Multiple proposals for permitting reform have been put forward in the 118^th Congress, and some were adopted in the Fiscal Responsibility Act of 2023 (P.L. 118-5).¹ In the current policy context, the term permit is commonly used in a broad sense to refer to a number of federal permits, approvals, authorizations, or other forms of consent around infrastructure development. Likewise, this report uses the term permit in a broad sense. Permitting reform proposals address electricity transmission in various ways. This report discusses current issues in the debate around transmission permitting and summarizes the key transmission provisions in major permitting reform bills introduced to date in the 118^th Congress. Additionally, this report summarizes modifications the Federal Energy Regulatory Commission (FERC) made to its transmission permitting rules in May 2024.

Much congressional interest in electricity transmission lies in issues other than permits. Nonetheless, this report uses the term transmission permitting reform to refer to proposals to change any aspect of transmission planning, siting, approval, cost allocation, and other transmission-related issues and processes. This approach is consistent with the common use of terms in the current policy discussion. This report focuses on topics in FERC's jurisdiction and does not cover topics related to the National Environmental Policy Act (NEPA) or other environmental protection statutes.

Background information on electricity transmission is available in the following CRS resources:

• CRS In Focus IF12253, Introduction to Electricity Transmission
• CRS Report R47862, Electricity Transmission: What Is the Role of the Federal Government?, by Ashley J. Lawson and Adam Vann
• CRS Report R47521, Electricity: Overview and Issues for Congress
• CRS In Focus IF11257, Variable Renewable Energy: An Introduction
• CRS Report R45764, Maintaining Electric Reliability with Wind and Solar Sources: Background and Issues for Congress

Current Electricity Transmission Policy Issues

Proponents of transmission permitting reform generally identify two main desired outcomes: (1) increased use of wind and solar energy and (2) improved electric reliability and resilience. To achieve these outcomes, a key goal of transmission permitting reform proponents is to support increased development of large transmission lines crossing two or more states. These types of transmission lines are widely viewed to be more beneficial than smaller, intrastate transmission lines with respect to the desired outcomes noted above.

Some industry participants and observers have identified a number of perceived barriers to the development of large interstate transmission lines, as discussed below.

Siting Authority

Currently, most electricity transmission siting authority (i.e., authority to approve the route and authorize construction) resides in the states. A transmission line crossing state lines may require approvals from multiple state governments along the line's path. Transmission line developers may need additional approvals from local or tribal governments, depending on the path of the line.² Critics argue the current framework adds time to the transmission development process and can allow a single state or other government to block a transmission project that is supported by neighboring jurisdictions. Others argue that the current framework protects the ability of states and other governments to approve (or disapprove) infrastructure that is in the best interest of their citizens.

The Energy Policy Act of 2005 added Section 216 of the Federal Power Act (FPA, 16 U.S.C. §824p), which carves out a limited role for FERC and other federal agencies in siting interstate electric transmission facilities. This section authorizes the Secretary of Energy, in consultation with the affected states, to designate areas experiencing electricity transmission constraints or congestion as National Interest Electric Transmission Corridors (NIETCs). The section grants FERC authority to issue permits for constructing interstate electricity transmission facilities in designated NIETCs (commonly referred to as FERC's backstop siting authority). As originally enacted, this authority could be exercised only if the state that has authority to approve the facilities had "withheld approval for more than one year."

Two judicial decisions hamstrung the exercise of the Section 216 authority granted in 2005 to the agencies. In Piedmont Environmental Council v. FERC (558 F.3d 304 (4^th Cir. 2009)), the U.S. Court of Appeals for the Fourth Circuit held that FERC may not permit transmission facilities if a state has denied the applicant's request to site transmission facilities; FERC may permit the transmission facilities only in the event the state has not acted on the applicant's request. And in California Wilderness Coalition v. U.S. Dep't of Energy (631 F.3d 1072 (9^th Cir. 2011)), the U.S. Court of Appeals for the Ninth Circuit vacated the Department of Energy's first two NIETC designations, finding that the agency had failed to consult adequately with the states as required by the FPA. Since the Ninth Circuit's 2011 decision, the Secretary of Energy has made no further NIETC designations.

In 2021, Congress amended FERC's backstop siting authority in the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) to address, among other things, the issues identified by the lawsuits.³ Under its amended authority, DOE released a guidance document for applicants in December 2023 and a preliminary list of potential NIETCs in May 2024.⁴ DOE expects to make final designations of NIETCs after additional public engagement and completion of any necessary environmental reviews.⁵ Similarly, FERC revised its regulations related to the backstop siting authority, as discussed in the section "FERC Activities."

Some transmission reform proposals would give FERC siting authority for large interstate transmission lines (in contrast to the status quo whereby states generally site such lines), while preserving state siting authority for small transmission lines and lines that do not cross state borders. Proponents of this approach say that having a single federal approval process would speed the development of large interstate transmission lines compared to the status quo. Opponents say that states are better positioned to identify the best path for all transmission line development. Another proposal would remove DOE's role in determining NIETCs and leave FERC as the sole federal agency involved in federal backstop siting authority.

Cost Allocation

A central tenet for electricity regulators is that the beneficiary of new electricity infrastructure should pay for that infrastructure (sometimes referred to as the cost causation principle). FERC enforces this principle in its transmission cost allocation policies laid out in its 2011 Order No. 1000. The order specifies that costs must be allocated "in a manner that is at least roughly commensurate with estimated benefits."⁶ A related principle (stated explicitly in Order No. 1000) is that customers that do not benefit from transmission investments should not be required to cover those costs. Under current practice, transmission beneficiaries are typically identified using easily quantified factors such as delivery of lower-cost electricity to a particular utility service territory. Costs for transmission development are allocated exclusively to these identified beneficiaries.

Some transmission reform proposals would shift some transmission cost allocation to less direct beneficiaries, either by considering a broader geographic spread of benefits or including benefits that are more difficult to quantify (e.g., resilience). Proponents of this approach say it would incentivize transmission projects with multiple values that might be overlooked in the current framework. Opponents say this could increase costs for some consumers without providing direct benefits.

Interregional Transmission Planning

Transmission planning—identifying needed upgrades or expansions to the transmission system—happens at the state level (for local projects) and at a multistate level (for regional projects). Transmission planning affects the kinds of transmission projects that are built in the future. Order No.1000 also addresses transmission planning, and aims in part to encourage increased development of regional projects. In Order No. 1000, FERC required utilities to participate in regional transmission planning in multistate regions.⁷ Order No. 1000 also addresses interregional transmission by requiring transmission providers in neighboring regions to coordinate their planning processes. Some stakeholders argue Order No. 1000 has been ineffective at encouraging a large build-out of regional and interregional transmission. In May 2024, FERC issued Order No. 1920 which adds to the Order No. 1000 requirements for regional planning, as discussed in the section "FERC Activities."

Transmission permitting reform proposals reviewed by CRS do not address regional transmission planning, but some do address interregional transmission planning. Some transmission permitting reform proposals would direct FERC to establish new interregional transmission planning requirements. Some would require FERC to enforce minimum levels of interregional transfer capacity. Proponents of these approaches say this would encourage more long-distance transmission development that could potentially lower costs for consumers and improve reliability and resilience. Opponents say the current process is sufficient and allows state regulators greater say in transmission development.

Other Issues

Various other topics have been included in some transmission permitting reform proposals. These include

• FERC's organizational structure for regulating transmission;
• Consumer protection, for example, an Independent Transmission Monitor to ensure transmission development is efficient and cost-effective;
• Presidential authority for approving international transmission lines (i.e., those connecting the United States with Canada or Mexico);⁸
• Reliability and resilience; and
• Incentives for new technology deployment, such as Grid Enhancing Technologies (GETs) and Non-Transmission Alternatives.

FERC Activities

In May 2024, FERC issued Order No. 1920, the first major revision to FERC's transmission policies since Order No. 1000.⁹ The new order adds to the requirements of Order No. 1000, primarily by requiring regional planning processes to consider transmission needs at least 20 years in the future. The order requires transmission planners to consider specific factors driving long-term transmission needs, including policies that affect the generation resource mix, decarbonization and electrification policies, trends in fuel and technology costs, plans for generator retirements and new construction, and corporate commitments (e.g., renewable energy procurement goals). The order further requires the use of scenarios for long-term transmission needs and the estimation of specific benefits of transmission over a 20-year horizon.

Order No. 1920 focuses on certain aspects of regional transmission planning and does not address the topics covered in Table 1 in a general manner, in contrast to many of the legislative proposals summarized in the table. For example, the order specifies some cost allocation requirements, but only those pertaining to transmission needs identified through the long-term planning process required by Order No. 1920. Cost allocation for transmission projects selected under different planning processes remain unchanged. Additionally, Order No. 1920 provides some support for GETs by requiring transmission planners to consider opportunities to deploy certain kinds of GETs (e.g., conduct a cost-benefit analysis of including GETs as part of regular regional transmission planning). Order No. 1920 does not, however, require the adoption of GETs.

Also in May 2024, FERC revised its regulations implementing its backstop siting authority in response to IIJA (backstop siting authority is discussed in the section "Siting Authority").¹⁰ The extent to which FERC's revised backstop siting authority could affect transmission development remains unclear. IIJA does not require FERC to approve projects that states have denied. Instead, the backstop siting authority provides a "second chance" for projects that meet specified criteria if the projects do not receive approval from the applicable state governments. Potentially, transmission project developers and states will be encouraged to come to agreements about siting, in order to avoid the federal process. Alternatively, transmission project developers may focus on project design that is likely to be approved by FERC, regardless of state regulators' preferences.

Legislative Proposals and FERC Order No. 1920

CRS analyzed the transmission permitting reform provisions in selected bills introduced in the 118^th Congress and draft legislative proposals, and in legislation enacted in the 118^th Congress. CRS also analyzed FERC Order No. 1920.

Table 1 provides a summary of the provisions in each bill addressing the issues identified above. The table is not a full analysis of each bill, and does not necessarily identify all transmission-related provisions in each bill. For example, H.R. 1 addresses NEPA review for vegetation management (a maintenance procedure for transmission lines) on public lands, but this provision is not included in the table because NEPA is not a topic discussed in this report. The table also does not identify all electricity-related provisions. For example, the discussion draft of Promoting Efficient and Engaged Reviews Act of 2023 addresses the process for interconnecting new power plants with the transmission system, but this provision is not included in the table.

The bills, legislative proposals, FERC regulation, and enacted legislation included in this analysis are

• The Streamlining Interstate Transmission of Electricity Act (SITE Act; S. 946), introduced by Senator Whitehouse on March 22, 2023.
• The Lower Energy Costs Act (H.R. 1), as passed by the House on March 30, 2023.
• The Building American Energy Security Act of 2023 (S. 1399), introduced by Senator Manchin on May 2, 2023.
• The Spur Permitting of Underdeveloped Resources Act (SPUR Act; S. 1456), introduced by Senator Barrasso on May 4, 2023.
• The Revitalizing the Economy by Simplifying Timelines and Assuring Regulatory Transparency Act (RESTART; S. 1449) Act, introduced by Senator Capito on May 4, 2023.
• The Promoting Efficient and Engaged Reviews Act of 2023 (PEER Act) discussion draft, released by Senators Carper and Schatz on May 18, 2023.¹¹
• The Interregional Transmission Planning Improvement Act of 2023 (S. 1748), introduced by Senator Heinrich on May 18, 2023.
• The Facilitating America's Siting of Transmission and Electric Reliability Act of 2023 (FASTER Act of 2023; S. 1804), introduced by Senator Heinrich on June 1, 2023. Companion legislation (H.R. 4689) was introduced by Representative Peters on July 17, 2023.
• The Fiscal Responsibility Act of 2023 (P.L. 118-5), enacted on June 3, 2023.
• The Connecting Hard-to-reach Areas with Renewably Generated Energy Act of 2023 (CHARGE Act of 2023; S. 2480), introduced by Senator Markey on July 25, 2023. Companion legislation (H.R. 5154) was introduced by Representative Ocasio-Cortez on August 4, 2023.
• The Building Integrated Grids With Inter-Regional Energy Supply Act (BIG WIRES Act; S. 2827/H.R. 5551), introduced by Senator Hickenlooper and Representative Peters on September 18, 2023.
• The Clean Electricity and Transmission Acceleration Act (CETA Act; H.R. 6747), introduced by Representative Casten on December 13, 2023.¹²
• FERC Order No. 1920, issued on May 13, 2024.

Biden Administration Priorities

On May 10, 2023, the White House released a fact sheet outlining the Biden Administration's priorities for permitting reform.¹³ For transmission, these priorities are

• providing for electric transmission siting and cost allocation;
• developing minimum interregional transfer requirements;
• broadening the benefits considered for cost allocation; and
• accelerating the deployment of GETs.

The Administration fact sheet does not provide legislative details for these priorities. For example, the fact sheet does not clarify the meaning of "providing for electric transmission siting and cost allocation." While announcing the Administration's priorities for permitting reform, White House Senior Advisor John Podesta said "Congress should give FERC clear authority to issue permits for interstate transmission lines."¹⁴

Concluding Observations

Various proposals in the 118^th Congress could potentially affect new transmission development. Many of the provisions identified in Table 1 aim to promote increased development of large, interstate transmission lines. Federal policy is not the only factor affecting development of such infrastructure. Other factors include electricity market conditions and state regulatory decisions.

Other topics included in some permitting reform debate could also potentially affect new transmission development. These include proposals to modify NEPA implementation and proposals to address energy infrastructure development on public lands. A separate, but related, issue is the process for approving offshore transmission lines which is currently overseen by the Department of the Interior's Bureau of Ocean Energy Management.¹⁵

Several of the issues addressed by proposed provisions (e.g., cost allocation) would provide policy direction to FERC within FERC's existing authority. FERC modified its requirements for regional transmission planning in Order No. 1920. The new order partially addresses some issues addressed by legislative proposals, although to a different degree than some legislative proposals would do. Congress may consider codifying some of these requirements or giving FERC alternative policy direction through legislation. Congress may also continue to monitor electricity transmission development and conduct oversight on implementation of Order No. 1920 as needed. Typically, FERC rules of this magnitude take several years to fully implement, so it remains unclear to what extent the new policy will affect transmission development. Implementation details will be determined by individual planning regions, with FERC oversight. In addition—if FERC's transmission rule follows the same path as previous major FERC orders—future FERC administrative actions (such as rehearings) or litigation and judicial review could influence implementation details.