A FERC conference this fall aired new major policy options for capacity markets. Amid the battle, ISOs are making tactical adjustments.
From EPAct to Order 1000, siting authority continues evolving.
process, FPA § 216 places certain obligations on DOE and FERC. DOE was required to conduct a study of electric transmission congestion, following which it may designate as a NIETC any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affect consumers. FERC was required to issue rules establishing an application process for issuing permits for the construction or modification of electric transmission facilities in a NIETC designated by DOE. But aspects of DOE’s and FERC’s actions to satisfy these requirements have been rebuked by the court of appeals.
• Piedmont: In 2006, as required by EPAct 2005 § 1221, FERC issued Order No. 689, et al. ,14 implementing new regulations to establish filing requirements and procedures for entities seeking to construct electric transmission facilities. FPA § 216 required FERC to issue rules specifying the form of, and the information to be contained in, an application for proposed construction or modification of electric transmission facilities in a NIETC, and the manner of service of notice of the permit application on interested persons. FERC analyzed the five circumstances, listed above, as to when it may preempt a state and issue a construction permit. The most controversial determination concerned the fourth circumstance, i.e., when a state commission has withheld approval for more than one year. FERC concluded that even if a state does act within the one year period specified in FPA § 216, FERC would step in if the state authority had denied an application. Specifically, in Order No. 689, FERC determined that the denial of an application by a state commission equated to withholding approval pursuant to FPA § 216. 15 According to Order No. 689, if a state regulator denied a permit application after a full review, that applicant could still apply to FERC for a federal permit for the previously denied project. One commissioner dissented on this issue, arguing that the majority’s interpretation contradicted the plain language and purpose of the statute. 16
State utility commissions and community interest organizations petitioned for review of Order No. 689, 17 challenging FERC’s determination that a denial of a transmission line siting application by a state authority is equivalent to withholding approval. The Fourth Circuit sided with the petitioners and concluded that FERC’s interpretation was contrary to the plain meaning of the statute, because EPAct 2005 did not give FERC transmission permitting authority when a state has affirmatively denied a permit application within the one-year deadline set by FPA § 216. 18 The court explained that when FERC substituted “denied” for “withheld” in Order No. 689, the agency ignored the context in which “withheld” is used. FERC’s substitution would make the statutory phrase read “denied approval [of an application] for more than 1 year,” thereby rendering the entire phrase nonsensical, according to the Fourth Circuit, because the final nature of the term “denied” conflicts with the continuing nature of the phrase “for more than 1 year.” 19
The Fourth Circuit determined that FPA § 216 grants limited jurisdiction to FERC. In contrast, FERC’s interpretation of the “withheld approval”