Opposition Brief — Edison Electric Institute v. Piedmont Environmental Council (No. 09-343)

eT ee U.S.

OCT 2 1 2009

No. 09-343 2

(hatte |

In The

Supreme Court of the United States

EDISON ELECTRIC INSTITUTE, ET AL.,

Petitioners,

V.

PIEDMONT ENVIRONMENTAL COUNCIL, ET AL.,

Respondents.

On Petition for Writ of Certiorari to the United

States Court of Appeals for the Fourth Circuit

BRIEF IN OPPOSITION

Lynn R. COLEMAN PETER M. McGowan

WILLARD Topp BENSON General Counse}

Piedmont Environmental JONATHAN D. FEINBERG*

Council Solicitor

45 Horner Street JOHN C. GRAHAM

P.O. Box 460 SEAN MULLANY

Warrenton, VA 20188 Assistant Counsel

(540) 347-2334 3 Empire State Plaza

Counsel for Respondent Albany, NY 12223-1350

Piedmont Environmental (518) 474-5597

Council Counsel for Respondent

—_ Public Service Commission

Counsel of Record of the State of New York

October 21, 2009

Additional Counsel listed on tnside cover

Becker Gallagher + Cincinnau, OH + Washington. D.C. + 800.890.5001

Lori SWANSON

Attorney General

State of Minnesota

ANNA E. JENKS

Assistant Attorney General

445 Minnesota Street, Suite 1100

St. Paul, MN 55101-2128

(651) 282-5735

Counsel for Respondent

Minnesota Public Utilities

Commission

i

LIST OF PARTIES

Petitioners:

Edison Electric Institute; American Public Power

Association; National Rural Electric Cooperative

Association; American Wind Energy Association;

Allegheny Power; Trans-Allegheny Interstate Line

Co.; and San Diego Gas & Electric Co.

Respondents:

Piedmont Environmental Council; Public Service

Commission of the State of New York; and

Minnesota Public Utilities Commission;

Federal Energy Regulatory Commission;

Communities Against Regional Interconnect

il

CORPORATE DISCLOSURE STATEMENT

Pursuant to Sup. Ct. Rule 29.6, Respondents state

as follows:

As State entities, the People of the State of New

York, the Public Service Commission of the State of

New York, and the Minnesota Public Utilities

Commission, are not required to file a disclosure

statement under Rule 29.6.

Piedmont Environmental Council is not a publicly

held corporation or entity and has no parent

corporations. Piedmont Environmental Council is not

a trade association.

ill

TABLE OF CONTENTS

Page No

Eee SO OD ie ve eee RRR RS KORA O NHS es i

CORPORATE DISCLOSURE STATEMENT ... ii

py SG Oe) ae Lag) to gy) -. Vv

COUNTER-STATEMENT OF THE CASE ...... 1

REASONS FOR DENYING A WRIT OF

iors rear ae a kes oc CR 9

I THE FOURTH CIRCUIT MAJORITY

PROPERLY CONSTRUED THE STATUTE BY

EMPLOYING FUNDAMENTAL STATUTORY

CONSTRUCTION PRINCIPLES IN A

STRAIGHTFORWARD MANNER ......... 12

A. This is an unremarkable Chevron statutory

construction case, which the Fourth Circuit

GOCUENG GCONTOGEEY 25 wc cee cect eses 12

1. The Fourth Circuit majority correctly

construed the word “withheld” in its

means GOING wk vk i hb ls eee 13

2. The Fourth Circuit majority correctly

construed the phrase in its broader

SEGTISUOTY COMTONE «wk cc ee eee ewes 14

3. The Fourth Circuit dissent misread the

NY org a oad

lV

B. An appellate court dissent does not create

statutory “ambiguity” entitling an agency to

PUGICIRL GOTOPONOD ww cect cc swe sacs 21

Ii. PETITIONERS FAIL TO DEMONSTRATE

THAT CONGRESS DEEMED THE SPECIFIC

STATUTORY LANGUAGE AT ISSUE TO

BE CRITICAL TO NATIONAL ENERGY

PO 66 5 ee de ee ee ee 25

A. The history of EPAct 2005 does not expressly

address the particular issue that the Fourth

tee GE oo 3 5 Kes Gk ee ee ens 25

B. Transmission infrastructure development is

affected by issues far more substantial than

the siting approval process............. 26

C. Siting-related legislation remains a work in

Es oy cogs boa nko ae eee 29

ft. NO HARM WILL RESULT FROM ALLOWING

THE FOURTH CIRCUIT’S DECISION TO

STAND

Vv

TABLE OF AUTHORITIES

CASES

Chevron U.S.A. v. Natural Res. Def. Council,

Ue RPT EOE bees cic ee aees esses passim

Gonzales v. Oregon,

ee I nc eke see erseecswaees 22

illinois Commerce Comm’n v. FERC,

576 F.3d 470 (7th Cir. 2008) ........... 27, 28

In re Thinking Machs. Corp..,

G7 F.e hues (ame Cir. LOUD . we eee 24, 25

New York v. FERC,

Se Ps OUD ike eva ea eves cece sees i. ae

Norfolk S. Ry. Co. v. Sorrell,

i arr 17

Piedmont Envtl. Council v. FERC,

558 F.3d 304 (4th Cir. 2009) ........... passim

Piedmont Envtl. Council v. FERC,

No. 07-1651 (4th Cir. Apr. 20, 2009) ......... 9

Ragsdale v. Wolverine World Wide, Inc.,

ae ee Oe Dg eile cv ae eee ea hewens 17

Robinson v. Shell Oil Co.,

op ROR ME. 900. |» ) Ree 13, 14

Rodriguez v. United States,

SP aa: OUR UPE) | 6 noe 5 6 vas ve we we te es 17

vi

United Mine Workers v. Fed. Mine Safety and

Health Review Comm’n,

Ole Wie ee Oe, GP. BO) onc ce cence: 25

United States v. Powell,

Po BS gk. nae 14

United States v. Shimer,

ee ES yg kd aos co Wee woe Vea Veen 22

United States v. Turkette,

452 U.S. 576 (1981)

Wyeth v. Levine,

US. , 1298S. Ct. 1187 (2009) ... 16,17

STATUTES

as oak \) 0; rey 18

Ur Oe iv ee ok cess 1

16 U.S.C. §824p(a\(2), (b) .. 0.0.0.2 eee eee 3

16 U.S.C. §824p(b)(1( AMI) 2 30

16 U.S.C. §824p(b\1MA)(C) oo... ee ee 3

16 U.S.C. §824p(b)..... 2.0. ee eee eee 1,3

16 U.S.C. §824p(b1) ... 2.2... eee ee eee 7

16 U.S.C. 8824p(b\IMCMI) oe eee eee ;

16 U.S.C. §824p(DKX1IKC)a) .. 2... ww eee 9, 19

V1i

16 0).6AC. Sees 30 6s hh eas ee ee eee 28

8G: 1.5, Se: <5 <2s. 0: 0 65-0 bee eee 6

BO USA. GERRI ds CP + 0 60 deen eke eueeees 7

Energy Policy Act of 1992, 106 Stat. 2776 ...... 27

Energy Policy Act of 2005 (EPAct 2005), Title XII,

Pub. L. No. 109-58, 119 Stat. 894 (2005) . 1,2,5

EPAct 2005 §1221. ...............005. 9,10

EPAct 2005 §1241(a), (b)(2), codified at 16

U.S.C. $0idsta), GD)... ces senses 28

FPA §216(b)(1). 0.0.2... c ee ee eee eee 8, 15, 16

FPA §216(b)\(1MC) 2... ee ee ee 21, 23

FPA §216(bMIMCKMG) .. 2.6 ce ec cee eee nesses 8

PPA GHD... ccc va ee 27, 28

REGULATIONS

CPR. 0 0... ck ocd ee 27, 28

18 C.F.R. §50.6(e(3)i) ... = ee 5

Promoting Wholesale Competition Through Open

Access Non-Discriminatory Transmisston

Services by Public Utilities, 61 Fed. Reg. 21,540

(May. 30, TOPO) 666s vee eaves eee 27

Vill

Regulations for Filing Applications for Permits to

Site Interstate Electric Transmission Corridors,

71 Fed. Reg. 36,258 (proposed June 16, 2006) . 5

Regulations for Filing Applications for Permits to

Site Interstate Electric Transmission Facilities,

71 Fed. Reg. 69,440 (Nov. 16, 2006) ........ 5

USDOE, National’ Electric Transmission

Congestion Report, 72 Fed. Reg. 56,992 (Oct. 5,

el LG we, Coe eG ak Cae eee eae 3

RULES

EES Me BOD ccs cccceerceccereneeeeeeoes 12

Sr 12

a) re 12

OTHER AUTHORITIES

Chinook Power Transmission, 126 F.E.R.C. 961,134

a oo os. 5 6.0.6.8 4 @ 6-0 040 6 60 0 0 66.0% 008 28

Comprehensive Nat'l Energy Policy: Hearings

Before the Subcomm. on Energy and Atr Quality

of the Comm. on Energy and Commerce, 108"

Cong. 13 (2003) (statements of Rep. Brown, Jr.

And Rep. Boucher) .................... 4,21

H.R. 6 §16012(b)(1)(B) (as introduced), 149 Cong.

Rec. H3130 (Apr. 10, 2003) ................ 3

H.R. 2454, 111" Cong. (2009) ........0..0.... 29

ix

H.R. Rep. No. 108-375 (2003) ................. 4

Keeping the Lights On: The Federal Role in

Munaging the Nation’s Elec.: Hearing Before

the Oversight of Gov't Mgmt., the Federal

Workforce and the Dist. of Columbia Subcomm.

of the S. Comm. on Governmental Affairs, S.

Hrg. 108-277, 108" Cong. 50 (2003Xstatement

of FERC’s then-Chairman Pat Wood, III) ..... 4

N.Y. Indep. Sys. Operator, Inc., 126 F.E.R.C.

461,320 (2009) (order on reh’g) ............ 28

Promoting Transmission Investment through

Pricing Reform, 113 F.E.R.C. 161,182 (proposed

ee ee ee cle ec a sa-u Oke ae ck eae 28

Promoting Transmission Investment through

Pricing Reform, 116 F.E.R.C. 461,057 (July 20,

ST Gv ak cave es ee tee Cee 27

Regulations for Filing Applications for Permits to

Site Interstate Electric Transmission Facilities,

119 F.E.R.C. 161,154 (May 17, 2007) (rehearing

Sg ana s Ae ater Ral ae org he: 6, 26

S. Rep. No. 109-78 (2005) ...........20cceeees 2

Electric Grid and Summer Heat, House

Government Reform Committee-Subcommittee

on Energy and Resources Hearing (July 12,

2006) (statement of FERC Chair Joseph T.

Kelliher), available at http://www.ferc.gov/

eventcalendar/files/200607 121453 18-Kelliher-

test-07-12-06.pdf 5

Xx

Regulations for Filing Applications for Permits to

Site Transmission Facilities, FERC Docket No.

RMO06-12-000 (June 15, 2006) (statement of

Joseph T. Kelliher, Chairman of FERC),

available at http://www.ferc.gov/news/

statements-speeches/kelliher/2006/06- 15-06-

PPE Peer rere Ere Pee 6

U.S. Department of Energy, National Transmission

Grid Study (May 2002), available at

http://www.ferc.gov/industries/electric/indus-

act/transmission-grid.pdf..............5.. 27

1

COUNTER-STATEMENT OF THE CASE

Authority to approve or deny a permit for the

construction of electric transmission facilities has

traditionally been exclusively reserved to the States, in

large part because the construction of such facilities

directly implicates compelling State interests

concerning, among other things, land-use,

environmental impacts, energy planning, and use of

State resources. In 1935, Congress enacted the

Federal Power Act (FPA) as part of a legislative

scheme under which the Federal government

regulated electric transmission and sales of electric

energy for resale in interstate commerce, while States

retained control over local matters, including siting of

transmission lines and generating plants. New York

v. FERC, 535 U.S. 1, 24 (2002).

In 2005, for the first time, Congress granted the

Federal Energy Regulatory Commission (FERC)

carefully limited “backstop” jurisdiction over the siting

of electric transmission facilities when it enacted a

new Section 216 of the FPA.’ Section 216 allows FERC

to grant siting permits in five very specific

circumstances. See, generally, 16 U.S.C. §824p(b).

One such circumstance — which is the focus of this case

— is when a State having legal authority to site a

proposed line and consider its interstate benefits, has

“withheld approval for more than 1 year after the

filing of an application” for a siting permit. Jd. at

§824p(b)(1)(C)(i).

' Energy Policy Act of 2005 (EPAct 2005), Title XII, Pub. L. No

109-58, 119 Stat. 594 (2005) (adding new §216 tothe FPA, codified

at 16 U.S.C. §824p)

2

In the broader context of EPAct 2005, transmission

line siting is only one element among many in

Congress’ multifaceted energy policy reform.” As the

Senate stated, “(t]he purpose of the measure is to

provide a comprehensive national energy policy that

balances domestic energy production with conservation

and efficiency efforts to enhance the security of the

United States and decrease dependence on foreign

sources of fuel.” S. Rep. No. 109-78, at 1 (2005). The

scope of EPAct 2005 is broad and covers numerous

topics including, e.g., energy efficiency, renewable

energy resources, natural gas storage, clean coal

technology, and alternative fuels for vehicles, to name

a few. See EPAct 2005 §1, “Table of Contents.”

To the extent Congress addressed transmission

siting, it granted FERC its limited “backstop” siting

authority when, generally speaking, a State either

cannot act, or has failed to act in a timely manner. In

deference to States’ traditional authority over

transmission siting, Congress confined FERC’s new

siting jurisdiction to five specific triggering events: 1)

when a State lacks authority to approve the siting of

transmission facilities; 2) when a State lacks authority

to consider the expected interstate benefits of a

facility; 3) when an applicant does not qualify for a

State permit because it does not serve end users

within the State; 4) when a State, having received a

permit application, has “withheld approval for more

than 1 year,” or 5) whena State conditions its approval

such that the project will not significantly reduce

‘ This is contrary to the impression Petitioners seek to create that

streamlined siting and permitting was the sole purpose of the

statute. Pet. Br. at 5.

3

transmission congestion or is not economically feasible.

16 U.S.C. §824p(b)(1)(A)-(C).

FERC’s backstop siting authority is further

confined to geographic areas that the United States

Department of Energy (DOE) has designated as a

“national interest electric transmission corridor.” Jd.

at §824p(a)(2), (b). A national interest electric

transmission corridor is only an area, designated by

the DOE, where transmission congestion adversely

affects consumers. According to DOE, moreover, the

designation of such a corridor does not indicate that

additional transmission facilities are needed.°

The particular statutory language at issue in this

case, the phrase “withheld approval for more than 1

year,” reflects a change that was made to the language

of an earlier legislative proposal in order to address

concerns that the earlier proposal might have allowed

FERC to override every State transmission siting

decision. The earlier draft of the bill would have

authorized FERC review where a State “has withheld

approval, ... or delayed final approval for more than

one year”. H.R. 6 §16012(b)(1)(B) (as introduced), 149

Cong. Rec. H3130 (Apr. 10, 2003). Commenting on

this initial draft, Representative Henry E. Brown, Jr.

observed that “the transmission siting provision .

seems to make FERC look more lke a Court of

* In DOE’s words, “a National Corridor designation does_not

constitute a finding that transmission must or even should be

built; it does not prejudice State or Federal siting processes

against non-transmission solutions; and it should not discourage

market participants from pursuing such solutions.”. USDOE,

National Electric Transmission Congestion Report, 72 Fed. Reg.

56,992, 57,012 (Oct. 5, 2007) (emphasis added).

4

Appeals for energy companies dissatisfied with State

decisions, than a true backstop[,]” and that “the

potential for FERC review for every siting decision

seems a step backward.” Comprehensive Natl Energy

Policy: Hearings Before the Subcomm. on Energy and

Air Quality of the Comm. on Energy and Commerce,

108” Cong. 13 (2003). Likewise, Representative Rick

Boucher expressed concern that the initial draft bill

“would give the FERC preemptive authority over the

siting of transmission lines[,]” stating that he had

“heard no evidence that would justify removing the

ultimate decision over this new siting from the States

to the Federal level.” Id. at 297.

Importantly, the language of Section 216, as finally

enacted, eliminated the two separate jurisdictional

triggers — “withheld approval” or “delayed final

approval for more than one year” — and replaced them

with the single trigger of “withheld approval for more

than 1 year.” H.R. Rep. No. 108-375 at 264 (2003).

FERC’s then-Chairman Pat Wood, IIJ, explained that

FERC’s understanding was that this single trigger

would confer limited authority upon the agency:

So the States are still in the driver’s seat. It is

only when they cannot act, or they are

prohibited by their law from acting, or they

choose not to act, that it comes to the Federal

Government ....

Keeping the Lights On: The Federal Role in Managing

the Nation’s Elec.: Hearing Before the Oversight of

Gov't Mgmt., the Federal Workforce and the Dist. of

Columbia Subcomm. ofthe S. Comm. on Governmental

Affairs, S. Hrg. 108-277, 108" Cong. 50 (2003).

Although the Senate later failed to agree to the

D

Conference Report, the single trigger was enacted into

Section 1221 of EPAct 2005, and became part of new

Section 216 of the FPA.

In its Notice of Proposed Rulemaking to enact rules

implementing Section 216, FERC did not indicate that

it would interpret the phrase “withheld approval for

more than 1 year” to include a State’s denia! ofa siting

application within one year. Regulations for Filing

Applications for Permits to Site Interstate Electric

Transmission Corridors, 71 Fed. Reg. 36,258 (proposed

June 16, 2006). Nor was this interpretation suggested

by any of the 51 comments FERC received in response

to its Notice of Proposed Rulemaking.

Nonetheless, a majority of FERC commissioners

adopted this interpretation in the preamble to FERC’s

final regulation. Regulations for Filing Applications

for Permits to Site Interstate Electric Transmission

Facilities, 71 Fed. Reg. 69,440, 69,444 726 (Nov. 16,

2006) (Order No. 689); Pet. App. at 70a. FERC’s

interpretation, however, was not promulgated as part

of its regulation, which generally adopted the

language of Section 216, and’ merely repeated the

phrase “withheld approval for more than one year.” 18

C.F.R. §50.6(e)(3)(i).4 The majority reaffirmed their

* Prior to issuing Order 689, FERC did not contend it had

authority to preempt state siting decisions. Astatement issued by

then-FERC Chair Joseph Kelliher instead said the new law gave

FERC “a carefully limited role that supplements state authorities

rather than supplanting them.” Statement of FERC Chair Joseph

T. Kelliher, Zlectric Grid and Summer Heat, House Government

Reform Committee-Subcommittee on Energy and Resources

Hearing at 8, available at http://www.ferc.gov/

eventcalendar/files/200607 121453 18-Kelliher-test-07- 12-06. pdf

6

interpretation on rehearing. Regulations for Filing

Applications for Permits to Site Interstate Electric

Transmission Facilities, 119 F.E.R.C. §61,154, at

W411, 15, 17, 19 (May 17, 2007) (rehearing order). Pet.

App. at 252a, 254a-55a, 256a-57a, 258a.

Notably, FERC’s view of the statute was not

unanimous. Commissioner Suedeen G. Kelly strongly

dissented. Order No. 689, 71 Fed. Reg. at 69,476; Pet.

App. at 240a. Commissioner Kelly stated it was

“nonsensical” to read the statute as the majority did,

because it would render the phrase “for more than one

year’ superfluous. Order No. 689, 71 Fed. Reg. at

69,476; Pet. App. at 242a. Commissioner Kelly also

observed that it “defies common sense to insert the

concept of ‘reject’ or ‘deny’ into [the statutory phrase]

‘withheid approval for more than 1 year after the filing

of an application.” Order No. 689, 71 Fed. Reg. at

69,476; Pet. App. at 241a.

Piedmont Environmental Council (Piedmont), the

Public Service Commission of the State of New York

{(NYPSC), the Minnesota Public Utilities Commission

(Minn. PUC) and Communities Against Regional

Interconnect (CARI) timely petitioned for review of

FERC’s orders, pursuant to 16 U.S.C. §825/(b).

Because the first of these four petitions was filed in the

(July 12, 2006). Then-Chairman Kelliher also said that Section

216 “doles] not preempt the states” but instead provides “a federal

siting process [that] supplements a state siting process”

Statement of Joseph T. Kelliher, Chairman of FERC, Regulations

for Filing Applications for Permits to Site Transmission Facilities,

FERC Docket No. RMO6-12-000 (June 15, 2006), avazlable at

http: //www.ferc.gov/news/statements-speeches/kelliher/2006/

06-15-06-kelliher-C-1.asp.

7

Fourth Circuit, the other three petitions were

transferred to that court, pursuant to 28 U.S.C.

§2112(a)(1),(5), and the cases were consolidated there.

Pet. App. at 15a.

Deciding the case at Step One of the framework

adopted by this Court in Chevron U.S.A. v. Natural

Resources Defense Council, 467 U.S. 837 (1984), a

majority of the Fourth Circuit panel held that the word

“withheld,” in the particular context of the phrase

“withheld approval for more than 1 year,” and in the

larger context of the statute, plainly is not synonymous

with “denied.” Piedmont Envtl. Council v. FERC, 558

F.3d 304, 313 (4th Cir. 2009). Pet. App. at 17a-18a.

First, with respect to the particular context, it

observed that the phrase “withheld approval” within

the larger phrase “withheld approval for more than 1

year” expressly pertains to a State’s continually

recurring failure to act on an application throughout

an ongoing period of one year, but does not pertain to

the instantaneous act of denial. Jd.. Thus, the Fourth

Circuit found that FERC’s attempt to conflate “denied”

and “withheld” would render the entire phrase

“withheld approval for more than 1 year” nonsensical.

558 F.3d at 313; Pet. App. at 18a. (“FERC’s word

substitution ... renders the entire phrase nonsensical

ear

The panel further concluded the broader context,

namely Section 216(b)(1) as a whole, confirmed that

the phrase “withheld approval for more than 1 year”

does not encompass a denial of a permit within one

year. Piedmont, 558 F.3d at 314; Pet App. at 19a-21a.

The Fourth Circuit reasoned that Section 216(b)(1), 16

U.S.C. §824p(b)(1), “provides a carefully drawn list of

five circumstances” under which FERC “may preempt

8

a state ....”. 558 F.3d at 313; Pet. App. at 19a. It

decided that, “[w)hen the five circumstances in

§216(b)(1) are considered together, they indicate that

Congress intended only a measured, although

important, transfer of jurisdiction to FERC.”

Piedmont, 558 F.3d at 314; Pet App. at 20a. The

Fourth Circuit observed that reading “withheld

approval” to include denial of a permit would “render[]

it completely out of proportion with the four other

jurisdiction-granting circumstances|{,]” and “would

mean that Congress has told state commissions that

they will lose jurisdiction unless they approve every

permit application in a national interest corridor.” 7d.

This, it found, was contrary to the limited authority

Congress gave FERC, because it would make it “futile

for a state commission to deny a permit based on

traditional considerations like cost and benefit, land

use and environmental impacts, and health and

safety.” Id. The Fourth Circuit reasoned that “if

Congress intended to take the monumental step of

preempting state jurisdiction every time a_ state

commission denies a permit in a national interest

corridor, it would surely have said so directly.”

Piedmont, 558 F.3d at 314; Pet. App. at 21a (emphasis

in original). Consequently, it reversed FERC’s

interpretation. The Fourth Circuit concluded that

Congress did not intend to authorize FERC to act

where a State has committed the final administrative

act of denying an application for a siting permit within

one year. Piedmont, 558 F.3d at 314; Pet. App. at 22a-

23a.

Judge Traxler dissented, opining that the phrase

“withheld approval” also applies to State denials.

Piedmont, 558 F.3d at 322-23; Pet. App. at 41la-42a.

Judge Traxler relied heavily on FPA §216(b)(1)(C)(ii)

9

which authorizes FERC review when a State has

“conditioned its approval in such a manner that the

proposed construction or modification will not

significantly reduce transmission congestion in

interstate commerce or is not economically feasible.”

16 U.S.C. §824p(b)(1)(C)(ii). Judge Traxler concluded

it was nonsensical for Congress to have allowed FERC

to review permit conditions, but not permit denials.

Piedmont, 558 F.3d at 323-24; Pet. App. at 43a-44a.

He found further support in, inter alia, the legislative

history. Piedmont, 558 F.3d at 324; Pet. App. at 46a-

48a.

The Fourth Circuit denied rehearing after the

panel failed to request that the judges be polled.

Piedmont Envtl. Council v. FERC, No. 07-1651 (4th

Cir. Apr.20, 2009); Pet. App. at 51a.

FERC has not petitioned this Court for a writ of

certiorari to the Fourth Circuit. Rather, only the

various electric power industry intervenors, who

intervened in the Fourth Circuit proceeding in support

of FERC, now seek certiorari.

REASONS FOR DENYING A

WRIT OF CERTIORARI

This is an unremarkable case applying Step One of

the familiar Chevron standard of review to FERC’s

construction of the statutory phrase “withheld

approval for more than 1 year” in light of its context

and the purpose of EPAct 2005 §1221. Because the

Fourth Circuit simply applied traditional principles of

statutory construction to comprehend the relevant

provision’s plain meaning, this case does not present

an important question of Federal law. There is no

10

compelling reason, therefore, to grant a writ of

certiorari.

The Fourth Circuit correctly construed the statute.

That Court properly concluded that, in its specific

context, the word “withheld” cannot be equated to

“denied.” It correctly understood that a “withholding”

of approval is continuous, while a “denial” is

instantaneous, and stops the running of time during

which approval was being withheld. Likewise, the

Fourth Circuit recognized that FERC’s equating of

“withheld” and “denied” reads the words “for more

than 1 year” out of the statute. And, in the broader

context of §1221, the Fourth Circuit properly

concluded that Congress intended to provide FERC

with measured, limited backstop siting authority, in

recognition of Congress’ careful balancing of national

transmission reliability interests against States’

traditional authority in the area of land use regulation.

In the Fourth Circuit’s opinion, the dissent

incorrectly imputed into the statute a purpose of

authorizing FERC to site transmission lines whenever

the State process does not generate either an outright

permit grant or a minimally conditioned one.

Consistent with this misapprehension, the dissent

failed to recognize that State approval can only be

“withheld” while an application is pending. Likewise,

the dissent failed to appreciate why Congress intended

to authorize FERC siting in the event of a State grant

with conditions that may frustrate Federal interests in

relieving transmission congestion, but not necessarily

whenever a State has lawfully denied a permit. State

denials are subject to review in State courts and, by

preserving the primary State role, Congress recognized

that State courts are capable of reviewing the

11

lawfulness and reasonableness of a State permit

denial. Conversely, when a State agency imposes

conditions interfering with the ability of a proposed

line to relieve interstate congestion or rendering a

proposed line uneconomic, Congress authorized a

limited Federal intrusion upon State jurisdiction.

Such circumstances raise questions relating more

directly te federal interests, and potentially triggering

FERC’s technical expertise. See POINT I. A, infra.

Petitioners’ argument that a judicial dissent creates

“ambiguity” invoking Chevron Step Two analysis rests

upon a fundamental misunderstanding of Chevron.

Statutory “ambiguity” under Chevron occurs only

when Congress has implicitly delegated to an agency

authority to resolve the policy question at issue by

leaving a statutory gap for the agency to fill. Because

judicial disagreement cannot substitute for Congress’

intentions, it does not trigger Chevron Step Two

analysis. See POINT I. B, infra.

Nothing in the legislative history cited by

Petitioners expressly resolves the pertinent question

of whether Congress intended to override legitimate

State permit denials. See POINT II. A, infra.

Moreover, Petitioners overlook the DOE’s findings that

transmission economics and market structure present

significant transmission development obstacles that

may overshadow the siting process. See POINT IT. B,

infra. In any event, Congressional policy on electric

transmission remains in flux. There is no urgency,

therefore, demanding this Court’s immediate

attention. See POINT II. C, infra.

Finally, Petitioners incorrectly speculate that siting

applications may halt if FERC cannot review State

12

siting denials. Petitioners offer no basis for assuming

State agencies will act inappropriately in considering

the interstate benefits of proposed lines or that State

courts will not carefully review timely denials to

ensure that interstate benefits were properly

considered. See POINT III, infra.

I. THE FOURTH CIRCUIT MAJORITY

PROPERLY CONSTRUED THE STATUTE BY

EMPLOYING FUNDAMENTAL STATUTORY

CONSTRUCTION PRINCIPLES IN A

STRAIGHTFORWARD MANNER.

A. This is an unremarkable Chevron statutory

construction case, which the Fourth Circuit

decided correctly.

At issue in this case is whether FERC properly

construed the phrase “withheld approval for more than

1 year ....” The Fourth Circuit majority applied Step

One of the familiar Chevron standard and held that

the plain statutory language precluded FERC’s

interpretation. There is nothing remarkable about the

majority’s straightforward application of Chevron.

This case does not involve an “important question of

federal law that has not been, but should be, settled by

this Court,”” Sup. Ct. R. 10(c), and, therefore, it does

not present any compelling reason to grant a writ of

certiorari.

* Because this case does not involve a conflict between federal

and/or state courts, Sup. Ct. R. 10(a), (b), a departure from the

accepted and usual course of judicial proceedings, td. R. 10(a), or

an important federal question decided in a way that conflicts with

relevant decisions of this Court, id. R. 10(c), this reason is the only

potential certiorari ground available to Petitioners

13

The Fourth Circuit supported its interpretation of

the plain language of the statute, through the

straightforward application of principles of statutory

construction, in an analysis that fits squarely within

Step One of Chevron. As this Court has held on

numerous occasions, “(t]he plainness or ambiguity of

statutory language is determined by reference to the

language itself, the specific context in which that

language is used, and the broader context of the

statute as a whole.” Robinson v. Shell Oil Co., 519

U.S. 337, 341 (1997).

1. The Fourth Circuit majority correctly

construed the word “withheld” in its specific

context.

The Fourth Circuit correctly found that the word

“withheld” as used in its specific context is not

synonymous with “denied.” It properly recognized that

the phrase “withheld approval for more than 1 year”

describes when approval has been continuously held

back throughout an ongoing period of one year.

Piedmont, 558 F.3d at 313; Pet. App. at 17a-18a. The

word “withheld” in this context is limited to a

continually recurring failure to act throughout a period

of one year. The majority also understood the converse

-that a denial of an application is a discrete and final

action. Thus, a denial “stops the running of time

during which approval was withheld.” /d. The word

“withheld,” therefore, cannot be equated to the word

“denied” in the specific statutory context.

Similarly, the court below recognized that FERC’s

attempt to substitute “denied” for “withheld” would

render the larger phrase “withheld approval for more

than 1 year” nonsensical. It explained that “the final

14

nature of ‘denied’ conflicts with the continuing nature

of ‘for more than one year.” /d. (emphasis in original).

A permit denial rendered less than one year after the

filing of an application terminates the State agency’s

application process, and nothing in that process would

continue for the remainder of the one-year period.

Petitioners accuse the Fourth Circuit of

inappropriately substituting “action” for “approval”

and therefore not reading the actual words of the

statute. Pet. Br. at 16. In so doing, they isolate one

sentence in the relevant paragraph, but fail to

recognize that the Fourth Circuit considered the entire

phrase “withheld approval for more than 1 year.” In

actuality, the Fourth Circuit concluded that “[t}he

continuous act of withholding approval for more than

a year cannot include the finite act of denying an

application within the one-year deadline.” Piedmont,

558 F.3d at 313; Pet. App. at 17a. The Court properly

attributed to Congress the most natural, common-

sense reading of the statute. United States v. Powell,

423 U.S. 87, 93 (1975).

2. The Fourth Circuit majority correctly

construed the phrase in its broader statutory

context.

Contrary to claims in the Petition, Pet. Br. at 16-17,

the Fourth Circuit correctly construed the statute in

its broader context. Robinson, 519 U.S. at 341. It

properly recognized that Congress intended a

measured transfer of jurisdiction in order to ensure

that a commission (either a State commission or

FERC) is available to make timely decisions on

transmission siting applications within National

Interest Electric Transmission Corridors. Piedmont,

558 F.3d at 314; Pet. App. at 20a. In this manner,

15

Congress balanced national interests against States’

traditional authority in the area of land use regulation,

energy planning and the adequacy of utility service.

The Fourth Circuit explained that §216(b)(1), as a

whole, “provides a carefully drawn list of five

circumstances” where FERC jurisdiction over a permit

application attaches. Piedmont, 558 F.3d at 314; Pet.

App. at 19a Those circumstances are when: 1) the

State lacks siting authority; 2) the State lacks

authority to consider the expected interstate benefits

of a proposed line; 3) the applicant does not qualify for

a State permit because it does not serve end-user

customers; 4) a State commission has “withheld

approval for more than 1 year” after the filing of an

application, or the designation of a National Interest

Electric Transmission Corridor, whichever is later; or

5) a State has imposed conditions that render the line

uneconomic or ineffective to reduce significantly

transmission congestion. Piedmont, 558 F.3d at 314;

Pet. App. at 19a

The four other circumstances — aside from

“withtholding] approval for more than 1 year” —

pertain to when a State either cannot site the line, or

has imposed onerous conditions. Piedmont, 558 F.3d

at 314; Pet. App. at 20a. Petitioners object to the

Court’s observation that FERC’s interpretation would

render it “futile” for the States to do their normal work

of reviewing a line. Pet. Br. at 18. Instead, they argue

that, even if FERC may issue a permit in any case

where a State has not approved a permit within one

year, States would retain the ability to decide

significant routing and other issues, albeit subject to

FERC review. Pet. Br. at 18. But the Fourth Circuit

was correct. FE RC’s interpretation would leave States

having siting authority with no choice but to approve

16

a line, or cede jurisdiction to FERC. FERC’s

interpretation would thus nullify the important and

primary State role that Congress carefully preserved.

Given that the remainder of §216(b)(1) carefully

delineates a limited transfer of authority from the

States to FERC, the Fourth Circuit correctly

recognized that, read as a whole, the statute does not

indicate Congress intended “the sweeping transfer of

jurisdiction” FERC sought. The Fourth Circuit also

noted that, “if Congress had intended to take the

monumental step of preempting state jurisdiction

every time a state commission denies a permit in a

national interest corridor, it would surely have said so

directly.” Piedmont, 558 F.3d at 314; Pet. App. at 2la

(emphasis in_ original). The Fourth Circuit’s

observation is in accord with this Court’s decisions

regarding the interpretation of statutes involving

Congressional! balancing of Federal and State power.

See Wyeth v. Levine, __s—*U'S.. : , 129 S. Ct.

1187, 1195 (2009) (noting that, “filn all pre-emption

cases, and particularly in those in which Congress has

legislated . . . in a field which the States have

traditionally occupied, .. . [the Court] start|s] with the

assumption that the historic police powers of the

States were not to be superseded by the Federal Act

unless that was the clear and manifest purpose of

Congress.”) (internai quotes omitted)).

3. The Fourth Circuit dissent misread the

Statute.

The reasoning of the FERC majority and the

Fourth Circuit dissent (and of Petitioners as well, Pet.

Br. at 17) imputes to Congress a broad statutory

purpose unsupported by the language Congress

17

actually employed. The express language of a statute

is the most reliable evidence of Congressional intent.

United States v. Turkette, 452 U.S. 576, 593 (1981).

This is because “[flederal legislation is often the result

of compromise between legislators and ‘groups with

marked but divergent interests.” Wyeth v. Levine,

US. ; , 129 S.Ct. 1187, 1215 (2009)

(Thomas, J., concurring) (quoting Ragsdale ov.

Wolverine World Wide, Inc., 535 U.S. 81, 93-94 (2002)).

This Court has noted that even under a more liberal

statutory construction standard, it is inappropriate “to

assume that whatever furthers the statute’s primary

objective must be the law” without textual support.

Norfolk S. Ry. Co. v. Sorrell, 549 U.S. 158, 171 (2007)

(quoting Rodriguez v. United States, 480 U.S. 522, 526

(1987) (emphasis in original)).

Here, the Fourth Circuit dissent’s asserted

Congressional objective — to grant FERC jurisdiction

over transmission siting whenever a State process does

not generate an outright grant or minimally

conditioned grant — rests upon an_ uncertain

foundation. For example, Judge Traxler, in describing

the context within which Congress enacted Section

216, relied primarily on a pre-enactment statement

made by Senator Pete V. Domenici. Piedmont, 558

F.3d at 321; Pet. App. at 37a. But the statement of

Senator Pete V. Domenici spoke only in general terms

about avoiding blackouts, providing limited federal

siting authority, and streamlining the siting process to

assure adequate transmission. Jd. It did not address

the particular roles of the States and FERC in the

siting process, and did not address the language that

Congress actually employed.

18

Although Judge Traxler purported to rely upon the

plain meaning of the statutory language, his

discussion of the overall “context” within which

Congress approved Section 216 indicates that his

interpretation was driven not by the particular

language and structure of the statute. Instead Judge

Traxler’s reasoning relies primarily upon a general

statutory purpose that he imputed to Congress. In

Judge Traxler’s words, “(tlhe notion that Congress

would have been willing to ‘trump’ states when they

thwart the goal of significantly reducing transmission

congestion in a national interest [transmission]

corridor by granting permits subject to conditions

FERC determines to be unreasonable but would not be

willing to do so when states thwart the same goal by

denying the permits outright makes no sense to me in

light of the purpose of the legislation.” Jd. Thus,

Judge Traxler’s reading cf “withheld approval for more

than 1 year” was influenced primarily by his view that

Congress had a_ singular purpose of reducing

transmission congestion — a purpose he derived in

large part from the statement of Senator Pete V.

Domenici. Piedmont, 558 F.3d at 321; Pet App. at 37a.

But if Congress intended such a wholesale transfer of

siting jurisdiction to FERC, it could, and would, have

expressly said so. Indeed, Congress did so in the

Natural Gas Act, with respect to interstate gas

transportation facilities. 15 U.S.C. §717f. By first

imputing a statutory purpose, and then interpreting

the statute in light of that purpose, Judge Traxler

misapplied Step One of the Chevron analysis. Under

Chevron Step One, a court must first look to the actual

language of the statute, and seek to ascertain its plain

meaning based on both its specific and general

statutory context.

19

Moreover, Judge Traxler’s dissent (and Petitioners

(Pet. Br. at 17]) failed to apprehend key differences

between outright State permit denials and State

permit grants with conditions that would cause the

project to “not significantly reduce transmission

congestion in interstate commerce or [not be]

economically feasible.” 16 U.S.C. §824p(b)(1)(C)(ii);

Piedmont, 558 F.3d at 324; Pet. App. at 43a-44a.

Permit denials are generally subject to challenge in

State courts. Thus, Petitioners’ fear that a State

decision that is “indefensible based on the evidence

presented” would be unreviewable, is unfounded. Pet.

Br. at 15. Congress properly concluded that a State

court can review and reverse such a decision.

Further, Petitioners err when they argue that it is

illogical to read the statute as allowing FERC to

review permits “encumbered with unreasonable

conditions’ but not permits “denied outright.” Pet. Br.

at 17. In the former case, FERC ‘backstop” siting

authority makes sense, because questions of whether

State permit conditions render a project unable to

significantly reduce interstate transmission

congestion, or cause it to be economically infeasible,

are best resolved with the aid of FERC’s technical

expertise. Congress further recognized that a State

that has granted a permit has less of an interest in

protecting the ability of State courts to review a

decision.® A State that has conditionally approved a

® Petitioners contend that it “could be entirely appropriate for a

state to condition a project on terms that are economically

onerous, depending on the circumstances of the particular

proposal” Pet. Br. at 17. It is hard to imagine such a situation,

however, because a state certifying a line under such

circumstances is either a) mistaken about the wisdom of the

20

line, based on a finding that such line is needed, has

no compelling interest against FERC review of the

conditions the State has imposed. On the other hand,

as the Fourth Circuit correctly observed, a State that

imposes “project-sinking conditions . . . misuses its

authority.” Piedmont, 558 F.3d at 315; Pet. App. at

2la. Congress properly decided that FERC should be

able to review and address any such misuse. Its

decision to employ such a finely-tuned trigger for

federal intrusion contradicts FERC’s claim that it has

jurisdiction whenever a State fails to approve a project

within one year.

Petitioners also fail to justify the dissent’s

reasoning that the continuing effect of a State’s denial

beyond the statutory one-year period constitutes a

“with{holding] approval for more than 1 year.” Pet. Br.

at 15. This is nonsensical because a State’s review

process concludes when a permit application is denied.

A “withholding” on the part of a State only occurs

while a decision is pending. Because a permit

application ceases to be active after a permit denial,

there can be no continuous “withholding” of approval

after such a denial. Contrary to Petitioners’ attempted

analogy, Pet. Br. at 15, one cannot rightly say this

Court has, for over 50 years, continuously withheld

affirmance from parties who sought to preserve

“separate-but-equal schools.” As Petitioners recognize,

“the actual holding was a discrete decision in 1954.”

An accurate characterization would therefore be that

the Court long ago held that separate but equal schools

are unconstitutional. Similarly, a State commission

conditions, or b) should be denying approval because the line can

only be certified on conditions making it uneconomic.

21

denying a permit application does so on a particular

day, and does not continuously “withhold approval”

thereafter.

The tightly restricted State role advocated by

Petitioners, Pet. Br. at 18, including a mere “advisory”

role through State participation in the FERC siting

process, ignores Congressional concerns that FERC not

act as a “Court of Appeals for energy companies

dissatisfied with State decisions.” Comprehensive

Nat'l Energy Policy: Hearings Before the Subcomm. on

Energy and Air Quality of the Comm. on Energy and

Commerce, 108" Cong. 13 (2003).

B. An_ appellate court dissent does not create

statutory “ambiguity” entitling an agency to

judicial deference.

Petitioners’ claim that the Fourth Circuit erred by

not granting FERC’s interpretation deference under

Step Two of Chevron should be rejected. Pet. Br. at 19-

20. In this case, no statutory “ambiguity” exists for

Chevron purposes. Both the Fourth Circuit majority

and dissent applied the de novo standard of Chevron

Step One because they found that the issue should be

decided based upon the plain meaning of the statutory

language. Piedmont, 558 F.3d at 315, 321; Pet. App. at

23a, 38a. Thus, none of the Judges in the Fourth

Circuit found the statute ambiguous in the relevant

sense under Chevron.

Petitioners, however, advance the novel theory that

§216(b)(1)(C) became ambiguous because the Fourth

Circuit panel did not entirely agree on the plain

meaning of the statute. /d. Petitioners, in effect,

argue that literal “ambiguity” 1s equivalent to Chevron

22

“ambiguity.” Petitioners rely upon this alleged

“ambiguity” as a basis for arguing the Fourth Circuit

erred by not proceeding to Chevron Step Two. Pet. Br.

at 20.

This argument fundamentally misconstrues the

meaning of the term “ambiguous” in the context of the

Chevron analysis. “Chevron deference ... is not

accorded merely because the statute is ambiguous and

an administrative official is involved.” Gonzales v.

Oregon, 546 U.S. 243, 258 (2006). Rather, deference to

an agency’s statutory interpretation is granted when

the question requires “reconciling conflicting policies”

and the policy question has been “committed to the

agency’s care by the statute ....” Chevron, 467 U.S. at

845 (quoting United States v. Shimer, 367 U.S. 374,

382-83 (1961)). Thus, “ambiguity” under Chevron is

limited to situations where the agency is “resolving the

competing interests which Congress itself either

inadvertently did not resolve, or intentionally left to be

resolved by the agency charged with the

administration of the statute in light of everyday

realities.” Id. at 865-66. Because of this, Chevron Step

Two is triggered only when Congress placed the agency

in the role of policymaker, such that the statute may

reasonably be read as an implicit grant of authority by

Congress to the agency to decide the question. Here,

however, Congress itself made the policy decisions, by

very carefully delineating when FERC could exercise

its limited “backstop” authority.

Moreover, under Chevron, judicial deference to an

agency's statutory interpretation is only appropriate

when the policy choice the agency seeks to make

depends upon its’ technical expertise. Thus,

“ambiguity” warranting judicial deference turns upon

23

whether “a full understanding of the force of the

statutory policy in the given situation has depended

upon more than ordinary knowledge respecting the

matters subjected to agency regulations.” Chevron,

467 U.S. at 845. In the instant case, the interpretation

of the phrase “withheld approval for more than 1 year”

is well within the competency of courts, and does not

require FERC’s special expertise. Indeed, FERC did

no more than repeat the statutory language in its

regulations. Pet. App. at 194a.

Finally, to find a statute “ambiguous” in the

relevant sense, a court must first find that “Congress

did not actually have an intent ....” Chevron, 467 U.S.

at 845. “If a court, employing traditional tools of

statutory construction, ascertains that Congress had

an intention on the precise question at issue, that

intention is the law and must be given effect.”

Chevron, 467 U.S. at 843 & n.9. The lack of consensus

among the Fourth Circuit judges does not support the

needed finding that Congress did not actually have an

intent. None of the judges believed Congress lacked

intent as to the meaning of the phrase “withheld

approval for more than 1 year” in §216(b)(1)(C).

Conversely, all of the judges concluded that Congress’

intent was clear and unambiguous. Given that none of

the judges below found the statute to be “ambiguous”

within the meaning of Chevron, their disagreement

does not create ambiguity for Chevron review

purposes.

Petitioners’ theory, that a lack of judicial consensus

renders a statute ambiguous such that a court must

defer to the agency’s’ statutory interpretation,

demonstrates a fundamental misunderstanding of

Chevron. Under Chevron, deference is not required

24

merely because judges disagree about the meaning of

a statute. Deference is only appropriate when the

statute can be read as an implicit delegation of

authority to the agency to resolve the matter. See

Chevron, 467 U.S. at 845 (referring to “conflicting

policies that were committed to the agency’s care by

the statute ....”). Disagreement among judges is not

equivalent to a Congressional grant of authority to the

agency. Moreover, Petitioners’ theory is paradoxical,

inasmuch at it postulates a Congressional delegation

of authority to the agency even when none of the

judges on the panel found any such implicit grant by

Congress.

Petitioners’ novel theory’ is’ particularly

unwarranted because it would effectively delegate

power to an agency, even if none of the judges found

that Congress intended the issue to be decided by the

agency. Such a result would not only thwart

Congressional intent, it would also fundamentally

intrude upon the inner workings of the judiciary. By

effectively chilling judicial deliberations, the rule

advanced by Petitioners would improperly frustrate

independent judicial review of the actions of

administrative agencies, even in cases where the

agency seeks to set the outer limits of its powers. Such

a standard of judicial review, which Petitioners offer

without supporting decisional authority, could have

potentially far-reaching adverse consequences.

The cases cited by Petitioners du not support their

“judicial ambiguity” theory. Pet. Br. at 20. In Jn re

Thinking Machs. Corp., 67 F.3d 1021, 1023 (1st Cir.

1995), the First Circuit interpreted a bankruptcy

statute pertaining to rejection of nonresidential leases.

The case did not involve an agency or a regulation, and

25

therefore did not involve judicial review of an agency’s

statutory interpretation within the Chevron

framework. Moreover, the “collision of viewpoints”

language quoted by petitioners, Pet. Br. at 20, refers to

differences of opinion among numerous other courts,

and not to a dissenting judge on a particular panel. Jn

re Thinking Machs. Corp., 67 F.3d at 1025.

The decision in United Mine Workers v. Federal

Mine Safety and Health Review Comm’n, 917 F.2d 42

(D.C. Cir. 1990), is also inapposite. Petitioners’

selective reliance on dicta suggesting a divided agency

panel may indicate “ambiguity” is misleading because

the court itself found the language of the statute to be

“ambiguous.” Pet. Br. at 20. The court’s conclusion

was based on its own analysis, and not upon

disagreement of the agency commissioners. United

Mine Workers, 917 F.2d at 47.

Il. PETITIONERS FAIL TO DEMONSTRATE

THAT CONGRESS DEEMED THE SPECIFIC

STATUTORY LANGUAGE AT ISSUE TO BE

CRITICAL TO NATIONAL ENERGY POLICY.

A. The history of EPAct 2005 does not expressly

address the particular issue that the Fourth

Circuit decided.

Petitioners generally argue that more investment

in transmission infrastructure is needed for electric

system reliability. Pet. Br. at 11-12. Nowhere,

however, do Petitioners expressly assert that State

siting denials are hindering transmission line

construction, or threatening in any way the reliability

26

of the electric grid.’ Indeed, they cannot. At best,

Petitioners point to isolated statements in the

legislative history indicating that EPAct 2005 was

created to address “[sliting challenges” and _ to

“streamline the permitting of siting for transmission

lines.” Pet. Br. at 13. These statements do not

establish, however, that Congress intended to

authorize FERC to override timely State permit

denials. Thus, Petitioners have not shown that the

legislative history of EPAct 2005 sheds light upon the

discrete, narrow question of whether Congress

intended to authorize FERC to act when a State has

denied a siting permit within one year. Notably,

FERC itself acknowledged that the legislative history

is unclear on this question. Rehearing Order, 119

F.E.R.C. 961,154 at 115; Pet. App. at 254a.

B. Transmission infrastructure development. is

affected by issues far more substantial than the

siting approval process.

Petitioners imply that State siting denials — or any

potential for such — are the primary reason for the

electric power industry’s failure to construct needed

transmission infrastructure. Pet. Br. at 11-13. To the

extent there are shortages in transmission capacity,

the primary reasons for such shortages are not state

permit denials but, rather, economics and market

structure, as Congress recognized in enacting EPAct

2005

’ Such denials should be contrasted to state process delays or a

lack of state authority to consider interstate benefits of a line,

which Congress intended to address.

27

In the past, vertically integrated utilities built

transmission mainly to move electricity within their

own geographic service areas. New York v. FERC,535

U.S. at 5 (2002); U.S. Department of Energy, National

Transmission Grid Study, at 3 (May 2002), available

at http://www.ferc.gov/industries/electric/indus-

act/transmission-grid.pdf. In 1996, FERC adopted

rules (pursuant to the Energy Policy Act of 1992, 106

Stat. 2776) to foster a transition to a competitive

wholesale electricity market. Jd. at 10; Promoting

Wholesale Competition Through Open Access Non-

Discriminatory Transmission Services by Public

Utilities, 61 Fed. Reg. 21,540 (May 10, 1996) (Order

No. 888). This competitive market structure gave rise

to two new demands on the transmission grid. First,

wholesale electricity sellers needed to transmit power

to their purchasers —- which often required

transmitting power across utility service territory

boundaries. /llinois Commerce Comm'n v. FERC, 576

F.3d 470, 479 (7th Cir. 2009) (Cudahy, J., concurring

in part and dissenting in part). Second, newly

constructed non-utility generators selling into the

wholesale market required new lines to connect their

output to the grid. Jd.; 18 C.F.R. pt. 35 — Promoting

Transmission Investment through Pricing Reform, 116

F.E.R.C. 961,057, 61,250 at 725 (July 20, 2006).

In 2002, the DOE found that a major barrier to

construction of new transmission facilities was

developers’ uncertainty as to whether they could

realize sufficient earnings on _ their financial

investments in transmission projects. National

Transmission Grid Study at 30. Consequently,

Congress created in EPAct 2005 new FPA §219, which

required FERC to establish’ incentive-based

transmission rates to, inter alia, “provide a return on

28

equity that attracts new investment in transmission

facilities.” EPAct 2005 §1241(a), (b)(2), codified at 16

U.S.C. §824s(a), (b)(2). FERC has found it necessary

to approve rates of return in excess of 12.5% to attract

such investment. 18 C.F.R. pt. 35 — Promoting

Transmission Investment through Pricing Reform, 113

F.E.R.C. 461,182, 61,276 at ]21 (proposed Nov. 18,

2005). As FERC acknowledged in its §219 rulemaking,

the debate over “whether transmission incentives are

necessary to encourage new infrastructure was put to

rest by the plain language of section 219(a).” Order

No. 679 at 419.° Thus, continuing uncertainty as to

return on investment, rather than prompt State

permit denials, is likely the primary obstacle to

transmission infrastructure development.’ Because

this case is not about transmission financing, it does

not present an opportunity for the Court to advance

the construction of new transmission facilities.’®

*The investment incentive problem remains particularly acute for

so-called “merchant transmission lines,” for which the developer

receives payment via private agreements, rather than by rates

established through regulatory and/or planning processes.

Chinook Power Transmission, 126 F.E.R.C. 461,134, 61,767 at 445

(2009).

* In fact, one of the pending siting applications Petitioners point

to in their petition (at 9) was withdrawn by the applicant one

week after FERC refused to alter the -cgional grid operator's

economic planning process so as to allow the project to receive

incentive-based rates under the grid operator's tariff. N.Y. Indep

Sys. Operator, Inc., 126 F.E.R.C. 161,320, 18-43 (2009) (order on

reh'g).

’ Another major factor affecting investment in transmission

facilities is the allocation of costs among electric utilities. ‘That

topic was recently addressed by the United States Court of

Appeals for the Seventh Circuit. Jld/inois Commerce Comm'n, 576

29

C. Siting-related legislation remains a work in

progress.

The overall field of electric transmission policy

remains in flux. Congress continues to refine its

approach to electric transmission facilities siting. In

light of new federal policy fostering renewable energy

facilities construction, the House of Representatives

passed the American Clean Energy and Security Act of

2009, that would further tailor FERC’s siting

jurisdiction. H.R. 2454, 111" Cong. (2009)."’ This bill

would expedite deployment of new transmission

capacity to connect such renewable energy facilities to

the power grid. /d. at §151. As a practical matter,

therefore, there is no urgency warranting the Court’s

attention because Congress is actively dealing with

transmission siting issues.

ii NO HARM WILL RESULT FROM

ALLOWING THE FOURTH CIRCUIT'S

DECISION TO STAND.

Petitioners overstate the potential consequences of

this Court's denial of certiorari. They speculate that

some siting applications will not be filed if State siting

denials cannot be reviewed by “a body taking a broader

regional or national perspective.” Pet. Br. at 21-22.

This argument fails to credit Congress’ express

decision to preserve the primary siting jurisdiction of

States having legal authority to consider the expected

F.3d 470 The case was remanded to FERC for further

proceedings

'' A Senate version was introduced by Senators Kerry and Boxer

on September 30, 2009

30

interstate benefits of proposed transmission. 16

U.S.C. §824p(b)(1)(A)(ii)). Congress did this because it

recognized that the States directly and materially

benefit from the interconnected electric grid and,

therefore, have a compelling local interest in

considering the interstate benefits of proposed

transmission facilities. Petitioners’ contrary

implication that States are entirely parochial when

reviewing proposed transmission facilities is baseless.

Furthermore, inherent in Petiti»sners’ speculation is

the notion that a State court reviewing a State

agency's siting denial would fail to give effect. to

Cengress’ implicit directive to consider interstate

benefits. Petitioners offer no basis for their

presumptions that State courts would act

inappropriately in reviewing State agency decisions.

The worst-case scenario for transmission

developers is that the Fourth Circuit’s decision will

encourage them to work closely and cooperatively with

State siting authorities. This can hardly be perceived

as a deleterious consequence.

31

CONCLUSION

For the foregoing reasons, Petitioners do not state

any compelling reasons for granting the petition for a

writ of certiorari.

denied.

Therefore, the petition should be

Respectfully Submitted,

Peter McGowan

General Counsel

Jonathan Feinberg

Counsel of Record

Solicitor

John C. Graham

Sean Mullany

Assistant Counsel

Of Counsel

Public Service Commission

of the State of New York

Three Empire State Plaza

Albany, New York 12223-1350

(518) 474-5597

Lynn R. Coleman

Willard Todd Benson

Of Counsel

Piedmont Environmental Council

45 Horner Street, PO Box 460

Warrenton, Virginia 20188

(540) 347-2334

(202) 371-7600

32

Lori Swanson

Attorney General

State of Minnesota

Anna E. Jenks

Assistant Attorney General

Atty. Reg. No. 0342737

445 Minnesota Street, Suite 1100

St. Paul, Minnesota 55101-2128

(651) 282-5735 (Voice)

(651) 296-1410 (TTY)

Dated: October 21, 2009