[Federal Register Volume 72, Number 193 (Friday, October 5, 2007)]
[Notices]
[Pages 56992-57028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-19731]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

[Docket No. 2007-OE-01, Mid-Atlantic Area National Interest Electric 
Transmission Corridor; Docket No. 2007-OE-02, Southwest Area National 
Interest Electric Transmission Corridor]


National Electric Transmission Congestion Report

AGENCY: Department of Energy.

ACTION: Order.

-----------------------------------------------------------------------

SUMMARY: The following is a report by the Department of Energy 
(Department or DOE) on its August 2006 National Electric Transmission 
Congestion Study under section 216 of the Federal Power Act (FPA). This 
report and order designates two national interest electric transmission 
corridors: The Mid-Atlantic Area National Interest Electric 
Transmission Corridor (Docket No. 2007-OE-01); and the Southwest Area 
National Interest Electric Transmission Corridor (Docket No. 2007-OE-
02). A list of the acronyms used in this report and order, and maps of 
the two national interest electric transmission corridors are provided 
at the end of this order.

DATES: The designations are effective October 5, 2007 and will remain 
in effect until October 7, 2019 unless the Department rescinds or 
renews the designation after notice and opportunity for comment.

FOR FURTHER INFORMATION CONTACT: For technical information, David 
Meyer, DOE Office of Electricity Delivery and Energy Reliability, (202) 
586-1411, [email protected]. For legal information, Warren Belmar, 
DOE Office of Legal Counsel, (202) 586-6758, [email protected], 
or Lot Cooke, DOE Office of the General Counsel, (202) 586-0503, 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Framework

    Section 1221(a) of the Energy Policy Act of 2005 (Pub. L. 109-58) 
(EPAct) added a new section 216 to the Federal Power Act (16 U.S.C. 
824p) (FPA). New FPA section 216(a) requires the Secretary of Energy 
(Secretary) \1\ to conduct a nationwide study of electric transmission 
congestion \2\ within one year from the date of enactment of EPAct and 
every three years thereafter. FPA section 216(a)(2) provides 
``interested parties'' with an opportunity to offer ``alternatives and 
recommendations.'' 16 U.S.C. 824p(a)(2). Following consideration of 
such alternatives and recommendations, the Secretary is required to 
issue a report on the study ``which may designate any geographic area 
experiencing electric energy transmission capacity constraints or 
congestion that adversely affects consumers as a national interest 
electric transmission corridor.'' FPA section 216(a)(2), 16 U.S.C. 
824p(a)(2). FPA section 216(a)(4) states that in determining whether to 
designate a national interest electric transmission corridor (National 
Corridor), the Secretary may consider whether:
---------------------------------------------------------------------------

    \1\ This report uses the terms ``Secretary,'' ``Department,'' 
and ``DOE'' interchangeably.
    \2\ Electric transmission congestion (congestion) is the 
condition that occurs when transmission capacity is not sufficient 
to enable safe delivery of all scheduled or desired wholesale 
electricity transfers simultaneously. Congestion results from a 
transmission capacity constraint (constraint).

    (A) the economic vitality and development of the corridor, or 
the end markets served by the corridor, may be constrained by lack 
of adequate or reasonably priced electricity;

[[Page 56993]]

    (B)(i) economic growth in the corridor, or the end markets 
served by the corridor, may be jeopardized by reliance on limited 
sources of energy; and (ii) a diversification of supply is 
warranted;
    (C) the energy independence of the United States would be served 
by the designation;
    (D) the designation would be in the interest of national energy 
policy; and
    (E) the designation would enhance national defense and homeland 
security.

16 U.S.C. 824p(a)(4).
    FPA section 216 imposes several consultation requirements upon the 
Department. FPA section 216(a)(1) states that the Department shall 
conduct the congestion study in consultation with affected States. 16 
U.S.C. 824p(a)(1). FPA section 216(a)(3) requires the Department to 
conduct the congestion study and issue the report in consultation with 
any appropriate Regional Entity. 16 U.S.C. 824p(a)(3).\3\ In addition, 
FPA section 216(h)(9) states:
---------------------------------------------------------------------------

    \3\ Regional Entities are regional reliability organizations to 
which the North American Electric Reliability Corporation (NERC), as 
the designated Electric Reliability Organization under FPA section 
215, has delegated authority to propose and enforce electric 
reliability standards.

    In exercising the responsibilities under this section, the 
Secretary shall consult regularly with--
    (A) the Federal Energy Regulatory Commission;
    (B) electric reliability organizations (including related 
regional entities); and
    (C) Transmission Organizations approved by the Commission.

16 U.S.C. 824p(h)(9).\4\
---------------------------------------------------------------------------

    \4\ As defined in FPA section 215(a)(6), 16 U.S.C. 824o(a)(6), 
``Transmission Organizations'' include Regional Transmission 
Organizations (RTOs) and Independent System Operators (ISOs). RTOs 
and ISOs are Federally regulated entities charged with operating a 
regional transmission system in a manner that is non-discriminatory 
and ensures safety and reliability. The existing RTOs and ISOs do 
not own any transmission or generation and are run by independent 
boards of directors.
---------------------------------------------------------------------------

    The effect of a National Corridor designation is to delineate 
geographic areas within which, under certain circumstances, the Federal 
Energy Regulatory Commission (FERC) may authorize ``the construction or 
modification of electric transmission facilities.'' FPA section 216(b), 
16 U.S.C. 824p(b). The statute imposes several conditions on the 
exercise of FERC's permitting authority within a National Corridor.
    Under FPA section 216(b)(1), FERC jurisdiction is triggered only 
when either: the State does not have authority to site the project; the 
State lacks the authority to consider the interstate benefits of the 
project; the applicant does not qualify for a State permit because it 
does not serve end-use customers in the State; the State has withheld 
approval for more than one year; or the State has conditioned its 
approval in such a manner that the project will not significantly 
reduce congestion or is not economically feasible. 16 U.S.C. 
824p(b)(1). FERC has issued regulations governing the process it will 
follow when reviewing any applications under FPA section 216(b), and 
those regulations incorporate the requirements of FPA section 
216(b)(1).\5\ Further, FPA section 216(g) states, ``Nothing in this 
section precludes any person from constructing or modifying any 
transmission facility in accordance with State law.'' 16 U.S.C. 
824p(g).
---------------------------------------------------------------------------

    \5\ Regulations for Filing Applications for Permits to Site 
Interstate Electric Transmission Facilities, Order No. 689, 71 FR 
69,440, 69,468 (Dec. 1, 2006), 117 FERC ] 61,202 at pp. 128-29 
(2006) (to be codified at 18 CFR pts. 50 and 380) (FERC Order No. 
689), order on reh'g, 119 FERC ] 61,154 (2007) (Sec.  50.6(e) 
requires applicants to demonstrate that the conditions of FPA sec. 
216(b)(1) are met).
---------------------------------------------------------------------------

    Under FPA section 216(b)(2)-(6), FERC may issue a permit only if 
all of the following conditions are met: the facilities will be used 
for the transmission of electric energy in interstate commerce; the 
project is consistent with the public interest; the project will 
significantly reduce congestion in interstate commerce and protect or 
benefit consumers; the project is consistent with national energy 
policy and will enhance energy independence; and the project maximizes, 
to the extent reasonable and economical, the transmission capabilities 
of existing towers or structures. 16 U.S.C. 824p(b)(2)-(6).\6\ With 
regard to the condition that a project must ``significantly reduce 
transmission congestion in interstate commerce and protects or benefits 
consumers,'' FERC has stated that it interprets this to mean that a 
project must significantly reduce the transmission congestion 
identified by DOE.\7\
---------------------------------------------------------------------------

    \6\ See also id. (Sec.  50.6(f) requires applicants to 
demonstrate that the conditions of FPA sec. 216(b)(2)-(6) are met).
    \7\ See id., 71 FR 69,440, 69,446, 117 FERC ] 61,202 at P 41.
---------------------------------------------------------------------------

    In order to construct a transmission facility, a developer must 
obtain both a construction permit as well as a right-of-way across each 
piece of public or private property along the route. If FERC were to 
issue a permit under FPA section 216(b), it would constitute the 
construction permit; it would not, in and of itself, grant any rights-
of-way. Thus, the holder of a FERC permit would still need to obtain 
rights-of-way. The first step in obtaining such rights-of-way would be 
for the developer to initiate negotiations with each affected property 
owner. If the permit holder could not acquire a necessary right-of-way 
through negotiation with a private property owner, then the FERC permit 
would entitle the permit holder to acquire the right-of-way by exercise 
of the right of eminent domain in either Federal or State court. FPA 
sec. 216(e)(1), 16 U.S.C. 824p(e)(1). The court would then determine 
the just compensation owed to the property owner by the permit holder, 
which would be the fair market value (including applicable severance 
damages) of the property taken on the date of the exercise of eminent 
domain authority. FPA sec. 216(f)(2), 16 U.S.C. 824p(f)(2).
    The right of eminent domain would not apply to property owned by 
the United States or a State. Id. Thus, if FERC were to issue a permit 
for a transmission facility across Federal or State property, the 
permit holder would still need to reach agreement with the Federal or 
State agency responsible for managing that property in order to obtain 
a right-of-way across that property. In addition, FPA section 216(j)(1) 
provides that except as specifically provided, nothing in FPA section 
216 affects any requirement of any Federal environmental law. 16 U.S.C. 
824p(j)(1). Thus, a FERC permit does not absolve the permittee of 
compliance with other Federal law, including obtaining authorizations 
from other agencies implementing applicable Federal environmental laws.
    The statute provides a specific mechanism by which States can 
insulate themselves from the FERC permitting provisions of FPA section 
216(b). FPA section 216(i) provides special treatment where three or 
more contiguous States have entered into an interstate compact, subject 
to approval by Congress, establishing a regional transmission siting 
agency to carry out the electric transmission siting responsibilities 
of the member States. If such a compact were established, FERC would 
have no authority to issue a transmission permit within any of the 
member States unless those members were in disagreement and the 
Secretary, after notice and opportunity for a hearing, made a finding 
that the conditions of FPA section 216(b)(1)(C) were met. FPA section 
216(i)(4); 16 U.S.C. 824p(i)(4).
    FPA section 216(a) does not shift to the Department the roles of 
electric system planners or siting authorities in evaluating solutions 
to congestion and constraint problems. Transmission expansion is but 
one possible solution to a congestion or constraint problem. Other 
potential solutions include increased demand response; improved energy 
efficiency; deployment of

[[Page 56994]]

advanced technology; and siting of additional generation, including 
distributed generation, close to load centers. Nothing in FPA section 
216 requires or suggests that the Department should engage in a 
comparison of the relative merits of these different solutions to 
easing congestion in a specific geographic area.
    For example, the congestion study required by FPA section 216(a)(1) 
is described as ``a study of electric transmission congestion,'' rather 
than a study of either the solutions to congestion or the need for 
transmission. FPA section 216(a)(2) authorizes the Department to 
designate areas experiencing constraints or congestion that adversely 
affect consumers, rather than areas where more transmission is needed. 
None of the considerations identified in FPA section 216(a)(4) 
necessitate a comparison of transmission and non-transmission 
solutions. The first two considerations, which look at whether economic 
vitality is constrained by either lack of adequate or reasonably priced 
electricity or reliance on limited sources of energy, focus on the 
effects of congestion and constraints rather than the effects of any 
potential solutions to such congestion or constraints. The remaining 
considerations address whether a National Corridor designation, rather 
than the construction of additional transmission, would promote energy 
independence, national energy policy, or national defense and homeland 
security.
    Thus, FPA section 216(a) assigns to the Department the role of 
identifying transmission congestion and constraint problems, and the 
geographic areas in which these problems exist. A National Corridor 
designation is not a determination that transmission must, or even 
should, be built. Whether a particular transmission project, some other 
transmission project, or a non-transmission project is an appropriate 
solution to a congestion or constraint problem identified by a National 
Corridor designation is a matter that market participants, applicable 
regional planning entities, State authorities, and potentially FERC 
will consider and decide before any project is built. A National 
Corridor designation itself does not preempt State authority or any 
State actions, including action to approve or order the implementation 
of non-transmission solutions to congestion and constraint problems. If 
FERC jurisdiction under FPA section 216(b) were triggered, the 
designation of a National Corridor by the Secretary would not control 
FERC's substantive decision on the merits as to whether to grant or 
deny the permit application. Moreover, FERC has committed to 
considering non-transmission alternatives, as appropriate, during its 
permit application review process.\8\
---------------------------------------------------------------------------

    \8\ See id.; see also 119 FERC ] 61,154 at P 61 (``During the 
pre-filing and application processes, Commission staff will work 
with the applicant and stakeholders to define issues in each 
proceeding, including the development of appropriate alternatives * 
* *. The public will have the opportunity to participate and file 
comments--which can include suggested alternatives of any kind--
throughout this review.'').
---------------------------------------------------------------------------

    Not only would a National Corridor designation not prejudice State 
or Federal siting processes against non-transmission solutions, it also 
should not discourage market participants from pursuing such solutions. 
Implementation of one solution to a congestion or constraint problem 
can reduce, and in some cases eliminate, the need for, and thus the 
viability of, competing solutions. For example, if a transmission line 
enabling the delivery of low-cost power from generation sources outside 
of a load center were to be put into service, the economic incentive to 
build a new generator closer to load could be eliminated. Designation 
of a National Corridor, however, does not constitute, advocate, or 
guarantee approval of any particular transmission project. Also, FERC, 
as discussed above, may only issue a permit if the applicant has shown 
that its project ``will significantly reduce transmission congestion in 
interstate commerce and protects or benefits consumers.'' If competing 
projects were to fully resolve the congestion or constraint problem 
before the issuance of a FERC permit, it would be difficult for the 
sponsor of a transmission project to make such a showing.\9\ Further, 
developers who diligently pursue meritorious non-transmission solutions 
may be able to obtain approval for those solutions long before a FERC 
permit is issued. In many cases it has taken less time to plan, get 
approval for, and implement non-transmission projects than transmission 
projects.\10\ In fact, FPA section 216, far from disadvantaging certain 
approaches to addressing congestion or constraint problems, is an 
attempt by Congress to put transmission projects on more of a level 
playing field with other congestion solutions.
---------------------------------------------------------------------------

    \9\ If non-transmission projects had not fully resolved the 
congestion problem, it would seem appropriate to consider the need 
for new transmission to supplement those non-transmission projects, 
and non-transmission project sponsors would have no legitimate 
expectation to the contrary.
    \10\ See, e.g., S.P. Vajjhala and Paul S. Fischbeck, Quantifying 
Siting Difficulty, A Case Study of U.S. Transmission Line Siting, 
Resources For the Future Discussion Paper 06-03, at 3 (Feb. 2006) 
(``Transmission line siting is one of the most extreme examples of 
siting difficulty today * * *. Siting problems are not unique to the 
electricity industry; however, siting difficulties associated with 
transmission lines are especially complex.'').
---------------------------------------------------------------------------

    Nor are the time frames established under FPA section 216 likely to 
provide any unfair head-start for transmission projects. A transmission 
developer must first devise a detailed plan for the project. Given the 
highly interconnected nature of the transmission grid, a developer 
considering any significant transmission project would need to work 
with the relevant RTO, ISO, or other regional or sub-regional 
transmission planning entities to explore the feasibility, likely 
costs, and likely system effects of alternative project designs. After 
having done substantial preparatory analyses and settled on a project 
design, the developer in most cases would file a permit application 
with a State agency and could not seek FERC review until the State had 
had one year to evaluate and act upon the application. FPA section 
216(h) establishes a mechanism to ensure that requests for Federal 
authorizations to construct transmission facilities, whether within or 
outside a National Corridor, are acted upon within one year. 16 U.S.C. 
824p(h).
    However, a transmission developer must first complete a pre-filing 
process before filing an application at FERC that would trigger the 
one-year deadline under FPA section 216(h).\11\ FERC has indicated that 
the pre-filing process for extensive projects may take a year to 
complete.\12\ Thus, designation of a National Corridor should not 
reduce the incentive or time available to sponsors of non-transmission 
solutions to pursue such solutions.
---------------------------------------------------------------------------

    \11\ FERC Order No. 689, 71 FR 69,440, 69,466-67, 117 FERC ] 
61,202 at pp. 122-27 (Sec.  50.5 establishes mandatory pre-filing 
procedures).
    \12\ Id., 71 FR 69,440, 69,453, 117 FERC ] 61,202 at P 112.
---------------------------------------------------------------------------

    A National Corridor designation is not the cause of proposals to 
construct transmission. A National Corridor designation is not a 
proposal to build a transmission facility and it does not direct anyone 
to make a proposal. A National Corridor designation does not create or 
discover the need to consider solutions to congestion or constraint 
problems. Developers of electricity projects, be they transmission or 
non-transmission, react to the state of the grid. It is the presence of 
congestion and constraints, already well known to most market 
participants, that causes developers to undertake projects.
    Just as a National Corridor designation is not a decision about the

[[Page 56995]]

best solution to a congestion or constraint problem, it also is not a 
siting decision. FPA section 216(a) does not shift to the Department 
the role of designing routes for transmission facilities, and a 
National Corridor designation does not dictate or endorse the route of 
any transmission project. If a transmission project is proposed in a 
National Corridor, it will be the State or local siting authorities, 
and potentially FERC if certain conditions are met, that will determine 
the specific route of that project. The designation of a National 
Corridor by the Secretary does not control FERC's substantive decision 
on the merits as to where any facilities covered by a permit should be 
located, or what conditions should be placed on that permit. If FERC 
jurisdiction were triggered by a proposed transmission project, FERC 
would conduct an evaluation of the reasonably foreseeable effects of 
transmission construction, including an analysis of alternative routes 
and mitigation options. Based on that analysis, FERC has the authority 
to approve the application, deny the application, or approve the 
application with modifications.\13\
---------------------------------------------------------------------------

    \13\ See, e.g., id. 71 FR 69,440, 69,446, 117 FERC ] 61,202 at 
PP 41-42 (``The Commission will conduct an independent environmental 
analysis of the project and determine if there is no significant 
impact as required by [the National Environmental Policy Act]. It 
will look at alternatives * * *. It will review the alternatives for 
their respective impacts on the environment and will determine 
mitigation measures to lessen the adverse impacts * * *. The 
Commission will also consider the adverse effects the proposed 
facilities will have on land owners and local communities.''); and 
71 FR 69,440, 69,470, 117 FERC ] 61,202 at p. 142-43 (Sec. Sec.  
380.5(b)(14) and 380.6(a)(5) require either an environmental 
assessment or an environmental impact statement for projects seeking 
permits under sec. 216(b)).
---------------------------------------------------------------------------

    In sum, by adding section 216 to the FPA, Congress directed that 
the National Corridor designation process establish a Federal safety 
net to provide, in a defined set of circumstances, an opportunity for 
analysis of the need for transmission from a national, rather than a 
State or local, perspective.

B. Congestion Study

    In accordance with the mandate of FPA section 216(a)(1), the 
Department issued its initial congestion study (the Congestion Study) 
for comment on August 8, 2006. The Congestion Study gathered historical 
congestion data obtained from existing studies prepared by the regional 
reliability councils, RTOs and ISOs, and regional planning groups. The 
Congestion Study also modeled future congestion: The years 2008 and 
2011 for the Eastern Interconnection; and the years 2008 and 2015 for 
the Western Interconnection. The modeling focused on five metrics: 
Binding hours (the number of hours per year that a path is loaded to 
its safe limit and, thus, unable to accommodate all desired power 
transactions), U90 (the number of hours per year that a path is loaded 
above 90 percent of its limit), all-hours shadow price (the marginal 
cost of generation redispatch required to accommodate a given 
constraint averaged across all hours in the year), binding hours shadow 
price (average shadow price over only those hours during which the 
constraint is binding), and congestion rent (shadow price multiplied by 
flow, summed over all hours the constraint is binding).
    Based on the historical data and the modeling results, the 
Congestion Study identified and classified the most significant 
congestion areas in the country. Two ``Critical Congestion Areas'' 
(i.e. areas where the current and/or projected effects of congestion 
are especially broad and severe) were identified: The Atlantic coastal 
area from metropolitan New York through northern Virginia (the Mid-
Atlantic Critical Congestion Area); and southern California (the 
Southern California Critical Congestion Area). Four ``Congestion Areas 
of Concern'' (i.e. areas where a large-scale congestion problem exists 
or may be emerging but more information and analysis appear to be 
needed to determine the magnitude of the problem) were identified: New 
England; the Phoenix-Tucson area; the San Francisco Bay area; and the 
Seattle-Portland area. Also, a number of ``Conditional Congestion 
Areas'' (i.e. areas where future congestion would result if large 
amounts of new generation were to be developed without simultaneous 
development of associated transmission capacity) were identified, such 
as: Montana-Wyoming; Dakotas-Minnesota; Kansas-Oklahoma; Illinois, 
Indiana and upper Appalachia; and the Southeast.

C. May 7 Notice

    On May 7, 2007, the Department published a notice in the Federal 
Register that summarized and responded to the comments relevant to 
National Corridor designation received in response to the Congestion 
Study. 72 FR 25,838 (May 7, 2007) (May 7 notice). The May 7 notice also 
issued and solicited comment on draft National Corridor designations 
for the two Critical Congestion Areas identified in the Congestion 
Study: The draft Mid-Atlantic Area National Corridor; and the draft 
Southwest Area National Corridor.
    In the May 7 notice, the Department noted that the term 
``constraints or congestion that adversely affects consumers'' as used 
in FPA section 216(a)(2) is ambiguous and stated that while it was not 
attempting to define the complete scope of the term, the term does 
include congestion that is persistent. Thus, the Department stated that 
FPA section 216(a) gives the Secretary the discretion to designate a 
National Corridor upon a showing of the existence of persistent 
congestion, as persistent congestion has adverse effects on consumers. 
The Department also stated that the Secretary would decide whether to 
exercise the discretion to make National Corridor designations based on 
the totality of the information developed, taking into account relevant 
considerations, including the considerations identified in FPA section 
216(a)(4), as appropriate. Further, the Department concluded that it 
would use a source-and-sink approach \14\ to delineate the boundaries 
of the draft Mid-Atlantic Area National Corridor and the draft 
Southwest Area National Corridor.
---------------------------------------------------------------------------

    \14\ ``Source'' refers to an area of existing or potential 
future generation, and ``sink'' refers to the area of consumer 
demand or ``load.''
---------------------------------------------------------------------------

    With regard to the Mid-Atlantic Critical Congestion Area, the 
Department noted that the Congestion Study had identified this area 
based on evidence of historical, persistent congestion caused by 
numerous well-known constraints that are projected to continue and 
worsen unless addressed through remedial measures. The Department 
provided data documenting how frequently these constraints have been 
binding, and noted that the modeling for the Congestion Study projected 
that some of these constraints will continue to be problems in 2008, 
along with other additional constraints. The Department also documented 
the existence of persistent congestion through regional differences in 
generation capacity factors within the footprints of the PJM 
Interconnection, LLC, (PJM) \15\ and the New York Independent System 
Operator (NYISO).\16\ Based on this information, the Department found 
under FPA section 216(a)(2) that consumers in the Mid-Atlantic Critical 
Congestion Area are being adversely affected by congestion.
---------------------------------------------------------------------------

    \15\ PJM is the RTO serving parts or all of Delaware, Illinois, 
Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, 
Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the 
District of Columbia.
    \16\ NYISO is the ISO serving New York State.
---------------------------------------------------------------------------

    Having concluded that the Department may designate a National 
Corridor for the Mid-Atlantic Critical Congestion Area, the Department 
then examined whether it is appropriate to

[[Page 56996]]

exercise that discretion. Using historical data on locational marginal 
prices (LMPs) and capacity prices, the Department documented that 
congestion results in electricity consumers in the eastern portion of 
PJM's footprint consistently paying higher electricity prices than 
consumers in the western portion, and in consumers in southeast New 
York consistently paying higher electricity prices than consumers in 
the rest of the State. The Department documented that if action is not 
taken to address congestion, consumers in the Baltimore-Washington-
Northern Virginia area, the northern New Jersey area, and southeast New 
York face threats to the reliability of their electricity supply. The 
Department also documented that congestion exacerbates the degree to 
which consumers in the eastern portion of PJM and in southeast New York 
rely on generation fueled by natural gas and oil. Finally, the 
Department described the importance of the Mid-Atlantic Critical 
Congestion Area to the security and economic health of the Nation as a 
whole. Thus, the Department stated its belief that economic 
development, reliability, supply diversity and energy independence, and 
national defense and homeland security considerations warrant exercise 
of the Secretary's discretion to designate a National Corridor for the 
Mid-Atlantic Critical Congestion Area.
    With regard to the Southern California Critical Congestion Area, 
the Department noted that the Congestion Study had identified this area 
based on evidence of historical, persistent congestion caused by 
numerous well-known constraints that are projected to continue and 
worsen unless addressed through remedial measures. The Department 
provided data documenting how frequently these constraints have been 
binding, and noted that the modeling for the Congestion Study projected 
that some of these constraints will continue to be problems in 2008. 
The Department also documented the existence of persistent congestion 
using flow data, data on congestion and redispatch costs, and data on 
transmission service denials. Based on this information, the Department 
found under FPA section 216(a)(2) that consumers in the Southern 
California Critical Congestion Area are being adversely affected by 
congestion.
    Having concluded that the discretion exists to designate a National 
Corridor for the Southern California Critical Congestion Area, the 
Department then examined whether it is appropriate to exercise that 
discretion. The Department documented that if action is not taken to 
address congestion, consumers in the Southern California Critical 
Congestion Area face threats to the reliability of their electricity 
supply. The Department also documented that congestion exacerbates the 
reliance of consumers in Southern California Critical Congestion Area 
on generation fueled by natural gas. Finally, the Department described 
the importance of the Southern California Critical Congestion Area to 
the security and economic health of the Nation as a whole. Thus, the 
Department stated its belief that reliability, supply diversity, and 
national defense and homeland security considerations warrant exercise 
of the Secretary's discretion to designate a National Corridor for the 
Southern California Critical Congestion Area.
    To delineate the boundaries of both the draft Mid-Atlantic Area 
National Corridor and the draft Southwest Area National Corridor, the 
Department identified source areas that would enable a range of 
generation options and then identified the counties linking the 
identified source areas with the respective sink areas, i.e., the Mid-
Atlantic Critical Congestion Area and the Southern California Critical 
Congestion Area.
    The Department stated that it intended to set a 12-year term for 
both the draft Mid-Atlantic Area National Corridor and the draft 
Southwest Area National Corridor. The Department further stated that 
FPA section 216(a)(1) did not require it to conduct an analysis of non-
transmission solutions to congestion before designating either the 
draft Mid-Atlantic Area National Corridor or the draft Southwest Area 
National Corridor, and that the National Environmental Policy Act of 
1969 (NEPA) did not apply to either designation.
    On June 7, 2007, the Department published a notice of correction 
indicating that the May 7 notice had inadvertently omitted six counties 
from the narrative list of counties comprising the draft Mid-Atlantic 
Area National Corridor; the six counties had been correctly included, 
however, in the map of the draft Mid-Atlantic Area National Corridor. 
72 FR 31571 (June 7, 2007) (June 7 errata).
    The comment period on the May 7 notice closed on July 6, 2007. The 
Department also held a series of public meetings on the May 7 
notice.\17\ All timely filed comments, as well as written comments 
submitted at the public meetings and transcripts of those public 
meetings were posted on the Department's Web site in order to 
facilitate public review. In addition, the Department consulted with 
each of the States within the two draft National Corridors,\18\ as well 
as with the Regional Entities that have authority within the draft 
National Corridors.\19\
---------------------------------------------------------------------------

    \17\ Arlington, VA, May 15, 2007; San Diego, CA, May 17, 2007; 
New York City, NY, May 23, 2007; Rochester, NY, June 12, 2007; 
Pittsburgh, PA, June 13, 2007; Las Vegas, NV, June 20, 2007; and 
Phoenix, AZ, June 21, 2007.
    \18\ The Department sent a letter to the Governor of each of the 
States within the draft National Corridors and the Mayor of the 
District of Columbia on April 26, 2007, requesting an opportunity to 
consult with them on the draft designations. The Department then 
held consultation meetings described below with the representatives 
of the Governors and the Mayor. Delaware: The Department met with 
Delaware on May 3, 2007, in the Governor's Washington, DC office. By 
phone, a staff person from the Delaware Public Service Commission 
and the Department of Natural Resources and Environmental Control 
participated in the meeting. District of Columbia: The Department 
met with the District of Columbia on June 27, 2007. This meeting 
included staff from the DC Department of Environment and the Office 
of the City Administrator. Maryland: On May 11, 2007, the Department 
met with staff from the Governor's Washington, DC Office. New 
Jersey: The Department met with New Jersey on May 9, 2007, in the 
Governor's Washington, DC office. An aide from the Governor's staff 
in New Jersey participated by phone. New York: The Department 
conducted a conference call with staff from the Governor's Office in 
Albany, NY on May 9, 2007. In addition, DOE met with staff from the 
Governor's Washington, DC office on May 11, 2007. Ohio: The 
Department met with Ohio on May 3, 2007, in the Governor's 
Washington, DC office. By phone, this meeting included the 
Governor's staff in Ohio and staff from the Public Utilities 
Commission of Ohio. Pennsylvania: The Department met with staff from 
the Governor's Office at DOE Headquarters on May 10, 2007. This 
meeting included staff from the Pennsylvania Department of 
Environmental Protection. Virginia: The Department conducted a 
conference call with staff from the Governor's office on May 30, 
2007. West Virginia: The Department conducted a conference call with 
staff from the Governor's office on May 24, 2007. Arizona: The 
Department met with staff from the Governor's Washington, DC office 
on May 9, 2007. California: The Department conducted a conference 
call with staff from the Governor's office on April 26, 2007. In 
addition, the Department met with staff in the Governor's 
Washington, DC office on May 3, 2007. Nevada: The Department met 
with staff in the Governor's Washington, DC office on May 3, 2007.
    \19\ On May 21, 2007, the Department sent letters to the 
affected Regional Entities inviting consultation on the draft 
designations. Northeast Power Coordinating Council, Inc. (NPCC) 
responded and the Department conducted a conference call on July 6, 
2007. ReliabilityFirst Corporation responded and the Department 
conducted a conference call on July 3, 2007. SERC Reliability 
Corporation and Western Electricity Coordinating Council (WECC) did 
not respond, although WECC filed timely written comments in this 
proceeding.
---------------------------------------------------------------------------

D. Focus of This Report

1. Overview of Report
    Section II of this report summarizes and responds to the comments 
received on the draft Mid-Atlantic Area National Corridor. Section III 
of this report summarizes and responds to the comments received on the 
draft

[[Page 56997]]

Southwest Area National Corridor. Section IV summarizes and responds to 
the comments received on the applicability of NEPA, the National 
Historic Preservation Act (NHPA), and the Endangered Species Act (ESA) 
to National Corridor designations. Section V of this report orders the 
designation of the Mid-Atlantic Area National Corridor and the 
Southwest Area National Corridor.
    This report focuses on the two geographic areas of the Nation 
experiencing the most acute and urgent electric transmission congestion 
problems; the report takes no action with regard to the other 
geographic areas discussed in the Congestion Study. The Department 
recognizes that it has received many comments and suggestions 
concerning the issues of: (1) National Corridor designation for areas 
other than the two Critical Congestion Areas, (2) technical aspects of 
the Congestion Study that relate to areas outside the two Critical 
Congestion Areas, and (3) the conduct of future congestion studies. The 
Department appreciates these comments and will consider these issues at 
a later date.
2. Other Issues
    Numerous commenters addressed issues that the Department considers 
to be beyond the scope of this report. These issues are described 
below.
a. Opposition to FPA Section 216
Summary of Comments
    Many commenters opposed the very concept of a National Corridor and 
urged the Department to refrain from designating any National 
Corridors. Some of these commenters argued that the eminent domain and 
Federal preemption provisions of FPA section 216 violate the Fifth and 
Tenth Amendments to the U.S. Constitution \20\ and are 
undemocratic.\21\ These commenters argued that a for-profit company 
should never be granted eminent domain,\22\ and expressed skepticism 
that the Federal government could appropriately balance competing 
interests when reviewing applications to construct transmission.\23\ 
Some commenters objected to the provision in FPA section 
216(b)(1)(C)(i) granting FERC jurisdiction within a National Corridor 
where a State commission has withheld approval of a transmission 
application for more than a year. These commenters argued that this 
one-year deadline will not provide adequate time to assess meaningfully 
the environmental impacts of a proposed transmission line project.\24\
---------------------------------------------------------------------------

    \20\ See, e.g., comments of Tommy and Kathy Hildebrand, Cindy 
Carter, and Gary Manoni.
    \21\ See, e.g., comments of Faith Bjalobok and statement of 
Christopher Zimmerman at May 15, 2007, Arlington, VA public meeting.
    \22\ See, e.g., comments of Joseph Zappulla and New York Public 
Interest Research Group (NYPIRG). See also comments of the 
Pennsylvania Senate.
    \23\ See, e.g., comments of Howard Armfield (``The State 
Corporation Commission of Virginia is in a better position than at 
the Federal level to know the historical importance of areas under 
consideration for a utility line.''), Donald Law (``The federal 
government should not interfere with this process.''), Julie Keller 
(``A state has better knowledge of the impact of transmission lines 
etc. and bases it's decisions on the best interest of its local 
citizens rather than private companies or federal agencies.''), 
Jackie Grant (``I feel the public, local municipalities, and the 
states should be able to address their energy needs locally. Local 
and state efforts to resolve energy demands should not be undermined 
by the federal government.''), and Chenango County Farm Bureau.
    \24\ See, e.g., comments of the New Jersey Department of 
Environmental Protection (NJDEP) and the Pennsylvania Department of 
Environmental Protection (PaDEP).
---------------------------------------------------------------------------

    Other commenters urged the Department to refrain from designating 
any National Corridors in light of various alleged generic adverse 
effects of transmission, including: The effects of electromagnetic 
fields on human health and the health of livestock and wildlife; \25\ 
the effect of herbicides used to maintain transmission rights of way; 
\26\ disruption of farming; \27\ reduction of property values; \28\ 
effect on viewsheds; \29\ fragmentation of wildlife habitat; \30\ and 
encroachment on open space.\31\
---------------------------------------------------------------------------

    \25\ See, e.g., comments of Lew McDaniel, David Katch, Alison 
Hanham, and William Hopkins.
    \26\ See, e.g., comments of Travis Turnley and Lee Scherer.
    \27\ See, e.g., comments of Pennsylvania Farm Bureau.
    \28\ See, e.g., comments of Sean Dobich, Jane Eickhoff, and 
Henry Woolman III.
    \29\ See, e.g., comments of Louise Peterson and Thomas Hoffman, 
Jr.
    \30\ See, e.g., comments of Murray Lantner and Ross Cooper.
    \31\ See, e.g., comments of Michael McPoland and Aurore Giguet.
---------------------------------------------------------------------------

    Many commenters argued that instead of implementing FPA section 
216(a), the Department should focus on developing and promoting a 
national energy plan based on conservation, energy efficiency, and 
distributed generation.\32\ These commenters argued that National 
Corridor designations would encourage utilities to pursue outdated, 
environmentally destructive transmission solutions and discourage the 
development of more innovative, sustainable solutions. Michael 
Arrington, for example, stated, ``[National Corridors] will only give 
utilities another reason not to innovate or conserve.'' \33\
---------------------------------------------------------------------------

    \32\ See, e.g., comments of Upen Patel, John Sprieser, Raman 
Jassal, Robert Hanham, Nora Palmatier, and Karen Kampfer, and 
statement of Paul Miller at June 12, 2007, Rochester, NY public 
meeting.
    \33\ See also comments of Russell McKelway (``I believe that 
cessation of land condemnation for power lines would force the kind 
of conservation of energy that our country desperately needs to 
reduce dependence on foreign sources of energy and to reduce global 
warming.''), Nora Marsh (``Yes, we have energy issues but the 
solution is not with old technology.''), and Sheila Paige 
(``Conservation and anti-congestion planning are vitally important--
not to be swept under the rug by temporary and ill-researched band-
aids. These `corridors'--actually vast regions--represent nothing 
but permission for power companies to continue doing what they do 
badly.'').
---------------------------------------------------------------------------

    Numerous individuals suggested specific steps the Department should 
take in lieu of designating National Corridors, including banning the 
use of incandescent lights\34\ and mandating higher efficiency 
standards in building codes.\35\
---------------------------------------------------------------------------

    \34\ See, e.g., comments of Joel Silverthorn and Karee Miller.
    \35\ See, e.g., comments of Ben Pisarcik and A. Pellechia.
---------------------------------------------------------------------------

DOE Response
    These comments are essentially suggestions that Congress should not 
have enacted FPA section 216, and requests that the Department ignore 
FPA section 216(a) based on concerns about the very statutory 
framework. The Department has an obligation to act consistent with the 
terms of FPA section 216(a) as written and enacted into law. Objections 
to the terms of this provision simply do not provide a basis for 
declining to implement the statute.
    The Department has no basis to conclude that the provision is 
unconstitutional. The Fifth Amendment to the U.S. Constitution bars the 
taking of private property for a public purpose without just 
compensation, but as discussed in Section I.A above, FPA section 
216(f)(2) explicitly provides for payment of just compensation in the 
event that a FERC permit holder were to exercise the right of eminent 
domain. While the Tenth Amendment reserves to States those powers not 
delegated to the Federal government by the Constitution, the Interstate 
Commerce Clause of Article I explicitly authorizes the Federal 
government ``to regulate commerce with foreign nations, and among the 
several states, and with Indian tribes.'' \36\ As discussed in Section 
I.A above, FERC's permit authority is limited to facilities that will 
be used for the transmission of electric energy in interstate commerce. 
FPA section 216(b)(2), 16 U.S.C. 824p(b)(2).\37\
---------------------------------------------------------------------------

    \36\ U.S. CONST. art. I, Sec.  8, cl. 3.
    \37\ See also Pub. Util. Comm'n of R.I. v. Attleboro Steam & 
Elec. Co., 273 U.S. 83, 86 (1927) (Attleboro) (transmission of 
electricity from one State to another is interstate commerce); and 
Fed. Power Comm'n v. Florida Power & Light, 404 U.S. 453, 462 (1972) 
(FPL) (transmission of electricity within one State held to be 
interstate commerce because the electricity commingled with 
electricity that was being transmitted out of State).

---------------------------------------------------------------------------

[[Page 56998]]

    Further, there is nothing novel about either the concept of 
granting eminent domain authority to for-profit utilities providing 
services deemed to be in the public interest, or the concept of Federal 
preemption with regard to the siting of interstate energy facilities. 
In most States, for-profit utilities that obtain permits to construct 
transmission facilities are granted the right of eminent domain.\38\ 
Also, FERC and its predecessor, the Federal Power Commission, have been 
issuing permits for the construction of non-Federal hydropower 
facilities and associated primary transmission lines since 1920 and for 
the construction of interstate natural gas pipelines since 1938, all of 
which permits granted the right of eminent domain. See FPA sec. 4(e) 
and 21, 16 U.S.C. 797(e) and 814; and Natural Gas Act, sec. 7(a) and 
(h), 15 U.S.C. 717f(a) and (h). In fact, given the inherently 
interstate nature of transmission, Congress could have completely 
preempted State siting of interstate transmission facilities, as it did 
almost 70 years ago with regard to siting of interstate natural gas 
pipelines.\39\
---------------------------------------------------------------------------

    \38\ See, e.g., ARIZ. REV. STAT. ANN. Sec.  12-1111 (2007); VA. 
CODE ANN. Sec.  1-219.1 (2007); N.Y. TRANSP. CORP. LAW Sec.  11 
(2006); W. VA. CODE ANN. Sec.  54-1-2 (2006); 66 PA. CONS. STAT. 
ANN. Sec.  1104 (1978); CAL. PUB. UTIL. CODE Sec.  612 (1975). 
Moreover, while FPA section 216(e)(1) provides holders of FERC 
permits with the option of going to either Federal or State court to 
exercise eminent domain, the statute also specifies that ``[t]he 
practice and procedure'' in any Federal eminent domain proceeding 
``shall conform as nearly as practicable to the practice and 
procedure in a similar action or proceeding in the courts of the 
State in which the property is located.'' FPA sec. 216(e)(3), 16 
U.S.C. 824p(e)(3).
    \39\ See, e.g., Attleboro, 273 U.S. at 86.
---------------------------------------------------------------------------

    As for those comments suggesting that a National Corridor 
designation is never appropriate because of the risks posed by 
transmission facilities, we note that all forms of energy 
infrastructure pose risks and benefits. The nature and magnitude of the 
risks and benefits posed by a particular infrastructure project (be it 
transmission or non-transmission), the feasibility and cost of 
mitigating those risks, and the comparison of the relative risks and 
benefits of competing projects are all issues with which electric 
system planners and siting authorities must grapple. However, as 
discussed in Section I.A above, FPA section 216(a) does not shift to 
the Department the roles of electric system planners or siting 
authorities in evaluating solutions to congestion and constraint 
problems. Moreover, the Department has no basis to conclude that the 
effects of transmission are so adverse that National Corridor 
designations are never warranted or are warranted only as a last 
resort. In fact, FPA section 216 evinces Congress' concern that 
transmission was not always being approved where and when needed.
    With regard to comments that the Department should abandon 
designation of National Corridors and pursue other energy policies, the 
Department notes that it is already actively engaged in efforts to 
promote conservation, energy efficiency, and distributed generation. 
For example, the Department funds a broad range of research and 
development in technologies that can be used as alternatives and 
supplements to transmission lines, including: Advanced methods of 
central generation such as nuclear energy, central solar, clean coal 
and sequestration of its carbon emissions, wind, geothermal, 
hydroelectric, and gas-fired combustion turbines; distributed 
generation such as solar photovoltaics; energy efficiency; demand 
response; better transmission conductors, such as those using high 
temperature superconductivity, that greatly reduce transmission losses; 
electricity storage; and ``smart grid'' technologies and related 
methods. In addition, the Department provides best-practice-based 
expert technical assistance to States that wish to enact electricity-
related laws, policies, or programs to encourage, allow, or otherwise 
enable their electric utilities to make greater use of alternatives to 
transmission lines. Upon the request of State utility regulators, the 
Department also has facilitated efforts to build regional consensus on 
means to improve energy efficiency, demand response, and distributed 
generation in retail and wholesale electricity markets, such as through 
the Mid-Atlantic Distributed Resources Initiative, the Midwest 
Distributed Resources Initiative, the Pacific Northwest Distributed 
Resources Project, the New England Demand Response Initiative, and the 
2006 National Action Plan for Energy Efficiency.
    Regardless, FPA section 216(a) requires the Department to conduct a 
congestion study every three years, and upon completion of such a 
study, to issue a report or reports in which it determines whether or 
not to designate one or more National Corridors. FPA section 216(a) 
does not grant the Department any other authorities or options. 
Therefore, requests that the Department initiate other regulatory 
activities are beyond the scope of these proceedings.
    Further, the Department disagrees that designation of a National 
Corridor limits or discourages non-transmission solutions (including 
conservation, energy efficiency, and distributed generation) to 
congestion or constraint problems. As discussed in Section I.A above, 
the Department sees no reason to conclude that a National Corridor 
designation would either prejudice State or Federal decision processes 
against non-transmission solutions or discourage market participants 
from pursuing such solutions.
    The only ``benefit'' that a National Corridor designation confers 
upon sponsors of proposed transmission projects is the provision of a 
potential Federal forum for review. The existence of this procedural 
option could well result in outcomes that differ from those that would 
result in its absence. Thus, the end result could be the additional or 
earlier construction of transmission. However, the fact that one 
process may produce a different result than another is not proof that 
the process is skewed in favor of a particular substantive result. For 
example, allowing applicants to appeal agency decisions in court can 
produce different outcomes than a system without a judicial right of 
appeal, but the existence of such a right does not constitute a bias. 
The Department has no reason to believe that designation of National 
Corridors will result in transmission projects supplanting superior 
non-transmission solutions.
    As many commenters have noted, FPA section 216(a) does not mandate 
the designation of any National Corridors; the statute states that the 
Department ``may'' designate a National Corridor. As explained further 
in Sections II and III below, the Department has concluded that in the 
case of the Mid-Atlantic Critical Congestion Area, the reliability of 
the supply of electricity to the political capital and to a key 
financial center of this Nation is at some risk; in the case of the 
Southern California Critical Congestion Area, a large and populous 
portion of one State faces threats to reliability while an adjacent 
State says that its generation resources should be reserved for the 
benefit of its residents. While the statute does grant the Department 
discretion, the Department believes that withholding the opportunity 
for a Federal safety net in the circumstances presented would be 
inconsistent with the intent of FPA section 216(a).

[[Page 56999]]

b. Comments on the Merits of Specific Transmission Projects
Summary of Comments
    Most of the written comments as well as most of the oral statements 
made at the Department's public meetings came from individuals who 
indicated that they live or own property near the routes of particular 
proposed transmission projects that would be within the draft National 
Corridors. Many of these individuals commented on the adverse effects 
that approval of these particular transmission projects would have on 
them.\40\ Some of these individuals acknowledged that designation of a 
National Corridor is not the same as approving a specific transmission 
project. Nonetheless, they argued that designation of the draft 
National Corridors would increase the chances that these particular 
transmission projects would be approved, and, thus, consideration of 
the merits of those particular lines in this proceeding is warranted. 
For example, Cynthia Ridout commented:
---------------------------------------------------------------------------

    \40\ See, e.g., comments of Kathleen Yasas (``I live along the 
route that has been proposed by New York Regional Interconnect, Inc. 
(NYRI) for a 400,000-volt direct current power line. This foreign-
owned project would bisect numerous communities, undermine our 
already fragile economy, wreak havoc on our environment and raise 
electric rates while delivering no benefits.''), Charles Elmes (``If 
this [NYRI] line were to go through my property, it would take a 
line through my farm about 6,000 feet long right through the middle 
of my polo fields, essentially putting me out of business and 
rendering the rest of my farm practically useless.''), Fred and 
Debra Burnside (``I protest Allegheny Energy's Trans-Allegheny 
Interstate Line. The line would run through my property and we only 
own 1 acre. I fear it would reduce the value of my property. * * 
*''), Janie Ricciuti (``We live within 600 ft of the proposed 
APTrail. My husband served his country in Vietnam, he has CTCL from 
Agent Orange Exposure. These towers are a death sentence for 
him.''), Vanessa Mueller (``I would like to go on record as saying I 
am opposed to Dominion's proposal to place power lines through this 
area.''), Linda Rose (``We are opposed to Dominion VA Power's 
attempted desecration of our local countryside. * * *''), Teresa 
Barker (``I would like to express my opposition to the Sunrise 
Powerlink * * *. The visual impacts will create a scar on our 
landscape that will endure for generations.''), and Alison Law-
Mathisen (``The City of Los Angeles, under the guise of the `Green 
Path Project,' is targeting many communities with blight * * *''); 
see also statement of Jay Biba at June 12, 2007, Rochester, NY 
public meeting, and statement of Terry Simmons at June 13, 2007, 
Pittsburgh, PA public meeting.

    My home is directly in the path of a proposed 500 kV 
transmission line in Southwest PA. I speak today to defend that 
home. The PA PUC is currently examining the proposal for the line, 
and may yet deny permission for it to be built. This careful 
investigation is the protection offered me as a citizen of PA. The 
looming danger for me, though, is the threat of NIETC designation. 
My fear is that private for-profit companies view the NIETC as a 
carte blanche to quickly gain approval for and build transmission 
lines to reap enormous profits.\41\
---------------------------------------------------------------------------

    \41\ See also comments of Eugene and Kristin Gulland, (``By 
granting the designation, DOE would make a de facto endorsement of 
the [Dominion's/Allegheny's] preferred pathway * * *'') and Kate 
Severinsen (``Corridor designation allows NYRI to complete the state 
Public Service Commission's review process knowing the federal 
government can and will say 'yes' even if the State of New York says 
`no' to it.'').

Numerous elected officials, environmental organizations, and other 
groups raised similar objections to specific proposed transmission 
projects.\42\
---------------------------------------------------------------------------

    \42\ See, e.g., comments of U.S. Rep. Hall, Chenango County Farm 
Bureau, City of Paris, New York, and Communities United for Sensible 
Power.
---------------------------------------------------------------------------

    A number of other commenters described the alleged benefits of 
specific proposed transmission projects that would be within the draft 
National Corridors.\43\
---------------------------------------------------------------------------

    \43\ See, e.g., comments of San Diego Gas and Electric (SDG&E), 
New York Regional Interconnect Inc. (NYRI), Allegheny Energy, Inc. 
(Allegheny), American Electric Power (AEP), and the California 
Chamber of Commerce.
---------------------------------------------------------------------------

DOE response
    As the Department stated in the May 7 Notice and as explained 
further in Section I.A above, designation of a National Corridor is not 
a siting decision, nor does such designation constitute approval or 
disapproval, or endorsement or rejection of any transmission project. 
The Department neither supports nor opposes any of the particular 
transmission projects that have been proposed within the draft National 
Corridors; indeed, the Department has not evaluated the merits of the 
design or route of any specific proposed transmission project, 
including whether any specific transmission project would meet the FPA 
section 216(b)(2)-(6) criteria for issuance of a FERC permit. The 
boundaries of the National Corridors being designated today are not 
based on any proposed transmission projects.
    The existence of a National Corridor designation does not mean that 
any transmission project within that National Corridor will ultimately 
be approved, let alone approved exactly as proposed by the project 
sponsor. As discussed in Section I.A above, if FERC jurisdiction were 
triggered, FERC could issue a permit only if all of the following 
conditions are met: The facilities will be used for the transmission of 
electric energy in interstate commerce; the project is consistent with 
the public interest; the project will significantly reduce congestion 
in interstate commerce and protect or benefit consumers; the project is 
consistent with national energy policy and will enhance energy 
independence; and the project maximizes, to the extent reasonable and 
economical, the transmission capabilities of existing towers or 
structures. FPA sec. 216(b)(2)-(6); 16 U.S.C. 824p(b)(2)-(6). FERC has 
issued regulations governing the process it will follow under FPA 
section 216(b). These regulations provide that if FERC jurisdiction 
under FPA section 216(b) were triggered, FERC would conduct an 
evaluation of the reasonably foreseeable effects of transmission 
construction, including an analysis of alternative routes and 
mitigation options. Based on that analysis, FERC has the authority to 
approve the application, deny the application, or approve the 
application with modifications.\44\
---------------------------------------------------------------------------

    \44\ FERC's experience in siting interstate natural gas 
pipelines demonstrates the latitude that FERC possesses to modify 
applications for energy infrastructure construction. FERC has 
processed many applications to construct natural gas pipelines and, 
where such applications have been approved, the final route has 
almost always been different from that proposed by the project 
sponsor. See, e.g., Millenium Pipeline Co., L.P., 97 FERC ] 61,292 
(2001) (ordering developer to negotiate with elected officials and 
interested parties and citizens to work toward an agreement on an 
alternate route through Mount Vernon, NY); and Greenbrier Pipeline 
Co., LLC, 103 FERC ] 61,024 (2003) (authorizing construction subject 
to 47 different environmental conditions, including a major route 
alternative and four route variations).
---------------------------------------------------------------------------

    Determination of whether and where to site transmission facilities 
raises important and difficult issues, the resolution of which is of 
especially critical importance to the people who live and work near 
those facilities. However, the pros and cons of any particular proposed 
transmission project are not germane to the Department's determination 
under FPA section 216(a) of whether consumers are being adversely 
affected by constraints or congestion such that National Corridor 
designation is appropriate.
c. Designation in the Absence of Current Congestion
Summary of Comments
    A few commenters, including the Organization of MISO States (OMS), 
the National Association of Regulatory Utility Commissioners (NARUC), 
the Ohio Power Siting Board (OH Siting Board), the Michigan Public 
Service Commission (MiPSC), and Communities Against Regional 
Interconnect (CARI), expressed concern about the Department's statement 
in the May 7 notice that the Secretary has discretion to designate a 
National Corridor in the case of a constraint that is hindering the 
development of generation that would be beneficial to consumers without 
demonstrating present congestion.

[[Page 57000]]

These commenters argued that the Department's position appears 
inconsistent with the plain language and legislative intent of FPA 
section 216(a)(2). NARUC asked that the Department clarify how 
constraints or congestion that adversely affects consumers can be 
``experienced,'' as required by the statute, if there is not yet 
generation that constrains or congests the system. OMS requests that 
the DOE reconsider its position or refrain from making these and 
similar findings in its final order on the two draft National 
Corridors. OH Siting Board states that DOE should reserve the issue 
regarding its authority to designate National Corridors for Conditional 
Congestion Areas for a future time.
DOE Response
    The May 7 notice addressed the question of designating a National 
Corridor in the absence of current congestion in response to 
conflicting comments we received on the Congestion Study. Some 
commenters on the Congestion Study asked the Department to clarify that 
it was not foreclosing the possibility of designating National 
Corridors for Conditional Congestion Areas before the expected 
generation was developed; others argued that no such designations were 
permissible because the statute requires a showing that an area is 
currently experiencing congestion adversely affecting consumers. In the 
May 7 notice, we observed that there is no generally accepted 
understanding of what constitutes a ``geographic area experiencing 
electric energy transmission constraints or congestion that adversely 
affects consumers,'' and the phrase, as used in the statute, is 
ambiguous. We noted that one way in which constraints can adversely 
affect consumers is by causing congestion that in turn adversely 
affects consumers. However, we also noted that if Congress had intended 
to limit the Secretary's designation authority over constraints to 
cases where constraints are currently causing congestion, then there 
would have been no need for the statutory language to refer to 
congestion or constraints. Further, we agreed with those commenters who 
argued that the total absence of a line connecting two nodes can be 
just as, if not more, limiting to consumers than the presence of a line 
that is operating at capacity and, therefore, that ``constraint'' 
includes the absence of transmission facilities between two or more 
nodes. Thus, we stated that the statute does not appear to foreclose 
the possibility of National Corridor designation in the absence of 
current congestion, so long as a constraint, including the absence of a 
transmission line, is demonstrably hindering the development of 
desirable generation. We noted that this interpretation would not only 
give meaning to all terms in the statutory phrase ``constraints or 
congestion that adversely affects consumers,'' it would also be 
consistent with the statutory reference to ``experiencing'' a 
constraint. Under this interpretation, any National Corridor 
designation would necessitate a showing that a current lack of capacity 
exists and that such lack of capacity is having a current, tangible 
effect--generation that would be of benefit to the general public 
including consumers, is actually being hindered by the lack of capacity 
to bring it to market. Finally, we noted that we were leaving open the 
question of the type of information that would be required to 
demonstrate that a constraint actually is hindering the development or 
delivery of a generation source and that development or delivery of 
such generation source would be beneficial to consumers.
    The Department is not relying on this interpretation of its 
statutory authority for either of the two designations being made in 
this report. Despite the characterizations of some commenters, in the 
case of both the Mid-Atlantic Area National Corridor and the Southwest 
Area National Corridor, the Department's assertion of authority is 
based on the conclusion that congestion adversely affecting consumers 
is currently being experienced. Neither of these two designations 
relies on any interpretation of the scope of the Department's authority 
in the absence of current congestion. If and when the Department 
considers making a National Corridor designation in the absence of 
current congestion, it intends to provide such designation in draft 
form for public comment and to consult with all affected States prior 
to making any final decision. At that time, interested parties will 
have a full opportunity to raise any concerns they have about the 
adequacy of the Department's demonstration of authority. Further 
clarification is beyond the scope of these proceedings.
d. FERC's Process
Summary of Comments
    Some commenters raise objections to FERC's process for reviewing 
permit applications under FPA section 216(b). These commenters dispute 
FERC's interpretation of FPA section 216(b)(1)(C)(i) allowing it to 
exercise jurisdiction where a State has denied, as opposed to simply 
delayed action on, an application.\45\ NJDEP expresses concern about 
how FERC will interpret the one-year timeframe for State action under 
FPA section 216(b)(1)(C)(i). PaDEP expresses concern that FERC's review 
will be narrowly restricted to the merits of a proposed line rather 
than examining whether generation or demand resources can better 
satisfy the underlying needs. PaDEP also expressed concern that 
approval by one State of a portion of a multi-state project may 
prejudice FERC's review.
---------------------------------------------------------------------------

    \45\ See, e.g., comments of the Delaware Department of Natural 
Resources and Environmental Control (DeDNR) and the Public Utilities 
Commission of Nevada and the Nevada State Office of Energy (Nevada 
Agencies).
---------------------------------------------------------------------------

    On the other hand, National Grid USA (National Grid) states that 
FERC's siting rules include a substantial measure of deference to 
existing regional, State, and local planning and siting processes.
DOE Response
    Congress specifically granted to FERC, rather than to DOE, the 
responsibility of reviewing any permit applications under FPA section 
216(b). As required by FPA section 216(c)(2), FERC has issued 
regulations governing the process it will follow when reviewing any 
such applications. These regulations are being challenged in court.\46\ 
Any allegations of inadequacy or inconsistency with statutory intent 
must be addressed there and are beyond the scope of these proceedings.
---------------------------------------------------------------------------

    \46\ See Piedmont Environmental Council, et al. v. FERC, 4th 
Cir., Nos. 07-1651, et al.
---------------------------------------------------------------------------

II. Mid-Atlantic Area National Corridor (Docket No. 2007-OE-01)

A. Procedural Matters

1. Parties to This Proceeding
    The May 7 notice provided instructions on how to provide comments 
and how to become a party to the proceeding in this docket. Consistent 
with those instructions, the Department is granting party status in 
this docket to all persons who either: (1) Filed comments 
electronically at http://nietc.anl.gov on or before July 6, 2007; (2) 
mailed written comments marked ``Attn: Docket No. 2007-OE-01'' to the 
Office of Electricity Delivery and Energy Reliability, OE-20, U.S. 
Department of Energy, 1000 Independence Avenue, SW., Washington, DC 
20585, that were received on or before July 6, 2007; or (3) hand-
delivered written comments marked ``Attn: Docket No. 2007-OE-01'' at 
one of the public meetings.

[[Page 57001]]

2. Fairness of the Designation Process
Summary of Comments
    Many commenters, including numerous individuals, argued that the 
Department had failed to provide adequate opportunity for the public to 
review and comment on the draft National Corridors. For example, John 
Balasko argued that the Department should have done more to inform and 
involve the general public because, ``If this corridor is adopted, no 
longer will landowners within the corridor be free to make sound land 
management decisions because the hammer of the Federal Energy 
Regulatory Commission and perhaps federal eminent domain is looming in 
the background.'' CARI contends that designation of the draft Mid-
Atlantic Area National Corridor would be a ``rule'' subject to the 
notice and comment rulemaking requirements of the Administrative 
Procedure Act, 5 U.S.C. 553 (APA). Many commenters argued that more 
public meetings should have been held and that they should have been 
held along the routes of various proposed transmission projects within 
the draft National Corridors.\47\ Numerous commenters requested an 
extension of the comment period. In particular, commenters argued that 
the June 7 errata published by the Department warranted an extension of 
the comment period. Numerous individuals and organizations asserted 
that the Department had failed to reveal the data underlying the draft 
designations.\48\
---------------------------------------------------------------------------

    \47\ See, e.g., comments of Karen Smolar, Rand Carter, Dale 
Roberts, U.S. Sen. Clinton, and NY Rep. Destito.
    \48\ See, e.g., comments of Greene County, Rick Layton, and 
Barbara Kessinger.
---------------------------------------------------------------------------

    Many commenters, including a number of individuals, alleged that 
the draft National Corridor designations were the result of improper 
influence by transmission companies.\49\ Some commenters complained 
that instead of conducting an independent study of congestion, the 
Department improperly relied on data and analyses from utilities or 
others with a vested interest in transmission expansion.\50\
---------------------------------------------------------------------------

    \49\ See, e.g., comments of Diane Eisenberg (``The proposals 
smack of cronyism, a lack of transparency, and improper attempts by 
secretive private interests to influence national energy policy not 
for the public benefit but for their own profit.'').
    \50\ See, e.g., comments of Toll Brothers, Inc. (Toll Bros.) and 
Jeffrey Brown.
---------------------------------------------------------------------------

DOE Response
    The Department concludes that its process has been fair, open, and 
transparent, and that it has provided ample opportunity for public 
comment. DOE does not agree that the designation of National Corridors 
is subject to the APA's informal rulemaking provisions. FPA section 
216(a) does not expressly require rulemaking, and, in DOE's view, the 
designation of National Corridors constitutes informal adjudication 
under the APA. Absent a statutory or other legal requirement providing 
otherwise, the choice whether to use rulemaking or adjudication in a 
particular matter is the administrative agency's to make. The APA 
defines ``adjudication'' as ``an agency process for the formulation of 
an order.'' 5 U.S.C. 551(7). An order is ``the whole or a part of a 
final disposition, whether affirmative, negative, injunctive, or 
declaratory in form, of an agency in a matter other than rule making 
but including licensing.'' 5 U.S.C. 551(6). A report designating a 
National Corridor is the final disposition in declaratory form of how 
DOE chooses to address the results of the study it must conduct under 
FPA section 216(a), and, therefore, is an informal adjudication for APA 
purposes.
    Regardless of the label one applies to the designation of National 
Corridors, DOE has employed procedures that satisfy all applicable 
procedural requirements. DOE complied with FPA section 216(a)(2) by 
soliciting comments on the Congestion Study through a notice of 
availability and request for comments published on August 8, 2006 (71 
FR 45047). DOE allowed 60 days for submission of public comments on the 
Congestion Study. After considering the comments received pursuant to 
that solicitation, DOE published the May 7 notice and provided a 60-day 
public comment opportunity on draft National Corridor designations. The 
May 7 notice stated that public comments would be considered prior to 
DOE issuing a report as required by FPA section 216(a)(2). DOE provided 
this comment opportunity even though FPA section 216(a) does not 
require DOE to solicit comments on either the report or on any proposed 
or draft National Corridor designations. FPA section 216(a) only 
requires that DOE solicit comments on the study, upon which the report 
and any designation of National Corridors are based.
    In addition, the Department held a series of public meetings on the 
draft National Corridors. Although the Department was not required to 
hold any public meetings, it announced in the May 7 notice that it 
would hold three public meetings. In response to numerous requests for 
additional meetings, the Department held four more meetings. With 
regard to complaints about the Department's failure to schedule 
meetings along the routes of various proposed transmission projects, 
the Department notes that, as discussed in Section I.A above, 
designation of a National Corridor is not a siting decision, nor does 
such designation constitute approval or endorsement of any transmission 
project.
    While some commenters argue that the June 7 errata warranted 
extension of the comment period, the Department notes that the counties 
inadvertently omitted from the narrative list were included in the 
previously available map of the draft Mid-Atlantic Area National 
Corridor. Further, given that the designations were issued in draft and 
the Department was soliciting comment on those drafts, including 
comment on its delineation of the boundaries of the draft National 
Corridors, persons concerned about counties in the general vicinity of 
the draft National Corridors were on notice on May 7, 2007, of the need 
to provide comments by July 6, 2007.
    The Department believes it has provided adequate disclosure of 
information. The May 7 notice identified the specific data the 
Department relied on to: Establish the existence of congestion 
adversely affecting consumers, determine whether the Secretary should 
exercise his discretion to designate a National Corridor, and delineate 
the specific boundaries of the draft National Corridors. Those data 
included memoranda that the Department has made available on its Web 
site. In addition, as noted in the May 7 notice, the non-proprietary 
data relied on in the Congestion Study has been available on the 
Department's Web site since September 27, 2006.
    The Department did not rely solely on data and information from any 
single source or category of sources. While conducting the Congestion 
Study, the Department contacted a wide range of stakeholders for 
publicly available and current data, and then, through the notice of 
inquiry and technical conference, opened the call for data to all 
entities. The Department then performed its own review of the 
information provided. All interested persons had an opportunity to 
comment on the May 7 notice, and the Department has considered all 
timely filed comments.
3. Adequacy of State Consultation
Summary of Comments
    Some commenters asserted that the Department has failed to 
adequately consult with affected States. For example, Virginia Governor 
Kaine states

[[Page 57002]]

that the Congestion Study was performed without consultation with 
Virginia, contrary to FPA section 216(a)(1). Pennsylvania Senator Casey 
asserts that States were not adequately consulted. The Pennsylvania 
Land Trust Association argued that various expressions of opposition to 
the draft Mid-Atlantic Area National Corridor from elected officials 
from Pennsylvania prove that the Department has failed to consult.\51\ 
CARI states that DOE has failed to consult adequately with New York.
---------------------------------------------------------------------------

    \51\ See also comments of Energy Conservation Council of 
Pennsylvania (ECCP) and statement of Robert Lazaro at May 15, 2007, 
Arlington, VA public meeting.
---------------------------------------------------------------------------

DOE Response

    The Department is cognizant of its responsibility to consult with 
affected States and believes that it has fulfilled this responsibility. 
As described in the May 7 notice, there are practical difficulties in 
conducting the level of consultation that some may prefer in the 
context of a study with the magnitude of the Congestion Study within 
the statutorily mandated deadlines. However, the Department believes 
that its consultation with States, as documented in the May 7 notice, 
satisfied the requirements of FPA section 216(a)(1). Moreover, in 
recognition of the importance of National Corridor designation to 
States, upon issuance of the May 7 notice, the Department engaged in 
additional consultation with each of the States within the draft 
National Corridors and the District of Columbia, as documented in 
Section I.C above.
    The Department recognizes the value and importance of State 
consultation. The Department has sought to ensure that it understands 
the concerns of the States within the Mid-Atlantic Area National 
Corridor and the Southwest Area National Corridor; that it has 
accommodated those concerns where possible consistent with its 
obligations under FPA section 216(a); and that it has fully explained 
its position where it concludes it cannot accommodate those concerns.

B. Overall Comments on the Draft Mid-Atlantic Area National Corridor

    The Department received comments from numerous State officials and 
agencies generally opposed to the Department's designation of a Mid-
Atlantic Area National Corridor. Governor Kaine opposes designation of 
a National Corridor that includes the Commonwealth of Virginia.\52\ The 
PaDEP, filing comments on behalf of Governor Rendell, opposes 
designation of the draft Mid-Atlantic Area National Corridor as 
premature; the Pennsylvania Public Utilities Commission (PaPUC) also 
filed comments opposing designation.\53\ Maryland Governor O'Malley 
states that the Department should set aside the draft Mid-Atlantic Area 
National Corridor and focus on other ways to address the region's 
energy problems. DeDNR, filing comments on behalf of Governor Miner, 
opposed designation of the draft Mid-Atlantic Area National Corridor. 
In addition, the Department received comments opposing designation 
from: The New York Public Service Commission (NYPSC) and the New York 
Department of Environmental Conservation (NYDEC); the New Jersey Board 
of Public Utilities, NJDEP, and the New Jersey Department of the Public 
Advocate (NJ Public Advocate); and OH Siting Board.
---------------------------------------------------------------------------

    \52\ See also comments of Virginia Department of Historic 
Resources.
    \53\ See also comments of the Pennsylvania House of 
Representatives and the Pennsylvania Senate.
---------------------------------------------------------------------------

    Numerous counties and cities within the draft Mid-Atlantic Area 
National Corridor filed comments opposing designation. The Department 
also received comments opposing designation from hundreds of 
individuals residing within the draft Mid-Atlantic Area National 
Corridor but outside of the Mid-Atlantic Critical Congestion Area. 
Numerous non-profit organizations also filed comments opposing 
designation.\54\
---------------------------------------------------------------------------

    \54\ See, e.g., comments of Piedmont Environmental Council, 
CARI, NYPIRG, and Sierra Club (National).
---------------------------------------------------------------------------

    The New York City Economic Development Corporation, filing comments 
on behalf of the City of New York (City of New York), supports 
designation of a National Corridor for New York City. PJM supports 
designation of the portion of the draft Mid-Atlantic Area National 
Corridor within the PJM footprint. NYISO supports designation of the 
draft Mid-Atlantic Area National Corridor based on the Department's 
clarifications in the May 7 notice that the designation does not 
represent either an endorsement of any individual project, a 
determination that new transmission construction is necessarily 
required, or a repudiation of regional planning mechanisms. Numerous 
utilities also filed comments supporting designation of a Mid-Atlantic 
Area National Corridor.\55\
---------------------------------------------------------------------------

    \55\ See, e.g., comments of AEP, National Grid, Allegheny, NYRI, 
and Old Dominion Electric Cooperative (ODEC); see also comments of 
Edison Electric Institute (EEI).
---------------------------------------------------------------------------

    NERC filed comments stating that the ultimate designation of 
National Corridors will further bolster the reliability of the grid. 
NPCC expressed concern about designation of an overly narrow National 
Corridor.
DOE Response
    These comments in general opposition to the designation of a Mid-
Atlantic Area National Corridor are essentially opposition to the 
regimen established by FPA section 216(a). As stated in Section 
I.D.2(a) above, the Department has an obligation to act consistent with 
the terms of FPA section 216(a) as written and enacted into law. 
Objections to the terms of this provision simply do not provide a basis 
for declining to implement the statute.

C. Adequacy of Showing of Congestion That Adversely Affects Consumers

Summary of Comments
    Numerous commenters argued that the Department had failed to make 
the showing of congestion adversely affecting consumers required in 
order to designate a Mid-Atlantic Area National Corridor. Some of these 
commenters took issue with the Department's position that it has the 
discretion to designate the Mid-Atlantic Area National Corridor upon a 
showing of the existence of persistent congestion, without further 
demonstration of adverse effects on consumers. For example, NYPSC 
states that DOE's interpretation is contrary to the express language of 
the statute, which recognizes that transmission congestion and 
constraints do not, per se, adversely affect consumers. NYPSC states 
that DOE's approach renders the statutory phrase ``that adversely 
affects consumers'' entirely superfluous, contrary to a fundamental 
canon of statutory construction. PaPUC states that DOE has misread the 
statute to give itself unlimited power to designate National Corridors 
almost anywhere in the United States, since every transmission pathway 
may become congested at some point in time. PaPUC states that it is not 
enough for the DOE to identify the existence of chronic congestion. OMS 
states that although it may be relatively easy to demonstrate that 
persistent congestion is adversely affecting consumers, OMS believes 
that DOE still needs to explicitly demonstrate such adverse effects 
before it can designate any National Corridor.\56\
---------------------------------------------------------------------------

    \56\ See also comments of MiPSC, ECCP, Consolidated Edison 
Company of New York, Inc. (Con Ed), CARI, Toll Bros., and City of 
Paris, NY.
---------------------------------------------------------------------------

    NYPSC argues that in regions such as New York State where 
competitive markets have been established, higher prices for 
transmission do not always

[[Page 57003]]

adversely affect consumers. NYPSC further states where the costs of 
relieving congestion exceed the costs of the congestion itself, 
consumers are not adversely affected by such congestion because such 
congestion reflects the most economically efficient operation of the 
grid.\57\ Erica Wiley states that areas of congestion or higher pricing 
are a result of natural market forces, thus, one would expect New York 
City's cost of energy to be higher than that in the Ohio River Valley, 
much like real estate prices. Higher prices, this commenter argued, do 
not adversely affect consumers, but rather have led to innovation and 
conservation.
---------------------------------------------------------------------------

    \57\ See also comments of Con Ed.
---------------------------------------------------------------------------

    Some commenters argued that the Department's analysis relies on 
inflated estimates of future congestion. A few commenters argued that 
the Department had failed to consider that greenhouse gas regulation 
will increase the price of coal-fired generation, and thereby reduce 
congestion between areas of coal generation and load centers.\58\ Con 
Ed argues that the Department should model new generation capacity in 
the eastern portion of the PJM footprint resulting from the new 
Reliability Pricing Model capacity market or other generation now 
expected to be in service after 2011. Con Ed states that using average 
losses instead of marginal losses also can serve to artificially 
inflate projections of congestion. Con Ed further states that the three 
cost curves for Upstate East, Upstate West, and Downstate New York used 
in the Congestion Study modeling should have been combined into one 
curve and the resulting energy prices compared to energy prices with 
constraints. PaPUC states that rather than relying solely upon a static 
direct current flow analysis, DOE should have performed dynamic 
analysis of alternating current flows, as is used in actual 
transmission grid planning models. CARI argues that the Department has 
not adequately considered data from NYISO's most recent Reliability 
Needs Assessment that suggests that future constraints and congestion 
will not be as severe as the Congestion Study modeling predicts. Some 
commenters argue that the Department failed to adequately consider the 
effects of ongoing demand reduction efforts on congestion, including 
New York Governor Spitzer's recent plan to decrease energy demand in 
the State by 15 percent below forecasted load by 2015.\59\
---------------------------------------------------------------------------

    \58\ See, e.g., comments of Sierra Club (National) and Con Ed.
    \59\ See, e.g., comments of CARI, NYPRIG, and American Council 
for an Energy-Efficient Economy.
---------------------------------------------------------------------------

    Other commenters supported the Department's showing of congestion 
adversely affecting consumers in the Mid-Atlantic Critical Congestion 
Area. For example, PJM states that persistent and growing transmission 
congestion such as that experienced in the Mid-Atlantic Critical 
Congestion Area is a precursor to threats to reliability of service in 
the near- and mid-term future.\60\ NYISO states that as a general rule, 
the Department correctly identified those areas of New York State lying 
along its major transmission pathways that historically have 
experienced significant congestion.\61\
---------------------------------------------------------------------------

    \60\ See also comments of WIRES.
    \61\ See also comments of National Grid.
---------------------------------------------------------------------------

DOE Response
    The Department concludes that it has sufficiently demonstrated and 
found the existence of congestion that adversely affects consumers in 
the Mid-Atlantic Critical Congestion Area. FPA section 216(a)(2) does 
not define the term ``congestion that adversely affects consumers,'' 
nor is there any dictionary definition or common usage of that phrase 
within the realm of electric system operations to clarify its meaning. 
The considerations listed in FPA section 216(a)(4), which authorize the 
Department to consider factors such as diversification of supply and 
energy independence when determining whether to designate a National 
Corridor, indicate that Congress intended the Department to consider 
adverse effects on consumers beyond increases in the delivered price of 
power. However, the statute provides no further clarification of the 
type or magnitude of adverse effect intended. The statute also does not 
dictate any particular method of determining the existence of 
congestion adversely affecting consumers, except that such 
determination is to be based on the study conducted pursuant to FPA 
section 216(a)(1). In sum, the statute is ambiguous, and leaves to 
agency discretion, as to when congestion can be said to adversely 
affect consumers.
    Nothing in the statute requires that the Department conduct a 
separate explicit empirical analysis of the specific adverse effects of 
an instance of congestion before designating a National Corridor. FPA 
section 216(a)(1) describes the congestion study on which any 
designation of a National Corridor must be based only as a ``study of 
electric transmission congestion.'' Similarly the term ``congestion 
that adversely affects consumers'' in FPA section 216(a)(2) does not 
dictate a two-step analysis--first to determine the level of congestion 
and second to determine the specific resulting adverse effects--before 
a National Corridor designation may be made.
    In the Congestion Study, the Department defined ``congestion'' as 
the condition that occurs when transmission capacity is not sufficient 
to enable safe delivery of all scheduled or desired wholesale 
electricity transfers simultaneously. This definition was based on 
common usage within electric system operations \62\ and spurred little 
dissent among commenters on the Congestion Study. Under this 
definition, determining and documenting the specific adverse effects 
caused by specific instances of congestion could necessitate 
identification of all the scheduled or desired power transactions that 
were denied transmission service, all the alternative power 
transactions that occurred as a result of the congestion, all the 
parties to both sets of transactions, all the terms of both sets of 
transactions, and all the sources of power for both sets of 
transactions. Obtaining and analyzing such information for each area 
under evaluation for potential National Corridor designation, assuming 
all such information were accessible, would be a daunting task, 
particularly in the context of a triennial study that must already 
identify and analyze the existence of congestion itself throughout 47 
States and the District of Columbia. Thus, given the practical 
complications of conducting in each case a specific analysis of the 
specific adverse effects caused by the specific instances of 
congestion, the Department considered whether it was possible to 
identify a class of congestion that necessarily adversely affects 
consumers.
---------------------------------------------------------------------------

    \62\ See, e.g., California Independent System Operator, 
Conformed Simplified and Reorganized Tariff, App. A, Master 
Definitions Supplement (April 6, 2007) (``Congestion--A condition 
that occurs when there is insufficient Available Transfer Capacity 
to implement all Preferred Schedules simultaneously or, in real 
time, to serve all Generation and Demand.''); and Southwest Power 
Pool, Glossary and Acronyms, http://www.spp.org/glossary.asp?letter=C (``Congestion is a condition that occurs when 
insufficient transfer capacity is available to implement all of the 
preferred schedules for electricity transmission simultaneously.'').
---------------------------------------------------------------------------

    Given the definition of ``congestion,'' any congestion prevents 
some users of the transmission grid from completing their preferred 
power transactions. These users include wholesale industrial consumers 
of power as well as load-serving entities buying power on behalf of 
retail consumers, all of whom are prevented by congestion from 
obtaining delivery of desired quantities of electricity from desired 
sources.

[[Page 57004]]

Thus, any congestion on a line necessarily interferes with the choices 
of those who wish to use that line on their own or their customers' 
behalf. Whenever there is congestion on a transmission path, there 
simply is not enough transmission capacity to accommodate all the 
desired power transactions, and some sort of rationing of available 
capacity is needed. In areas with organized electricity markets, this 
rationing generally occurs through a pre-established economic 
mechanism, such as an LMP-based system designed to allocate the limited 
capacity to the users who value it the most. In areas of the country 
without organized markets, the rationing may involve the transmission 
provider denying requests for transmission service, adjusting 
schedules, or in some cases making pro rata curtailments in real time. 
Regardless of how the rationing is resolved, however, one thing remains 
true: Congestion results in some users of the transmission system being 
denied the benefit of their preferred transactions.
    Interference with customers' preferred power transactions poses 
numerous potential adverse effects on consumers. One reason for 
choosing a particular power seller is commodity price. Electricity 
buyers frequently seek power from sellers who offer the lowest power 
price. When congestion prevents those transactions from being 
consummated, more expensive power must be purchased, which adversely 
affects consumers. However, congestion can result in the loss of 
benefits to consumers other than just low commodity prices. A seller 
may offer contract terms other than lower commodity price that benefit 
consumers, including better credit terms, greater long-term pricing 
certainty, or greater flexibility in terminating contracts. A seller 
may offer consumer benefits in terms of fuel source. For example, a 
seller may offer power from a fuel source that would increase diversity 
or energy independence, both of which protect consumers from unforeseen 
events and market volatility related to fuel availability. Or a seller 
may offer consumers the ability to buy renewable power, which offers 
environmental benefits to consumers. A seller may offer consumer 
benefits simply by being unaffiliated with a load-serving entity's 
primary electricity supplier, which protects consumers from being 
completely dependent on a single supplier. While analysis of why the 
transactions thwarted by a particular instance of congestion were in 
fact preferred by customers would reveal which of these specific 
consumer benefits had been forgone, no such analysis is needed to 
conclude that congestion thwarts customer choice resulting in the loss 
of one or more of these benefits. Finally, congestion results in parts 
of the transmission system being so heavily loaded that grid operators 
have fewer options for dealing with adverse circumstances or 
unanticipated events. Therefore, as congestion increases consumers are 
exposed to increased risk of blackouts, forced interruptions of 
service, or other grid-related disruptions.
    Some commenters suggest that congestion only adversely affects 
consumers if the costs of relieving the congestion are less than the 
costs of the congestion itself. As discussed above, we conclude that 
Congress intended the Department to consider adverse effects on 
consumers beyond increases in the delivered price of power, some of 
which effects may not be easily monetized. Further, designation of a 
National Corridor does not dictate how or even whether to address a 
particular instance of congestion. Therefore, the Department believes 
that restricting the term ``congestion that adversely affects 
consumers'' to congestion that can be cost-effectively relieved is an 
overly narrow reading of the statute. Some commenters suggest that 
congestion can actually benefit consumers by spurring energy efficiency 
or the adoption of innovative technologies. The Department believes, 
however, that their comments speak not to any true benefits of 
congestion itself, but rather to the benefits of congestion management 
systems that put a price on congestion, thus making it easier for 
market participants to evaluate how best to address that congestion.
    While the Department concludes that, in theory, any congestion 
adversely affects at least some consumers, it is not adopting that 
interpretation of the term ``congestion that adversely affects 
consumers.'' Instead, the Department recognizes that isolated instances 
of congestion can arise on any transmission path, and such events are 
more in the nature of occasional inconveniences than a significant 
adverse effect on consumers. However, as congestion becomes more 
frequent on a particular path, the occasional inconveniences start to 
accumulate until, at the point where congestion becomes persistent, 
customers find that they must recurrently resort to less desirable 
power sources. In fact, as customers lose the ability to access 
preferred suppliers on a firm basis, they may need to make permanent 
arrangements with less desirable suppliers, all to the detriment of 
consumers.
    Further, the Department recognizes that congestion remedies are not 
free. As discussed above, the identification of congestion adversely 
affecting consumers is not a determination of whether or how a 
particular instance of congestion should be addressed. It is, however, 
the first step in the process of determining whether to provide a 
potential Federal forum that would examine whether addressing 
congestion through transmission expansion is in the public interest. 
Just as isolated or infrequent instances of congestion do not usually 
cause significant adverse effects to consumers, they also do not 
usually warrant consideration of structural changes, such as 
transmission expansion, increased demand response, or siting of 
additional generation. The ``solution'' to such transient instances of 
congestion is short-term, temporary adjustments, such as redispatch. 
Thus, when electric system planners consider whether structural changes 
are needed in the system, they typically start by looking for recurrent 
patterns of congestion and calculating the number of hours per year 
that a given transmission line or path is congested.
    The Department emphasizes that while a finding of congestion that 
adversely affects consumers provides the Department with the discretion 
to designate a National Corridor, it does not mean that the Department 
will choose to exercise that discretion in all instances. Before making 
any designation of a National Corridor, the Department will consider 
whether such designation is in the national interest, based on the 
totality of the information developed, taking into account relevant 
considerations, including the considerations identified in FPA section 
216(a)(4), as appropriate.
    The Department concludes, based on its technical expertise and 
policy judgment, that it is reasonable to interpret the phrase 
``congestion that adversely affects consumers'' to include congestion 
that is persistent. Thus, the Department believes that FPA section 
216(a) gives the Secretary sufficient authority and discretion to 
designate the Mid-Atlantic Area National Corridor upon a showing of the 
existence of persistent congestion.
    The Department further concludes that persistent congestion exists 
into and within the Mid-Atlantic Critical Congestion Area. Some 
commenters question assumptions made in the modeling performed in the 
Congestion Study, and others suggest that the modeling be performed 
again to

[[Page 57005]]

incorporate additional analysis or more recent data. All of these 
comments concern the accuracy of projections of future levels of 
congestion; however, the analysis in the Congestion Study and the May 7 
notice was not limited to estimating future levels of congestion. The 
Mid-Atlantic Area National Corridor is based on well-documented 
existing constraints causing patterns of congestion that have persisted 
over a number of years.
    For example, Tables VIII-4 and VIII-5 in the May 7 notice 
identified 25 different transmission elements in the PJM and NYISO 
footprints that have been constrained more than five percent of the 
time from 2004 through 2006.\63\ Some of these elements were 
constrained much more than five percent of the time: Bedington-Black 
Oak was constrained 52 percent and 45 percent of the time in the Day-
Ahead market in 2005 and 2006 respectively; the Kammer 765/500 
transformer was constrained 39 percent and 23 percent of the time in 
the Day-Ahead market in 2005 and 2006 respectively; Rainey to Vernon 
345 kV was constrained 36 percent and 32 percent of the time in the 
Day-Ahead market in 2005 and 2006 respectively; and Dun-Shore Road was 
constrained 71 percent and 89 percent of the time in the Day-Ahead 
market in 2005 and 2006 respectively. While some commenters question 
how much and how quickly congestion in the Mid-Atlantic Critical 
Congestion Area will increase or decrease, and how much and how quickly 
various efforts will reduce the congestion, no one seriously questions 
that this congestion exists now and that it will continue for some 
period of time.\64\
---------------------------------------------------------------------------

    \63\ Given the large daily and seasonal swings in the level of 
demand and the associated changes in the patterns of generation 
dispatch, congestion on a line is significant even if the line is 
not congested most of the hours in the year. For example, although 
Path 15 in California was congested in only 11.9 percent of the 
total hours in the Day-Ahead market and 4.7 percent in the Hour-
Ahead market in 2004 (see CAISO, 2004 Annual Report on Market Issues 
and Performance, table 5.2 (April 2005)), upgrades implemented in 
December 2004 are estimated to save consumers hundreds of millions 
of dollars (see CAISO, Potential Economic Benefits to California 
Load from Expanding Path 15-Year 2005 Prospect (Sept. 24, 2001)). 
Congestion does not occur until a line is already loaded to its 
safety limit; this means that in general congestion tends to occur 
when demand is relatively strong, which happens only during a 
portion of the day or year.
    \64\ Further, as discussed in Section I.A above, FERC may only 
issue a permit if the applicant has shown that its project will 
significantly reduce congestion, and FERC has interpreted this to 
mean that an applicant must make a showing that its project will 
significantly reduce the congestion identified by DOE. Thus, if 
congestion into or within the Mid-Atlantic Critical Congestion Area 
were to be resolved before the issuance of a FERC permit, it would 
be difficult for the sponsor of a transmission project to make such 
a showing.
---------------------------------------------------------------------------

    Moreover, while the Department concludes that the statute 
authorizes the designation of the Mid-Atlantic Area National Corridor 
upon the Department's finding of the existence of persistent 
congestion, the Department nevertheless has provided additional 
documentation. In the context of explaining the considerations that led 
to the draft designation of the Mid-Atlantic Area National Corridor, 
the Department documented that congestion is causing consumers in the 
Mid-Atlantic Critical Congestion Area to face consistently higher 
electricity prices; that congestion poses threats to the reliability of 
electricity supply to consumers in the Mid-Atlantic Critical Congestion 
Area; and that congestion limits supply diversity and energy 
independence for Mid-Atlantic Critical Congestion Area consumers.\65\ 
For example, the May 7 notice explained that PJM has determined that 
unless constraints into the Baltimore-Washington-Northern Virginia area 
are mitigated, existing 500 kV transmission facilities serving that 
area will become overloaded by 2011 in violation of NERC and PJM 
reliability and planning criteria, and unless constraints into northern 
New Jersey are mitigated, that area faces violations of NERC and PJM 
reliability and planning criteria by 2014. The May 7 notice further 
explained that NYISO has determined that constraints limiting delivery 
of electricity to southeast New York pose a threat to reliability by 
2011.
---------------------------------------------------------------------------

    \65\ See May 7 notice, Section VIII.C.1-3. NJ Public Advocate 
argues that the congestion rents calculated in the Congestion Study 
exaggerate the adverse economic impacts on consumers because they 
ignore the availability of transmission cost hedging instruments. 
However, as explained in the May 7 notice, the Department believes 
that while congestion rents are a useful indicator of the 
persistence and pervasiveness of congestion, the Department is not 
suggesting that such rents represent the actual monetary cost that 
consumers pay specifically as a result of congestion. The May 7 
notice's discussion of increased costs to consumers focused on 
differences in actual power and capacity prices paid as a result of 
the documented congestion, rather than projections of congestion 
rents.
---------------------------------------------------------------------------

    Far from simply assuming the presence of congestion that adversely 
affects consumers, as some commenters allege, the Department has made a 
reasoned determination that the statutory conditions triggering 
discretion to designate a National Corridor for the Mid-Atlantic 
Critical Congestion Area have been met.

D. Boundaries of the Mid-Atlantic Area National Corridor

Summary of Comments
    Numerous commenters argued that the draft Mid-Atlantic Area 
National Corridor is impermissibly broad. For example, ECCP states that 
designation of an area spanning much of the Mid-Atlantic region exceeds 
the Secretary's authority and the Department's expansive definition of 
``corridor'' does not comport with Congress'' definition of 
``corridor'' or Congress' intent in enacting FPA section 216. Upper 
Delaware Preservation Coalition states that DOE exceeded its statutory 
authority by disregarding the common usage of the word ``corridor'' 
under EPAct and drawing the boundaries of the draft Mid-Atlantic Area 
National Corridor arbitrarily.\66\ Southern Environmental Law Center 
(SELC) states that the definition employed by DOE in establishing 
corridors under EPAct section 368 should also apply to National 
Corridors designated under FPA section 216(a). Appalachian Trail 
Conservancy states that the draft Mid-Atlantic Area National Corridor 
is so broad as to be virtually meaningless.
---------------------------------------------------------------------------

    \66\ See also comments of U.S. Sen. Casey, Pennsylvania Farm 
Bureau, Piedmont Environmental Council, and numerous individuals.
---------------------------------------------------------------------------

    ODEC states that a National Corridor designation that would provide 
Federal backstop siting authority for any project in eastern portion of 
the PJM footprint likely would be counter-productive to getting 
transmission built in that region. PaPUC states that the draft Mid-
Atlantic Area National Corridor is both overly broad and overly narrow. 
The draft Mid-Atlantic Area National Corridor is overly broad, 
according to PaPUC, because it includes many areas that for a variety 
of economic, environmental, or technical engineering reasons would be 
excluded from any major transmission infrastructure project study; it 
is overly narrow because the simplistic ``box'' methodology ignores the 
actual topology of the existing transmission grid and excludes regions 
outside the ``box'' that might be equally suitable or superior for 
siting National Interest transmission infrastructure. PaPUC also 
objects to the use of political boundaries that have no clear relevance 
to electric infrastructure as a physical system. PaPUC suggests 
defining one or more smaller National Corridors in the Mid-Atlantic 
region, each with an entry point at the source, an exit point at the 
load, and a congestion interface in the middle.
    Numerous commenters argued that the statute requires any Mid-
Atlantic Area National Corridor to be limited to

[[Page 57006]]

the confines of the urban areas experiencing the congestion.\67\ CARI 
states that if any area is to be designated in New York State, it 
should be those limited portions of the existing New York transmission 
system actually functioning as a transmission constraint or causing 
persistent congestion that adversely affects consumers. CARI also 
argues that a broad reading of the term ``geographic area experiencing 
electric energy transmission capacity constraints or congestion that 
adversely affects consumers'' violates the principle of statutory 
construction known as the ``presumption against preemption.''
---------------------------------------------------------------------------

    \67\ See, e.g., comments of Karl Cehonski, Susan Morgan, and 
City of Paris, New York.
---------------------------------------------------------------------------

    Some commenters suggested redrawing the Mid-Atlantic Area National 
Corridor boundaries so as to follow existing transmission lines or 
highways.\68\
---------------------------------------------------------------------------

    \68\ See, e.g., comments of Karen Gonzales and Laura Krauza.
---------------------------------------------------------------------------

    Other commenters supported the Department's approach. For example, 
PJM and NYISO support the Department's source-and-sink approach. Pepco 
Holdings, Inc. (PHI) states that the draft Mid-Atlantic Area National 
Corridor is appropriately broad so as to encompass all necessary RTO-
approved system enhancements associated with major new transmission 
solutions and to complement existing and foreseeable transmission 
plans. National Grid states that the Department's approach to 
establishing boundaries for the draft Mid-Atlantic Area National 
Corridor is precisely the approach that accords deference to existing 
regional, State, and local planning and siting authorities by 
preserving the flexibility those authorities need to consider multiple 
alternative solutions. EEI states that DOE has properly delineated the 
draft Mid-Atlantic Area National Corridor as a general, inclusive 
geographic area, and adds that if utility, State, or regional agency 
staff indicate that the margins of the draft Mid-Atlantic Area National 
Corridor need to be modified to encompass potential solutions, DOE 
should make such modifications so that a full array of solutions can be 
considered.
    NPCC expressed concern that the Department's source-and-sink 
approach may lead to the designation of overly narrow National 
Corridors. NPCC cautions against making transmission improvements in 
narrow corridors without giving sufficient attention to the possible 
need for coordinated improvements in distant but related parts of the 
Eastern Interconnection. NPCC points out, for example, that increasing 
the west-to-east electricity flows in PJM without regard to broader 
effects could exacerbate loop flows around Lake Erie. Accordingly, NPCC 
recommends that DOE maintain an Interconnection-wide perspective in 
making National Corridor designations and emphasize to all stakeholders 
that adding more transmission capacity within a National Corridor could 
exacerbate reliability problems outside the Corridor unless appropriate 
and coordinated countermeasures are implemented.
DOE Response
    The Department concludes that its approach to defining the 
boundaries of the draft Mid-Atlantic Area National Corridor is 
consistent with the statute. FPA section 216 does not explicitly define 
the term ``national interest electric transmission corridor.'' FPA 
section 216(a)(2) does, however, authorize the Department to designate 
``any geographic area experiencing electric energy transmission 
capacity constraints or congestion that adversely affects consumers'' 
as a National Corridor. 16 U.S.C. 824p(a)(2). ``Any geographic area'' 
connotes no particular shape, proportion, or size. Thus, the language 
of FPA section 216(a) does not appear to limit the shape, proportion, 
or size for a National Corridor.
    A few commenters point to the approach being used by DOE and the 
Federal land managing agencies to delineate energy right-of-way 
corridors for oil, gas, and hydrogen pipelines and electricity 
transmission and distribution facilities under EPAct section 368 as 
evidence that the draft Mid-Atlantic Area National Corridor is too 
broad to be consistent with the statute. We believe, to the contrary, 
that the differences in the language and intent of FPA section 216(a) 
and EPAct section 368 underscore the appropriateness of the 
Department's overall approach to establishing the boundaries of the 
draft Mid-Atlantic Area National Corridor.
    In contrast to FPA section 216(a)(2)'s reference to ``any 
geographic area,'' EPAct section 368(e) explicitly requires that ``[a] 
corridor designated under this section shall, at a minimum, specify the 
centerline, width, and compatible uses of the corridor.'' Congress 
could have included similar language in FPA section 216(a) had it 
intended the Department to use the same approach to delineating 
National Corridors, but it did not. The plain language of EPAct section 
368(e) limits its applicability to corridors ``designated under this 
section.'' Further, despite the assertions of some commenters, the 
Department sees no reason to conclude that the language of EPAct 
section 368(e) implicitly governs FPA section 216(a)(2). Nothing in 
EPAct section 368 suggests that the language of EPAct section 368(e) 
was intended to establish a general definition of ``corridor'' for all 
EPAct purposes. In fact, the heading of EPAct section 368(e) 
characterizes that subsection not as a definition, but rather as 
``Specifications of Corridor.'' Further, while FPA section 216 was 
added to the FPA by EPAct section 1221(a), it was part of a stand-alone 
title called the ``Electricity Modernization Act of 2005.'' \69\
---------------------------------------------------------------------------

    \69\ See EPAct sec. 1201.
---------------------------------------------------------------------------

    Moreover, National Corridors designated under FPA section 216(a) 
serve a fundamentally different purpose than energy right-of-way 
corridors for oil, gas, and hydrogen pipelines and electricity 
transmission and distribution facilities, designated under EPAct 
section 368; therefore, use of different approaches to delineating the 
respective corridors is not only appropriate, it is necessary. The 
corridors called for by EPAct section 368 are specifically 
characterized as ``right-of-way corridors.'' Congress required that the 
Federal land-managing agencies designate these right-of-way corridors 
through amendments to their land use resource management plans or 
equivalent land use plans. Thus, designation of right-of-way corridors 
under EPAct section 368 is in the nature of land use planning.
    In contrast, when the Department designates National Corridors 
under FPA section 216(a) it is not engaging in land use planning. FPA 
section 216(a) established a profoundly different task for the 
Department, a task that is novel in the realm of electric system 
planning and development. As discussed in Section I.A above, the 
Department's role under FPA section 216(a) is limited to the 
identification of congestion and constraint problems and the geographic 
areas in which these problems exist, and does not extend to the 
functions performed by siting authorities in evaluating routes for 
transmission facilities. None of the considerations listed in FPA 
section 216(a)(4) speak to land use issues. Thus, unlike an EPAct 
section 368 energy right-of-way corridor, an FPA section 216(a) 
National Corridor is not intended to identify a potential transmission 
siting route. As the Supreme Court recently held, ``A given term in the 
same statute may take on distinct characters from association with 
distinct statutory objects calling for different implementation 
strategies.'' \70\
---------------------------------------------------------------------------

    \70\ Environmental Def. v. Duke Energy Corp., 127 S. Ct. 1423, 
1432 (2007).

---------------------------------------------------------------------------

[[Page 57007]]

    Numerous commenters argue that the draft Mid-Atlantic Area National 
Corridor is inconsistent with common meanings of the term ``corridor.'' 
Given the statutory reference to ``any geographic area'' as well as the 
novel nature of FPA section 216(a), it is not clear that common 
meanings or past uses of the term ``corridor'' have much relevance for 
the delineation of National Corridor boundaries. Nonetheless, the 
Department does not believe that the draft Mid-Atlantic Area National 
Corridor is inconsistent with such commonly accepted meanings. There 
was broad consensus among the commenters on the Congestion Study that 
if a project-based approach were not used to set National Corridor 
boundaries, then a source-and-sink approach should be. The Department 
used a source-and-sink approach to develop the boundaries of the draft 
Mid-Atlantic Area National Corridor. Such an approach comports with the 
common usage of ``corridor'' as an area linking two other areas. This 
approach is also consistent with the physical properties of the 
electric grid, because a transmission line into a congested or 
constrained load area will not benefit that load unless the line 
connects with a source of power that could help to serve the load.
    In addition to dictionary definitions of ``corridor,'' commenters 
offer examples of usage of the term to argue that the draft Mid-
Atlantic Area National Corridor is overly broad. Again, the Department 
questions the relevance of such examples, even the examples of 
electricity industry usage, given the novel nature of a National 
Corridor under FPA section 216(a). However, the Department notes that 
there are examples of the term ``corridor'' being used in other 
contexts to refer to geographic areas not dissimilar in size and shape 
to the draft Mid-Atlantic Area National Corridor.\71\
---------------------------------------------------------------------------

    \71\ For example, in the trade context, ``corridors'' are often 
very broad. The North American Free Trade Agreement led to the 
establishment of various trade corridors in North America. Not 
unlike National Corridors, these trade corridors are areas where 
there is a need to develop transportation and communications 
infrastructure to facilitate trade. These trade corridors include 
the ``Pacific Corridor,'' which ``includes the entire geographic 
band formed by the Rocky Mountain range and the Pacific Coast.'' See 
North American Forum on Integration Web site at http://www.fina-nafi.org/eng/integ/corridors.asp?langue=eng&menu=integ.
---------------------------------------------------------------------------

    The Department does not think it is reasonable, as some commenters 
have suggested, to interpret the term ``geographic area experiencing 
electric energy transmission capacity constraints or congestion that 
adversely affects consumers'' as restricting a National Corridor 
designation to the specific confines of the load being adversely 
affected by congestion or the constrained transmission lines causing 
such congestion. FPA section 216(a)(4)(A) and (B) both refer to the 
Department considering economic factors in ``the corridor, or the end 
markets served by the corridor.'' Since the end markets served by a 
National Corridor are the load centers where consumers are being 
adversely affected by congestion, this language indicates that Congress 
envisioned designation of National Corridors that extend beyond the 
location of the adversely affected consumers. FPA section 216(b)(6) 
requires that before FERC issues a permit for a project in a National 
Corridor, it must make a finding that the project ``will maximize, to 
the extent reasonable and economical, the transmission capabilities of 
existing towers or structures.'' Thus, FERC is authorized to issue a 
permit for projects that do not use existing towers, provided that it 
concludes that use of existing towers is not reasonable or economical. 
Since FERC can only issue permits within the bounds of a National 
Corridor, this language indicates that Congress envisioned designation 
of National Corridors that extend beyond existing constrained 
transmission lines.
    The term ``geographic area experiencing electric energy 
transmission capacity constraints or congestion that adversely affects 
consumers'' envisions an area that encompasses the load being adversely 
affected by congestion and the constrained transmission lines causing 
such congestion, but the statute is ambiguous with regard to the 
precise scope of the area. The Department believes its source-and-sink 
approach to delineating the boundaries of the draft Mid-Atlantic Area 
National Corridor represents a reasonable interpretation of this 
ambiguous statutory term.
    As discussed in Section I.A above, FPA section 216(a) does not 
shift to the Department the roles of electric system planners or siting 
authorities in evaluating or selecting solutions to congestion and 
constraint problems. Thus, in implementing its source-and-sink 
approach, the Department has attempted to identify source areas that 
would enable a range of generation options. Theoretically, a sink area 
could be served by generation sources from across the entire 
interconnection. Also, given the long lead time involved in planning, 
obtaining regulatory approvals for, and constructing transmission 
projects, areas without a current surplus of generation could well 
develop additional power sources by the time a transmission project is 
completed. Therefore, not only could areas with existing surplus 
generation function as source areas, but also areas with projected 
surplus generation, or areas with available fuel supply for additional 
generation. The Department was faced, therefore, with a considerable 
range of potential source areas from which to choose when delineating 
the draft Mid-Atlantic Area National Corridor.
    In exercising its judgment as to which source areas to use for 
purposes of delineating the boundaries of the draft Mid-Atlantic Area 
National Corridor, the Department was guided by several factors. The 
Department has tried to balance the objective of accommodating a range 
of options against the practical limitations on delivery of power over 
increasingly longer distances.\72\ The Department has also taken into 
consideration State concerns about the size of any Mid-Atlantic Area 
National Corridor, as well as the fact that Congress opted for a 
limited approach to Federal preemption of transmission siting. The 
Department has been further guided by the considerations identified in 
FPA section 216(a)(4). Finally, consistent with the language of FPA 
section 216(a)(2) referring to designation of a geographic area 
experiencing constraints or congestion that adversely affects 
consumers, the Department has restricted its selection of source areas 
to those separated from the identified sink area, i.e. the Mid-Atlantic 
Critical Congestion Area, by one or more of the constraints identified 
in Section VIII.B of the May 7 notice as causing congestion adversely 
affecting consumers.
---------------------------------------------------------------------------

    \72\ The Department recognizes, as some commenters have pointed 
out, that the longer the transmission line, the greater the 
associated line losses, and that generation that is remote from a 
load center is less effective in providing some of the ancillary 
services required to maintain reliability than generation that is 
closer to the load center.
---------------------------------------------------------------------------

    The result of this analysis was the identification of two 
categories of source areas: (1) The closest locations with substantial 
amounts of existing, under-used economic generation capacity separated 
from the identified sink area by one or more of the constraints 
identified as causing congestion adversely affecting consumers; and (2) 
the closest locations with the potential for substantial development of 
wind generation capacity separated from the identified sink area by one 
or more of the constraints identified as causing congestion adversely 
affecting consumers. Identification of the first category is consistent 
with FPA section

[[Page 57008]]

216(a)(4)(A), which emphasizes the importance of ensuring adequate 
supplies of reasonably priced power. Identification of the second 
category is consistent with FPA section 216(a)(4)(B), which emphasizes 
diversification of supply, and FPA section 216(a)(4)(C), which 
emphasizes promotion of energy independence. Much of the generation in 
the first category happens to be coal-fired, thus identification of 
that category is also consistent with FPA section 216(a)(4)(B) and 
(C).\73\
---------------------------------------------------------------------------

    \73\ As discussed in Section VIII.C.3 of the May 7 notice, much 
of the existing generation fleet in the eastern portion of PJM's 
footprint and in the downstate portion of New York is fueled by oil 
or natural gas. While NJBPU argues that increasing access to coal-
fired generation would reduce fuel diversity within the PJM 
footprint as a whole, the Department notes that this does not alter 
the desirability of reducing where possible the reliance on oil and 
natural gas. Further, given this source area's consistency with the 
other considerations in FPA section 216(a)(4), we conclude that its 
use in setting an outer bound for the draft Mid-Atlantic Area 
National Corridor was appropriate.
---------------------------------------------------------------------------

    The Department then delineated the draft Mid-Atlantic Area National 
Corridor by identifying the counties linking the identified source 
areas with the Mid-Atlantic Critical Congestion Area. While the 
Department recognizes that political boundaries have nothing to do with 
the characteristics of the electric system, we continue to believe that 
it is important to establish precise, easily identified boundaries for 
the Mid-Atlantic Area National Corridor. We conclude that use of county 
boundaries is a reasonable means of providing such certainty.
    Thus, the Department delineated the draft Mid-Atlantic Area 
National Corridor by connecting the sink area containing consumers 
adversely affected by congestion with a range of source areas separated 
from the identified sink area by the constraints causing such 
congestion.\74\ While many commenters complain that the identified 
source areas are too far from the sink area or that the draft Mid-
Atlantic Area National Corridor is too broad, we note that these 
commenters have not identified specific alternative source areas or 
specific alternative Corridors.\75\ Further, we acknowledge NPCC's 
concerns that the draft Mid-Atlantic Area National Corridor may be too 
narrow; the grid is highly interconnected and modifications to one 
portion of the transmission system can have significant effects on 
power flows over other distant portions. However, the desire to ensure 
that all potentially required reliability upgrades are encompassed must 
be balanced against other statutory considerations. Thus, given the 
overall framework of FPA section 216 and the physical properties of the 
electric grid, the Department concludes that its approach to 
delineating the draft Mid-Atlantic Area National Corridor is consistent 
with the statutory call for the designation of a ``geographic area 
experiencing electric energy transmission capacity constraints or 
congestion that adversely affects consumers.'' \76\
---------------------------------------------------------------------------

    \74\ The Department notes that in this instance the sink area is 
large and diverse, and there are many possible sources, meaning that 
DOE could have drawn a large number of narrower but crossing or 
overlapping source-and-sink corridors. The result, however, would 
have been confusing, and could have given the impression that DOE 
was prescribing or advocating which source should be linked with 
which sub-part of the sink area. Designating one National Corridor 
encompassing the sink area and the source areas is a more practical 
approach that is consistent with the source-and-sink concept while 
preserving the latitude of others to make their decisions on the 
basis of more specific analyses.
    \75\ While commenters have failed to identify specific 
alternative source areas, some commenters have offered examples of 
significant potentials for increased efficiency and distributed 
generation. As discussed in Section I.A above, designation of the 
draft Mid-Atlantic Area National Corridor will neither prejudice 
State or Federal siting processes against such non-transmission 
solutions, nor discourage market participants from pursuing such 
solutions. Thus the existence of such non-transmission alternatives 
does not provide a basis for adjusting the boundaries of the draft 
Mid-Atlantic Area National Corridor or declining to designate the 
Corridor.
    \76\ With regard to comments about the ``presumption against 
preemption,'' this doctrine arises when there is a controversy 
whether a given State authority conflicts with, and thus has been 
displaced by, the existence of a Federal authority. New York v. 
FERC, 535 U.S. 1, 17-18 (2002). We are not concerned here with the 
validity of any State law or regulation, nor are we invalidating any 
such law or regulation. Thus, the doctrine is not applicable.
---------------------------------------------------------------------------

    Some commenters complain that the draft Mid-Atlantic Area National 
Corridor fails to provide adequate guidance on appropriate transmission 
solutions and, thus, the Department should go back to the drawing board 
to determine specific routes linking specific sources and sinks. 
However, the Department is deliberately not attempting to identify 
preferred transmission solutions. As discussed in Section I.A above, 
the Department has concluded that FPA section 216(a) was not intended 
to shift to the Department the roles of electric system planners or 
siting authorities. \77\
---------------------------------------------------------------------------

    \77\ With regard to PaPUC's comment that the draft Mid-Atlantic 
Area National Corridor includes areas that for a variety of 
economic, environmental, or technical engineering reasons would be 
excluded from any major transmission infrastructure project study, 
the Department notes that if PaPUC's assessment is correct, then no 
transmission project will be proposed in such areas. Thus, the 
objection is more academic than of real consequence.
---------------------------------------------------------------------------

    The Department recognizes that some States are concerned about 
unintended expansion of Federal siting authority to include proposed 
transmission projects that happen to be located within the Mid-Atlantic 
Area National Corridor but are unrelated to the problem that prompted 
its designation. The Department recognizes that while Congress could 
have completely preempted State siting of interstate transmission 
facilities, it instead chose a more limited approach. However, the 
Department does not believe that designation of the Mid-Atlantic Area 
National Corridor will result in the exercise of Federal permitting 
authority beyond that envisioned by Congress. FPA section 216(b)(4) 
specifies that FERC jurisdiction is limited to projects that will 
``significantly reduce transmission congestion in interstate commerce 
and protects or benefits consumers.'' As discussed in Section I.A 
above, FERC has stated that it interprets this to mean that a project 
must significantly reduce the transmission congestion identified by 
DOE. Therefore, only those transmission projects within the Mid-
Atlantic Area National Corridor that would significantly reduce 
congestion into or within the Mid-Atlantic Critical Congestion Area 
would be eligible for a FERC permit.
    In the May 7 notice, the Department stated that determining the 
exact boundaries of a National Corridor under a source-and-sink 
approach is more an art than a science, and there will rarely be a 
dispositive reason to draw a boundary in one place as opposed to some 
number of miles to the left or right. This statement was not, as some 
commenters allege, an admission that the boundaries of the draft Mid-
Atlantic Area National Corridor are arbitrary and capricious. Rather, 
the statement was a recognition that no single boundary line can be 
determined based solely upon analysis of the data and, thus, the 
drawing of the boundary necessarily involves the exercise of judgment. 
The Department believes that it has exercised that judgment in a 
reasonable manner.
    Finally, numerous commenters have requested that particular 
counties be added or removed from the Mid-Atlantic Area National 
Corridor. \78\ The Department has carefully considered these requests. 
However, it concludes that its approach to delineating the draft Mid-
Atlantic Area National Corridor, as described above, does not warrant 
further adjustment.
---------------------------------------------------------------------------

    \78\ See, e.g., comments of Fauquier County, VA, Philip Morin, 
Jayne Baran, AEP, ODEC, Allegheny, and FirstEnergy Service Company.

---------------------------------------------------------------------------

[[Page 57009]]

E. Inclusion of Environmentally, Historically, or Culturally 
Significant Lands

Summary of Comments
    Many commenters, including numerous individuals, argued that the 
Department should exclude National Parks, State parks, and other 
environmentally, historically, or culturally significant lands from any 
Mid-Atlantic Area National Corridor. For example, National Parks 
Conservation Association (NPCA) opposes inclusion of any units of the 
National Park System in the Mid-Atlantic Area National Corridor. NPCA 
states that the draft Mid-Atlantic Area National Corridor conflicts 
with the National Park Service Organic Act and the provisions of the 
Land and Water Conservation Fund program. Many commenters objected to 
the inclusion of the Upper Delaware River Valley in the draft Mid-
Atlantic Area National Corridor. For example, the Upper Delaware 
Preservation Coalition noted that the Upper Delaware River is a 
Federally designated Wild and Scenic River, whose management plan 
declares ``major electric lines'' as incompatible uses. Other 
commenters urged exclusion of various historic sites in the Piedmont 
and Shenandoah Valley regions of Virginia. The Pennsylvania Land Trust 
Association states that public lands, including lands subject to 
conservation easements, having been protected through public and 
private resources, must be exempted from conversion to the private use 
of the energy industry. \79\
---------------------------------------------------------------------------

    \79\ See also statement of Arthur Gray Coyner at May 15, 2007, 
Arlington, VA public meeting.
---------------------------------------------------------------------------

DOE Response
    The Department concludes that exclusion of environmentally, 
historically, or culturally sensitive lands from the Mid-Atlantic Area 
National Corridor is neither required nor necessary. First, with regard 
to public lands such as parks and wildlife refuges, nothing in the 
statute suggests that the Department should exclude such lands from a 
national interest electric transmission corridor. In fact, FPA section 
216(f)(2), as discussed in Section I.A above, expressly excludes 
property owned by the United States or a State from a FERC permit 
holder's exercise of eminent domain authority. Given that FERC can only 
issue permits that cover geographic areas within a National Corridor, 
the presence of explicit statutory language clarifying that a FERC 
permit does not provide the right of eminent domain over Federal or 
State property indicates that Congress envisioned that such property 
could be included within National Corridors. \80\
---------------------------------------------------------------------------

    \80\ The significance of the absence of any express exclusion of 
Federal or State property from the reach of FPA section 216(a) is 
further underscored by Congress' explicit exemption of National 
Parks and certain other Federal lands from the Presidential appeal 
process established by FPA section 216(h)(6). See FPA section 
216(j)(2), 16 U.S.C. 824p(j)(2).
---------------------------------------------------------------------------

    The Department sees no need to exclude Federal or State property 
from the Mid-Atlantic Area National Corridor. As discussed in Section 
I.A above, if FERC were to issue a permit for a transmission facility 
slated to cross any Federal or State property, the permit holder would 
still need to obtain a right-of-way across that property. Inclusion of 
Federal or State property in a National Corridor does nothing to change 
the process for obtaining such a right-of-way. In the absence of a 
National Corridor designation, a developer seeking to build a 
transmission facility on Federal or State property would need to obtain 
the permission of the Federal or State agency responsible for managing 
that property. If Federal or State property were included in a National 
Corridor, a developer seeking to build a transmission facility on such 
property would still need to obtain the permission of the Federal or 
State agency responsible for managing that property. Further, neither a 
National Corridor designation nor the issuance of a FERC permit 
controls a Federal or State land management agency's decision whether 
to grant or deny a right-of-way. Thus, contrary to the assertions of 
various commenters, inclusion of Federal and State property within the 
Mid-Atlantic Area National Corridor creates no additional risk that 
such property might become the site of a transmission facility.
    Exclusion of Federal or State property from the Mid-Atlantic Area 
National Corridor is not only unnecessary, it could also unduly 
restrict existing flexibility in siting transmission facilities. In the 
absence of a National Corridor designation, a transmission project 
could be built on Federal or State property if the developer obtained a 
construction permit from a State siting agency and a right-of-way from 
the Federal or State land managing agency. FERC's authority to issue a 
permit is limited to the geographic extent of the designated National 
Corridor. If Federal and State property were excluded from the Mid-
Atlantic Area National Corridor, then FERC would not be able to issue a 
permit for any portion of a transmission project that crossed such 
property, even if the Federal or State agency responsible for managing 
that property were willing to grant a right-of-way. There is no reason 
to believe that Congress intended such a result.
    Some commenters recommended that the Mid-Atlantic Area National 
Corridor exclude certain environmentally, historically, or culturally 
significant lands not owned by the United States or a State. Nothing in 
the statute suggests that the Department should exclude such lands from 
the Mid-Atlantic Area National Corridor. None of the considerations 
listed in FPA section 216(a)(4) address any specific environmental, 
historical, or cultural factors or even land use issues in general. 
While FPA section 216(a)(4) is not an exclusive list of the factors 
that the Department may consider when designating a National Corridor, 
the Department does not believe that analysis of the effect of 
transmission construction on environmentally, historically, or 
culturally significant lands is warranted at the National Corridor 
designation stage. If FERC jurisdiction were triggered under FPA 
section 216(b), FERC would conduct an evaluation of the reasonably 
foreseeable effects of transmission construction on any 
environmentally, historically, or culturally significant lands, 
including an analysis of alternative routes and mitigation options.\81\ 
Based on that analysis, FERC has the authority to approve the 
application, deny the application, or approve the application with 
modifications. The Department has delineated the Mid-Atlantic Area 
National Corridor broadly enough to enable FERC to consider a wide 
range of alternative routes. Thus, the Department sees no need to 
exclude environmentally, historically, or culturally significant lands 
from the Mid-Atlantic Area National Corridor. Further, as with Federal 
and State property, exclusion of such lands could unduly restrict 
existing flexibility in siting transmission facilities, and there is 
nothing in FPA section 216 that indicates Congress intended such a 
result.
---------------------------------------------------------------------------

    \81\ See FERC Order No. 689, 71 FR 69,440, 69,459, 117 FERC ] 
61,202 at P 177 (avoidance of special land use areas will be 
explored through the course of the NEPA review).
---------------------------------------------------------------------------

    Some commenters have argued that certain Federal laws bar the 
construction of transmission facilities in certain areas, and thus the 
Department should exclude those areas from the Mid-Atlantic Area 
National Corridor. To the extent that any Federal laws do limit or 
prohibit construction of transmission facilities in certain areas, FERC 
as well as the States and other siting authorities

[[Page 57010]]

already are bound by those limitations or prohibitions.\82\ Therefore, 
no exclusion of such areas from the Mid-Atlantic Area National Corridor 
is needed.
---------------------------------------------------------------------------

    \82\ See FPA sec. 216(j), 16 U.S.C. 824p(j) (except as 
specifically provided, nothing in FPA section 216 affects any 
requirement of any Federal environmental law).
---------------------------------------------------------------------------

F. Consideration of Alternatives Under FPA Section 216(a)(2)

Summary of Comments
    Several commenters, including Governor O'Malley and Governor Kaine, 
argue that the Department should evaluate non-transmission solutions to 
congestion before designating the Mid-Atlantic Area National Corridor. 
Many of these commenters argued that FPA section 216(a)(2) requires 
such an evaluation. SELC states that designation of a Mid-Atlantic Area 
National Corridor would put in place a process that allows for fast-
tracking the approval of high-voltage transmission lines, whereas the 
designation would do nothing to fast-track investments in energy 
efficiency, conservation, or other alternative solutions to congestion. 
NYPSC states that efficient price signals allow market participants to 
make informed choices when determining whether investment in new or 
improved transmission is economically justified. Therefore, NYPSC 
states, the Mid-Atlantic Area National Corridor should only be 
designated if a cost/benefit analysis shows a transmission solution 
will clearly yield a net positive benefit to the system. Otherwise, 
NYPSC asserts, project developers may abandon already planned 
facilities, such as additional generation facilities downstream of 
constrained or congested transmission facilities, and States' ability 
to pursue non-transmission solutions will be compromised.
    OMS states that while the Department asserted in the May 7 notice 
that it was not making findings on the optimal remedy for congestion, 
the May 7 notice nonetheless contains statements that suggest the 
contrary, for example, statements that efforts to increase demand 
response in PJM do not appear capable of forestalling the need for 
additional transmission.
    Other commenters, such as the National Rural Electric Cooperative 
Association and the American Public Power Association, stated that 
DOE's proposed designations do not and should not be interpreted to 
prejudge any particular solution. NYISO argues that the Department 
should not take on the function of comparing the merits of alternative 
solutions to congestion. Duke Energy Corporation argues that developers 
will make project proposals and decisions based upon business-case 
economic analyses and the availability of appropriate cost-recovery 
mechanisms, and designation of a Mid-Atlantic Area National Corridor 
does not bias this process in favor of any particular solution.\83\
---------------------------------------------------------------------------

    \83\ See also comments of PHI.
---------------------------------------------------------------------------

DOE Response
    The Department concludes that consideration of non-transmission 
solutions to the congestion problems facing the Mid-Atlantic Critical 
Congestion Area is neither required nor necessary as a precondition to 
designating the Mid-Atlantic Area National Corridor. FPA section 
216(a)(2) calls for the Secretary to consider ``alternatives and 
recommendations from interested parties'' before making a National 
Corridor designation. The statute, however, does not specify what the 
term ``alternatives'' refers to. Numerous commenters would have us 
interpret the phrase to mean alternative solutions to congestion or 
constraint problems, which would then necessitate a comparison of non-
transmission solutions against transmission solutions. Nothing in the 
language of FPA section 216 requires or suggests such an 
interpretation.
    As discussed in Section I.A above, the very structure of FPA 
section 216 indicates that the Department's role is limited to the 
identification of congestion and constraint problems and the geographic 
areas in which these problems exist, and does not extend to the 
functions of electric system planners or siting authorities in 
evaluating solutions to congestion and constraint problems. Even the 
statutory requirement to consider alternatives is not couched in terms 
of an independent analysis of a reasonable range of alternatives, as 
one would expect if Congress had intended the Department to analyze and 
select a solution, but rather refers merely to the Department 
considering those alternatives and recommendations offered by 
interested parties. The Department believes that expanding its role to 
include analyzing and making findings on competing remedies for 
congestion could supplant, duplicate, or conflict with the traditional 
roles of States and other entities.
    Not only does the statute not require the Department to analyze 
non-transmission alternatives, such analysis is also not warranted as a 
matter of discretion. The primary concern of those arguing for analysis 
of non-transmission solutions to congestion or constraints is that 
National Corridor designation disadvantages those solutions, and thus, 
according to these comments, the Department should only make such a 
designation where it has determined that transmission is the best 
solution. As discussed in Section I.A above, the Department sees no 
basis to conclude that designation of the Mid-Atlantic Area National 
Corridor would either prejudice State or Federal siting processes 
against non-transmission solutions or discourage market participants 
from pursuing such solutions.
    The Department concludes that the phrase ``alternatives and 
recommendations from interested parties'' as used in FPA section 
216(a)(2) is ambiguous. For the reasons given above, the Department 
declines to interpret the phrase to mean non-transmission solutions to 
congestion or constraint problems. The Department believes it is more 
appropriate to interpret this phrase in a manner that recognizes the 
statutory limits on DOE's authority. Upon completion of a congestion 
study, the statute gives the Department two options: Designate one or 
more National Corridors or do not designate any National Corridors. In 
light of this statutory framework, the Department concludes that the 
term ``alternatives and recommendations from interested parties'' was 
intended to refer to comments suggesting National Corridor designations 
for different congestion or constraint problems, comments suggesting 
alternative boundaries for specific National Corridors, and comments 
suggesting that the Department refrain from designating a National 
Corridor.
    With regard to OMS' concerns about certain statements in the May 7 
notice, the Department reiterates that its designation of the Mid-
Atlantic Area National Corridor is an identification of congestion 
problems and the geographic areas in which these problems exist. The 
designation does not constitute a determination of the best solution to 
those problems. The Department is expressing no opinion about how the 
identified congestion problems should or will be addressed. To the 
extent that any statements in the May 7 notice suggested the contrary, 
that was not the Department's intent.

G. Whether DOE Should Exercise Its Discretion To Designate the Draft 
Mid-Atlantic Area National Corridor

Summary of Comments
    Several commenters agreed with the May 7 notice's analysis that 
economic

[[Page 57011]]

development, reliability, supply diversity, energy independence, and 
national defense and homeland security considerations warrant the 
exercise of the Secretary's discretion to designate the draft Mid-
Atlantic Area National Corridor. For example, PJM argued that all of 
the considerations identified by the Department demonstrate the 
critical importance of designating at least the portion of the draft 
Mid-Atlantic Area National Corridor within the PJM footprint. PJM 
further notes that its most recent 2007 Regional Transmission Expansion 
Plan reveals additional looming violations of NERC's and PJM's own 
reliability criteria beyond those already identified in the May 7 
notice. The City of New York argues that designation of a National 
Corridor would increase reliability; heighten national security; allow 
for increased economic transfers from the PJM and upstate New York 
markets into the New York City load pocket; reduce reliance on 
antiquated and inefficient generating plants that raise air quality 
issues in the densely populated New York City urban environment; and 
increase diversity of fuel sources for New York City, which is overly 
reliant on an increasingly constrained natural gas supply system.
    Other commenters argued that the considerations identified by the 
Department do not support designation of the draft Mid-Atlantic Area 
National Corridor. Numerous commenters argued that economic development 
considerations do not warrant designation of the draft Mid-Atlantic 
Area National Corridor. A few commenters argued that improving access 
to coal-fired generation in the Midwest would not in fact result in 
lower power prices for consumers in the sink area. For example, OH 
Siting Board states that the generation fleet in the Midwest is old, 
due for several retirements, and uncontrolled in emissions. Therefore, 
OH Siting Board states, the additional environmental and operational 
costs associated with increased generation from these plants, in 
conjunction with bidding into a different wholesale market, may 
eliminate the expected economic benefit of improving the sink area's 
access to such plants. NJBPU argues that with the likely advent of 
greenhouse gas regulation, the cost of power from these plants will 
increase, making their output less competitive in eastern load 
centers.\84\
---------------------------------------------------------------------------

    \84\ See also comments of Sierra Club (National).
---------------------------------------------------------------------------

    Many commenters argued that even if economic development in the 
sink area would benefit from designation of the draft Mid-Atlantic Area 
National Corridor, such benefit must be weighed against the negative 
economic effect that construction of transmission would have on other 
areas within the Mid-Atlantic Area National Corridor. For example, New 
York Farm Bureau (NYFB) states that construction of transmission lines 
within the upstate New York portions of the draft Mid-Atlantic Area 
National Corridor would increase upstate wholesale electric costs, thus 
reducing the ability of the region to recruit new upstate employment 
opportunities and negatively affecting farm businesses. Pike County, 
Pennsylvania states that its recreation and tourism industries will 
suffer if the draft Mid-Atlantic Area National Corridor is designated.
    Many commenters argued that some areas within the draft Mid-
Atlantic Area National Corridor away from the sink area are already in 
a worse economic position than the sink area that the draft Corridor is 
designed to serve. Chenango County Farm Bureau states that upstate New 
York, as a region, has had one of the lowest job growth rates in the 
Nation over the past ten years. Pennsylvania House of Representatives 
Majority Leader DeWeese states that if the draft Mid-Atlantic Area 
National Corridor were designated, Pennsylvania would become an energy 
hub for the urban centers of the Mid-Atlantic region, while residents 
of western Pennsylvania would face increased electric rates and receive 
no economic or quality-of-life benefit from the resulting transmission 
lines.\85\
---------------------------------------------------------------------------

    \85\ See also comments of OH Siting Board, Pennsylvania Farm 
Bureau, and Fauquier County, VA.
---------------------------------------------------------------------------

    Many individuals residing within the draft Mid-Atlantic Area 
National Corridor but away from the sink area argued that designation 
would require them to bear an unfair burden. For example, Jameson 
O'Donnell stated:

    I believe this is really an effort to take away local control of 
our region to our detriment and for the benefit of other areas which 
have not planned accordingly * * *. Especially in today's electronic 
world, the tremendous economic development occurring in MD and VA 
could occur in other places (e.g. southwestern PA) however, that 
opportunity is being taken away from us as those states try to make 
us the armpit of the region by dumping all of their trash here, 
using all the coal without adequate compensation for the damage 
caused, and now through the destruction of our land and economic 
development potential by scarring us with generation plants and 
transmission lines they don't want in their own states.\86\
---------------------------------------------------------------------------

    \86\ See also comments of Debra Bohunicky (``[I]t is 
unconscionable that these intentions to increase power availability 
should only serve the interests of a few in a specifically overusing 
region (such as NY city) to the grave disadvantage of those 
displaced by or put under the deleterious effects of the entire 
line.''), and William Loftus (``This idea of source/sink areas is 
repugnant, and will cause rural properties to be impacted so that 
urban dwellers may continue to have access to cheaper power.'').

    With regard to reliability considerations, Con Ed states that the 
Department has failed to account for the adverse reliability impacts of 
favoring long-haul transmission.
    Numerous commenters argued that instead of promoting national 
defense and homeland security, the draft Mid-Atlantic Area National 
Corridor would actually create security problems by promoting the 
construction of long above-ground transmission lines that would become 
prime targets for terrorist attacks.\87\ NYFB states that before 
designating a Mid-Atlantic Area National Corridor, the Department 
should examine all areas surrounding New York City and Long Island from 
which power could be supplied.
---------------------------------------------------------------------------

    \87\ See, e.g., comments of York County, PA Planning Commission, 
Frances Cooley, and Ralph Neal.
---------------------------------------------------------------------------

    Environmental Defense states that although it is not categorically 
opposed to construction of new interstate transmission facilities, the 
draft Mid-Atlantic Area National Corridor demonstrates a bias toward 
large interstate transmission projects serving coal and nuclear 
generating stations to the detriment of demand response programs, 
energy efficiency, and distributed generation, all of which would do 
more to enhance national defense, homeland security, and energy 
independence, and to provide an adequate and reasonably priced supply 
of electricity.
    Other commenters argued that additional considerations beyond those 
identified in the May 7 notice warrant the Department exercising its 
discretion not to designate the draft Mid-Atlantic Area National 
Corridor. Many commenters argued that the Department should have 
factored in environmental considerations, and that had it done so, it 
would have concluded that designation is not justified. Some of these 
commenters raised concerns about the effects of long transmission lines 
on viewsheds and wildlife habitat. Numerous commenters, including many 
individuals, argued that the draft Mid-Atlantic Area National Corridor 
would worsen greenhouse gas emissions and air quality, because, they 
claim, the PJM portion of the Corridor is designed to increase coal-
based generation.\88\ For example, NJDEP is concerned that the 
designation would undermine any reductions in greenhouse gas emissions

[[Page 57012]]

New Jersey may achieve through its legislative and regulatory programs, 
including the State's recently enacted Global Warming Response Act. 
Other commenters stated that some of the coal-based plants in the 
source areas identified in the May 7 notice are already among the most 
polluting in the country and construction of additional transmission 
capacity to enable these plants to operate at higher levels will result 
in additional risk to human health and the environment.
---------------------------------------------------------------------------

    \88\ See, e.g., comments of NPCA, Wickliffe Walker, Mitzi Price, 
and Kevin Brogley.
---------------------------------------------------------------------------

    Other commenters argued that the Department should accord more 
deference to existing State and regional planning and siting processes 
and hold off on any designation of a Mid-Atlantic Area National 
Corridor until and unless it is clear that a Federal siting forum is 
needed. These commenters offered descriptions of existing State siting 
and PJM and NYISO planning processes. For example, PaDEP states that 
designation of the draft Mid-Atlantic Area National Corridor would be a 
premature usurpation of State authority given that there is no evidence 
that the PaPUC has either refused to site proposed transmission 
projects, obstructed the siting of such projects, or modified such 
projects in a way that renders them uneconomic. Governor Kaine states 
that Virginia enacted an energy plan in 2006 that expressly recognizes 
the importance of regional considerations, as well as new energy 
efficiency and conservation measures. NYPSC states that because the 
transmission siting process in New York works well, there has been no 
demonstrated need to designate any National Corridor within New York 
State.\89\
---------------------------------------------------------------------------

    \89\ See also comments of NJ Public Advocate, CARI, and ODEC.
---------------------------------------------------------------------------

    Those commenters who suggested that the Department defer 
designation of any Mid-Atlantic Area National Corridor argued that such 
deferral would be consistent with FPA section 216's recognition that 
States retain primary authority over transmission siting. These 
commenters also argue that designation of a Mid-Atlantic Area National 
Corridor would have an extremely disruptive effect on energy planning 
efforts currently ongoing in the States. For example, Governor Kaine 
states that designation of a Mid-Atlantic Area National Corridor along 
with ensuing FERC siting proceedings could have the effect of delaying 
construction of transmission in Virginia, contrary to the purpose of 
FPA section 216. Governor O'Malley states that designation would 
significantly reduce incentives for utilities to continue to work 
cooperatively with Maryland agencies.
    On the other hand, some commenters urged the Department not to 
defer designation of a Mid-Atlantic Area National Corridor. For 
example, AEP argued that Federal backstop authority would provide the 
impetus needed to bring parties together and resolve any impasse in a 
timely fashion. AEP states that the obstacles and excessive delays it 
encountered during the 15-year process of siting and building its 
Jacksons Ferry--Wyoming line demonstrate the dire need for National 
Corridors to be designated. National Grid argues that as a practical 
matter, no prudent transmission developer would rely on a National 
Corridor designation to circumvent regional, State, or local planning 
and siting rules and processes, because the developer will need the 
support of key stakeholders such as customers, States, and local 
authorities for other reasons.\90\
---------------------------------------------------------------------------

    \90\ See also comments of WIRES and statement of Bill May at May 
23, 2007, New York, NY public meeting.
---------------------------------------------------------------------------

DOE Response
    The Department recognizes that FPA section 216 adopted a novel 
approach to addressing congestion problems, and that many commenters 
have grave concerns about the effects of this new approach. However, 
after careful consideration of these concerns, the Department concludes 
that designation of the draft Mid-Atlantic Area National Corridor is 
consistent with the intent of FPA section 216(a).
    As an initial matter, the Department notes that a number of the 
comments seem premised on the assumption that designation of the draft 
Mid-Atlantic Area National Corridor would create a bias in favor of 
long transmission lines running the full length of the Corridor, and in 
particular long transmission lines connecting to coal-fired generation. 
The Department regards such an assumption as unfounded. As discussed in 
Section I.A above, 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. Further, even within the realm of potential 
transmission solutions, designation of the draft Mid-Atlantic Area 
National Corridor would not favor any particular transmission project 
within the Corridor. While the Department did identify regions with 
coal-fired generation as source areas when it delineated the draft Mid-
Atlantic Area National Corridor, such delineation was not a 
determination that transmission lines connecting those particular 
source areas to the sink area must or should be built, or that such 
projects are preferable to other transmission projects. The 
Department's identification of source areas was a means of setting an 
outer bound on the geographic range of potential transmission projects 
that could become subject to FERC jurisdiction. Designation of the 
draft Mid-Atlantic Area National Corridor no more dictates or endorses 
the construction of transmission lines to access coal-fired generation 
than it does the construction of transmission lines to access the wind-
rich identified source areas. If a transmission project were proposed 
within the draft Mid-Atlantic Area National Corridor to deliver 
generation to the Mid-Atlantic Critical Congestion Area from somewhere 
other than the identified source areas, the developer of the project 
would be eligible to seek a FERC permit, provided it met the standards 
of FPA section 216(b). The Department sees no reason to conclude that 
designation of the draft Mid-Atlantic Area National Corridor would 
discourage any such projects.\91\
---------------------------------------------------------------------------

    \91\ For example, when explaining its rationale for the eastern 
boundary of the draft Mid-Atlantic Area National Corridor in the May 
7 notice, the Department explicitly recognized that if additional 
generating capacity were developed at the Calvert Cliffs nuclear 
plant, additional transmission capacity would likely be needed to 
enable the electricity output to be moved from the Calvert Cliffs 
substation to the load centers in the sink area. Since the issuance 
of the May 7 notice, UniStar Nuclear has filed a partial application 
with the Nuclear Regulatory Commission to construct an additional 
unit at Calvert Cliffs. See UniStar Nuclear, NRC Project No. 746, 
Submittal of a Partial Combined License Application, Acc. No. 
ML071980292 (filed July 13, 2007).
---------------------------------------------------------------------------

    Given that designation of the draft Mid-Atlantic Area National 
Corridor does not determine whether or which transmission projects will 
be built, concerns about the reliability, national security, and 
environmental effects of long transmission lines and transmission lines 
accessing coal-fired generation are not germane at this stage. If FERC 
jurisdiction under FPA section 216(b) were triggered, FERC would 
analyze and take into consideration the reasonably foreseeable effects 
of that project, including the reliability impacts of the project,\92\ 
implications for

[[Page 57013]]

national security,\93\ and air quality and greenhouse gas impacts, as 
required by NEPA and other environmental laws.\94\
---------------------------------------------------------------------------

    \92\ See FERC Order No. 689, 71 FR 69,440, 69,446, 117 FERC ] 
61,202 at P 41 (``[The Commission] will investigate and determine 
the impact the proposed facility will have on the existing 
transmission grid and the reliability of the system.'').
    \93\ See id., 71 FR 69,440, 69,459, 117 FERC ] 61,202 at P 180 
(``Homeland security related issues will be addressed on a case-by-
case basis.'').
    \94\ See id., 71 FR 69,440, 69,456, 117 FERC ] 61,202 at P 141.
---------------------------------------------------------------------------

    Commenters have disputed the Department's reliance on economic 
growth considerations. Some have argued that improving access to coal-
fired generation in the Midwest will not reduce power prices in the 
Mid-Atlantic Critical Congestion Area because of likely increases in 
the cost of generation from such sources. The Department has documented 
that consumers in the Mid-Atlantic Critical Congestion Area are 
currently paying higher power prices because of persistent congestion 
that thwarts access to cheaper power sources.\95\ As discussed above, 
designation of the Mid-Atlantic Area National Corridor is not a 
determination that transmission must, or even should, be built, let 
alone that transmission to a particular generation source must be 
built. If potential future events, such as the adoption of greenhouse 
gas regulation, were to occur and increase the operating costs of 
generation sources that are currently relatively cheap, such 
developments would be taken into consideration by market participants 
evaluating their economic incentives to build a transmission project to 
those sources. Such developments would likely also be relevant in any 
FERC permit proceeding, given FPA section 216(b)(4)'s requirement that 
any project authorized by FERC must benefit or protect consumers. 
Moreover, we note that our designation of the draft Mid-Atlantic Area 
National Corridor is not motivated solely by a concern over price 
differentials. Consumers in the Mid-Atlantic Critical Congestion Area 
are facing near-term threats to the adequacy of their electricity 
supply.\96\ Even if coal-fired power from some of the identified source 
areas becomes more expensive, it may still be needed in substantial 
amounts to serve demand in the Mid-Atlantic Critical Congestion Area.
---------------------------------------------------------------------------

    \95\ See May 7 notice, Sections VIII.B and VIII.C.1.
    \96\ See id., Section VIII.C.2; see also comments of PJM.
---------------------------------------------------------------------------

    With regard to the other comments concerning economic development 
considerations, the Department recognizes that it is critically 
important to consider the relative effect that proposed transmission 
facilities will have on the economic development of the communities 
through which they are routed versus the communities those facilities 
will serve. However, how a transmission line actually affects a 
community through which it is routed is chiefly a function of how the 
line is sited and how its costs are allocated, neither of which is 
determined by a National Corridor designation.\97\ Further, FPA section 
216(a)(4)(A) provides for consideration of the effect that congestion 
and constraints are having on economic development; it does not speak 
to the economic impacts of adding transmission capacity to address such 
congestion and constraints. While FPA section 216(a)(4) is not an 
exclusive list of the factors that the Department may consider when 
deciding whether to designate a National Corridor, the Department does 
not believe that consideration of the effect of adding transmission 
capacity on economic development is warranted at the National Corridor 
designation stage. If FERC jurisdiction under FPA section 216(b) were 
triggered, FERC would consider the reasonably foreseeable economic 
effects of the proposed project on the communities through which it is 
proposed to be routed.\98\
---------------------------------------------------------------------------

    \97\ As discussed in the May 7 notice, cost allocation for 
transmission facilities is a long-standing FERC function.
    \98\ See, e.g., FERC Order No. 689, 71 FR 69,440, 69,446, 117 
FERC ] 61,202 at P 42 (``The Commission will also consider the 
adverse effects the proposed facilities will have on land owners and 
local communities.''); see also id., 71 FR 69,440, 69,456-57, 117 
FERC ] 61,202 at P 150 (applicant required to provide information 
concerning the impact of the proposed project on the towns and 
counties in the vicinity of the project).
---------------------------------------------------------------------------

    Some commenters urge us to defer any designation of a Mid-Atlantic 
Area National Corridor until States and regional planning efforts have 
had more time to address the congestion problems. These commenters 
provide details on the effectiveness of various State and RTO or ISO 
planning processes. As the Department stated in the May 7 notice, we do 
not believe that Congress envisioned the adoption of a wait-and-see 
approach to National Corridor designation. Nothing in the comments we 
have received on the May 7 notice has changed our view of this subject.
    Congress could have instructed the Department to study the adequacy 
of State siting processes and consider that information when making 
National Corridor designations, but Congress did not do so. Nothing in 
FPA section 216(a) even mentions the issue of the State siting 
processes. Instead, Congress itself, in FPA section 216(b)(1), 
specified the conditions related to State siting processes that would 
trigger potential Federal siting authority after designation of a 
National Corridor.\99\ Thus, the Department believes that evidence of 
the adequacy of State siting processes is not relevant to the 
Department's decision-making under FPA section 216(a).
---------------------------------------------------------------------------

    \99\ Specifically, as discussed in Section I.A above, FERC 
jurisdiction is triggered only when either: The State does not have 
authority to site the project; the State lacks the authority to 
consider the interstate benefits of the project; the applicant does 
not qualify for a State permit because it does not serve end-use 
customers in the State; the State has withheld approval for more 
than one year; or the State has conditioned its approval in such a 
manner that the project will not significantly reduce congestion or 
is not economically feasible. 16 U.S.C. 824p(b)(1).
---------------------------------------------------------------------------

    Some commenters appear to regard National Corridor designation as 
tantamount to punishing the States within the Corridor and, thus, 
suggest that States who have ``good'' energy policies should be spared 
such punishment. However, National Corridor designation is not an 
indictment of State siting processes. The Department strongly supports 
State and regional efforts to collectively address the congestion 
problems confronting the region, whether those efforts are focused on 
transmission solutions, non-transmission solutions, or a combination of 
both. Despite the assertions of some commenters, the Department does 
not believe that designation of the draft Mid-Atlantic Area National 
Corridor necessarily will disrupt ongoing State or regional planning 
processes. As discussed in Section I.A above, a National Corridor 
designation itself does not preempt State authority or any State 
actions. Thus, States retain the authority to work together to address 
aggressively the congestion problems confronting the region. Further, 
we expect utilities within the Mid-Atlantic Area National Corridor to 
continue to work cooperatively with State and local authorities and to 
participate in the regional planning processes of PJM and NYISO. We 
note that FERC has indicated that it will consider any allegations that 
an applicant has acted in bad faith in State proceedings when it 
reviews permit applications under FPA section 216(b)(1)(C)(i).\100\
---------------------------------------------------------------------------

    \100\ See FERC Order No. 689, 71 FR 69,440, 69,443-44, 117 FERC 
61,202 at P22 (``The Commission expects all potential applicants 
under FPA section 216 to act in good faith as it relates to State 
jurisdiction. Although the Commission may exercise jurisdiction in 
all instances where a State has withheld approval for more than one 
year, the Commission, in determining whether to do so, will weigh 
heavily clear evidence that an applicant has abused the State 
process.''); see also 119 FERC ] 61,154 at P 35 (* * * if questions 
arise during pre-filing concerning the adequacy of the applicant's 
efforts to site the facility at the state level and Commission staff 
determines that more processing at the state level is appropriate, 
it will not hesitate to suspend the pre-filing process while the 
state process continues'').

---------------------------------------------------------------------------

[[Page 57014]]

    State and regional efforts may well resolve the congestion problems 
afflicting the Mid-Atlantic Critical Congestion Area without any 
invocation of FERC authority. However, as the May 7 notice documented, 
economic development, reliability, supply diversity, energy 
independence, and national defense and homeland security considerations 
all warrant designation of the draft Mid-Atlantic Area National 
Corridor.\101\ Given the increasingly interconnected nature of the 
transmission grid and wholesale power markets, siting of electricity 
infrastructure poses increasingly complex questions about how to 
balance equitably all competing interests. Tensions can exist between 
what is perceived to be best for a region as a whole versus what is 
perceived to be best for an individual State or a portion of one 
State.\102\ National Corridor designation provides, in a defined set of 
circumstances, a potential mechanism for analyzing the need for 
transmission from a national, rather than State or local, perspective. 
The comments the Department has received on the draft Mid-Atlantic Area 
National Corridor reveal the presence of the kinds of tensions that 
prompted Congress to create such a mechanism. The Department 
acknowledges that designation of the draft Mid-Atlantic Area National 
Corridor introduces a significant new possibility into the process of 
siting transmission, and that the existence of this possibility may 
pose challenges for States and may ultimately prove unnecessary. 
However, given the totality of circumstances, including the expanse of 
the congestion problem, the presence of looming reliability violations, 
and the significance of the Mid-Atlantic Critical Congestion Area to 
the security and economic health of the Nation as a whole, the 
Department concludes that it would be inconsistent with the intent of 
FPA section 216(a) to withhold the Federal safety net of National 
Corridor designation.\103\
---------------------------------------------------------------------------

    \101\ See May 7 notice, Section VIII.C.
    \102\ While some commenters have questioned the Department's 
authority to designate a National Corridor in reaction to the 
presence of congestion problems within a single State, courts have 
long recognized the inherently interstate nature of transmission, 
even transmission within one State. See FPL, 404 U.S. at 462. 
Congestion problems within one State may well raise issues of 
national concern. Nothing in FPA section 216(a) suggests that the 
Department is limited to addressing congestion that crosses State 
lines, provided that the Department determines that constraints or 
congestion are adversely affecting consumers and that designation is 
warranted, taking into account relevant considerations, including 
the considerations identified in FPA section 216(a)(4), as 
appropriate.
    \103\ Further, whereas Congress could have completely preempted 
State siting of interstate transmission facilities, allowing for the 
potential exercise of limited Federal preemption in accordance with 
FPA section 216(a) does not intrude on any State rights or 
prerogatives.
---------------------------------------------------------------------------

    In sum, having found the presence of congestion that adversely 
affects consumers in the Mid-Atlantic Critical Congestion Area, the 
Secretary has the discretion to designate a National Corridor. The 
Secretary concludes, based on the totality of the information 
developed, taking into account relevant considerations, including the 
considerations identified in FPA section 216(a)(4), as appropriate, 
that exercise of his discretion to designate the draft Mid-Atlantic 
Area National Corridor is warranted.

H. Duration of the Mid-Atlantic Area National Corridor Designation

Summary of Comments
    Several commenters objected to setting a twelve-year term for the 
Mid-Atlantic Area National Corridor. For example, NARUC opposes the use 
of a twelve-year term as inconsistent with the statute. NARUC argues 
that the requirement that the Department conduct a congestion study 
every three years indicates that the factual basis for National 
Corridors must be reexamined and updated every three years, and, thus, 
only a three-year term, subject to three-year extensions, is 
permissible. NARUC states that use of a twelve-year term could easily 
result in a designation remaining in place long after congestion issues 
have been resolved.\104\ NYFB advocates a nine-year term rather than a 
twelve-year term.
---------------------------------------------------------------------------

    \104\ See also comments of OH Sitting Board and The Wilderness 
Society.
---------------------------------------------------------------------------

    Other commenters, including National Grid and PJM, support a 
twelve-year term for the Mid-Atlantic Area National Corridor 
designation as consistent with planning needs.
RDOE Response
    FPA section 216(a) does not itself impose any time limit on a 
National Corridor designation, nor does the statute require the 
Department to impose any such limit. While the statute requires the 
Department to conduct a congestion study every three years, nothing in 
the statute suggests that a National Corridor designation based on one 
congestion study should sunset unless re-justified in the next 
congestion study.
    Some commenters express concern about FERC retaining jurisdiction 
to issue permits within a National Corridor after the congestion 
problem that motivated the Corridor has been resolved. However, as 
discussed in Section I.A above, FERC has clarified that only those 
transmission projects within a designated National Corridor that would 
significantly reduce the congestion identified by DOE would be eligible 
for a FERC permit. Therefore, even without an expiration date, a 
National Corridor designation would not result in any exercise of 
Federal permitting authority beyond that envisioned by Congress.
    Nevertheless, in recognition of State concerns about open-ended 
National Corridor designations, the Secretary has decided to condition 
the Mid-Atlantic Area National Corridor designation by imposing a time 
limit on it. Any such time limit, however, must balance State concerns 
against the disruptive effect that regulatory uncertainty can have on 
transmission investment. Given the time frames involved in planning and 
developing a transmission project, the Secretary concludes that it is 
appropriate to set a twelve-year term for the Mid-Atlantic Area 
National Corridor designation, subject to the Department's right to 
rescind, renew or extend the designation after notice and opportunity 
for comment. Further, the Department does not intend to allow the 
termination of the Mid-Atlantic Area National Corridor designation as 
it may apply to an accepted permit application pending at FERC, or, 
once FERC has granted a permit, during the period in which the approved 
facilities are being constructed.

III. Southwest Area National Corridor (Docket No. 2007-OE-02)

A. Procedural Matters

    The May 7 notice provided instructions on how to provide comments 
and how to become a party to the proceeding in this docket. Consistent 
with those instructions, the Department is granting party status in 
this docket to all persons who either: (1) Filed comments 
electronically at http://nietc.anl.gov on or before July 6, 2007; (2) 
mailed written comments marked ``Attn: Docket No. 2007-OE-02'' to the 
Office of Electricity Delivery and Energy Reliability, OE-20, U.S. 
Department of Energy, 1000 Independence Avenue, SW., Washington, DC 
20585, that were received on or before July 6, 2007; or (3) hand-
delivered written comments marked ``Attn: Docket No. 2007-OE-02'' at 
one of the public meetings.

[[Page 57015]]

B. Overall Comments on the Draft Southwest Area National Corridor

    The Department received comments from State agencies and officials 
expressing a range of views about the draft Southwest Area National 
Corridor. Arizona Governor Napolitano and the Arizona Corporation 
Commission (ACC) both filed comments opposing designation of the draft 
Southwest Area National Corridor. Nevada Agencies, filing comments on 
behalf of the State of Nevada, oppose inclusion of Clark County in the 
draft Southwest Area National Corridor.
    The California Energy Commission (CEC) supported designation of the 
draft Southwest Area National Corridor but recommended that the 
Department develop a process to identify and protect environmentally 
sensitive areas that are unsuitable for transmission. The California 
Public Utilities Commission (CPUC) opposes designation of a Southwest 
Area National Corridor that would include all of southern California. 
However, CPUC notes that since the issuance of the May 7 notice, ACC 
has rejected an application by Southern California Edison Company (SCE) 
to construct the Devers-Palo Verde 2 project (DPV2),\105\ which, 
according to CPUC, would increase transfer capability between the 
desert Southwest and southern California and had already been approved 
by the CPUC, the California Independent System Operator (CAISO),\106\ 
and the Arizona Power Plant and Transmission Line Siting Committee. 
Thus, CPUC supports designation of a National Corridor that is more 
narrowly targeted than the draft Southwest Area National Corridor, such 
as a National Corridor along the Arizona section of the proposed DPV2 
route.
---------------------------------------------------------------------------

    \105\ See Order Denying a Certificate of Environmental 
Compatibility, ACC Dec. No. 69638 (June 6, 2007).
    \106\ CAISO is the ISO serving most of California.
---------------------------------------------------------------------------

    The Wyoming Infrastructure Authority (WIA) supports designation of 
the draft Southwest Area National Corridor.
    The Department received dozens of comments from individuals 
opposing designation of the draft Southwest Area National Corridor. 
Numerous non-profit organizations also filed comments opposing 
designation.\107\ The Imperial Irrigation District (IID) opposed 
designation of the draft Southwest Area National Corridor.
---------------------------------------------------------------------------

    \107\ See, e.g., comments of San Diego Renewable Energy Society 
(SDRES) and the Sierra Club (Grand Canyon Chapter).
---------------------------------------------------------------------------

    The California Chamber of Commerce supported designation of the 
draft Southwest Area National Corridor. A number of utilities also 
filed comments supporting designation of the draft Southwest Area 
National Corridor.\108\
---------------------------------------------------------------------------

    \108\ See, e.g., comments of SCE, SDG&E, and Coral Power, LLC 
(Coral); see also comments of EEI.
---------------------------------------------------------------------------

    NERC filed comments stating that the ultimate designation of 
National Corridors will further bolster the reliability of the grid. 
The Transmission Expansion Policy Planning Committee of the Western 
Electricity Coordinating Council (TEPPC) filed comments raising a 
number of questions, but stated that it was not advocating for or 
against the draft Southwest Area National Corridor.

C. Adequacy of Showing of Congestion That Adversely Affects Consumers

Summary of Comments
    Numerous commenters argued that the Department had failed to make 
the showing of congestion adversely affecting consumers required in 
order to designate a Southwest Area National Corridor. Some of these 
commenters took issue with the Department's position that it has the 
discretion to designate the draft Southwest Area National Corridor upon 
a showing of the existence of persistent congestion, without a further 
demonstration of adverse effects on consumers. For example, ACC states 
that DOE has not demonstrated adverse effects on consumers as required 
by FPA section 216(a)(2). ACC argues that DOE has inappropriately 
assumed that all persistent congestion harms the public interest and 
that no evidence or analysis supports this broad, unfounded conclusion. 
CPUC states that congestion and constraints do not, in and of 
themselves, adversely affect consumers, and DOE must develop valid 
criteria for measuring congestion and transmission constraints and show 
how they impact consumers.\109\ TEPPC notes that the Congestion Study 
did not provide an analysis of the economic benefits of relieving this 
congestion. CPUC states that congestion costs over major transmission 
inter-ties between southern California and Arizona/Nevada amounted to 
about $30 million per year in 2006, a small fraction of the annualized 
cost of a major transmission project.
---------------------------------------------------------------------------

    \109\ See also comments of Colorado Public Utilities Commission 
and OMS.
---------------------------------------------------------------------------

    TEPPC questions whether the Western Area Power Administration 
(WAPA) data on denial of transmission service requests cited in the May 
7 notice reveal an actual lack of physical capacity as contrasted to a 
contractual issue.
    Some commenters argue that the Department has exaggerated the 
significance of congestion into and within southern California. CPUC 
states that the Congestion Study itself indicates that the major 
transmission paths into southern California have recently been less 
fully loaded than other Western transmission paths. TEPPC states that 
the data in the Congestion Study do not support an unequivocal finding 
of congestion on paths within the draft Southwest Area National 
Corridor as compared to other paths within the Western Interconnection 
and that CAISO data do not appear to show a clear pattern of congestion 
over a number of years.
    Other commenters supported the Department's showing of congestion 
adversely affecting consumers in the Southern California Critical 
Congestion Area. For example, SDG&E states that persistent congestion 
adversely affects consumers because buyers must rely on power from 
less-preferred generating sources, a smaller range of generators is 
available, and the grid operators have fewer options for dealing with 
unanticipated events.
DOE Response
    The Department concludes that it has sufficiently demonstrated and 
found the existence of congestion that adversely affects consumers in 
the Southern California Critical Congestion Area. As discussed in 
Section II.C above with regard to the Mid-Atlantic Area National 
Corridor, congestion prevents users of the transmission grid from 
completing their preferred power transactions, which in turn can deny 
those users the benefit of lower prices, diversity of supply, and 
increased grid operator flexibility, all to the detriment of consumers. 
Loss of these benefits increases as congestion on a particular path 
becomes more frequent. Thus, the Department believes that FPA section 
216(a) gives the Secretary the discretion to designate a Southwest Area 
National Corridor upon a showing of the existence of persistent 
congestion.
    Some commenters suggest that congestion into and within the 
Southern California Critical Congestion Area does not adversely affect 
consumers unless the costs of relieving the congestion are less than 
the costs of the congestion itself. As discussed in Section II.C above, 
the Department concludes that Congress intended the Department to 
consider adverse effects on consumers beyond increases in the delivered 
price of power, some of which effects may not be easily monetized. 
Further, designation of a National Corridor does not dictate how or 
even whether to address a particular instance of congestion. Therefore, 
the Department

[[Page 57016]]

believes that restricting the term ``congestion that adversely affects 
consumers'' to congestion that can be cost-effectively relieved is an 
overly narrow reading of the statute.
    The Department further concludes that it has adequately 
demonstrated the existence of persistent congestion into and within the 
Southern California Critical Congestion Area. The May 7 notice 
identified data establishing the presence of existing constraints 
causing patterns of congestion that have persisted over a number of 
years. The data included line flow data revealing the presence of 
congestion from 1999 through 2005 on a number of lines into and within 
southern California, as well as CAISO data from 2004 through 2006 
showing binding hours on paths into and within southern California. The 
Department also noted that the modeling performed for the Congestion 
Study projected that several historical constraints into and within 
southern California would continue to cause congestion in 2008.
    The WAPA data questioned by TEPCC are but one category of data used 
in the May 7 notice to establish the presence of persistent congestion. 
Further, for the same reasons that the Department does not see a need 
to analyze the potential solutions to congestion at the National 
Corridor designation stage, the Department does not believe it is 
necessary at the National Corridor designation stage to analyze the 
causes of persistent congestion. Regardless of whether congestion is 
the function of power flows reaching operational limits or of capacity 
being contractually committed yet unused, users of the transmission 
system are denied the benefit of their preferred transactions. If FERC 
jurisdiction under FPA section 216(b) were triggered, parties to the 
FERC proceeding could raise any concerns they had about the contractual 
nature of the congestion and whether market operation alternatives 
would be preferable to the construction of additional capacity.
    Moreover, while the Department concludes that the statute 
authorizes the designation of a Southwest Area National Corridor upon a 
finding of the existence of persistent congestion, the Department 
nevertheless has provided additional documentation. In the context of 
explaining the considerations that led to the draft designation of the 
Southwest Area National Corridor, the Department documented that 
congestion poses threats to the reliability of electricity supply to 
consumers in the Southern California Critical Congestion Area, and that 
congestion limits supply diversity for Southern California Critical 
Congestion Area consumers. For example, the May 7 notice explained that 
CAISO has determined that the San Diego area is projected to be 
deficient in overall generation capacity by the year 2010 due to severe 
import limits, and that there are looming reliability problems on the 
South of Lugo path, a major CAISO internal path that serves the Los 
Angeles Basin.
    Some commenters complain that pathways into and within southern 
California are less congested than other paths in Western 
Interconnection and that the Department has failed to develop specific 
criteria and metrics for evaluating the significance of congestion. 
However, the relative level of congestion into and within southern 
California as compared to other paths in the Western Interconnection is 
not dispositive of whether consumers are adversely affected by 
congestion. FPA section 216(a) does not require the Department to rank 
different levels of congestion, nor does it restrict the Department to 
considering National Corridor designation only in those areas 
experiencing the highest levels of congestion. FPA section 216(a)(2) 
authorizes the Department to designate as a National Corridor ``any 
geographic area experiencing electric energy transmission capacity 
constraints or congestion that adversely affects consumers.'' While 
some of the metrics used in the Congestion Study do suggest that the 
level of congestion on paths into and within southern California is 
lower than on other paths in the Western Interconnection, congestion 
into and within southern California is a precursor of a serious 
reliability problem. This serious threat to the reliability of 
electricity supply to the Southern California Critical Congestion Area 
constitutes an adverse effect on consumers that, in conjunction with 
other factors discussed here, warrants consideration of a National 
Corridor designation.
    In conclusion, far from simply assuming the presence of congestion 
that adversely affects consumers, as some commenters allege, the 
Department has made a reasoned determination that the statutory 
conditions triggering discretion to designate a National Corridor for 
the Southern California Critical Congestion Area have been met.

D. Boundaries of the Draft Southwest Area National Corridor

Summary of Comments
    Numerous commenters argued that the draft Southwest Area National 
Corridor is impermissibly broad. ACC argues that DOE's source-and-sink 
approach to delineating the draft Southwest Area National Corridor is 
insufficient under the statute. Governor Napolitano states that DOE 
should revisit its broad-brush approach and consider adopting a more 
targeted method for defining a National Corridor. CPUC states that 
designation of a National Corridor as broad as the draft Southwest Area 
National Corridor would provide a basis for second-guessing, forum-
shopping, and re-litigation of decisions regarding complex issues. CPUC 
also states that while the focus of FPA section 216(a) is on interstate 
transmission, more than 48,000 square miles of the draft Southwest Area 
National Corridor falls within California alone. CPUC states that the 
prospect of Federal transmission siting over this in-State area 
effectively trumps California's ability to establish and pursue its own 
energy goals. CPUC states that any National Corridor to address 
congestion in the Southern California Critical Congestion Area should 
be more narrowly focused on connecting specific sink nodes with 
specific supply nodes, such as along the proposed DPV2 route.
    IID states that DOE cannot reasonably assert that designation of an 
area as large as the draft Southwest Area National Corridor complies 
with FPA section 216(a), which limits designation of National Corridors 
to constrained areas. IID states that DOE should tailor its designation 
to locations where congestion problems truly exist, such as along Path 
42 between IID's system and SCE's system. Citizens Campaign for the 
Environment supports limiting the Southwest Area National Corridor to 
only those lines and substations that are critically congested and 
constrained.
    The Colorado Public Utilities Commission suggests DOE reclassify 
the draft Southwest Area National Corridor as a ``Zone'' and then 
designate narrower paths of specific widths and lengths within this 
Zone as National Corridors.
    Some commenters suggested redrawing National Corridor boundaries so 
as to follow existing transmission lines or highways.\110\
---------------------------------------------------------------------------

    \110\ See, e.g., comments of William Haven.
---------------------------------------------------------------------------

    Nevada Agencies believes that the Department has failed to 
adequately support the inclusion of Clark County, Nevada in the draft 
Southwest Area National Corridor. Nevada Agencies states that the 
Congestion Study did not identify any portion of Clark County as part 
of either a Critical Congestion Area or a Congestion Area of Concern, 
and the May 7 notice identified Arizona, not

[[Page 57017]]

Nevada, as a source area. Nevada Agencies argues that the Department's 
only rationale for including Clark County is the statement that it 
would be useful to think of the transmission facilities around Mead as 
closely related to those around Palo Verde; however, according to 
Nevada Agencies, Palo Verde and Mead are considered two separate and 
distinct trading hubs. Thus, Nevada Agencies argues that the Department 
has bootstrapped Clark County into the draft Southwest Area National 
Corridor in violation of the statute.
    Some commenters objected to the Department's use of county 
boundaries to delineate the outer bounds of the draft Southwest Area 
National Corridor. For example, Governor Napolitano states that Arizona 
counties are some of the largest in the country.\111\
---------------------------------------------------------------------------

    \111\ See also comments of Nevada Agencies.
---------------------------------------------------------------------------

    Other commenters supported the Department's approach to delineating 
the boundaries of the draft Southwest Area National Corridor. For 
example, EEI states that DOE has properly delineated the draft 
Southwest Area National Corridor as a general, inclusive geographic 
area, and adds that if utility, State, or regional agency staff 
indicate that the margins of the draft Southwest Area National Corridor 
need to be modified to encompass potential solutions, DOE should make 
such modifications so that a full array of solutions is considered.
DOE Response
    The Department concludes that its general approach to defining the 
boundaries of the draft Southwest Area National Corridor is consistent 
with the statute. As discussed in Section II.D above, the language of 
FPA section 216(a), which refers to designation of a ``geographic 
area,'' does not dictate any particular shape, proportion, or size for 
a National Corridor, and the Department's approach to delineating 
right-of-way corridors under EPAct section 368 does not inform the 
delineation of National Corridors under FPA section 216(a). Further, to 
the extent that common meanings and usage of the term ``corridor'' are 
relevant to the determination of a National Corridor under FPA section 
216(a), the overall size and shape of the draft Southwest Area National 
Corridor are not inconsistent with such meanings and usage.
    Some commenters have suggested that the statute should be 
interpreted as restricting any National Corridor designation to the 
specific confines of the load being adversely affected by congestion or 
the constrained transmission lines causing such congestion. For the 
reasons detailed in Section II.D above, the Department disagrees with 
this interpretation. The term ``geographic area experiencing electric 
energy transmission capacity constraints or congestion that adversely 
affects consumers'' envisions an area that encompasses the load being 
adversely affected by congestion and the constrained transmission lines 
causing such congestion, but the statute is ambiguous with regard to 
the precise scope of the area. The Department believes its source-and-
sink approach to delineating the boundaries of the draft Southwest Area 
National Corridor represents a reasonable interpretation of this 
ambiguous statutory term.
    As with the Mid-Atlantic Area National Corridor, in implementing 
its source-and-sink approach to delineating the draft Southwest Area 
National Corridor, the Department has attempted to identify source 
areas that would enable a range of generation options. In exercising 
its judgment as to which source areas to use for purposes of 
delineating the draft Southwest Area National Corridor, the Department 
was guided by several factors. The Department has tried to balance the 
objective of accommodating a range of options against the practical 
limitations on delivery of power over increasingly longer distances. 
The Department has also taken into consideration State concerns about 
the size of any Southwest Area National Corridor as well as the fact 
that Congress opted for a limited approach to Federal preemption of 
transmission siting. The Department has been further guided by the 
considerations identified in FPA section 216(a)(4). Finally, consistent 
with the language of FPA section 216(a)(2) referring to designation of 
a geographic area experiencing constraints or congestion that adversely 
affects consumers, the Department has restricted its selection of 
source areas to those separated from the identified sink area, i.e. the 
Southern California Critical Congestion Area, by one or more of the 
constraints identified in Section IX.B of the May 7 notice as causing 
congestion adversely affecting consumers.
    The result of this analysis was the identification of two 
categories of source areas: (1) The closest locations with substantial 
amounts of existing, under-used generation capacity separated from the 
identified sink area by one or more of the constraints identified as 
causing congestion adversely affecting consumers; and (2) the closest 
locations with the potential for substantial development of wind, 
geothermal, or solar generation capacity separated from the identified 
sink area by one or more of the constraints identified as causing 
congestion adversely affecting consumers. Identification of the first 
category is consistent with FPA section 216(a)(4)(A), which emphasizes 
the importance of ensuring adequate supplies of power. Identification 
of the second category is consistent with FPA section 216(a)(4)(B), 
which emphasizes diversification of supply, and FPA section 
216(a)(4)(C), which emphasizes promotion of energy independence.
    Having identified source areas, the Department then delineated the 
draft Southwest Area National Corridor by identifying the counties 
linking the identified source areas with the sink area.\112\ While the 
Department recognizes that counties are generally larger in the West 
than in the East, we continue to believe in the importance of 
establishing precise, easily identified boundaries for the Southwest 
Area National Corridor. Thus, we conclude that use of county boundaries 
is a reasonable means of providing such certainty.
---------------------------------------------------------------------------

    \112\ ACC and CPUC note that certain plants identified as 
potential sources in Table IX-4 of the May 7 notice were not 
actually included within the draft Southwest Area National Corridor. 
In recognition of concerns about the size of National Corridors, DOE 
chose not to include each entire identified source area in the draft 
Southwest Area National Corridor. Instead, for source areas located 
where the transmission grid is already relatively strong, the 
Department extended the draft Southwest Area National Corridor only 
so far into those source areas as needed to encompass one or more 
possible strong points on the transmission network that serves those 
areas.
---------------------------------------------------------------------------

    The Department's approach to delineating the draft Southwest Area 
National Corridor was designed to connect the sink area containing 
consumers adversely affected by congestion with a range of source areas 
separated from the identified sink area by the constraints causing such 
congestion. Given the overall framework of FPA section 216 and the 
physical properties of the electric grid, the Department concludes that 
this approach is consistent with the statutory call for the designation 
of a ``geographic area experiencing electric energy transmission 
capacity constraints or congestion that adversely affects consumers.'' 
However, upon further consideration, the Department concludes that 
inclusion of Clark County, Nevada in the Southwest Area National 
Corridor is not consistent with this approach. Nevada Agencies 
correctly note that the May 7 notice did not identify Clark County as 
either a sink area, a source area, or an area containing a constraint 
separating an

[[Page 57018]]

identified sink area from an identified source area. Rather, the May 7 
notice stated that the Hoover Dam area southeast of Las Vegas, Nevada 
and the area around Palo Verde, Arizona are the two principal portals 
for transferring bulk power from the east into southern California, and 
that from a transmission planning and operational perspective, it is 
useful to think of these two pathways as closely related. As Nevada 
Agencies point out, the area around Las Vegas is experiencing 
tremendous growth. This growth could result in congestion that may at 
some future date warrant expansion of the Southwest Area National 
Corridor or designation of additional National Corridors in the 
Southwest. For now, though, the Department has decided to exclude Clark 
County, Nevada from today's Southwest Area National Corridor 
designation.
    Some commenters complain that the draft Southwest Area National 
Corridor fails to provide adequate specificity on appropriate 
transmission solutions and suggest that the Department should go back 
to the drawing board to determine narrower routes linking specific 
sources and sinks. However, the Department is deliberately not 
attempting to identify preferred transmission solutions. As discussed 
in Section I.A above, FPA section 216(a) was not intended to shift to 
the Department the roles of electric system planners or siting 
authorities.
    The Department recognizes the concerns about unintended expansion 
of Federal siting authority to include proposed transmission projects 
that happen to be located within the Southwest Area National Corridor 
but are unrelated to the problem that prompted the National Corridor 
designation. However, as discussed in Section II.D above, only those 
transmission projects within the Southwest Area National Corridor that 
would significantly reduce congestion into the Southern California 
Critical Congestion Area would be eligible for a FERC permit. 
Therefore, the Department does not believe that designation of the 
draft Southwest Area National Corridor, modified to exclude Clark 
County, Nevada, will result in the exercise of Federal permitting 
authority beyond that envisioned by Congress. Finally, while CPUC 
questions the Department's authority to designate a National Corridor 
when a large portion of that Corridor lies within a single State, the 
Department notes that courts have long recognized the inherently 
interstate nature of transmission, even transmission within one 
State.\113\
---------------------------------------------------------------------------

    \113\ See FPL, 404 U.S. at 462.
---------------------------------------------------------------------------

E. Inclusion of Environmentally, Historically, and Culturally 
Significant Lands

Summary of Comments
    Many commenters argued that the Department should exclude National 
Parks, State parks, and other environmentally, historically, or 
culturally significant lands from any Southwest Area National Corridor. 
For example, CEC argues that certain ``no-touch zones'' should be 
established so that environmental impacts and controversies can be 
avoided. Governor Napolitano expresses concern about the sensitive 
wildlife areas included in the draft Southwest Area National Corridor. 
NPCA opposes inclusion of any unit of the National Park System in the 
Southwest Area National Corridor. Numerous commenters urged the removal 
of Death Valley National Park, Joshua Tree National Park, and Anza 
Borrego State Park from the draft Southwest Area National 
Corridor.\114\
---------------------------------------------------------------------------

    \114\ See, e.g., comments of Polly Pistker, Steven Ellsworth, 
Claudia Sall, and Vivian Hopkins, and statement of Peter Frigeri at 
June 20, 2007, Las Vegas, NV public meeting.
---------------------------------------------------------------------------

DOE Response
    For the reasons detailed in Section II.E above, the Department 
concludes that exclusion of environmentally, historically, or 
culturally sensitive lands from the Southwest Area National Corridor is 
neither required nor necessary. Nothing in the statute suggests that 
the Department must or should exclude such lands. With regard to 
Federal- and State-owned land, inclusion of such lands within the 
Southwest Area National Corridor does nothing to change the process for 
obtaining a right-of-way across such property. With regard to 
environmentally, historically, or culturally sensitive lands that are 
not owned by the U.S. or a State, the Department notes that designation 
of the Southwest Area National Corridor is not a determination that 
transmission will or should be built; it does not constitute, advocate, 
or guarantee approval of any transmission project; and it is not a 
determination of the route of any transmission project. If FERC 
jurisdiction under FPA section 216(b) were triggered, FERC would 
conduct an evaluation of the reasonably foreseeable effects of 
transmission construction on any environmentally, historically, or 
culturally significant lands, including an analysis of alternative 
routes and mitigation options. To the extent that any Federal laws do 
limit or prohibit construction of transmission facilities in certain 
areas, FERC is bound by those limitations or prohibitions. Further, 
exclusion of environmentally, historically, or culturally sensitive 
lands, whether public or private, could unduly restrict existing 
flexibility in siting transmission facilities, and the Department sees 
no reason to conclude that Congress intended such a result.

F. Consideration of Alternatives Under FPA Section 216(a)(2)

Summary of Comments
    Several commenters argue that the Department should evaluate non-
transmission solutions to congestion before designating the Southwest 
Area National Corridor. Many of these commenters argued that FPA 
section 216(a)(2) requires such an evaluation. For example, ACC states 
that designation of a Southwest Area National Corridor would tip the 
market toward transmission solutions by dampening or extinguishing 
market signals for other solutions, such as constructing generation 
close to load centers, that may better serve the public interest.
DOE Response
    For the reasons set forth in Section II.F above, the Department 
concludes that no analysis of alternative solutions to congestion is 
required or warranted under FPA section 216(a) before designation of 
the Southwest Area National Corridor. While FPA section 216(a)(2) calls 
for the Secretary to consider ``alternatives and recommendations from 
interested parties'' before making a National Corridor designation, the 
Department concludes that, given the overall statutory framework, this 
term was intended to refer to comments suggesting National Corridor 
designations for different congestion or constraint problems, comments 
suggesting alternative boundaries for specific National Corridors, and 
comments suggesting that the Department refrain from designating a 
National Corridor. Moreover, as discussed in Section I.A above, 
designation of the Southwest Area National Corridor does not prejudice 
State or Federal siting processes against non-transmission solutions or 
discourage market participants from pursuing such solutions.

G. Whether DOE Should Exercise Its Discretion To Designate the Draft 
Southwest Area National Corridor

Summary of Comments
    Several commenters agreed with the May 7 notice's analysis that 
reliability,

[[Page 57019]]

supply diversity, and national defense and homeland security 
considerations warrant the exercise of the Secretary's discretion to 
designate a Southwest Area National Corridor. For example, CEC supports 
the Department's conclusion that one of the consequences of congestion 
in southern California is heightened dependence on natural gas for the 
generation of electricity. The California Chamber of Commerce argued 
that designation of the draft Southwest Area National Corridor would 
help ensure reliability, noting that power failures that occur in 
California may affect neighboring States. SDG&E states that southern 
California has been subject to severe reliability impacts in recent 
years, and these impacts are likely to continue if congestion is not 
addressed. SDG&E adds that reliable power supplies for the Navy and 
Marine Corps bases in San Diego County are critical from a national 
security standpoint, and that the need for increased transmission 
access to meet California's portfolio diversity targets is self-
evident. SCE states that resolving congestion into and within the 
Southern California Critical Congestion Area is not only vital for 
California and its residents, it is important for the region and the 
Nation as a whole. WIA urges the Department to consider broader 
National Corridor designations in the Western Interconnection, but 
supports designation of the draft Southwest Area National Corridor as a 
first step, given that it addresses a relatively discrete area that, 
according to WIA, is beyond any reasonable doubt experiencing 
congestion adversely affecting consumers.
    Other commenters argued that designation of the draft Southwest 
Area National Corridor is not warranted. ACC argues that reliability 
considerations do not necessarily warrant designation of the draft 
Southwest Area National Corridor, because adding generation close to 
load centers can be preferable from a reliability perspective to adding 
new transmission accessing remote generation. ACC further states that 
differences in LMPs between California and Arizona may not reflect an 
``apples to apples'' comparison of costs, in light of the different 
market structures in place in those two States. Therefore, according to 
ACC, the presence of higher LMPs in California than in Arizona does not 
necessarily indicate that California consumers are being harmed, and 
efforts to reduce such price differences could result in subsidies to 
California consumers at the expense of Arizona consumers.
    Some commenters raised equity concerns. Governor Napolitano states 
that the draft Southwest Area National Corridor improperly focuses 
solely on the energy needs of California. ACC states that Arizona's 
economy is as important to the Nation as that of California, and that 
designation of the draft Southwest Area National Corridor would 
unfairly require Arizona to provide resource adequacy for California. 
ACC states that Arizona has no resource advantages for siting gas-fired 
generation compared to California, yet California has failed to site 
sufficient generation to meet its needs. ACC argues that California 
should not be allowed to rely on Arizona generation when the cost of 
externalities would be borne by Arizona consumers. ACC notes that 
Arizona's population has grown 20.2 percent since 2000, with Maricopa 
County being the fastest growing county in the Nation. As a result, ACC 
argues, any current excess generation in Arizona will actually be 
needed within the State by 2010.
    IID states that designation of the draft Southwest Area National 
Corridor could have a significant adverse impact upon Imperial County's 
agricultural businesses and desert ecosystem. Individuals residing 
within the draft Southwest Area National Corridor but away from the 
sink area argued that designation of the draft Southwest Area National 
Corridor would require them to bear an unfair burden.\115\
---------------------------------------------------------------------------

    \115\ See, e.g., comments of Albert Coonrod, Jr. (``[P]ush CA to 
solve their own needs in their own state and stay out of AZ.'') and 
John Batka (``Perhaps California should start building power plants 
again. Don't string a lifeline electric grid from the Palo Verde 
Nuclear Generating Station to support their growing population.''); 
see also statement of Tom Wray at June 21, 2007, Phoenix, AZ public 
meeting.
---------------------------------------------------------------------------

    Some commenters argued that the Department should accord more 
deference to existing State and regional planning and siting processes 
and hold off on any designation of a Southwest Area National Corridor 
until and unless it is clear that a Federal siting forum is needed. ACC 
argues that Federal intervention is unnecessary unless State and 
regional processes are not addressing the problem in a timely manner. 
ACC states that if State siting processes are efficient, transparent, 
and responsive to the market, as ACC asserts its process is, the 
Secretary should not designate a National Corridor. Governor Napolitano 
states that Arizona agencies and utilities have a strong record of line 
siting and infrastructure planning, in contrast to California, and that 
designation of the draft Southwest Area National Corridor would create 
great uncertainty in State and local efforts to plan for growth, 
infrastructure, and protection of natural resources.\116\
---------------------------------------------------------------------------

    \116\ See also comments of IID and SDRES.
---------------------------------------------------------------------------

    On the other hand, some commenters urged the Department against 
deferring designation of the draft Southwest Area National Corridor. 
For example, Coral states that provision of a Federal backstop is 
necessary to solve the congestion problems into and within the Southern 
California Critical Congestion Area and to assist California in meeting 
demand within the State. Coral argues that the mere possibility that 
FERC could step in and approve or reject siting proposals in the draft 
Southwest Area National Corridor may itself provide the necessary 
incentive for the States to find a common solution. But, according to 
Coral, if the States fail to do so, FERC, removed from local pressures, 
will be able to make the hard decisions that the States have been 
unable to make. SCE states that designation of the draft Southwest Area 
National Corridor will focus both State and local efforts on the 
resolution of key congestion issues.
DOE Response
    The Department recognizes that FPA section 216 adopted a novel 
approach to addressing congestion problems, and that some commenters 
have grave concerns about the effects of this new approach. However, 
after careful consideration of these concerns, the Department concludes 
that designation of the draft Southwest Area National Corridor, 
modified to exclude Clark County, Nevada, is consistent with the intent 
of FPA section 216(a).
    A number of the comments seem premised on the assumption that 
designation of a Southwest Area National Corridor would create a bias 
in favor of long transmission lines running the full length of the 
Corridor, and in particular long transmission lines connecting to 
generation located in Arizona. The Department regards such an 
assumption as unfounded. As discussed in Section I.A above, 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. Further, 
even within the realm of potential transmission solutions, designation 
of a Southwest Area National Corridor would not favor any particular 
transmission project within the Corridor. While the Department did 
identify source areas in Arizona when it delineated the draft

[[Page 57020]]

Southwest Area National Corridor, such delineation was not a 
determination that transmission lines connecting those particular 
source areas to the sink area must or should be built, or that such 
projects are preferable to other transmission projects. The 
Department's identification of source areas was a means of setting an 
outer bound on the geographic range of potential transmission projects 
that could become subject to FERC jurisdiction. Designation of a 
Southwest Area National Corridor no more dictates or endorses the 
construction of transmission lines to access generation in the 
identified source areas in Arizona than it does the construction of 
transmission lines to access the identified source areas in California. 
If a transmission project were proposed within the Southwest Area 
National Corridor to deliver generation to the Southern California 
Critical Congestion Area from somewhere other than the identified 
source areas, the developer of the project would be eligible to seek a 
FERC permit, provided it met the standards of FPA section 216(b). The 
Department sees no reason to conclude that designation of a Southwest 
Area National Corridor would discourage any such projects.
    Given that designation of a Southwest Area National Corridor does 
not determine whether or which transmission projects will be built, 
ACC's concerns about the reliability effects of constructing 
transmission accessing remote generation are not germane at this stage. 
If FERC jurisdiction under FPA section 216(b) were triggered, FERC 
would analyze and take into consideration the reasonably foreseeable 
effects of a proposed project, including the reliability impacts.\117\
---------------------------------------------------------------------------

    \117\ See FERC Order No. 689, 71 FR 69,440, 69,446, 117 FERC ] 
61,202 at P 41 (``[The Commission] will investigate and determine 
the impact the proposed facility will have on the existing 
transmission grid and the reliability of the system.'').
---------------------------------------------------------------------------

    With regard to comments about the equities of building transmission 
to access generation in one area to serve the needs of another area, 
the Department recognizes that consideration of the relative effects 
that a proposed project will have on the areas where the facilities are 
located versus the areas served by those facilities is critically 
important. However, how a transmission line actually affects a 
community through which it is routed is a function of how the line is 
sited and how the costs of the transmission line are allocated, neither 
of which is determined by a National Corridor designation.\118\ If FERC 
jurisdiction under FPA section 216(b) were triggered, FERC would 
consider the reasonably foreseeable effects of the proposed project on 
the communities through which it is proposed to be routed.\119\
---------------------------------------------------------------------------

    \118\ As discussed in the May 7 notice, cost allocation for 
transmission facilities is a long-standing FERC function.
    \119\ See, e.g., FERC Order No. 689, 71 FR 69,440, 69,446, 117 
FERC ] 61,202 at P 42 (``The Commission will also consider the 
adverse effects the proposed facilities will have on land owners and 
local communities.''); see also id., 71 FR 69,440, 69,456-57, 117 
FERC ] 61,202 at P 150 (applicant required to provide information 
concerning the impact of the proposed project on the towns and 
counties in the vicinity of the project).
---------------------------------------------------------------------------

    Although ACC argues that efforts to reduce power price differences 
between California and Arizona could result in subsidies to California 
consumers at the expense of Arizona consumers, the Department's 
designation of a Southwest Area National Corridor is not motivated by 
price differentials between California and Arizona. In the May 7 
notice, the Department specifically identified the considerations that 
it believed warranted designation of the draft Southwest Area National 
Corridor. The Department documented that if action is not taken to 
address congestion, consumers in the Southern California Critical 
Congestion Area face threats to the reliability of their electricity 
supply. The Department also documented that congestion exacerbates the 
reliance of consumers in the Southern California Critical Congestion 
Area on generation fueled by natural gas. Finally, the Department 
described the importance of the Southern California Critical Congestion 
Area to the security and economic health of the Nation as a whole. 
Thus, the Department stated its belief that reliability, supply 
diversity, and national defense and homeland security considerations 
warrant designation of a National Corridor for the Southern California 
Critical Congestion Area; the Department did not identify higher prices 
in southern California as a consideration justifying designation of a 
Southwest Area National Corridor.\120\
---------------------------------------------------------------------------

    \120\ Similarly, the Department's showing of the existence of 
congestion adversely affecting consumers in the Southern California 
Critical Congestion Area does not rely on the presence of price 
differentials between southern California and Arizona. The May 7 
notice detailed the data on which the Department is relying to 
establish the presence of congestion that adversely affects 
consumers. Those data included line flow data revealing the presence 
of congestion from 1999 through 2005 on a number of lines into and 
within southern California, as well as CAISO data from 2004 through 
2006 showing binding hours on paths into and within southern 
California. The Department did note that the modeling performed for 
the Congestion Study projected that several historical constraints 
into and within southern California would continue to cause 
congestion in 2008, and the Congestion Study modeling did quantify 
projected congestion rents derived from estimated LMP differences. 
However, congestion rents were only one of the metrics used in the 
Congestion Study modeling; in the May 7 notice, the Department 
emphasized the modeling's projection of U75 and U90 for pathways 
into and within southern California.
---------------------------------------------------------------------------

    ACC also argues that the rate of load growth in Arizona warrants 
elimination of Arizona from the draft Southwest Area National Corridor. 
However, as discussed above, designation of a Southwest Area National 
Corridor does not dictate or guarantee that transmission lines will be 
built to export power from Arizona to California. The Department 
included three counties in Arizona within the draft Southwest Area 
National Corridor because those counties have access to currently 
available excess generation capacity.\121\ If load growth in Arizona 
were to result in all existing generation capacity in the State, as 
well as all additional capacity coming on line in Arizona, being 
unavailable for export to California, that development would be taken 
into consideration by market participants evaluating their economic 
incentives to build a transmission project to facilitate such exports. 
Such a development would likely also be relevant in any FERC permit 
proceeding, given FPA section 216(b)(4)'s requirement that any project 
authorized by FERC must benefit or protect consumers. The Department 
recognizes the growing needs of Arizona consumers, and, in fact, 
identified the Tucson-Phoenix area as a Congestion Area of Concern in 
the Congestion Study. The growing demand in Arizona and the resulting 
growing congestion may at some future date warrant expansion of the 
Southwest Area National Corridor or designation of additional National 
Corridors in the Southwest. However, given the urgency of addressing 
the reliability threats facing consumers in the Southern California 
Critical Congestion Area and State concerns over the designation of 
broad National Corridors, the Department believes that designation of 
the draft Southwest Area National Corridor, modified to exclude Clark

[[Page 57021]]

County, Nevada, is an appropriate first step.
---------------------------------------------------------------------------

    \121\ We further note that as market participants consider 
development of new coal/wind generation and transmission capacity in 
Wyoming and other areas beyond Arizona, the Phoenix area has the 
potential to become even more important than it is now as a trans-
shipment point for electricity headed for urban centers in southern 
California. See, e.g., ``High Plains Express Transmission Study 
Joined by the Wyoming and New Mexico Transmission Authorities,'' 
Denver Business News, Aug. 15, 2007, at http://denver.dbusinessnews.com/shownews.php?newsid=129768&type&_news=latest.
---------------------------------------------------------------------------

    Some commenters urge us to defer any designation of a Southwest 
Area National Corridor until State and regional planning efforts have 
had more time to address the congestion problems. These commenters 
provide details on the purported effectiveness of State and regional 
planning processes. As discussed in Section II.G above, we do not 
believe that Congress envisioned the adoption of a wait-and-see 
approach to National Corridor designation.
    The Department strongly supports State and regional efforts to 
collectively address the congestion problems confronting the region, 
whether those efforts are focused on transmission solutions, non-
transmission solutions, or a combination of both. Despite the 
assertions of some commenters, the Department does not believe that 
designation of the Southwest Area National Corridor necessarily will 
disrupt ongoing State or regional planning processes. As discussed in 
Section I.A above, a National Corridor designation itself does not 
preempt State authority or any State actions. Thus, States retain the 
authority to work together to address aggressively the congestion 
problems confronting the region. Further, we expect utilities within 
the Southwest Area National Corridor to continue to work cooperatively 
with State and local authorities. We note that FERC has indicated that 
it will consider any allegations that an applicant has acted in bad 
faith in State proceedings when it reviews permit applications under 
FPA section 216(b)(1)(C)(i).
    State and regional efforts may well resolve the congestion problems 
afflicting the Southern California Critical Congestion Area without any 
invocation of Federal review. However, as the May 7 notice documented, 
reliability, supply diversity, and national defense and homeland 
security considerations all warrant designation of a Southwest Area 
National Corridor.\122\ Given the increasingly interconnected nature of 
the transmission grid and wholesale power markets, siting of 
electricity infrastructure poses increasingly complex questions about 
how to balance equitably all competing interests. Tensions can exist 
between what is perceived to be best for a region as a whole versus 
what is perceived to be best for an individual State or an individual 
portion of one State. National Corridor designation provides, in a 
defined set of circumstances, a potential mechanism for analyzing the 
need for transmission from a national, rather than State or local, 
perspective. The comments the Department has received on the draft 
Southwest Area National Corridor reveal the presence of the kind of 
tensions that prompted Congress to create such a mechanism. The 
Department acknowledges that designation of a Southwest Area National 
Corridor introduces a significant new possibility into the process of 
siting transmission, and that the existence of this possibility may 
pose challenges for States and may ultimately prove unnecessary. 
However, given the totality of the circumstances, including the 
presence of looming reliability violations and the significance of the 
Southern California Critical Congestion Area to the security and 
economic health of the Nation as a whole, the Department concludes that 
it would be inconsistent with the intent of FPA section 216(a) to 
withhold the Federal safety net of National Corridor designation.\123\
---------------------------------------------------------------------------

    \122\ See May 7 notice, Section IX.C.
    \123\ Further, whereas Congress could have completely preempted 
State siting of interstate transmission facilities, allowing for the 
potential exercise of limited Federal preemption in accordance with 
FPA section 216(a) does not intrude on any State rights or 
prerogatives.
---------------------------------------------------------------------------

    In sum, having found the presence of congestion that adversely 
affects consumers in the Southern California Critical Congestion Area, 
the Secretary has the discretion to designate a National Corridor. The 
Secretary concludes, based on the totality of the information 
developed, taking into account relevant considerations, including the 
considerations identified in FPA section 216(a)(4), as appropriate, 
that exercise of his discretion to designate the draft Southwest Area 
National Corridor, modified to exclude Clark County, Nevada, is 
warranted.

H. Duration of the Southwest Area National Corridor Designation

Summary of Comments
    Several commenters, including CPUC and Nevada Agencies, objected to 
setting a twelve-year term for the Southwest Area National Corridor. 
For example, NARUC opposes the use of a twelve-year term as 
inconsistent with the statute. NARUC argues that the requirement that 
the Department conduct a congestion study every three years indicates 
that the factual basis for National Corridors must be reexamined and 
updated every three years, and, thus, only a three-year term, subject 
to three-year extensions, is permissible. NARUC states that use of a 
twelve-year term could easily result in a designation remaining in 
place long after congestion issues have been resolved.\124\
---------------------------------------------------------------------------

    \124\ See also comments of Citizens Campaign for the Environment 
and The Wilderness Society.
---------------------------------------------------------------------------

DOE Response
    For the reasons discussed in Section II.H above, the Department 
concludes that imposition of a time limit on the Southwest Area 
National Corridor designation is not required by law. Nevertheless, in 
recognition of State concerns about open-ended National Corridor 
designations, as balanced against the disruptive effect that regulatory 
uncertainty can have on transmission investment, the Department has 
decided to set a twelve-year term for the Southwest Area National 
Corridor designation, subject to the Department's right to rescind, 
renew or extend the designation after notice and opportunity for 
comment. Further, the Department does not intend to allow the 
termination of the Southwest Area National Corridor designation as it 
may apply to an accepted permit application pending at FERC, or, once 
FERC has granted a permit, during the period in which the approved 
facilities are being constructed.

IV. NEPA, NHPA, and ESA

A. Overview of Comments on NEPA

Summary of Comments
    Several commenters, including PHI, PJM, WIRES, EEI and National 
Grid, asserted that the Department is not required to prepare an 
Environmental Impact Statement (EIS) or conduct other NEPA review for 
the designation of National Corridors. Many other commenters asserted 
that the Department should conduct a Programmatic EIS (PEIS) before 
designating any National Corridors because designation itself requires 
NEPA review.\125\
---------------------------------------------------------------------------

    \125\ See, e.g., comments of ECCP, Environmental Defense, 
National Trust for Historic Preservation, Columbia Environmental Law 
Clinic, SELC, Sierra Club (Pennsylvania Chapter), Western 
Pennsylvania Conservancy, Toll Bros., CARI, Appalachian Trail 
Conservancy, NCPA, Wilderness Society, NYDEC, and Piedmont 
Environmental Council; see also statement of Tom Darin at May 17, 
2007, San Diego, CA public meeting.
---------------------------------------------------------------------------

DOE response
    Section 102(2)(C) of NEPA requires that all Federal agencies 
include an EIS for ``every recommendation or report on proposals for 
legislation and other major Federal actions significantly affecting the 
quality of the human environment.'' 42 U.S.C. 4332(2)(C). NEPA section 
102(2)(C) ensures that Federal agencies provide full and fair 
discussion of significant environmental impacts and

[[Page 57022]]

informs decision makers and the public of reasonable alternatives that 
would avoid or minimize adverse impacts or enhance the quality of the 
human environment. NEPA review is designed to examine the foreseeable, 
measurable, and predictable consequences of a proposed Federal action; 
it is not intended to forecast hypothetical or unknowable proposals or 
results. National Corridor designations have no environmental impact. 
They are only designations of geographic areas in which DOE has 
identified electric congestion or constraint problems.

B. Federal Plan/Program

Summary of Comments
    Several commenters asserted that NEPA review is required because 
the designation of National Corridors is part of a continuing agency 
action constituting a new Federal scheme, program, or policy to site 
transmission projects. They argue that the Council on Environmental 
Quality regulations implementing NEPA require that EISs be prepared for 
broad Federal actions such as the adoption of new agency programs or 
for a group of concerted actions to implement a specific policy or 
plan. They also suggest that DOE and FERC are acting jointly to effect 
the single goal of establishing transmission projects.
DOE Response
    The designation of the Mid-Atlantic Area National Corridor and the 
Southwest Area National Corridor is not part of a group of concerted 
agency actions to implement a Federal scheme or program of siting 
transmission projects. These two National Corridors, and any potential 
future National Corridors, have been designated for reasons unrelated 
to each other. Not only is each of the National Corridors being 
designated today manifestly separate and distinct in size and location, 
but also different considerations led to the designation of each of 
them. For example, economic development and energy independence 
considerations played a role in the Department's decision to designate 
the Mid-Atlantic Area National Corridor but were not factors in the 
decision to designate the Southwestern Area National Corridor.
    These National Corridor designations are not part of a unitary 
agency action taken jointly by DOE and FERC. As specified by statute, 
and described in Section I.A., the factors that FERC will consider when 
reviewing any application to construct transmission facilities are 
different from the factors that DOE has considered in designating 
National Corridors. Although DOE's designations allow FERC to assert 
jurisdiction in specified circumstances to permit transmission 
projects, DOE and FERC have separate and distinct statutory obligations 
and objectives. Congress expressly authorized DOE to identify 
congestion, and authorized FERC to review permit applications under FPA 
section 216(b).

C. Authorization for Future Action

Summary of Comments
    Several commenters stated that NEPA review is required whenever an 
agency makes a decision that permits some other party, whether private 
or governmental, to take action affecting the environment. Commenters 
claimed that NEPA review is required here because DOE's decision to 
designate National Corridors provides FERC with jurisdiction to site 
transmission projects and gives applicants who receive construction 
permits for transmission projects the authority to exercise the right 
of eminent domain, without DOE approval, within the National Corridors.
DOE Response
    The designation of National Corridors is not a precondition to 
siting transmission projects. In particular, designation is not a 
prerequisite for anyone taking actions with environmental consequences 
within National Corridors. Designation gives no permission nor 
establishes any entitlement to construct a transmission project. States 
can still permit transmission facilities, just as they have always 
done. As described in Section I.A., FPA section 216(g) contemplates 
continued State action: ``Nothing in this section precludes any person 
from constructing or modifying any transmission facility in accordance 
with State law.'' Although FPA section 216(b) establishes a new and 
additional potential procedural forum for transmission applicants, 
designation of National Corridors does not in itself authorize 
development of transmission projects that could not otherwise be built.

D. Ability To Preclude Surface-Disturbing Activity

Summary of Comments
    Commenters asserted that an agency cannot delay NEPA review unless 
the agency reserves the ability to prevent surface-disturbing 
activities at a later stage. These commenters claimed that after 
designation of a National Corridor, DOE loses the ability to preclude 
surface-disturbing activity because permitting authority is in the 
exclusive control of FERC after designation.
DOE Response
    As provided in the Ordering Paragraphs in Section V below, the 
Department is explicitly reserving the right to rescind, renew or 
extend the designations or modify the scope of the designations, should 
circumstances so require.\126\
---------------------------------------------------------------------------

    \126\ Any such change in a National Corridor designation would 
be made only after notice and opportunity for public comment.
---------------------------------------------------------------------------

E. Bias in Favor of Transmission Solutions

Summary of Comments
    Certain commenters, including the Sierra Club (National), Sierra 
Club (Grand Canyon Chapter), and West Virginia Environmental Council 
stated that the May 7 notice understated the likelihood that National 
Corridor designation will lead to widespread FERC permitting of 
transmission projects and growth in associated generation, specifically 
coal-fired power plants. They commented that National Corridor 
designation favors a transmission-based solution to congestion and is 
tantamount to permitting transmission projects.
DOE Response
    The Department's designation of National Corridors itself has no 
environmental impact: It neither permits nor precludes the construction 
of any transmission projects or any other ground-disturbing activity. 
One of the primary themes voiced by commenters is that DOE's 
designation of National Corridors will somehow inexorably lead to the 
construction of transmission projects and that DOE should, in an EIS, 
predict their range, extent, and impact on the environment. However, 
DOE has no authority to site transmission. Moreover, FERC's discretion 
to approve transmission projects located within National Corridors is 
circumscribed. As discussed in Section I.A above, FERC may only issue a 
permit if the applicant has shown that its project will significantly 
reduce congestion. If competing projects, including non-transmission 
projects, were to resolve the congestion or constraint problem before 
the issuance of a FERC permit, the sponsor of a transmission project 
would be hard pressed to make such a showing. FERC, at the siting 
stage, will determine whether a transmission-based solution to 
particular instances of congestion is warranted.

[[Page 57023]]

    Any commitment to groundbreaking activities with environmental 
impacts is made only after FERC authorizes construction. Before that 
point, FERC will have conducted a full NEPA review of the proposed 
project.

F. Pending Transmission Proposals

Summary of Comments
    Several commenters, including the National Trust for Historic 
Preservation, NPCA, the Wilderness Society, and the Sierra Club (Grand 
Canyon chapter), have argued that DOE should prepare a PEIS now based 
upon transmission projects that are currently under review by State 
permitting agencies or are currently being planned within the Mid-
Atlantic Area National Corridor or the Southwest Area National 
Corridor.
DOE Response
    The Department concludes that conducting a PEIS based on currently 
pending transmission proposals would be premature and speculative. The 
Department does not know if these specific proposed projects will be 
permitted, or if they are permitted, the ultimate location of the 
transmission facilities. Considering the impacts of pending 
transmission proposals would inappropriately presume the outcome of 
permitting actions, first by the States and then by FERC. If the 
proposed transmission projects are permitted by the States, FERC would 
never become involved and there would be no Federal action other than 
DOE's designation. If the transmission projects were not permitted by 
the States, sponsors of the proposals may or may not seek construction 
permits from FERC. If FERC were to receive an application, FERC would 
conduct a full NEPA review. FERC, as a result of its own NEPA review, 
could very well decide to pick alternative transmission routes that 
would reduce the environmental impact of currently proposed routes. As 
described in Sections II.D and III.D, the Mid-Atlantic Area National 
Corridor and the Southwest Area National Corridor are sufficiently 
broad to account for numerous alternative transmission routes and 
sources of generation including renewables and nuclear.\127\ Thus, any 
PEIS performed by DOE now would be entirely speculative and could 
improperly second-guess both the States and FERC.
---------------------------------------------------------------------------

    \127\ Arnold & Porter, filing comments on behalf of several 
Virginia landowners, commented that the Department has issued draft 
National Corridor designations that are wide to the point of 
rendering meaningless any environmental review of the National 
Corridors. See also statement of Milton Wagner at June 21, 2007, 
Phoenix, AZ public meeting. However, the geographic breadth of the 
Mid-Atlantic Area National Corridor and the Southwest Area National 
Corridor ensure that FERC has flexibility to choose alternative 
siting locations if its jurisdiction under FPA section 216(b) is 
triggered.
---------------------------------------------------------------------------

G. Cumulative Impacts

Summary of Comments
    Certain commenters asserted that DOE should anticipate the impacts 
from current pending applications for transmission projects and analyze 
the cumulative impact of such projects in a PEIS. They argue that only 
DOE, and not FERC, has the ability to assess the overall impact to an 
area of multiple new transmission facilities and potential associated 
generation, such as coal-fired power plants.
DOE Response
    The Department cannot determine the number, size, or location of 
new transmission facilities that might be permitted within the National 
Corridors. The Department also does not know whether any new 
electricity generation, or what type of generation, will develop in the 
future. While commenters assert that designation of the Mid-Atlantic 
Area National Corridor will spur additional coal-fired generation, the 
Department concludes, as discussed in Section II.G above, that such 
designation neither favors transmission solutions to congestion over 
non-transmission solutions nor favors transmission projects accessing 
one type of generation over transmission projects accessing any other 
type of generation. Thus, it may be just as likely that renewable or 
nuclear generation would increase. Cumulative impacts are speculative 
at this stage; through this designation DOE is not setting criteria for 
particular transmission facilities, the number of transmission 
facilities, or type of generation that may be developed within the 
National Corridors. The Department has no control over how and when any 
such development might occur and therefore cannot predict or estimate 
its impacts. It is apparent from a reading of the FPA section 216 that 
Congress anticipated that the States would be the first to determine 
whether to site projects within their borders; Congress then gave FERC, 
in certain specified circumstances, the authority to site projects. If 
any parties are capable of analyzing or affecting cumulative impacts it 
would be FERC and the States, and then only after they had actual 
projects to consider.

H. Planning for Conservation Areas

Summary of Comments
    Some commenters, including Sierra Club (National), the ECCP, and 
the Piedmont Environmental Council, argued that designation of National 
Corridors will have an immediate impact on conservation easements and 
State decisions about allocating land as parks and green space. 
Commenters assert that because existing conservation districts in 
designated National Corridors are not exempt from potential Federal 
siting, such areas will lose their State protection. Additionally, 
commenters claim that because property owners and State planners will 
anticipate that land within designated National Corridors will be the 
site of future eminent domain proceedings and transmission 
construction, property owners will not place property into new 
conservation easements and States will not designate new protected 
lands within any designated National Corridors.\128\
---------------------------------------------------------------------------

    \128\ Similarly, several commenters argue that designation of 
National Corridors will lead private sector parties and States to 
make other decisions based on the assumption that construction of 
transmission lines is inevitable within the National Corridors. For 
example, some commenters have said that designation will lead to a 
decline in the value of real estate in areas within the National 
Corridors such that residents will move elsewhere. The Department's 
response to comments on protected lands in this subsection applies 
with equal force to these comments about other types of planning 
decisions and commitments made in anticipation of future development 
within the National Corridors.
---------------------------------------------------------------------------

DOE Response
    The possibility that State land planners and property owners will 
make land use decisions based on the assumption that there will be 
future development through environmentally sensitive areas within the 
Mid-Atlantic Area National Corridor or the Southwest Area National 
Corridor is too attenuated an impact to require a NEPA review. 
Analyzing such decisions would require DOE to speculate about actions 
that are at best weakly linked to the designation of National 
Corridors, namely how State and property land owners might react to 
their subjective, perceived risk of FERC granting construction permits 
for projects that will affect the physical environment in particular 
sections of the National Corridors.
    Even if FERC were to authorize the construction of transmission 
facilities in the future, FERC would address avoidance of special land 
use areas in its NEPA review.\129\ To the extent that

[[Page 57024]]

the National Corridors may have any impact on land use planning 
decisions, those impacts are too speculative and uncertain at this 
point to meaningfully analyze.
---------------------------------------------------------------------------

    \129\ See FERC Order No. 689, 71 FR 69,440, 69,459, 117 FERC ] 
61,202 at P 177.
---------------------------------------------------------------------------

    In addition, as described in Section I.A, transmission developers 
will need rights-of-way in addition to a construction permit when 
developing State property. The right of eminent domain under FPA 
section 216 does not apply to State property. Thus, any current State 
lands will not lose existing conservation protection unless authorized 
by the appropriate State authorities. In addition, State authorities 
will not lose any incentive to create new parks or State conservation 
areas.

I. State Environmental Protection Statutes

Summary of Comments
    Certain commenters, including the ECCP, Environmental Defense, the 
National Trust for Historic Preservation, SELC, the Sierra Club 
(Pennsylvania Chapter), NJ Highlands Water Protection and Planning, 
NYDEC, and the Piedmont Environmental Council, raised concerns that 
designation of National Corridors will have an immediate impact on the 
environment because it undercuts the ability of States, who are more 
intimately familiar with local environmental issues and historic 
artifacts, to implement their own procedural and substantive 
environmental statutes during the siting process. According to these 
commenters, State environmental review statutes may, in some instances, 
be more stringent than NEPA, and such State reviews will be 
shortchanged in order to meet the one-year timeframe for State action 
under FPA section 216(b)(1)(C)(i).
DOE Response
    The effect of designation of National Corridors on prospective 
State environmental and cultural reviews would have no physical impact 
on the environment and is also too remote, indirect, and speculative to 
require NEPA review. The Department recognizes that designation of 
National Corridors could theoretically prompt States with lengthy 
environmental review processes to speed up their environmental and 
cultural analyses in order to meet the one-year deadline for review 
established by Congress. However, at the National Corridor designation 
stage, the environmental effects from such a potential procedural 
impact are entirely speculative. National Corridor designation may lead 
to no change in the degree of environmental review or in the role of 
State expertise in the permitting decision; the States will have an 
opportunity to share their analysis and expertise during FERC's NEPA 
comment period. In such instances, even though NEPA may limit the 
applicability of State environmental review statutes, the substance of 
a State's environmental review actually becomes an important piece of 
the NEPA review. Even where State environmental review statutes may be 
more stringent, FERC's NEPA review will provide a second hard look at 
environmental impacts. Thus, National Corridor designation may 
ultimately lead to FERC environmental reviews that are more thorough 
and/or protective of the environment than State reviews.

J. EPAct Section 368

Summary of Comments
    Several commenters, including Environmental Defense, Sierra Club 
(Grand Canyon Chapter), SELC, and the Advisory Council on Historic 
Preservation, stated that DOE should be preparing a PEIS because DOE 
and several other agencies are preparing a PEIS for the designation of 
corridors on Federal lands in eleven western States under EPAct section 
368. For example, Environmental Defense asserts that DOE in both EPAct 
section 368 and FPA section 216(a) will set the stage for potential 
site-specific activity and establish energy policy, and that both 
decisions therefore require a PEIS.
DOE Response
    While both EPAct section 368 and FPA section 216(a) call for 
designation of ``corridors,'' as discussed in Section II.D above the 
purposes and effects of the two provisions are quite different.
    Pursuant to EPAct section 368, the Departments of the Interior, 
Agriculture, Energy, Defense, and Commerce are required to designate 
right-of-way corridors on Federal lands in eleven western States for 
oil, gas, and hydrogen pipelines and electricity transmission and 
distribution facilities. Congress required very different corridors 
under EPAct section 368 than it authorized under FPA section 216(a)--
EPAct section 368 corridors must have a defined centerline, width, and 
compatible uses. Congress required that the Federal land management 
agencies designate these right-of-way corridors through amendments to 
their land use resource management plans or equivalent land use plans. 
Finally, EPAct section 368 requires the Federal land management 
agencies to institute procedures to expedite applications to construct 
energy transport systems within the corridors. As such, EPAct section 
368 influences Federal land use planning decisions. EPAct section 368 
is ultimately a land use provision, one which arises in a subtitle on 
``Access to Federal Lands.'' \130\
---------------------------------------------------------------------------

    \130\ EPAct, Title III, Subtitle F.
---------------------------------------------------------------------------

    In contrast, the Department, in implementing FPA section 216(a), is 
not establishing right-of-way corridors or making any other land use 
planning decision that is even remotely connected to ground-breaking 
activity that might affect the physical environment. In fact, in 
implementing FPA section 216(a), the Department is designating National 
Corridors that are sufficiently broad for FERC to select from a wide 
array of geographic routes for any transmission facilities that it may 
permit. As such, FERC, not the Department, will make land use choices; 
the Department here makes no decisions about the suitability of 
particular geographical routes for future development of transmission 
facilities.
    In sum, EPAct section 368 and FPA section 216(a) are fundamentally 
different. Because EPAct section 368 necessarily alters how Federal 
land management agencies manage their lands, the designation of EPAct 
section 368 right-of-way corridors is an action less removed from 
ground-breaking impacts than the designation of National Corridors 
under FPA section 216(a), which does not itself influence land 
management decisions.

K. NHPA and ESA

Summary of Comments
    Several commenters, including the ECCP, Sierra Club (National), 
National Trust for Historic Preservation, SELC, Sierra Club 
(Pennsylvania Chapter), Advisory Council on Historic Preservation, 
NPCA, Wilderness Society, Arnold & Porter (filing comments on behalf of 
several landowners in Virginia), Virginia State Historic Preservation 
Office, and Piedmont Environmental Council, express concern about the 
lack of DOE review pursuant to NHPA section 106 and ESA section 7. The 
Advisory Council on Historic Preservation requested clarification of 
the Department's position on whether NHPA section 106 consultation is 
required for the designation of National Corridors.
DOE Response
    As stated above, the Department does not believe that the 
designation of National Corridors, in itself, is a major

[[Page 57025]]

Federal action significantly affecting the quality of the human 
environment, requiring NEPA review. Similarly, and for the same 
reasons, the designation of National Corridors, in itself, is not an 
undertaking that has the potential to cause effects on historic 
properties, requiring NHPA review, nor is the designation of National 
Corridors a Federal action that is likely to jeopardize the continued 
existence of any endangered species or threatened species or result in 
the destruction or adverse modification of habitat of such species. If 
FERC jurisdiction were triggered under FPA section 216(b), FERC would 
conduct all appropriate NHPA and ESA reviews.\131\
---------------------------------------------------------------------------

    \131\ See, e.g., FERC Order No. 689, 71 FR 69,440, 69,457, 117 
FERC ] 61,202 at P148 (``The Commission will not authorize 
construction, however, until the permittee has complied with all the 
requirements of NHPA and all other relevant environmental laws.''). 
The Wilderness Society asserts that DOE must engage in consultation 
and carry out conservation programs for listed species pursuant to 
ESA section 7(a)(1). Section 7(a)(1) is not triggered by specific 
Federal actions and, in particular, not by ones that are not likely 
to jeopardize the continued existence of any endangered species or 
threatened species or result in the destruction or adverse 
modification of habitat of such species.
---------------------------------------------------------------------------

V. Ordering Paragraphs

    For the reasons set forth in the May 7 notice as clarified in this 
report above, it is hereby ordered that:
    A. In Docket No. 2007-OE-01, the Department designates the Mid-
Atlantic Area National Interest Electric Transmission Corridor as a 
national interest electric transmission corridor pursuant to FPA 
section 216(a)(2) encompassing the following counties and cities: Kent 
County, DE, New Castle County, DE, and Sussex County, DE; Washington, 
DC; Allegany County, MD, Anne Arundel County, MD, Baltimore County, MD, 
Calvert County, MD, Caroline County, MD, Carroll County, MD, Cecil 
County, MD, Charles County, MD, Dorchester County, MD, Frederick 
County, MD, Garrett County, MD, Harford County, MD, Howard County, MD, 
Kent County, MD, Montgomery County, MD, Prince George's County, MD, 
Queen Anne's County, MD, St. Mary's County, MD, Talbot County, MD, 
Washington County, MD, Wicomico County, MD, Worcester County, MD, and 
City of Baltimore, MD; Atlantic County, NJ, Bergen County, NJ, 
Burlington County, NJ, Camden County, NJ, Cape May County, NJ, 
Cumberland County, NJ, Essex County, NJ, Gloucester County, NJ, Hudson 
County, NJ, Hunterdon County, NJ, Mercer County, NJ, Middlesex County, 
NJ, Monmouth County, NJ, Morris County, NJ, Ocean County, NJ, Passaic 
County, NJ, Salem County, NJ, Somerset County, NJ, Sussex County, NJ, 
Union County, NJ, and Warren County, NJ; Albany County, NY, Bronx 
County, NY, Broome County, NY, Cayuga County, NY, Chenango County, NY, 
Clinton County, NY, Columbia County, NY, Delaware County, NY, Dutchess 
County, NY, Erie County, NY, Franklin County, NY, Fulton County, NY, 
Genesee County, NY, Greene County, NY, Herkimer County, NY, Jefferson 
County, NY, Kings County, NY, Lewis County, NY, Livingston County, NY, 
Madison County, NY, Monroe County, NY, Montgomery County, NY, Nassau 
County, NY, New York County, NY, Niagara County, NY, Oneida County, NY, 
Onondaga County, NY, Ontario County, NY, Orange County, NY, Orleans 
County, NY, Otsego County, NY, Putnam County, NY, Queens County, NY, 
Renssalaer County, NY, Richmond County, NY, Rockland County, NY, St. 
Lawrence County, NY, Saratoga County, NY, Schenectady County, NY, 
Schoharie County, NY, Seneca County, NY, Suffolk County, NY, Sullivan 
County, NY, Ulster County, NY, Wayne County, NY, Westchester County, 
NY, and Wyoming County, NY; Belmont County, OH, Carroll County, OH, 
Columbiana County, OH, Harrison County, OH, Jefferson County, OH, 
Monroe County, OH, and Stark County, OH; Adams County, PA, Allegheny 
County, PA, Armstrong County, PA, Beaver County, PA, Bedford County, 
PA, Berks County, PA, Blair County, PA, Bradford County, PA, Bucks 
County, PA, Butler County, PA, Cambria County, PA, Carbon County, PA, 
Centre County, PA, Chester County, PA, Clearfield County, PA, Clinton 
County, PA, Columbia County, PA, Cumberland County, PA, Dauphin County, 
PA, Delaware County, PA, Fayette County, PA, Franklin County, PA, 
Fulton County, PA, Greene County, PA, Huntingdon County, PA, Indiana 
County, PA, Jefferson County, PA, Juniata County, PA, Lackawanna 
County, PA, Lancaster County, PA, Lebanon County, PA, Lehigh County, 
PA, Luzerne County, PA, Mifflin County, PA, Monroe County, PA, 
Montgomery County, PA, Montour County, PA, Northampton County, PA, 
Northumberland County, PA, Perry County, PA, Philadelphia County, PA, 
Pike County, PA, Schuylkill County, PA, Snyder County, PA, Somerset 
County, PA, Susquehanna County, PA, Union County, PA, Wayne County, PA, 
Washington County, PA, Westmoreland County, PA, Wyoming County, PA, and 
York County, PA; Arlington County, VA, Clarke County, VA, Culpeper 
County, VA, Fairfax County, VA, Fauquier County, VA, Frederick County, 
VA, Loudon County, VA, Madison County, VA, Page County, VA, Prince 
William County, VA, Rappahannock County, VA, Rockingham County, VA, 
Shenandoah County, VA, Stafford County, VA, Warren County, VA, City of 
Alexandria, VA, City of Harrisonburg, VA, City of Fairfax, VA, City of 
Falls Church, VA, City of Manassas, VA, City of Manassas Park, VA, and 
City of Winchester, VA; and Barbour County, WV, Berkeley County, WV, 
Boone County, WV,\132\ Braxton County, WV, Brooke County, WV, Calhoun 
County, WV, Clay County, WV, Doddridge County, WV, Gilmer County, WV, 
Grant County, WV, Hampshire County, WV, Hancock County, WV, Hardy 
County, WV, Harrison County, WV, Jackson County, WV, Jefferson County, 
WV, Kanawha County, WV, Lewis County, WV, Marion County, WV, Marshall 
County, WV, Mason County, WV, Mineral County, WV, Monongalia County, 
WV, Morgan County, WV, Nicholas County, WV, Ohio County, WV, Pendleton 
County, WV, Pleasants County, WV, Pocahontas County, WV, Preston 
County, WV, Putnam County, WV, Randolph County, WV, Ritchie County, WV, 
Roane County, WV, Taylor County, WV, Tucker County, WV, Tyler County, 
WV, Upshur County, WV, Webster County, WV, Wetzel County, WV, Wirt 
County, WV, and Wood County, WV. This designation is effective on 
October 5, 2007 and will remain in effect until October 7, 2019. The 
Department reserves the right to rescind, renew or extend this 
designation or modify the scope of this designation after notice and 
opportunity for comment.
---------------------------------------------------------------------------

    \132\ Boone County, WV, was inadvertently omitted from the 
narrative description of the draft Mid-Atlantic Area National 
Corridor in the May 7, 2007, notice at 72 FR 25909. It was correctly 
included in the May 7, 2007 map of the draft National Corridor.
---------------------------------------------------------------------------

    B. In Docket No. 2007-OE-02, the Department designates the 
Southwest Area National Interest Electric Transmission Corridor as a 
national interest electric transmission corridor pursuant to FPA 
section 216(a)(2) encompassing the following counties: Imperial County, 
CA, Kern County, CA, Los Angeles County, CA, Orange County, CA, 
Riverside County, CA, San Bernardino County, CA, and San Diego County, 
CA; and La Paz County, AZ, Maricopa County, AZ, and Yuma County, AZ. 
This designation is effective on October 5, 2007 and will remain in 
effect until October 7, 2019. The Department reserves the right to 
rescind, renew or extend this

[[Page 57026]]

designation or modify the scope of this designation after notice and 
opportunity for comment.
    C. The Department grants party status in Docket No. 2007-OE-01 to 
all persons who either: (1) Filed comments marked ``Attn: Docket No. 
2007-OE-01'' electronically at http://nietc.anl.gov on or before July 
6, 2007; (2) mailed written comments marked ``Attn: Docket No. 2007-OE-
01'' to the Office of Electricity Delivery and Energy Reliability, OE-
20, U.S. Department of Energy, 1000 Independence Avenue, SW., 
Washington, DC 20585, that were received on or before July 6, 2007; or 
(3) hand-delivered written comments marked ``Attn: Docket No. 2007-OE-
01'' at one of the public meetings. Only those persons who are parties 
to the proceeding in Docket No. 2007-OE-01 and who are aggrieved by the 
Department's order in that docket may apply for rehearing pursuant to 
FPA section 313.
    D. The Department grants party status in Docket No. 2007-OE-02 to 
all persons who either: (1) Filed comments marked ``Attn: Docket No. 
2007-OE-02'' electronically at http://nietc.anl.gov on or before July 
6, 2007; (2) mailed written comments marked ``Attn: Docket No. 2007-OE-
02'' to the Office of Electricity Delivery and Energy Reliability, OE-
20, U.S. Department of Energy, 1000 Independence Avenue, SW., 
Washington, DC 20585, that were received on or before July 6, 2007; or 
(3) hand-delivered written comments marked ``Attn: Docket No. 2007-OE-
02'' at one of the public meetings. Only those persons who are parties 
to the proceeding in Docket No. 2007-OE-02 and who are aggrieved by the 
Department's order in that docket may apply for rehearing pursuant to 
FPA section 313.
    E. Any application for rehearing must be either: (1) Mailed or 
hand-delivered to the Office of Electricity Delivery and Energy 
Reliability, OE-20, U.S. Department of Energy, 1000 Independence 
Avenue, SW., Washington, DC 20585; or (2) faxed to 202-586-8008. 
Applications for rehearing of the order in Docket No. 2007-OE-01 must 
be marked ``Attn: Docket No. 2007-OE-01.'' Applications for rehearing 
of the order in Docket No. 2007-OE-02 must be marked ``Attn: Docket No. 
2007-OE-02.'' Applications for rehearing must be received by 5 p.m., 
Eastern time November 5, 2007. The Department will not accept responses 
to requests for rehearing.

    Note: Delivery of U.S. Postal Service mail to DOE continues to 
be delayed by several weeks due to security screening; therefore, 
applicants who choose to mail their rehearing applications are 
encouraged to use express mail.

    The Secretary of Energy has approved the publication of this 
notice.

    Issued in Washington, DC on October 2, 2007.
Kevin M. Kolevar,
Assistant Secretary, Electricity Delivery and Energy Reliability. .

Acronyms

ACC Arizona Corporation Commission
AEP American Electric Power
APA Administrative Procedure Act
CAISO California Independent System Operator
CARI Communities Against Regional Interconnect
CEC California Energy Commission
CPUC California Public Utilities Commission
DeDNR Delaware Department of Natural Resources and Environmental 
Control
DOE U.S. Department of Energy
DPV2 Devers-Palo Verde 2 project
ECCP Energy Conservation Council of Pennsylvania
EEI Edison Electric Institute
EIS Environmental Impact Statement
EPAct Energy Policy Act of 2005
ESA Endangered Species Act
FERC Federal Energy Regulatory Commission
FPA Federal Power Act
IID Imperial Irrigation District
ISO Independent System Operator
LMP Locational Marginal Price
MiPSC Michigan Public Service Commission
MISO Midwest Independent System Operator
NARUC National Association of Regulatory Commissioners
NEPA National Environmental Policy Act
NERC North American Electric Reliability Council
NHPA National Historic Preservation Act
NJBPU New Jersey Board of Public Utilities
NJDEP New Jersey Department of Environmental Conservation
NPCA National Parks Conservation Association
NPCC Northeast Power Coordinating Council
NYDEC New York Department of Environmental Conservation
NYFB New York Farm Bureau
NYISO New York Independent System Operator
NYPSC New York Public Service Commission
ODEC Old Dominion Electric Cooperative
OMS Organization of MISO States
PaDEP Pennsylvania Department of Environmental Conservation
PaPUC Pennsylvania Public Utilities Commission
PEIS Programmatic EIS
PHI Pepco Holdings, Inc.
PJM PJM Interconnection
RTO Regional Transmission Operator
SCE Southern California Edison Company
SDG&E San Diego Gas and Electric
SELC Southern Environmental Law Center
TEPPC Transmission Expansion Policy Planning Committee of the 
Western Electricity Coordinating Council
WAPA Western Area Power Administration
WIA Wyoming Infrastructure Authority
WIRES Working Group for Investment in Reliable and Economic Electric 
Systems
BILLING CODE 6450-01-P

[[Page 57027]]

[GRAPHIC] [TIFF OMITTED] TN05OC07.010


[[Page 57028]]


[GRAPHIC] [TIFF OMITTED] TN05OC07.011

[FR Doc. E7-19731 Filed 10-4-07; 8:45 am]
BILLING CODE 6450-01-C