Commissioner Christie’s Concurrence to Transmission Backstop Siting NOPR

Docket No. RM22-7-000

Updating the Commission’s existing regulations and practices governing the Commission’s exercise of its transmission siting backstop authority is required by a statutory change adopted last year by Congress.[1]  While, of course, we must implement the change made by Congress, a simple update to our existing regulation would have been sufficient.  This order,[2] however, goes beyond merely implementing the required conforming changes to our existing regulation.  So while I concur with putting these amendments out for comment, I look forward to reviewing the comments on this proposal, particularly from organizations representing state regulators. 

Some relevant history:  States have historically had sole authority for permitting and siting transmission lines (two very separate functions), and for good reasons.  Every power line, from the small ones below 100 kV to the huge 765 kV lines, visible for many miles around, comes with its own unique set of facts and local concerns.  One of those concerns—let us not forget— is the cost, and that cost will be paid, in some portion, by consumers in the situs state, through FERC formula rates.  So, whenever the day comes when FERC orders a line built after a state has found it was not needed or found the cost was not reasonable and prudent, FERC will not only be choosing a route that was rejected by state regulators, but FERC will be ordering the state’s consumers to pay for the project, under applicable cost allocation rules.  And even if the proposed project ends up being litigated for years before any steel is in the ground — a virtual certainty for a controversial project that was rejected by state regulators but imposed by FERC — consumers will likely be paying through formula rates for years for pre-construction costs, which can be substantial.[3]

State regulators are much better prepared to deal with that myriad of local concerns, including concerns over routing and costs, than FERC.  Furthermore, state processes are far more convenient and user-friendly than processes at FERC, if for no other reason than geographic proximity.  So, waiting one full year to allow a state to “go first” and make its decision makes sense for a lot of reasons.  One obvious reason is that if the line is truly needed, the state regulators will in all likelihood approve it, and no FERC staff time and resources will need to be expended at all.  The whole mantra that goes “the states are blocking needed transmission all over the country!” is simply a political and special-interest narrative.  The steadily mounting increases over the past decade in transmission rate base nationally,[4] with concomitant skyrocketing increases in transmission costs to consumers, blows up the narrative that states are systemically blocking needed transmission lines.  Contrary to the narrative, states need more authority to scrutinize transmission projects for need and prudence of cost, not less, to protect consumers.    

This proposed regulation changes the practice this Commission adopted in 2006 of holding off on all processes here for a year, to one in which pre-filing processes will begin, potentially concurrent with the initiation of state proceedings.[5]  That change is not required by last year’s congressional action.  It is an act of discretion.  

Some more history:  The Energy Policy Act of 2005[6] altered the traditional arrangement of state authority by creating FPA section 216, which provided this Commission with supplemental or “backstop” siting authority in certain narrow circumstances.  This authority was limited, not plenary:  As discussed in greater detail in the order, EPAct 2005 explicitly authorized the Commission to exercise transmission siting authority in DOE-designated “national-interest” transmission corridors when a state application had been rendered futile because the state lacks authority to act, the applicant lacks standing to obtain authority from the state, the state attaches conditions rendering the project infeasible, or the state fails to act within one year.[7] 

In Order No. 689, the Commission implemented this new FPA section 216 authority.[8]  In doing so, it construed that authority expansively in two respects..  First, it construed the statute as vesting siting authority in the Commission even when a state acts within a year to deny an application.  Second, it construed the statute as “permit[ting] parallel Commission-State processes.”[9]  But these expansive constructions were promptly curbed:  the first, by the Fourth Circuit Court of Appeals; the second, by the Commission itself. 

As for the first, the Fourth Circuit correctly found in Piedmont that Congress had not, in fact, authorized the Commission to grant an application that had been timely denied by a state.[10]  In direct response to the Fourth Circuit’s opinion, last year Congress expanded the Commission’s FPA section 216 a notch further, by empowering the Commission essentially to exercise a veto over a state’s timely decision to deny a transmission siting application.  In other words, in the IIJA, Congress sought to (and did) overturn the key holding in Piedmont. 

As for the second, the Commission wisely decided that “that States which have authority to approve the siting of facilities should have one full year to consider a siting application without there being any overlapping Commission process,” and therefore found that, “in cases where our jurisdiction rests on FPA section 216(b)(1)(C), the pre-filing process should not commence until one year after the relevant State applications have been filed.”[11]  This policy was not set in stone, of course — the Commission noted that it would “reconsider the issue” if in the future it turned out “that the lack of a Commission pre-filing process prior to the end of the one year is delaying projects or otherwise not in the public interest.”[12]  

This was sound policy in 2006, and I am not convinced that the intervening years have taught us that “the lack of a Commission pre-filing process prior to the end of the one year is delaying projects or otherwise not in the public interest.”[13]  Nor did Congress, in the IIJA, do anything to suggest that commencement of the Commission’s pre-filing process should be accelerated — although of course it could have. 

Nonetheless, I support this order, in its current form, because I believe that the proposal to allow states a 90-day comment period following a year of pre-filing processes may afford adequate protection for the states and their processes, provided that the Commission’s pre-filing process does not begin before the relevant state processes have been commenced.  This order actually invites comment on whether FERC’s pre-filing processes should be allowed to commence prior to the initiation of state proceedings.[14]  I would not even have raised that prospect.  I ask states in particular to review closely and comment on these provisions.  There are also other examples of this order going beyond where it needed to go.[15] 

To be clear, I have no concern with informal communications between applicants and Commission staff before the states have had a year to act.  Nor do I have any concern with allowing an initial consultation or other preparatory work during this one-year period.  But as discussed above, I believe strongly that the states should have an opportunity to complete their processes without any impediment or distraction from Commission proceedings. 

I support revising the Commission’s Regulations to reflect the modest expansion of its authority worked on FPA section 216 by the IIJA, and I am inclined to believe that the 90-day comment period afforded to states at the close of a year’s worth of pre-filing may adequately protect a state’s interests.  To that extent, I support putting this order out for comment and I look forward to the comments the Commission will receive. 

For these reasons, I concur.