DOE Proposed Rule “Coordination of Federal Authorizations for Electric Transmission Facilities”

Introduction

The Biden administration has “set an ambitious U.S. goal of achieving a carbon pollution-free power sector by 2035 and net zero emissions economy by no later than 2050.”¹ In order to reach that goal, the United States needs to site and construct a massive amount of new high-voltage electric lines to connect the new renewable power resources needed to replace our existing generation fleet. A Princeton University study provides that transmission capacity will need to increase 60 percent to reach that goal.² DOE’s latest needs study concludes that a 57 percent growth in transmission capacity by 2035 is needed just to meet future load scenarios.³ DOE has been researching such needs because the agency has been authorized to act as the lead agency for coordinating all Federal authorizations and related environmental reviews for the siting of electric transmission facilities since the passage of the Energy Policy Act of 2005. In this role, DOE released a pre-publication copy of a forthcoming proposed rule that seeks to expedite the siting, permitting, and construction of electric transmission facilities.

Titled, “Coordination of Federal Authorizations for Electric Transmission Facilities,” DOE’s proposed rule would (1) establish the Coordinated Interagency Transmission Authorizations and Permits Program (“CITAP Program”) to accelerate the federal environmental review and permitting processes of certain high voltage transmission projects, and (2) modify the existing Integrated Interagency Preapplication Process (“IIP Process”) to require project proponents to provide additional information and develop public engagement plans. The proposed rule comes on the heels of simultaneous efforts from DOE, the Federal Energy Regulatory Commission (“FERC”), and other federal agencies to expedite the siting of electric transmission facilities and the interconnection of new electric generation.

Although the stated goal of expediting federal reviews is laudable, the proposed rule is not a silver bullet and significant barriers to siting, permitting, and constructing new electric transmission infrastructure remain unaddressed.

The proposal was published in the Federal Register on August 16, 2023 and comments are due on October 2, 2023. Additionally, DOE plans to host a webinar regarding the proposed rule on August 23, 2023.

Background

Section 216(h) of the Federal Power Act (“FPA”) establishes DOE as the lead agency responsible for coordinating the Federal authorizations and environmental reviews required to site a high voltage transmission project. The statute also requires the Secretary of Energy to coordinate the federal permitting process and environmental review with the separate permitting and environmental reviews of Indian Tribes, multi-state entities, and state agencies. In addition, Section 216(h) requires the Secretary of Energy to (1) establish milestones for reviews of Federal authorizations (though they can be appealed to the President in some circumstances); (2) provide an expeditious pre-application mechanism for project proponents; (3) prepare, in consultation with affected agencies, a single environmental review document that will be the basis for all federal decisions of the proposed project; and (4) issue regulations necessary to implement Section 216(h) and coordinate with all affected agencies under a memorandum of understanding (“MOU”) to ensure that the review and permitting of electric transmission facilities is timely and coordinated.

In 2016, under its Section 216(h) authority, DOE established the IIP Process.⁴ The IIP Process is currently a voluntary process that allows project proponents to submit information to DOE before submitting a formal application to aid in the early identification of issues. As discussed below, the proposed rule seeks to modify key elements of the IIP Process.

Creation of CITAP Program

The proposed rule’s most critical change is the establishment of the CITAP Program, which aims to establish a process under which federal environmental reviews and authorizations would be completed within two years. DOE makes three key proposals related to the CITAP Program.

First, project participants must participate in the IIP Process in order to be eligible for the CITAP Program. According to DOE, this will facilitate the timely submission of materials needed for Federal authorizations and environmental reviews and ensure that DOE has the information necessary for all Federal entities to review authorization applications for and prepare environmental reviews of projects. However, as discussed below, this may actually result in further delay for some projects because these new changes may add more time to the siting process.

Second, the CITAP Program would allow DOE to set intermediate milestones and deadlines for these Federal authorizations. Such milestones would ostensibly help to ensure that the project remains on track and is able to complete its federal environmental reviews and authorizations within two years. However, the two-year timeline commences only once a Notice of Intent to prepare an Environmental Impact Statement (“EIS”) issues. DOE has separately released a draft of the standard schedule, and that schedule is available here.

Third, the proposed rules would establish DOE as the lead agency for the National Environmental Policy Act (“NEPA”) analysis of the project. Doing so would enable DOE to control and coordinate the NEPA review process with other federal agencies and set schedules for the NEPA process. Additionally, the record established and the EIS prepared through the NEPA process would inform all relevant Federal entities’ decisions to authorize the project.

Proposed changes to the IIP Process

In implementing the CITAP Program, DOE proposes changes to the IIP Process. Specifically, DOE proposes to (1) make participation in the IIP Process mandatory for project participants that wish to participate in the CITAP and (2) amend the current IIP Process, including requiring project proponents to provide additional information during the process.

A. Background on IIP Process

The current IIP Process is voluntary and was created to give prospective applicants an opportunity to identify and resolve issues before submitting an application.⁵ Under the current IIP Process, project proponents can submit an initiation request to DOE that includes a summary of the (i) proposed project, (ii) affected environmental resources and impacts, and (iii) early identification of project issues. DOE then notifies entities with jurisdiction over the project that would participate in the project’s evaluation and schedules an IIP Initial Meeting for Federal and Non-Federal entities to discuss the project with the proponent and consider any potential issues. To complete the current IIP Process, a project proponent can request a “Close-Out Meeting” 45 days after the Initial Meeting. During the Close-Out Meeting, Federal entities, Non-Federal entities, and the project proponent discuss remaining issues of concern and identify a potential “Lead Agency” for the NEPA process. After the Close-Out Meeting, DOE prepares a Final IIP Resources Report to detail the proposed project, which Federal entities are encouraged to use to inform the NEPA process. Finally, all participating Federal and Non-Federal entities identify a preliminary schedule for authorizations for the proposed project.

B. Changes to IIP Process

While the proposed rule makes many small changes to the current IIP Process (such as requiring project proponents to name their contracted environmental and engineering firms and subcontractors), the proposed rule would also insert three additional requirements that will likely add additional costs and burdens on transmission project applicants.

First, instead of the affected environmental resources and impacts study currently required as part of a proponent’s initiation request, the proposed IIP Process would require project proponents to submit thirteen separate resource reports. The resource reports are meant to facilitate the relevant Federal entities’ own environmental analyses and authorizations and to ensure compliance with various natural resource statutes, such as the National Historic Preservation Act, Endangered Species Act, and NEPA. This approach to environmental resource reports closely mirrors FERC’s requirements of applicants in the interstate natural gas context, where eleven different resource reports cover the general project description; water use and quality; fish, wildlife, and vegetation; cultural resources; socioeconomics; geological resources; soil resources; land use, recreation, and aesthetics; air and noise quality; alternatives; and reliability and safety. The areas where DOE deviates from FERC’s approach coincide with certain of the Biden administration’s areas of emphasis. For example, DOE would require additional stand-alone resource reports (for a total of thirteen) to address potential impacts to Tribal interests (which are discussed with cultural resources in the FERC context) and potential impacts to communities of interest (which are discussed with socioeconomics in the FERC context).

It is worth noting that DOE estimates the cost of each of the thirteen reports to be between $18,734 and $42,933. This estimated cost is low based on our experience with similar resource reports in the FERC context. For example, applicant-prepared environmental and cultural resource reports often require teams of biologists, archeologists, etc., to do extensive field surveys to catalog what is there and to analyze potential impacts, which makes those analyses far more expensive than DOE’s purported estimates. As a result, we believe that DOE is severely underestimating the costs of this proposal.

Second, and instead of the summary of early identification of project issues currently required as part of a proponent’s initiation request, DOE proposes to require project proponents to submit a public participation plan, which would include a public engagement plan. As DOE itself recognizes in the proposed rule, resource reports and plans will “require a significant investment of time and effort on the part of the project proponent.”⁶ DOE claims that this is unlikely to be an additional burden on respondents because the same information would likely be required during other unspecified transmission siting processes. However, as mentioned above, DOE seems to be underestimating the costs that would be imposed upon project proponents under the proposed rule.

Third, the proposed IIP Process will create a formal mechanism by which project proponents can request a meeting with the relevant Federal entities.⁷ This could prove to be a useful mechanism for project developers. Like the current IIP Process, project proponents would still engage in an Initial Meeting and Close-Out Meeting with Federal entities to ensure that Federal entities have opportunities to provide guidance. However, unlike the previous IIP Process, project proponents would now have a procedure by which to request a “review meeting” with the relevant Federal entities after the Initial Meeting in which federal agencies have an additional opportunity to discuss potential issues. However, the proposed rule makes it clear that the IIP Process is meant to be “iterative” and that the new process to initiate a review meeting does not preclude any other meetings or communications between project proponents and Federal entities.

Remaining Issues

While the proposed rule’s goal of increasing the speed at which proposed transmission projects receive Federal authorization and environmental approvals is laudable, we see at least two major issues with the rule.

First, the rule seems less likely to result in a completed review process within two years, and more likely to actually elongate review timelines due to the mandated pre-application reviews that have no time limits and carry 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. Thus, rather than streamlining project reviews, the proposed process 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 a proposed rule from the Council on Environmental Quality (“CEQ”), which would “expand 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 counsel proactively during the project planning and NEPA review process to address issues that might later arise in litigation.

Second, for all of the efforts in aligning and coordinating the work of different agencies and furthering the understanding of projects’ impacts, this proposed 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 projects benefit. The ability to use eminent domain authority for these projects is limited and does not apply to the states themselves. 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. However, even if these efforts, and the proposed rule, are ultimately implemented as currently proposed, there is still a major gap in eminent domain authority insofar as states, not the federal government, retain such 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 such project or require a reroute if land rights are unable to be obtained. As a result, even if the proposed rule expedites the process of federal approvals for transmission siting and FERC’s pending proposed 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 gap in eminent domain authority and could force developers to build transmission lines that are not along the most efficient or cost-effective path in an effort to avoid state-owned land if they are unable to get state authorizations for their projects.

Next Steps

Due to the far-reaching implications of the proposed rule, and the concerns addressed above, we expect that many comments from a multitude of viewpoints will be filed with DOE. The proposed rule may change before it is finalized as part of the rulemaking process. Participating in the public comment period is the best opportunity to influence the rulemaking process and directly communicate concerns and comments to DOE staff working to finalize the rule.

Vinson & Elkins is available to provide more in-depth information about the proposed rule, the implications on your operations, and steps you can take now to mitigate exposure to its future ramifications, should the proposed rule be finalized. Vinson & Elkins also has broad experience guiding interested parties through the project planning and NEPA review process, helping to best position projects for consideration and potential future judicial action. The comment period closes 45 days after the rule is published in Federal Register. To learn more about the proposed rule and transmission siting issues, please contact the Vinson & Elkins attorney with whom you usually work or the attorneys below.

¹ Fact Sheet: President Biden to Catalyze Global Climate Action through the Major Economies Forum on Energy and Climate, White House (Apr. 20, 2023).

² Eric Larson, et al., Net-Zero America: Potential Pathways, Infrastructure, and Impacts, Final Report, Princeton Univ. (Oct. 29, 2021), available at: https://netzeroamerica.princeton.edu/the-report.

³ National Transmission Needs Study, U.S. Dept. of Energy 106 (Feb. 2023) https://www.energy.gov/sites/default/files/2023-02/022423-DRAFTNeedsStudyforPublicComment.pdf.

⁴ Coordination of Federal Authorizations for Electric Transmission Facilities, 81 Fed. Reg. 66,500 (Sept. 28, 2016) (codified at 10 C.F.R. 900).

⁵ See 10 C.F.R. § 900.4.

⁶ Dept. of Energy, Coordination of Federal Authorizations for Electric Transmission Facilities, 12 (proposed Aug. 8, 2023) (to be codified at 10 C.F.R. Part 900), https://public-inspection.federalregister.gov/2023-17283.pdf.

⁷ Id. at 11.  Note that a “relevant Federal entity” is essentially any Federal entity that must be consulted, must complete a review, or must issue a permit before a project may begin.  The proposed rule defines “relevant Federal entity” under section 900.2 as “a Federal entity with jurisdictional interests that may have an effect on a qualifying project, that is responsible for issuing a Federal authorization for the qualifying project, that has relevant expertise with respect to environmental and other issues pertinent to or potentially affected by the qualifying project, or that provides funding for the qualifying project.”

Although whether an agency is considered a relevant Federal entity will vary based on the proposed project, agencies that are likely to often be considered relevant Federal entities include the FERC, the Environmental Protection Agency, the Council on Environmental Quality, the Office of Management and Budget, the Federal Permitting Improvement Steering Council, and the Department of the Interior.