On April 27, the Biden administration proposed new infrastructure initiatives aimed at enabling developers to finally break ground on their shovel-ready transmission line projects, including over $8 billion in funding from the U.S. Department of Energy, as part of the administration's effort to develop low-carbon energy.
On the same day, the U.S. Department of Transportation issued new guidance on how federal and state agencies can work together to approve construction of power transmission, clean energy and connectivity projects running along federal highway rights-of-way.
Burdensome permitting processes often stall plans to place high-voltage transmission line construction projects in highway ROW, which can leave developers with no choice but to negotiate multiple easements across private property — often leading to opposition, increased costs and further delays.
The administration's initiatives appear intended to alleviate impediments to construction of new transmission projects, including those presented by state and local permitting requirements and easement disputes with owners of private property. Notably, however, the administration proposal did not include legislation providing national siting authority for interstate transmission projects.
$8.25 Billion for Transmission Line Developers
The DOE is offering up to $8.25 billion to support developers constructing high-voltage transmission lines. Nearly half of the funds — $3.25 billion — are available from the Western Area Power Administration's Transmission Infrastructure Program, in the form of low-cost capital for applicants planning to build transmission lines connecting to renewable energy sources in Western states.
The remaining $5 billion is being provided by the DOE's Loan Programs Office in the form of loan guarantees to applicants seeking to construct innovative power transmission projects, such as high-voltage direct current systems and transmission lines located within highway ROW.
These two sources of funding could serve as a much-needed catalyst for transmission line projects, which require significant up-front investment to get off the ground.
Two Paths to Approval for Developers' Right-of-Way Development Projects
The DOT's guidance clarifies how ROW can be used by developers of clean energy and connectivity projects such as renewable energy, alternative fuels and broadband internet. It does not, however, change much for transmission line developers.
Essentially, the guidance encourages state and federal agencies to treat clean energy and connectivity projects like power transmission projects of a traditional utility. The guidance highlights two different methods for developers to seek approval: (1) accommodation as a utility under Title 23 of the Code of Federal Regulations, Part 645, or (2) approval as an alternative use of the highway ROW under Title 23, Part 710.
The first method allows for state approval of projects that satisfy the definition of "utilities" in the state's federally approved utility accommodation policy. This means that the federal government need not review the projects on a case-by-case basis. However, utility accommodation policies differ from state to state, which can increase complexity in interstate projects.
The second method allows the Federal Highway Administration to approve individual projects as alternative uses of highway ROW. Under this method, the FHWA can approve alternative uses within the ROW, so long as they are "in the public interest and will not impair the highway or interfere with the free and safe flow of traffic thereon."
And because power transmission and clean energy projects "provide an opportunity to reduce carbon emissions and are an important tool to address climate change," the acting administrator has already determined they are in the public interest.
The DOT's guidance highlights the administration's new focus on using these methods to approve developers' clean energy and connectivity projects in highway ROW. Additionally, the guidance encourages the FHWA to "collaborate as frequently as practicable with State departments of transportation in reviewing utility accommodation policies" and "foster an enhanced consideration of right-of-way and utility accommodation interests as part of the transportation planning process."
The administration's efforts may not be enough to allow all transmission line developers to break ground on their projects. This is because oftentimes the most onerous obstacles to development lie with the state-by-state patchwork of regulations, and the need to get approvals from individual state departments of transportation.
The goal is to connect the states that produce the most power to the states that use the most power. No matter the route, that will rely on interstate lines requiring multistate coordination and approval. Unfortunately, the federal guidance does little to address these hurdles.
The guidance from the FHWA encourages federal-state coordination to enable the construction of projects in highway ROW, but — beyond encouragement — it provides little new assistance for transmission line developers. Both the methods for approval highlighted in the new guidance can already be used for transmission line projects.
The real focus of the federal guidance is primarily to encourage states to treat clean energy and connectivity projects like traditional transmission line projects, so that their developers, too, can take advantage of ROW in the same way some developers of transmission lines have occasionally been able in prior circumstances.
However — regardless of the type of project — approval under Part 645 requires states to update their utility accommodation policies for federal approval. If a state decides not to update its policy, then there will be nothing for the federal government to approve.
Further development would likely be facilitated were the Federal Energy Regulatory Commission more clearly given effective siting authority for interstate transmission line projects, much like it has for interstate natural gas pipeline projects. Congress gave FERC "backstop siting" authority for transmission lines in Section 216 of the Federal Power Act — which allows the commission to approve transmission lines in designated corridors where states have withheld approval.
But various factors have allowed states to hold significant sway over those approvals. It remains to be seen whether the Biden administration will revisit the role of FERC in power transmission siting.
Completion of shovel-ready, high-voltage transmission projects could help boost the country's wind and solar power generation by almost 50%, according to some estimations. Streamlined approval of transmission projects through state and federal coordination could create hundreds of thousands of jobs, while strengthening transmission ties between neighboring power grids.
While the federal guidance and commitment of the FHWA are useful and a step forward, it will remain to be seen how state and local agencies with permitting authority respond.
This article is reprinted with permission from Law360, May 28, 2021, www.Law360.com.