DOE Issues Final Rule on Coordination of Federal Authorizations for Electric Transmission Facilities

Introduction

Electric transmission facilities are more important now than ever as the United States navigates the energy transition and growing demands for electricity. As Federal Energy Regulatory Commission (“FERC”) Chairman Willie Phillips has noted, a “robust transmission network is the foundation for electric reliability,” and building additional “transmission will enable [ratepayers in the United States] to access new, low-cost generating resources.” However, the United States needs significant new transmission facilities to meet the expected growing demand for electricity, according to the October 2023 National Transmission Needs Study by the DOE. Yet, investments in transmission projects have actually decreased in the past decade. And, to make matters worse, when investments are made in transmission projects, those projects face a lengthy permitting process that includes a federal environmental review with a median review time of approximately four years, with some projects taking up to 11 years.

As we discussed in a previous article, the Biden administration is taking steps to address the issues with the current permitting process for transmission lines. In line with these efforts, the DOE released the final rule establishing the CITAP Program. According to the DOE, this new rule and the CITAP Program are meant to “make the federal permitting process for transmission infrastructure more efficient and effective without sacrificing the quality of environmental reviews.”

It is not yet clear whether this rule will actually create a more efficient permitting process because it does not solve major issues that often delay transmission projects, such as the challenges transmission projects face in federal courts and the gap in federal authority to efficiently site interstate transmission projects in the face of state opposition. What is clear, however, is that project proponents will need to work with their project teams, subject matter experts, and regulatory and environmental counsel to ensure that they navigate this new process in a way that best positions their projects for an efficient permitting process that will withstand judicial review.

The CITAP Program

The final rule creates the CITAP Program in an effort to streamline the federal permitting process for electric transmission projects. To participate, project developers must first complete a revised version of the pre-existing IIP Process, described further below. During that process, the DOE develops a project-specific schedule that contains milestones and deadlines for all necessary federal actions and approvals and ensures that the project receives those federal decisions within two years of the DOE’s publication of a notice of intent (“NOI”) to prepare an environmental review document. The DOE must also maintain a consolidated administrative docket that contains information submitted and created during the IIP Process as well as information assembled by federal entities for authorizations and reviews after the IIP Process.

Although the DOE issued a Notice of Proposed Rulemaking for this rule in August 2023 and received numerous comments, it made few notable changes in the final rule. Importantly, DOE reduced the total time for the IIP Process by 100 days, established criteria that the DOE may consider when evaluating requests to determine whether a proposed electric transmission facility is a “qualifying project,” and explicitly allowed members of the public to request and obtain the non-confidential materials in a project’s consolidated administrative docket. Most other changes from the proposed rule were intended to improve clarity, eliminate duplicative requirements, and conform requirements to better align with existing federal statutes, regulations, and procedures.

The IIP Process

Much of the heavy lifting under the CITAP Program occurs during the IIP Process. The IIP Process is meant to prepare project proponents for federal reviews by requiring them to gather, submit, and discuss with federal and non-federal entities information that is required for federal agencies to authorize the project. During this process, the DOE also develops the project-specific schedule and sets binding deadlines for federal agency reviews and authorizations.

The IIP Process includes three key meetings: an initial meeting, a process review meeting, and a close-out meeting. For each meeting, the project proponent must initiate the meeting by submitting a request to the DOE that includes specific information about the project.

Next, the DOE must review the meeting request and determine whether it meets the statutory requirements for the type of meeting requested, on a timeline that depends on the type of meeting requested. If the request does not meet the statutory requirements, the DOE must provide its reasons for its finding and describe how the project proponent may address deficiencies in its request. If the request meets the statutory requirements, the DOE is required to convene the requested meeting within a certain number of days. The DOE, project proponent, and relevant federal entities identified by the DOE must all attend each meeting, while relevant non-federal entities identified by the DOE are invited to attend and participate.

After each meeting, the DOE must circulate a summary of the meeting, give participants an opportunity to review and correct the summary, incorporate any corrections, and finalize the summary before providing a final summary to each participant and filing a copy of the final summary in the consolidated administrative docket. After the initial and process review meetings, the project proponent must make a request for the next meeting to continue the IIP Process, but there is no deadline by which the project proponent must make its next meeting request.

After the close-out meeting, the DOE and any NEPA joint lead agency will issue a NOI to prepare an environmental review document for the proposed project. This NOI must be issued within 90 days of the later of the IIP Process close-out meeting or the receipt of a complete application for a federal authorization for which NEPA review will be required. After the NOI is issued, federal agencies must complete the federal permitting process within two years by following the project-specific schedule that was developed during the IIP Process.

Remaining Issues

While the rule aims to increase the speed at which proposed transmission projects receive federal authorization and the DOE made a few changes to the final rule, we still see at least two major issues with the final rule.

First, while the DOE reduced the timeline of the IIP Process in its final rule, it is still possible that the CITAP Program may actually lengthen review timelines, and it carries no promise or guarantee that issues that have stymied past projects will get resolved. Moreover, one of the primary drivers of siting and construction delay is the proliferation of court challenges that private citizens and groups can bring alleging deficiencies in project review under NEPA and other natural resource statutes, which can tie up the associated approvals in months or years of litigation and require agencies to conduct additional analysis. After all, only Congress can change statutory requirements, and all relevant agencies must still meet those statutory responsibilities. Notably, “binding deadlines” that DOE seeks to establish cannot override or violate each federal agency’s statutory requirements. Thus, rather than streamlining project reviews, the process in the DOE’s new rule could make it more difficult for agencies to meet all of these new requirements within the required timeframes, and any efforts to streamline could result in additional legal challenges brought by project opponents under applicable laws. For example, the recent Fiscal Responsibility Act of 2023, which amended NEPA in order to speed up environmental reviews for energy and other infrastructure projects, will likely increase project litigation risk in light of the recently finalized rule from the Council on Environmental Quality, which expands the analysis required under NEPA. As a result, it is critically important for transmission developers to mitigate the risk and potential impact of NEPA challenges by working with their consultants and counsel proactively during the project planning and NEPA review process to ensure issues are fully addressed in the administrative record to reduce the potential for litigation pitfalls.

Second, for all of the efforts in aligning and coordinating the work of different agencies and furthering the understanding of projects’ impacts, the new rule does not address a critical gap in the agencies’ ability to facilitate interstate transmission development in the face of opposition from states. Recent history has shown that states are unwilling to bear the environmental costs of large transmission facilities when they perceive that they receive little or none of the transmission project’s benefits. The ability to use federal eminent domain authority for these projects is quite limited and does not apply to the states themselves. The DOE and FERC have both been working to update processes related to federal transmission siting backstop authority, which would allow FERC to step in and employ its siting authority over certain multi-state transmission projects when states have denied approval or failed to act on a proposal for more than one year. In December 2023, the DOE issued guidance related to National Interest Electric Transmission Corridor (“NIETC”) designations and stated that it expected to release a preliminary list of potential NIETC designations for public comment in the spring of 2024. Similarly, FERC has signaled that it is planning to release the final rule on its backstop authority on May 13, 2024. However, even if these efforts are ultimately implemented as currently proposed, there is still a major gap in eminent domain authority insofar as state lands are not subject to claims of eminent domain under existing statutory authority. Thus, for projects that cross state land (such as river bottoms) or a state conservation easement, for example, the state will still have the ability to block the crossings, some of which lack any feasible reroutes (e.g., rivers forming the borders between states). As a result, even if the DOE’s final rule expedites the process of federal approvals for transmission siting, and FERC’s final rule allows it to use its backstop authority for state authorizations that are taking too long (assuming that too survives judicial review), the currently proposed system still fails to address the significant gap in eminent domain authority.

Next Steps

Those supporting transmission projects will need to quickly develop a strategy for how to navigate this new, untested federal permitting process. This will be a highly project-specific endeavor, so transmission project proponents should work closely with their project teams, subject matter experts, and counsel to ensure that the authorizations for their projects will be able to withstand judicial review.

Vinson & Elkins is available to provide more in-depth information about the rule, the implications for your operations, and steps you can take to navigate the new CITAP Program. To learn more about the CITAP Program and other transmission siting issues, please contact the Vinson & Elkins attorney with whom you usually work or the attorneys below.