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Gary Hunt is Founder & President, TCLABZ, disruptive innovation strategy adviser to energy technology and information services companies on leveraging intellectual property for scalable growth and go-to-market strategies. His checkered past includes stints as VP-Global Analytics & Data... More
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  • Big Legal Setback for Smart Grid and Renewable Energy 0 comments
    Feb 2, 2011 10:45 AM

    In the Energy Policy Act of 2005, Congress specifically directed DOE to undertake a Congestion Study “in consultation with affected States.” 16 U.S.C. § 824p(a)(1). It further directed that in undertaking this study and in designating any national interest electric transmission corridors, DOE was to comply with NEPA. We determine that DOE failed to consult with the affected States prior to issuing its Congestion Study and that this failure was prejudicial to the States. Accordingly, the Congestion Study is vacated. We further find that DOE’s statement that its designation of NIETCs “does not significantly affect the quality of the human environment” is not supported by sufficient evidence to show that DOE has taken the requisite “hard look” at the environmental consequences. See Kleppe v. Sierra Club, 427 U.S. at 410 n.21; California ex rel. Lockyer, 575 F.3d at 1012. We further find that the record does not allow us to conclude that the failure to take a hard look at the environmental consequences was harmless. Accordingly, the Designation of the NIETCs is vacated. In light of our vacation of the Congestion Study and the NIETCs Designation, we decline to consider the petitioners’ challenges (1) under the Endangered Species Act, (2) under the National Historic Preservation Act, and (3) to specific aspects of the Mid-Atlantic Corridor and the Southwest Corridor.

    The petitions for review are GRANTED, the Congestion Study and Designation of NIETCs are VACATED, and the matter is REMANDED for further proceedings consistent with this opinion.”

    ----US Court of Appeals, 9th Circuit, February 1, 2011 in opinion 08-71074 California Wilderness versus US Department of Energy

    Whether this is a procedural setback or a fatal blow to the concept of national interest electric transmission corridors, the 9th Circuit---the most overturned appeals court in the United States known for interpreting the laws the way it likes them not the way Congress wrote them---has pulled the rug out from under one of the principal tenets of smart grid and done serious harm to the near-term national goal of expanding renewable energy use across the power grids.

    This is a signpost of smart grid failure.

    For smart grid to succeed at achieving the promise of a more integrated, optimized, digital grid requires more than just smart meters to collect data---it requires the electric transmission capacity to move intermittent energy from wind and solar projects often in remote locations to load centers.  Increasingly that will require transmission projects that cross state lines.  But building electric transmission has traditionally been a state by state matter and NIMBY issues cause high mortality rates in such projects. 

    In the Energy Policy Act amendments in 2005 Congress sought to give FERC fast track authority to pre-empt state rules when it determined national interests were at stake in the transmission system caused by congestion of power lines in certain areas.  The concept of national interest electric transmission corridors was used to encourage planning for transmission needs to achieve the EPAct goals.  Two corridors were designated in 2007 as a result of the first DOE Congestion Study one in the Southwest designed to bring solar energy to markets and one in the Mid-Atlantic.  Both are now vacated and the court of appeals has told US DOE is did not follow its environmental impact review obligations under NEPA so it must start over.

    DOE argued that it held public meetings on the congestion study and accepted comments from all parties.  It argued that consultation with the states also involves consideration of the ex parte and other rules of the evidentiary process used by the states which made it difficult for many state regulatory agencies with pending cases to discuss them.  That did not deter states such as California from objecting to US DOE interpretations of EPAct 2005 since in the view of the states it was an intrusion into traditional state jurisdiction over transmission.

    US DOE also argued that no detailed NEPA studies were required at this state since the purpose of the NIETC designation was to indicate the areas of most concern from the congestion study with detailed environmental reviews to take place if, and when, specific transmission projects were proposed.  DOE argued it cannot be expected to do endless environmental studies on every possible project possibility---doing so is impracticable and unreasonable.

    If the legal conclusion is US DOE cannot designate national interest transmission corridors without undertaking the detailed, time consuming and costly environment review of every possible transmission project that might occur in such a corridor before it is designated---then this process is dead on arrival and the promise of a smart digital grid future just got switched off.

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