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Green Power, Red Lights

Environmental activists have yet to meet an energy project they won’t try to stop.

Feb 28, 2011, Vol. 16, No. 23 • By ADAM J. WHITE
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Public participation. Communities are naturally distrustful of corporate projects that threaten to affect their local environments substantially. No regulatory process can retain its legitimacy without providing a meaningful opportunity for affected persons to be heard, and to be taken seriously.

Safety. Energy infrastructure places electricity, nuclear fuel, natural gas, and other hazards close to the workforce and the community. Federal regulators must therefore ensure that a project will be safely constructed, operated, and maintained.

Environmental protection. The myriad environmental protections codified in federal and state law promote a clean environment. The national interest in promoting renewable energy does not require their wholesale dis-regard, but it does require federal lawmakers to ensure that environmental statutes retain their flexibility, instead of becoming inappropriately rigid.

Expertise. Many federal and state agencies and other organizations have expertise to contribute to the regulatory process. The best regulatory framework draws that expertise to the table, where it can be put to its best use, while not allowing every contributing agency an effective veto over the project.

Judicial review. In the modern regulatory state, expert agencies are supervised lightly, but surely, by the courts. Judicial review, conducted under the deferential but firm standards of administrative law, allows the agencies to exercise their expert judgment in light of national priorities yet protects against clear errors of judgment or violations of binding law.

Efficiency. A national effort to promote renewable energy infrastructure—especially one intended to stimulate “green jobs” in the near future—must ensure that the regulatory reviews and subsequent judicial reviews are undertaken as promptly and efficiently as possible. Cape Wind, the embattled Cape Cod offshore wind farm, demonstrated astonishing fortitude in enduring a decade of litigation, environmental reviews, and legislative battles before finally securing its regulatory approvals. That project’s willingness and ability to forge ahead were exceptional, and Congress cannot assume that other projects will be able to endure similar tests of will.

Most important, in constructing a regulatory framework to achieve those ends, Congress need not write on a blank slate. Lessons have been learned from a century’s experience in regulating oil and gas pipelines, liquefied natural gas import facilities, hydropower dams, nuclear facilities, and even the interstate transmission lines and the wind or solar farms that already have been proposed. Applying those lessons, an effective regulatory scheme for major renewable energy projects must include at least the following components:

One decision, one decider. Writing in support of the single presidency in Federalist 70, Alexander Hamilton urged that committing the executive power to a single office would not only secure the benefit of “energy in the Executive,” but also would focus responsibility and ensure accountability. Absent a single decisionmaker, “it often becomes impossible, amidst mutual accusations, to determine on whom the blame or the punishment of a pernicious measure, or series of pernicious measures, ought really to fall. It is shifted from one to another with so much dexterity, and under such plausible appearances, that the public opinion is left in suspense about the real author.”

Such is the case when responsibility for reviewing and approving or disapproving an energy infrastructure project is scattered across numerous federal agencies, or is bifurcated between the federal and state levels. Agencies that lack total jurisdiction over—and responsibility for—a given regulatory issue may avoid hard choices, interject opinions without taking responsibility for their effects, or lack the incentive to develop their own organizational competency for reviewing and processing project applications. Committing to one agency the sole authority over a project would better avoid those ills by focusing clear responsibility on that agency.

Accordingly, if Congress deems large-scale renewable energy projects to be a national priority, then it should commit to one federal agency—Interior, for example, or the Federal Energy Regulatory Commission (FERC)—the power and responsibility to make final decisions to approve or disapprove projects. Just as “the unity of the executive . . . was one of the best of the distinguishing features” of New York’s constitution, according to Federalist 70, the unity of the executive will be the best distinguishing feature of renewable energy regulation.

Of course, the other relevant federal and state agencies must be brought into the process and contribute their expertise: the Army Corps of Engineers and the Department of the Interior on water issues, the EPA on air quality issues, state regulators on matters of local concern, and so on. Furthermore, Congress can require the primary agency to undertake particular types of public involvement and to respond to public comments, to protect local communities’ right to be meaningfully heard. 

Current laws that organize environmental reviews by assigning one agency the role of “lead agency,” with other agencies serving as “consulting” agencies, are good models. Even more effective would be a regulatory framework giving the single lead agency controlling authority over all collateral permits as well—namely, approvals under the Clean Water Act, Coastal Zone Management Act, and other statutes that distribute control of mandatory collateral approvals across multiple state and federal agencies.

Alternatively, Congress might determine that state regulators ought to be allowed the “first bite at the apple,” with federal regulators stepping in only under certain circumstances. That framework might be workable, but only if Congress sharply identifies the precise circumstances in which federal authority controls. 

A cautionary example of that alternative model is the Energy Policy Act of 2005, which assigned to FERC the “backstop” authority to approve or disapprove interstate transmission lines in “national interest corridors” if the state “withheld approval for more than one year” after a project filed its state application. That statute seemed clear enough, until a federal court surprisingly concluded that FERC lacked authority to overturn the state when the state disapproved the project outright within one year. (Specifically, the court concluded that a state that denied a project application within a year had not “withheld approval for more than one year.”) An effective regulatory framework for renewable energy projects would need to speak with utmost clarity as to when the state’s authority ends and the federal authority begins.

Federal preemption of state law. On a related but separate point, dueling federal and state laws often overlap in the regulation of energy infrastructure safety or environmental protection. That overlap leaves the courts with the ultimate task of deciding whether state law can block a project that federal law authorizes. 

Congress often enacts statutes that give federal law preemptive effect, but even clear statutes may give rise to lengthy litigation. The Natural Gas Act’s implied preemption of state law required decades of litigation to establish. The Energy Policy Act of 2005 expressly provided that federal law would trump state law in the approval or disapproval of liquefied natural gas import facilities, but years of litigation still ensued in federal courts to confirm the scope of that preemptive authority. Any federal plan intended to quickly build renewable energy infrastructure must either decide the preemption question clearly and broadly or risk years of delay while the question works its way through the courts.

Balancing energy development and environmental protection. The various environmental statutes regulating energy projects tend to be written in broad terms that, while originally intended to be administered prudently, can be transformed into rigid, imprudent barriers against sound projects. If renewable energy infrastructure development is a federal priority, then Congress should prevent environmental laws from barring projects even when their social benefit far outweighs the minimal social cost. 

One possible solution would be to vest the federal decisionmaker with authority to waive the operation of a federal environmental law in extraordinary circumstances. Such provisions are not novel; Congress included a discretionary waiver of obstructive federal laws in the REAL ID Act’s mandate for the building of a southern border fence, and it has included similar provisions elsewhere. But any waiver would need to be constructed carefully, to limit its application to extraordinary cases.

Expedited judicial review. After surviving years of federal regulatory review, an approved project faces still more years of judicial review, absent a federal statute requiring expedited review. Jurisdiction to hear appeals involving renewable energy projects should be assigned to the federal courts of appeals—bypassing the lower federal district courts—with instructions to expedite those cases. Furthermore, Congress should consider assigning exclusive jurisdiction over such cases to the U.S. Court of Appeals for the D.C. Circuit—a well-respected, comparatively expert body of judges that regularly hears many cases involving energy and environmental regulation.

None of this is to say that the nation must promote clean energy alternatives. The costs of that transition would be immense. But if Congress and the president continue to spend substantial sums in support of utility-scale renewable power projects, then regulatory reform is necessary to ensure that those expenditures amount to more than a full-employment fund for lawyers, activists, and bureaucrats.

Adam J. White is a lawyer in Washington, D.C.

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