FERC Establishes Federal Backstop for Transmission Siting, Mandates 20-Year Planning Horizon

Washington D.C. – The Federal Energy Regulatory Commission (FERC) has recently enacted significant regulatory changes aimed at accelerating the development of crucial electricity transmission infrastructure across the United States. These new rules, particularly Order No. 1977 and Order No. 1920, are designed to streamline the approval process for interstate power lines, potentially making it more challenging for regional utilities and state commissions to reject projects. As technology investor and author Ramez Naam stated in a recent social media post, “A new court ruling makes it somewhat harder for regional utilities and their (often captured) utility commissions to reject transmission lines. This is a small step. What we need is closer to eminent domain for FERC supported transmission.”

FERC’s Order No. 1977, issued in May 2024, establishes a limited federal backstop authority for siting interstate electric transmission facilities. This rule allows FERC to issue a federal permit for projects located within designated "National Interest Electric Transmission Corridors" (NIETCs) if state permits have been denied or have been pending for over one year without a decision. This mechanism provides a pathway for critical transmission lines to proceed even in the face of state or local opposition, directly addressing the challenge of project rejections. FERC Chairman Willie Phillips emphasized that the rule provides a "clear and efficient process for developers to seek a federal permit for transmission projects that are in the public interest and that face state or local opposition."

Complementing this, Order No. 1920, also approved in May 2024, mandates long-term regional transmission planning, requiring transmission providers to develop 20-year plans and revise cost allocation methods for new projects. This comprehensive planning aims to identify future grid needs and facilitate the construction of large-scale transmission lines necessary for grid reliability and integrating diverse energy sources. While subsequent modifications in Order No. 1920-A and 1920-B have aimed to bolster state regulators' participation in cost allocation discussions, the overarching goal remains to ensure that vital transmission projects are planned and built efficiently.

Despite these federal efforts, the new regulations have drawn criticism and legal challenges from various state public utility commissions, utilities, and industry groups. These parties primarily express concerns over how costs will be allocated across multiple states and whether FERC is encroaching on state authority over transmission planning and siting. Ramez Naam's call for "closer to eminent domain" for FERC-supported transmission underscores a sentiment among some advocates that even with these new rules, further federal authority may be needed to overcome persistent local and regional hurdles to infrastructure development.

The implementation of these FERC orders is expected to significantly impact the nation's energy landscape, potentially accelerating the deployment of transmission infrastructure vital for grid modernization and the integration of renewable energy. However, the ongoing legal challenges to Order No. 1920, particularly regarding cost allocation, introduce an element of uncertainty regarding the timeline and full scope of their impact. Order No. 1977, the backstop siting rule, has faced criticism but has not yet been challenged in federal court, allowing its provisions to stand as a key tool for federal intervention in transmission siting.