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If the initial wave of litigation is any indication, the looming battles over the Department of Energy designation of electric transmission corridors in the Northeast and Southwest could be long, complex and expensive. At stake is the reach of the Energy Policy Act of 2005, which in effect creates a new federal appeals system for utilities and power generators as a backstop to state rejection of their transmission projects. The 2005 act obligated the Department of Energy to designate corridors of electric transmission congestion in need of upgrading. The linchpin of the act allowed the federal government to speed up the permit process for high-power electric transmission lines should states drag their feet on granting approval. Once a utility is granted a federal permit for the line, the company can use eminent domain power to acquire property, which adds to the threat to property owners in the path of a transmission line. Although the Department of Energy corridor designations are less than six months old, a variety of challenges have been launched, including federal environmental lawsuits in Pennsylvania and California federal courts; jurisdiction and sovereignty issues in three federal appellate courts, pitting at least 14 states against federal regulators; and a regulatory challenge at the Federal Energy Regulatory Commission. “They have given FERC a big club to bash the states over the head . . . it is the federal equivalent of a cattle prod,” said Peter Allen, a utilities regulatory expert in the San Francisco office of Thelen Reid Brown Raysman & Steiner. “But it is not clear yet how much FERC wants to use it,” said Allen. Commandeered state review? In October, the Energy Department designated a mid-Atlantic corridor that cuts a wide swath through Pennsylvania, Maryland, New Jersey, Delaware, New York, Virginia, West Virginia, Ohio and the District of Columbia. The Southwest corridor includes a 70,000 square miles of Southern California from Los Angeles and San Diego into Arizona. The national corridor designation gives FERC authority to review transmission projects if states fail to act within a year. And FERC has ruled that a state’s denial of a transmission project is also ground for federal review. That ruling led to an outcry among state regulators claiming that FERC had commandeered the state review process, leaving them with little option but to say yes or have FERC do it for them. The decision is being challenged. Piedmont environmental Council v. FERC, 07-1651(L), in the 4th Circuit. Similar challenges are pending in the 9th Circuit and 2nd Circuit. “There is now a federal [transmission line] siting procedure that didn’t exist before,” said Robert Young, deputy chief counsel for the Pennsylvania Public Utility Commission, which is challenging the mid-Atlantic designation. “The broad scope of this designation has the potential for any state siting case to be relitigated at the federal level,” he said. But investor-owned utilities think the federal role is critical. “We think it is very clear, in congested corridors designated by DOE, the FERC has authority to act, even if the state says no,” said Ed Comber, general counsel for the Edison Electric Institute, whose members control 71% of investor-owned power generation in the U.S., including Southern California Edison Co. to Alleghany Power. The first test The first test of the federal “backstop” authority over a state denial may already be near. The Arizona Corporation Commission voted 5-0 last year to deny a Southern California Edison request for a $581 million line to carry cheap power from Arizona to customers to Southern California, saying they didn’t want to be an “energy farm” for California. In a Feb. 25 letter, Edison warned the Arizona commissioners that it was meeting with FERC to initiate the “pre-filing process” if the efforts with the state failed. Once FERC grants a permit for a transmission line, the utility would have the right to use eminent domain power to force private owners to give up rights-of-way or sell land. A flock of environmental and historic preservation groups began pursuing lawsuits saying that the DOE was obligated to investigate the environmental impacts of the corridors, which include national parks, civil war battlefields and areas with endangered species. “We think the act itself is illegal and what DOE did was pretty extraordinary,” said James Dougherty, an environmental attorney in Washington who represents the Piedmont Environmental Coucil in Piedmont Environmental Council v. DOE, 08-0093, which was filed in Pennsylvania. That suit joins four separate lawsuits, including the Pennsylvania Public Utilities Commission, and includes nine environmental or historic preservation groups. It raises environmental and sovereignty challenges over the Energy Department corridor designation. Dougherty said the designation would aid bringing dirty coal power from West Virginia and Ohio to the East, severely threatening the viability of a wind power project off the Delaware coast. Brian Toth, an attorney with the Energy Department in the Pennsylvania case, has asked the trial judge to dismiss it, arguing that only appellate courts have jurisdiction over challenges to the department designation of national transmission corridors. In the nearly identical California suit, “We’re saying at this stage the agency should do programmatic environmental impact statements,” said Megan Anderson of the Western Environmental Law Center. The group’s suit, Center for Biological Diversity v. DOE, C08-0168AHM, is pending in Los Angeles federal court.

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