On February 1, 2011, in California Wilderness Coalition v. U.S. Dept. of Energy,i the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) granted petitions for review challenging the implementation by the United States Department of Energy (DOE) of Section 216 of the Federal Power Act (FPA). Under Section 216 of the FPA, DOE is required to undertake a congestion study and designate National Interstate Electric Transmission Corridors (NIETCs). DOE released its first congestion study in 2006 and made its first two NIETC designations in 2007. Thirteen petitions for review of DOE’s determinations were filed with the Ninth Circuit, which vacated both the study and the NIETC designations. The Ninth Circuit determined that DOE failed to consult with affected States in undertaking the congestion study as required by FPA Section 216, and failed to perform an environmental analysis in connection with the NIETC designations as required by the National Environmental Protection Act (NEPA).ii Having vacated the NIETC designations, the Ninth Circuit did not consider the merits of challenges to the specific NEITCs.
Section 216 was added to the FPA by the Energy Policy Act of 2005 (EPAct 2005), and gives the Federal Energy Regulatory Commission (FERC) backstop siting authority with respect to transmission lines located within NIETCs designated by DOE based on a congestion study to be performed by DOE.iii It also gives the applicant the right to acquire rights-of-way through eminent domain. Section 216 charges the Secretary of Energy with designating NIETCs following, among other things, a congestion study “in consultation with affected States.”iv Section 216 further states that, except as specifically provided, it does not affect requirements under environmental laws, including NEPA,v which requires a statement on the potential environmental consequences of all “major Federal actions significantly affecting the quality of human environment.”vi
DOE completed its first congestion study in 2006 and received over 400 comments on its contents. In May 2007, DOE responded to comments on the 2006 congestion study and sought additional comments on its draft NIETC designations. On October 5, 2007, DOE issued its order formally designating the Mid-Atlantic Area National Corridor (Mid-Atlantic Corridor) and the Southwest Area National Corridor (Southwest Corridor), and responding to comments recommending different approaches.
Ninth Circuit Decision
The Ninth Circuit determined that DOE’s limited interactions with affected States did not amount to “consultation” as required by Section 216 of the FPA. In fact, the court found that DOE’s failure to provide states with the modeling data on which it based its 2006 congestion study prevented States from being able to make meaningful comments and interfered with their ability to consult with DOE.
The court further determined that DOE’s failure to consult was not a harmless error that could be regarded as having had no bearing on the procedure used or the substance of the decision reached. As a consultation requires “an exchange of information and opinions before the agency makes a decision,”vii and there was the likelihood that proper consultation would have produced different results, the court vacated DOE’s 2006 congestion study. In reaching this decision, the court was careful to note that it was not “suggest[ing] that DOE’s determinations were unreasonable,” and acknowledged that DOE could subsequently, in the exercise of its sound discretion, come to the same or similar conclusions that it did in the initial study.viii
The Ninth Circuit also vacated DOE’s NIETC designations based on DOE’s failure to take into account the environmental consequences of its decision as required by NEPA. DOE argued that these designations were not major Federal actions affecting the environment requiring review under NEPA, because they do not themselves approve the siting of any transmission facilities. The Ninth Circuit rejected these arguments, however, emphasizing that its precedent holds that broad agency programs may constitute major Federal actions even if the programs “do not direct any immediate ground-disturbing activity.”ix The Ninth Circuit found that the “intent and impact of the NIETCs support the conclusion that they constitute major Federal action,” and vacated DOE’s designations of the NIETCs.
Having vacated the NIETC designations, the Ninth Circuit found it unnecessary to consider claims that those designations violated the Endangered Species Act or the National Historic Preservation Act. It also found that challenges to particular aspects of the Mid-Atlantic Corridor and the Southwest Corridor were moot.
Judge Sandra Ikuta dissented to the decision, which she described as a “tale of two errors.” x She described the first error as DOE’s failure to consult with the States on the congestion study, and the second the majority’s ruling that DOE must repeat the process “even though its consultation error caused no harm.”xi Judge Ikuta characterized the majority as “inflict[ing] the only real injury in this saga.”xii She also took exception to the majority’s ruling under NEPA. In her view, DOE complied with NEPA by documenting its determination that no environmental impact statement was required.