On February 1, 2011, the United States Court of Appeals for the Ninth Circuit (the “Ninth Circuit”) decided that the Department of Energy (“DOE”) failed to consult with affected states when conducting their congestion study as part of section 216 of the Federal Power Act (“FPA”), and the designations of the Mid-Atlantic Area National Corridor (“Mid-Atlantic Corridor”) and the Southwest Area National Corridor (“Southwest Corridor”) were arbitrary and capricious. DOE also failed to undertake any environmental study as required by the National Environmental Protection Act (“NEPA”). Thus, the DOE congestion study and the national interest electric transmission corridor (“NIETC”) designations are vacated and remanded back to DOE.
The Energy Policy Act of 2005 added the new section 216 to the FPA. That section provides that DOE must conduct a study on electric transmission congestion, and the study should be conducted in consultation with any affected states. Based on the study, constrained areas of the country may receive a NIETC designation. The NIETC designation allows the Federal Energy Regulatory Commission to approve siting permits when a state commission fails to approve a permit application within a year. This backstop siting authority has been controversial and litigated in other federal courts (see February 20, 2009 edition of the WER).
DOE released their congestion study in 2006, and DOE states it did reach out to affected states by meeting with the National Association Regulatory Utility Commissioners (“NARUC”) and other state entities. Then on October 5, 2007, DOE released an order designating the Southwest and Mid-Atlantic Corridors as NIETCs, and in that order DOE stated no environmental study was needed. DOE also argued that although Congress said states must be consulted, Congress did not define “consultation.” DOE argued their definition of consultation should receive deference, and DOE also argued that any failures to comport with various requirements are harmless.
The present case represents thirteen petitions challenging the DOE’s implementation of section 216, and in remanding back to DOE, the Ninth Circuit found that DOE’s errors were not harmless. According to the court, the DOE’s decision was also not adequately documented. Regarding state participation, the Ninth Circuit took particular issue with DOE having an invitation-only workshop and not providing data used for models as part of the congestion study. Also, EPAct actually requires DOE to confer with the states, and a post-release of modeling data will not excuse the agency from its obligation to consult with states in preparing the study.
Although several petitioners challenged aspects of the NIETC designations, the Ninth Circuit did not address those concerns. Since the designations are now vacated, those particular challenges are now moot.
Judge Ikuta dissented from the majority and said that the affected states still have opportunity to participate and object to the study, and no evidence was presented to show DOE would have reached a different conclusion. However, as the current case law stands, DOE will be required to re-do the congestion study with full consultation of the states. Also, DOE must now comply with NEPA requirements.
A copy of the full court opinion is available here.