial declaration of abandonment, whichever comes first.  As a necessary precondition to that judicial declaration, STB must “authorize an abandonment,” thus that the line is no longer required for interstate commerce.

If there is judicial declaration of abandonment, then, section 912 states that the title vests in the person or entity owning the legal subdivision traversed by the FGROW.  Thus to the municipality concerned or to a state or local government if a public highway is established on that parcel within one year of the judicial declaration of abandonment.

Later, in the National Trails System Act Amendments of 1988, 16 U.S.C. section 1248(c), it was provided that unless a public highway was set within the one year time limit then the federal interest in the FGROW “shall remain in the United States.” This latter requirement was set to assist the rails to trails movement but could conceivably be used also for a transfer to the NAS as another type of envisioned public use.

Recent federal court decisions have, however, challenged that remaining federal FGROW interest based on Takings Clause under the Fifth Amendment to the United States Constitution. The Federal Tucker Acts designate the U.S. Court of Claims to resolve takings claims against the United States.[153] The “Little Tucker Act” permits claimants seeking compensation from the federal government under $10,000 to be heard by the relevant federal district court.[154]

The question of a taking turns on what ownership interest was originally acquired by the railroad.  This applies not only to rights on federal land but also to other rights not acquired by rail-banking procedures as below.  It is the important element also in deciding quieting of title to the land concerned under state law by judicial declaration that resolves adverse claims of ownership and rights in property so it can be used for trails or other public uses as under rail banking below.

The important factors include the method by which the railroad interest was acquired (private grant, condemnation, federal grant or adverse possession) and the property interest acquired (fee simple absolute, determinable or subject to condition subsequent, general or limited easement, or license).  A railroad deed may not clearly state the right granted and whether the right-of-way is included.   Grant of a conditional (defeasible) fee may mean its extinguishment upon the occurrence of a specified event, such as cessation of rail service.  Where the railroad acquired an easement, non-use alone may not be sufficient for abandonment but may have to be coupled with affirmative actions such as piecemeal sales of the corridor or removal of tracks and ties.[155] Thus the acquiring of rights in abandoned railway rights of way in federal land are complex and must be dealt with on a case-by-case and state-by-state basis.  The preparation of initial case studies will put these issues in more concrete focus.

Finally, the second possibility is to explore the abandoned railways legislation enacted to protect the railway system for future use following the increasing number of abandonments and railway bankruptcies starting in the 1970s.  These rules are difficult to apply for use by the NAS but indicate what is now being done to use such railways for public uses such as trails.

The STB has jurisdiction over interstate railway service, and thus exclusive authority to issue a certificate of public convenience and necessity authorizing abandonment. STB authority preempts any conflicting state or local law.

The Railway Revitalization and Regulatory Reform Act of 1976 (4-R Act) provides authorization for the STB to impose a Public Use Condition as part of an abandonment authorization.  That Condition defers the disposition of railroad rights of way for 180 days to allow for possible transfers for public use.[156]

The restrictions on railway abandonments were then loosened in 1980 under the Staggers Act. Railways that had been out of service for two or more years could abandon their lines under an abbreviated notice process.[157]  However, this led to sale offs of underlying property or allowing claims of adjacent landowners that risked making the rail system very fragmented.

Then in 1983, Section 8(d) of the National Trails System Amendments Act set up a national policy to preserve established rights of way for future re-activation of rail service, to protect rail transportation corridors, and to encourage energy efficient transport use.[158] This Law established a rail banking process under the STB by which a railway could free itself from an unprofitable rail line by transferring it to a qualified private party or public authority for interim use as a trail until the line is needed again for rail service.[159]

The rail banking procedures are complex and have a number of problems that make them difficult to use for the NAS.  The railroad concerned must agree to enter negotiations with the interested party and reach a voluntary agreement within the 180-day period set under the 4-R Act for the transfer by sale, lease or donation.  What is issued by the STB is a Notice or Certificate of Interim Trail Use.  Thus the agreement must provide that the corridor remains available for future restoration of rail service.  A rail banking order will not be issued by STB if the railroad has already sold sections of a corridor for non-transportation uses.  STB loses its jurisdiction if the railroad “consummates” its abandonment authority prior to the issuance of the above notice.  Also, once STB loses jurisdiction over the corridor, then state law principles would apply.  Some states have no clear answer as to who owns a railway corridor.  Many states give priority to the rights of nearby landowners according to ownership principles discussed above.

In some cases, abandonment of a railway easement may be inferred when the corridor is put to uses outside the scope of the easement.  Trail use has been considered as within the easement as a broader public use (shifting public use policy).  This rule might apply to an NAS right-of-way as well, but different states have different policies.

Finally, the federal definition of abandonment under these laws is where STB grants the railway permission to terminate its common carrier obligation to provide rail service and liquidate its property interest in the rail corridor.  However, that authorization is permissive only.  Abandonment under state law generally requires actions of implementation, such as removal of tracks and ties and transfer of the line for non-railroad use.

There are many general problems with the use of abandoned railway rights of way that must be considered on a case-by-case basis.  There is a strong policy reason that the NAS has a strong public use justification for such use.  The next step will be a review of the rails to trails program to see whether legislation can be provided to fulfill that public use.  Railroad rights of way, in general, can be an important supplement to highway rights of way for the creation of the NAS that avoids where possible the purchase of private land rights.

 

Regional Approach: The Argument for a Regional Transmission Organization or Independent Service Operator Centered Regulatory Structure for the North American Supergrid

Incorporating the NAS into the existing regulatory framework for transmission line projects would not be impossible; however, it would be costly and possibly temporally prohibitive. A nation-wide electricity transmission project within the existing regulatory scheme would require coordinated compliance with regulatory siting bodies across the lower 48 states. Siting authority across states results in multiple decision-makers applying multiple legal standards. A new regulatory framework with a consistent, nation-wide structure for interstate transmission projects like the NAS would best be provided through Congressional legislation. Thus, Congress should pass legislation which transfers authority from the individual states to create a new regulatory framework to accommodate the NAS, and contribute to its overall goal of a national energy market with increased capacity for renewable technology connectivity. This section will address this topic, and proposes a RTO or ISO centered framework in order to retain regional power, in a cooperate form, without surrendering siting authority to the FERC.

This proposal draws heavily from the writings of University of Minnesota Law School Professor Alexandra Klass, who has served as a member of the NAS Steering Committee.

 

The Need for Change

 Barriers to the NAS

Advancing the NAS in the current regulatory state is theoretically possible—but could prove to be functionally impossible once the siting process begins across the lower 48 states. Specifically speaking, the circumstances justifying a regulatory shift in authority include:

1) the physical nature of the grid which long ago grew from local and state based origins to a regional, multi-state network that facilitates interstate, wholesale electricity market transactions;

2) the growth of renewable energy, particularly wind energy which is often located far from population centers and can only be transported by interstate transmission lines, in contrast to fossil fuels which can be transported by train, pipeline, truck, or ship throughout the country;

3) the growth of RTOs—federally-approved nonprofit entities that manage the transmission of electricity within multi-state regions in many parts of the country, operate wholesale market transactions for electricity, and oversee the planning of transmission grid expansions within their foot prints; and

4) developing state and federal clean energy policies such as state renewable portfolio standards and the U.S. Environmental Protection Agency’s (EPA’s) 2014 proposed greenhouse gas (GHG) rule for existing power plants, which has the potential to fundamentally shift the dominant electric energy sources throughout the country in future years toward increased renewable energy.”[160]However, it is very uncertain whether these rules will be implemented under the Trump administration. Since the time of writing, the Trump Administration’s EPA Director Scott Pruitt has proposed a new rule to repeal the Clean Power Plan’s emission guidelines for existing Electric Generating Units (EGUs).[*]

5) lastly, the current grid as is is ill equipped for three main security challenges: EMPs, structural integrity, and cybersecurity.

A starting point for regulatory analysis regarding the NAS is the WPP, a connection between Arizona and California created by installing the wire overlay technology along the path of the I-10 freeway. The WPP specifically highlights the large number of different regulatory authorities for just two states individually. This is representative of the multiple permitting agencies and stakeholders involved in each stage of siting a transmission line.

While the need for an updated regulatory framework is evidenced by the changing nature of the electric grid, what to change and where to start can be a daunting task for developers of projects like the NAS. It is useful to consider the process for previously developed nationwide energy infrastructure projects and compare those circumstances to those implicated in the proposal for the NAS.

Parallels from the Natural Gas Pipeline System

The development of the natural gas pipeline system is a comparable illustration with regard to the regulatory considerations for an interstate system. Congress granted federal siting and eminent domain authority for interstate natural gas pipelines under the Natural Gas Act of 1938, with amendments in 1947.[161] For a developer to begin construction, it must first apply to obtain a Certificate of Public Convenience and Necessity from FERC (states have their own respective certificates for intrastate projects). In its evaluation, FERC determines whether the applicant is willing and able to perform the operation, sale, service, construction, extension or acquisition while in compliance with any rules or regulations of the Commission, and that the action “is required by the present or future public convenience and necessity.”[162] If the applicant is unable to meet this statutory criteria, the application will be denied.

Once a pipeline receives a Certificate of Public Convenience and Necessity from FERC’s predecessor (the Federal Power Commission), the pipeline operator is granted nationwide eminent domain authority along the path of the pipeline if they cannot not first enter into voluntary easements with implicated landowners.[163] Such a structure is beneficial for pipeline developers because it offers a centralized authority and, in many cases, greater certainty  and lower costs of implementation by eliminating roadblocks created by multiple state permitting and eminent domain requirements.

In comparison to current circumstances, using a federal regulatory approach in implementing the NAS would require a major shift in regulatory structure. Even though grid connectivity implicates both interstate commerce and nationwide security, electricity transmission line siting and permitting is a power held primarily by the individual states.[164] This allows states to have final authority on the lines which run through them, requiring consideration of local market interests, as well as geographic and aesthetic concerns. Shifting such a power to FERC would federalize the line siting process and has the potential to be not just politically unpopular amongst states, but could produce economically inefficient results for localized interests not taken into account.

On the other hand, increased transmission capacity is necessary for the inclusion of renewable energy resources, specifically wind and solar, as well as natural gas, as the transmission lines are the sole option of transport for such resources. This is in contrast to other modes of energy generation, such as oil, which is easily (and sometimes dangerously) transported by pipeline and rail.[165]

While the regulatory framework for the natural gas pipeline system is useful as guidance in the development of regulatory reform considerations for the NAS, it should not be followed for this project. The rise and resulting success of regional organizations like RTOs and ISOs offer a less federally-centralized option—a benefit to states and local regions, whose diverse energy resource portfolios would be benefitted by localized focus.

What is also apparent from this history is that it “shows that Congress is able to move beyond state authority in the energy law context when there is a drive to turn what has historically been a locally constrained energy resource into a national one.”[166] The reality is that the modern electric grid’s potential for capacity and technological progress is stymied by the slow pace of achieving the regulatory go-ahead state by state. Therefore, a regionally-centered approach, like placing the decision-making authority in the hands of a regional body, can streamline the line siting process while safeguarding local control.

 

 Proposed Modified Framework

 Introduction and Politics of RTOs/ISOs

Regional bodies like RTOs and ISOs are “FERC-approved nongovernmental agencies that manage portions of the transmission grid and regional markets for wholesale power for much of the country.”[167] RTOs/ISOs provide three key functions: 1) while utilities maintain ownership of their lines, RTOs/ISOs handle day-to-day operations like running the transmission grid, 2) operating and setting prices for wholesale electricity markets within each jurisdiction, and 3) planning for grid expansions.[168] The EPAct of 2005 preserved the status of the organizations “as central to the wholesale markets.”[169] The structure of RTOs and ISOs allow the bodies to provide significant benefits, specifically lowering prices for end consumers.[170] We provide describe the geographic layout of all the RTOs and ISOs in 3.3.

In the FERC Notice of Proposed Rulemaking (NOPR) first authorizing RTOs in 1999, the Commission found RTOs could improve efficiencies in grid management, improve grid reliability, remove opportunities for discriminatory transmission practices, improve market performance and “facilitate lighter-handed governmental regulation.”[171]

It is important to consider why RTO membership is not already mandatory, and the circumstances surrounding that decision. Initially, FERC considered mandating RTO membership, though “it eventually instead required that public utilities either join a FERC-approved RTO or report on their progress toward joining one.”[172] Through FERC Order No. 2000, codified in 1999, the Commission encouraged utility participation in RTOs in order to shift to a regional approach. Order No. 2000 requires that “each public utility that owns, operates, or controls facilities for the transmission of electric energy in interstate commerce make certain filings with respect to forming and participating in an RTO.”[173]

While RTOs and ISOs already cover roughly two-third of the U.S. population, a main contributor to the lack of nationwide participation has been political opposition centered in the Southeast and the West.[174] Oregon Representative Greg Walden commented in a 2017 congressional hearing that there have been failed attempts for RTO formation in Oregon and Washington—a failure fueled by opposition which is still present today.[175] While FERC Order No. 2000, which was a compromise of sorts, was released in 1999, the regional politics of forming an RTO or ISO might not have changed enough over that time to make nationalized participation a reality. This only highlights the need for government participation to incentivize unassociated regions. In light of this, the proposed regulatory reform should not be squashed as a political impossibility as the movement toward cleaner energy has gained momentum nationwide. RTOs and ISOs have been leaders to including more renewable resources onto local grids, and implementing the NAS only increases the amount of accessible renewable energy sources with connectivity capability.

Many states have already passed legislation declaring a commitment to grid modernization technology and are in the developing stages of their own respective plans. The North Carolina Clean Energy Technology Center—out of North Carolina State University—tracks grid modernization strategies in all 50 states and published a report[176] with some existing regulatory considerations. The largest commitments so far come from both Illinois and Ohio. Illinois’ project NextGrid is described as a “utility of the future study.”[177] The state’s Commerce Commission just ended the public comment period for proposals on both technology and utility and regulatory models to modernize the energy grid and benefit end use consumers. Ohio’s Power Forward is an initiative of the state’s Public Utility Commission to examine technologies, ratemaking and regulation recommendations from stakeholders.[178] In addition, in the wake of withdrawal from the Paris Climate Accord, states and cities across the country have publicly asserted their individual leadership in achieving the goal of a more sustainable energy future.

In the time since their creation, RTOs and ISOs have proven to have the expertise when it comes to “setting wholesale electricity rates, planning new transmission lines, and acting as a forum where multiple stakeholders, including regulated entities, consumer interests, and state can collaborate on these issues.”[179] Existing RTO and ISO bodies act as an example for how such regional structures can bring together all relevant stakeholders and craft workable solutions for providing electricity. Next it is important to look at how RTOs function, and then how they can serve as a model for a nationalized regional solution.

Mechanics of RTOs

To be considered an RTO sanctioned by the Commission, Order No. 2000 sets out minimum characteristics, which are “1) independence from market participants; 2) appropriate scope and regional configuration; 3) possession of operational authority for all transmission facilities under the RTO’s control; and 4) exclusive authority to maintain short-term reliability.”[180]

The gaps in RTO/ISO coverage leave an opportunity for unassociated utilities to form their own RTOs or ISOs, or join existing ones to work collaboratively on transmission line siting. States choosing to form their own regional bodies can look within their own public utilities for guidance. Western states have begun to organize in an impressive regional wholesale market in the form of the Western Energy Imbalance Market (WEIM). WEIM formed out of CAISO and is a bulk power market with utility membership spanning across 8 states – Washington, Oregon, California, Arizona, Nevada, Utah, Wyoming and Idaho. Regional leadership such as WEIM could be beneficial for implementing the NAS across the West.

 

Paths to Achieving the Regional Approach

In order to meet the goal of an RTO-centered regulatory structure, there are two promising paths; the first centered on states themselves and the latter requiring Congressional action—though there is room for Congressional participation along both paths.

First, EPAct 2005 “allows three or more contiguous states to enter into interstate compacts to establish regional siting authorities to determine the need for future transmission facilities within those states and carry out the transmission siting responsibilities of those states.”[181] Such authorities could then review, certify and permit the siting lines for transmission facilities.[182] The National Center for Interstate Compacts (NCIC) has proposed a model compact for this option, including:

1. A state project review panel within each member state to coordinate the views of different agencies and interests in the state.
2. A combined multi-state siting authority, consisting of states affected by the project authorized to make siting decisions for the project.
3. Interstate Compact Commission to provide administrative support and rulemaking capability.[183]

This would provide the structure for states to have representation, meaning each state’s local concerns can be voiced, while the ultimate decision will likely weigh what is best for the region as a whole. Such a democratic system could avoid the problem of individual state holdouts blocking interstate transmission projects which would be regionally beneficial. As an example, Southwest Power Pool President and CEO Nick Brown recently testified before Congress that the RTO formed a Commission with representation from each member state to invest in $10 billion into transmission across the RTOs 14 state footprint.[184] Brown also testified that but for transmission growth in the region such as this, the rise of wind energy would not have been possible.[185]

One problem with this interstate compact approach is that there is no incentive for states to engage with partners to form regional authorities. A possible solution would be to stipulate in the delegating legislation that absent an interstate compact, transmission line siting authority would default to FERC or offer additional funds for participating states.[186] In order to retain authority over transmission line siting, states would be incentivized to form compact agreements rather than lose representation.

A second option would be for Congress to pass legislation delegating line siting authority to RTOs and ISOs within their footprint.[187] It’s useful to consider federal precedent of support for RTO planning in analyzing the likelihood of federal legislation. FERC has supported RTO planning efforts in both Order No. 1000, which mandated “a regional transmission planning process for the first time with RTOs playing a central role in the process in the areas where they exist, and places regional planning process requirements on all public utility transmission providers regardless of whether they are part of an RTO.”[188] Such an exercise of FERC authority was upheld in subsequent legal challenges[189] and the 2013 decision in Illinois Commerce Commission.[190] In addition, both RTOs and ISOs have a history and reputation of successfully creating a forum for implicated stakeholders—including utilities, consumer advocates and local governments.

Any discussion of encouraging of congressional legislation requires a subsequent discussion on the likelihood of political success. However, rather than a general discussion on the politics of including increased renewable resources onto the nation’s grid, the scope of political discussion here will be limited to the specific legislative requests of the NAS, i.e. a legislative grant of line siting authority with incentives for nationwide RTO/ISO participation.

 

Political Hurdles

The overall likelihood of Congressional legislation granting line siting authority to regional bodies is quite uncertain. As previously mentioned, regional politics has been a main contributor to the lack of national RTO/ISO participation and could translate to national politics as well. However, there are some members of Congress who recognize the role of regional organizations in the national wholesale electricity market and are open to hearing if any federal action is needed. In July of 2017, the House Energy and Commerce Committee held a hearing on just that, including witnesses from the leadership of various RTOs and ISOs.[191] While the focus of that hearing was the broad role of RTO/ISO participation in wholesale electricity markets, the discussion of the hearing here will be limited to the scope of this policy document—which is how RTO/ISO-centered authority for transmission line siting is preferable for implementing the NAS.

NYISO Chairman and CEO Bradley Jones told the story of how the New York power grid was “a tale of two grids”—upstate the grid is fueled by nuclear, hydro, wind and solar energy, whereas the southern portion of the state is powered with 75% fossil fuel generation.[192] This highlights the importance of transmission lines in remedying grid disparities amongst regions. Jones testified that focusing on transmission projects would help the state meet its goal of 50% energy from renewables by the year 2030.[193]

Representative Jerry McNerney posed an open question to all witnesses in the hearing asking what federal policies could encourage investment needed to address the changing circumstances on the grid.[194] While the responses varied amongst region, the most occurring answers covered grid resiliency, and regulatory certainty and stability.[195] If legislation granting RTO/ISO transmission line siting authority succeeded, the NAS initiative would best be equipped to address these organizational goals.

 

Conclusion

Constructing and obtaining the necessary permits for the NAS will be an arduous and lengthy task. Fortunately, there are several pathways to success. The NAS can use private lands and can petition state and local governments for expanded uses of eminent domain. By participating with local state Public Utility Commissions, the NAS developers can apply for eminent domain authority to serve regional goals. Expanding federal authority may also streamline the permitting process but could also ignore state and local concerns. On the other hand, a state-based approach could meet those concerns but may become tedious. An RTO could provide a balance between both approaches as long as states are willing to work with each other.

If private lands are inaccessible, the NAS could use BLM segregated lands and take advantage of the competitive process or use highway corridors. The problem, however, with highway corridors is varying state statutes and regulations. Using railroads as potential ROWs could sometimes be simpler.

The NAS could also obtain a ROW through tribal lands held in trust by the federal government, so the NAS would have to work the tribes and BIA. Finding ways to allow the tribe to play a more central role in granting ROWs could be key to streamlining the process.

While planning a process for implementing such a wide scale initiative, the NAS must consider the existing regulatory framework and must offer concrete changes to existing regulatory policy to best accommodate the project. In the case of the NAS, the HVDC wire overlay would best be implemented and operated through a regional body such as an RTO or ISO. While these bodies exist and currently serve regional markets in a beneficial way, we advocate for a nationwide and independent RTO/ISO structure to be the primary regulatory authority governing interstate transmission lines. This strikes a balance between local concerns and centralized federal authority. Such a regulatory shift would require Congressional action.

 

Citations

[*] Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units, 82 Fed. Reg. 48035 (proposed Oct. 16, 2017)(to be codified at 40 C.F.R. pt. 60).

[1] George Cameron Coggins & Robert L. Glicksman, Public Natural Resource Law § 15:2 (2d ed. 2007) (Westlaw current as of June 2017).

[2] Ibid. § 15:27.

[3] Colby L. Branch et. al., Indian Lands Rights-of-Way, No. 5 RMMLF-Inst. Paper No. 9, Energy and Mineral Development in Indian Country, Part Two- The Legal Landscape Paper 9, 9-1, 9-22 (2014).

[4] Alexandra B. Klass, The Electric Grid at a Crossroads: A Regional Approach to Siting Transmission Lines, 48 U.C. Davis L. Rev. 1895, 1916 (2015).

[5] Elena P. Vekilov, If It’s Broke, Fix It: Federal Regulation of Electrical Interstate, 2013 U. Ill. L. Rev. 695, 706.

[6] Fla. Stat. Ann. § 403.537 (West 2006).

[7] Ariz. Rev. Stat. Ann. § 40-360.07

[8] N.Y. Comp. Codes R. & Regs. tit. 16, § 86.3 (1970).

[9] N.Y. Comp. Codes. R. & Regs. tit. 16, § 86.4 (1970).

[10] N.Y. Comp. Codes. R. & Regs. tit. 16 § 86.7 (1970).

[11] 220 ILCS 5/3-105 (West 2012).

[12] Ibid.

[13] Illinois Landowners Alliance, NFP v. Illinois Commerce Comm’n, 2017 Il. 121302, 2017 WL 4173350 (Ill. 2017).

[14] Ibid. at ¶¶ 4, 6, and 8.

[15] Ibid. at ¶ 21.

[16] Ibid. at ¶ 39.

[17] Ibid. at ¶ 38 (quoting Mississippi River Fuel Corp. v. Illinois Commerce Comm’n, 1 Ill. 2d 509, 516 (1953); Peoples Energy Corp. v. Illinois Commerce Comm’n, 142 Ill. App. 3d 917, 930 (1986)).

[18] Ibid. at ¶ 40.

[19] Ibid. at ¶ 42.

[20] Ibid. at ¶ 48.

[21] Ibid. at ¶ 21.

[22] Ibid. at ¶ 48.

[23] Klass, supra note 4, at 1918.

[24] Summary of Regulations Implementing Federal Power Act Section 216(h), Dept. of Energy, September 2008, https://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/Summary_of_216_h__rules_clean.pdf, Energy Policy Act of 2005, Pub. L. No. 109-58, § 1221, 119 Stat. 594, 946 (2005), Federal Power Act, 16 U.S.C.A. §§ 824, 824p (2005).

[25] The National Council on Electricity Policy, Coordinating Interstate Electric Transmission Siting: An Introduction to the Debate, 1, 5 (July 2008).

[26] Ibid.

[27] Ibid.

[28] Alexandra B. Klass & Elizabeth J. Wilson, Interstate Transmission Challenges for Renewable Energy: A Federalism Mismatch, 65 Vand. L. Rev. 1801, 1818-1819(2012).

[29] 16 U.S.C.A. § 824p(b)(1)(B)(i-ii)., Klass, supra note 28, 1819.

[30] Ibid. § 824p(B)(1)(B), Klass, supra note 28, 1819.

[31] Ibid. § 824p(b)(1)(C)(i). Klass, supra note 28, 1819.

[32] Ibid. § 824p(b)(1)(C)(ii). Klass, supra note 28, 1819.

[33] Klass, supra, note 28, 1819.

[34] Piedmont Environmental Council v. Federal Energy Regulatory Commission, 558 F.3d 304, 311 (4^th Cir. 2009).

[35] Ibid. at 313.

[36] Piedmont, 558 F.3d 304, 313, supra note 24.

[37] Piedmont, 558 F.3d 304, 314.

[38] Ibid.

[39] Ibid.

[40] Michael S. Dorsi, Piedmont Environmental Council v. FERC, 34 Harv. Envtl. L. Rev. 593, 597 (2010).

[41] Alexandra B. Klass, Takings and Transmission, 91 N.C. L. Rev. 1079, 1136 (2013).

[42] Ibid.

[43] Ibid.

[44] U.S. Const. amend. V.

[45] Klass, supra note 40, at 1104.

[46] Klass, supra note 28, at 1846, E.g. Eileen O’Grady, Update 1-FPL Power Line May Complicate Texas Wind Growth, Reuters (Oct. 28, 2009), http://in.reuters.com/article/2009/10/27/utilities-wnid-idINN2725847720091027.

[47] Alexandra B. Klass & Jim Rossi, Revitalizing Dormant Commerce Clause Review for Interstate Coordination 130 Minn. L. Rev. 129, 153 (2015).

[48] Klass, supra note 4, at 1917.

[49] Klass, supra note 40, at 1106.

[50] Ibid. at 1107.

[51] N.D. Const. art. I, § 16.

[52] Ibid.

[53] Idaho Const. art I, § 14.

[54] Cal. C.C.P. § 1240.010 (West 1976).

[55] Cal. Const. Art. I, § 19 (West 2008).

[56] Heidi Wentz, Let’s Make A Deal: Negotiated Rates for Merchant Transmission, 28 Pace Envtl. L. Rev. 421, 425 (2011).

[57] Ibid.

[58] Ibid.

[59] Coggins, supra note 1, at § 15:2.

[60] Ibid.

[61] Ibid.

[62] Ibid.

[63] Ibid.

[64] Ibid.

[65] Ibid.

[66] Ibid. at § 15:1.

[67] Ibid. at § 15:7

[68] Federal Land Policy and Management Act, 43 U.S.C.A. § 1761(4) (West, Westlaw current through P.L. 115-43).

[69] Ibid.

[70] Ibid.

[71] Coggins, supra note 1, at § 15:21

[72] Ibid.

[73] 43 C.F.R. § 2804.10 (2017).

[74] Ibid.

[75] 43 C.F.R. § 2804.25(e) (2017).

[76] Roxanne J. Perruso & Kathleen C. Schroder, Flexible FLPMA: Renewable Energy Development on Public Lands, 2014 No. 3 RMMLF-Inst. Paper No. 7 (May 8-9, 2014) at *7-4.

[77] Ibid.

[78] Ibid.

[79] Ibid. At *7-6.

[80] Ibid. at § 2804.25(e)(2)(i-iii).

[81] Ibid. at § 2804.25(e)(4), E.g. 43 C.F.R. Part 46, 40 C.F.R. Parts 1500 and 1508.

[82] Ibid. at § 2804.25(f)(1).

[83] Ibid.

[84] Ibid.

[85]43 C.F.R. § 2804.26 (2017).

[86] Ibid.

[87] Ibid.

[88] 43 C.F.R. § 2803.10 (2005).

[89] 43 C.F.R. § 2804.26 (2017).

[90] Ibid.

[91] Ibid.

[92] Ibid.

[93] Ibid.

[94] 43 C.F.R. § 2804.40 (2017).

[95] 43 C.F.R. § 2801.10 (2005).

[96] Presidential Executive Order on Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure, 2017 WL 3484552 (August 15, 2017).

[97] Ibid.

[98] Ibid.

[99] Ibid.

[100] Ibid.

[101] Ibid.

[102] Ibid.

[103] 25 U.S.C.A. § 323 (1948) (current through P.L. 115-43); Elizabeth Ann Kronk Warner, Tribal Renewable Energy Development Under the HEARTH Act: An Independently Rational, But Collectively Deficient, Option, 55 Ariz. L. Rev. 1031, 1060 (2013), Johnson v. M’intosh, 21 U.S. 543 (1823).

[104] United States v. Navajo Nation, 123 S. Ct. 1079 (2003).

[105] Ibid. at 1091; 28 U.S.C.A. § 1491  (The Tucker Act waives the federal government’s sovereign immunity with respect to certain lawsuits).

[106] Warner, supra note 103, at 1043.

[107] Definition of “Indian Country,” United States Department of Agriculture, Natural Resources Conservation Service, https://www.nrcs.usda.gov/Internet/FSE_DOCUMENTS/nrcs141p2_024362.pdf

[108] Ibid. at 1.

[109] Colby L. Branch et. al., Indian Lands Rights-of-Way, No. 5 RMMLF-Inst. Paper No. 9, Energy and Mineral Development in Indian Country, Part Two- The Legal Landscape Paper 9, 9-1, 9-24 (2014).

[110] Ibid.

[111] Ibid. 16 U.S.C.A. § 792 (2014).

[112] Ibid. 16 U.S.C.A. § 797(e).

[113] Ibid. at 9-23.

[114] Ibid. 25 U.S.C.A. 357 (Current through P.L. 115-43).

[115] Ibid.

[116] Warner, supra note 103, at 1044.

[117] Ibid. at 1052.

[118] Ibid. 25 U.S.C.A. § 415 (West 2012).

[119] Branch, supra note 109, at 9-16.

[120] Ibid. at 9-20.

[121] 25 C.F.R. § 224.71 (2008).

[122] Ibid. at § 224.72.

[123] Ibid.

[124] Ibid.  at 9-21.

[125] Ibid.

[126] 25 U.S.C.A. § 3504(b) (West 2005).

[127] Ibid.

[128]Branch, supra note 109, at 9-21.

[129] Elizabeth Ann Kronk, Tribal Energy Resource Agreements: The Unintended “Great Mischief for Indian Energy Development, 29 Pace Envtl. L. Rev. 811, 815 (2012).

[130] Ibid. at 816 (citing 149 Cong. Rec. s74590-60 (daily ed. June 5, 2003) (statement of Senate Ben Nighthorse Campbell, Chairman, S. Comm. on Indian Affairs)).

[131] Branch, supra note 109 at 9-19, 25 C.F.R. § 162.538 (2013).

[132] Ibid.

[133] 25 C.F.R. § 162.563 (2013).

[134] Ibid.

[135] Ibid. at § 162.555.

[136] Renewable Energy Generation in the Highway Right-of-Way, FWHA-HEP-16-052, 1,2.

[137] Id. at 5, 23 CFR 710 Subpart D (2016).

[138] 23 C.F.R. § 710.405 (2016).

[139] Ibid.

[140] Ibid.

[141] 23 C.F.R. § 645.213 (Current through August 3, 2017) (West).

[142] Kronk, supra note 129, at 5.

[143] Alternative Uses of Highway Right-of-Way: Accommodating Renewable Energy Technologies and Alternative Fuel Facilities, U.S. Dept. of Transportation, Jan. 2012 at 14.

[144] Ibid.

[145] Diane W. Whitney, Land Use Regulation and The Railroads: Who’s in Charge?, Connecticut Law Tribune, Jan. 12, 2015, http://www.pullcom.com/news-publications-671.html5

[146] Ibid.

[147] Ibid.

[148] Ibid.

[149] Ibid.

[150] Ibid.

[151] Ibid.

[152] 43 U.S.C. § 912 (1922).

[153] 28 U.S.C. § 1491(a)(1) (2011).

[154] 28 U.S.C. § 1346(a)(2) (2013).

[155] What Constitutes Abandonment of a Railway Right of Way, 95 A.L.R. 2d 468-499 (1966)

[156] 45 U.S.C. § 801 (1976).

[157] 49 USC § 10101 (1980).

[158] 16 U.S.C. § 1247(d) (2014).

[159] 49 C.F.R. 1152.29

[160] Klass, supra note 4, at1888-89.

[161] Ibid. at 1907.

[162] 15 U.S.C. § 717f(e).

[163] Ibid. at 1943.

[164] Ibid. at 1900.

[165] Ibid.

[166] Ibid. 1942.

[167] Ibid. at 1936.

[168] Ibid. at 1937.

[169] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017) (statement of Rep. Frank Pallone (D-NJ)).

[170] Ibid.

[171] Regional Transmission Organizations, 89 F.E.R.C. ¶ 61,285, at p. 71 (1999) [hereinafter Order No. 2000].

[172] Klass, supra note 4, at 1938.

[173] Order No. 2000 at 1.

[174] Klass supra note 4, at 1938.

[175] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017) (statement of Rep. Greg Walden (R-OR)).

[176] North Carolina Clean Energy Technology Center, The 50 States of Grid Modernization: Q1 2017 Quarterly Report, May 2017.

[177] “NextGrid” Utility of the Future Study, Illinois Commerce Commission, available at https://www.icc.illinois.gov/NextGrid/.

[178]  PowerForward, Ohio Public Utilities Commission, available at https://www.puco.ohio.gov/industry-information/industry-topics/powerforward/.

[179] Klass supra note 4, at 1944-45.

[180] Order No. 2000 at 152.

[181] Klass supra note 4, at 1946.

[182] Ibid. at 1947.

[183] Ibid.

[184] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017) (statement of Nick Brown, President and CEO of Southwest Power Pool).

[185] Ibid.

[186] Klass supra note 4, at 1947.

[187] Ibid.  at 1948.

[188] Ibid.  1939.

[189] S.C. Pub. Serv. Auth. V. FERC, 762 F.3d 41, 63 (D.C. Cir. 2014) (holding FERC has the authority under the Federal Power Act to require transmission providers to partake in the regional planning process).

[190] Ibid.

1. Commerce Comm’n v. FERC, 721 F.3d 764, 770 (7th Cir. 2013) (affirming MISO’s postage-stamp cost allocation financing scheme for regional transmission lines, a scheme which has been struck down on different construction by PJM).

[191] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017).

[192] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017) (statement of Bradley Jones, Chairman and CEO of New York Independent Service Operator).

[193] Ibid.

[194] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017) (statement of Rep. Jerry McNerney (D-CA)).

[195] Powering America: A Review of the Operation and Effectiveness of the Nation’s Wholesale Electricity Markets: Hearing Before the H. Energy and Commerce Comm., 115^th Cong. (2017).