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New Senate Draft Expands FERC Backstop Authority Over Transmission

The Senate Energy and Natural Resources Committee last Wednesday released a new discussion draft of the electric transmission title of its broad-based energy bill, which would give FERC jurisdiction to site high-voltage transmission (345-kV or more) facilities when a state fails to act within one year from the filing of an application, imposes conditions that would "unreasonably interfere" with a project or denies an application.

The new draft responds to an appellate court decision earlier this year, which rejected the Federal Energy Regulatory Commission's (FERC) interpretation that its backstop siting authority extended to cases where state regulators denied applications for electric transmission project applications .

In late February the U.S. Court of Appeals for the Fourth Circuit in Richmond, VA, rejected FERC's "expansive interpretation" of language in the Energy Policy Act of 2005 (EPAct), which granted the federal agency preemption authority over the siting of electric power transmission projects when a state regulator has "withheld approval" of a permit application for more than one year.

In 2006 orders the Commission interpreted the legislative phrase "withheld approval" to include "denied," but the the Fourth Circuit ruled otherwise. "With FERC's word substitution, the statutory phrase would read 'denied approval [of an application] for more than one year.' The substitution renders the entire phrase nonsensical because, in the context of dealing with a permit application, the final nature of 'denied' conflicts with the continuing nature of 'for more than one year,'" wrote Judge M. Blane Michael at the time.

The Fourth Circuit last month denied the agency's request for a review of the decision by the full court.

The EPAct amendment of the Federal Power Act gave FERC the authority to issue permits for the construction or modification of electric transmission facilities in national interest corridors when a state regulator has "withheld approval for more than one year after the filing of an application." Until EPAct, FERC historically had no permitting authority over transmission facilities. This had always fallen to the states.

The new draft also gives FERC lead agency status for development of records of decision for projects on private lands and on public lands in corridors that have been designated by EPAct as energy corridors.

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