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Elena P. Vekilov VEKILOV.DOCX (DO NOT DELETE) 3/29/2013 2:23 PM IF IT’S BROKE, FIX IT: FEDERAL REGULATION OF ELECTRICAL INTERSTATE TRANSMISSION LINES * ELENA P. VEKILOV The current electrical transmission line regulatory system is bro- ken, preventing the nation from expanding the electricity grid to keep up with growing energy consumption. The current regulatory scheme reserves to the states siting authority over where new lines are con- structed, which often hinders project development because interstate lines are not seen as good for the state’s own citizens. Natural gas does not suffer the same infirmity, because it has been under federal control since the Natural Gas Act of 1938. This Note traces the histo- ry of the regulation of the two energy delivery systems—beginning with local control over local utilities early in their development—to today’s complex interstate systems. Then this Note analyzes three possible regulatory approaches: (1) state control; (2) an intermediate solution that retains state power to regulate line siting from each state’s internal energy sources to its internal load centers, but allocates to the federal government the power to construct interstate lines from plentiful energy sources to distant load centers; and (3) a federal sys- tem mirroring the system for siting natural gas pipelines. Finally, this Note concludes that only a federal regulatory system modeled on the natural gas pipeline regulations is adequate to keep up with growing energy demand. I. INTRODUCTION The Commerce Clause of the U.S. Constitution grants the federal government the power to regulate commerce among the States, while the Tenth Amendment reserves to the individual states all powers not specif- ically delegated to the federal government or prohibited to the states by the Constitution.1 Thus, the federal government has the authority to regulate interstate commerce, while state governments have the authori- * J.D. Candidate 2013, University of Illinois College of Law; B.A. 2010, University of Texas at Austin. Special thanks to Clean Line Energy Partners for the inspiration for this note and their assis- tance in finding a great topic; James Liu for his helpful edits; and the University of Illinois Law Review editors, members, and staff for their hard work. Finally, I would like to thank my family and my won- derful fiancé, Matt Kamps, for their love and support in all that I do. Please contact me with any ques- tions or comments at [email protected]. 1. U.S. CONST. art. I, § 8, cl. 3; U.S. CONST. amend. X; see also Judith M. Matlock, Federal Oil and Gas Pipeline Regulation: An Overview (Rocky Mtn. Min. L. Inst. Paper No.4, Feb. 23, 2011). 695 VEKILOV.DOCX (DO NOT DELETE) 3/29/2013 2:23 PM 696 UNIVERSITY OF ILLINOIS LAW REVIEW [Vol. 2013 ty to regulate intrastate commerce. In 1938, Congress exercised its Commerce Clause authority to regulate interstate natural gas pipelines by passing the Natural Gas Act (the NGA).2 Congress, however, has yet to assert similar authority to regulate interstate electrical transmission lines. For example, the Federal Energy Regulatory Commission (FERC) has had sole siting authority over natural gas pipelines since the begin- ning of the twentieth century,3 but it does not have similar siting authori- ty over electrical transmission lines. United States energy consumption continues to increase, reliance on energy sources that are distant from where the energy is desperately needed mandates that the electrical transmission grid is expanded and interconnected. The current regulatory scheme reserves to the states sit- ing authority over electrical transmission line construction, which is often used to squander project development resources because development is seen as not being used for the good of that state’s citizens.4 Consequent- ly, interstate lines are barred from extending a source’s energy to distant consumer needs. This system cannot continue to support the nation’s people, and a solution employing federal regulation of siting transmission lines, similar to the federal regulatory system that built up the interstate natural gas pipeline system, must be implemented. The Federal Energy Regulatory Commission’s (FERC’s) most recent Order 1000, mandating states to consider regional impacts of transmission lines in their siting evaluations, reflects the maximum extension of FERC’s reach under cur- rent legislative authorization. It is now left to Congress to mirror the NGA’s authorization of FERC and implement a federally regulated transmission line system that considers the welfare of the entire nation in determining the need for an electrical line. Part II presents an overview of electrical transmission in the United States and the history of its electrical system. The history of electrical transmission regulation is reviewed, as is the current state-governed regulation scheme. An overview of natural gas pipelines in the United States is then presented, including the history of the natural gas pipeline system. The history of gas pipeline regulations follows, as well as a de- scription of the current federally regulated scheme and the security that interstate pipelines provide for energy supplies. Part III considers three regulatory approaches that may be used to address the growing energy crisis. First, the current, state-regulated sys- tem is described. The independent nature of each state’s regulations is discussed, and the discussion demonstrates how these regulations work to effectively restrict electrical development. Second, an intermediate 2. Natural Gas Act of 1938, Pub. L. No. 75-688, 52 Stat. 821 (codified as amended at 15 U.S.C. § 717 (2006)). 3. Section 7(c) of the NGA provides that natural gas companies must obtain a certificate of convenience and necessity before constructing facilities. 15 U.S.C. § 717f(c). 4. See infra Part II.A.3. VEKILOV.DOCX (DO NOT DELETE) 3/29/2013 2:23 PM No. 2] INTERSTATE TRANSMISSION LINE REGULATION 697 solution is presented that retains state powers to regulate line siting from each state’s internal energy sources to its internal load centers, but allo- cates to the federal government the power to construct interstate lines from plentiful sources to distant load centers. Finally, a federally regu- lated system is presented as a third possible solution. Part IV recom- mends a solution mirroring natural gas pipeline regulations and explains why this is the best solution for electrical transmission lines. II. BACKGROUND This Part outlines the history of the electrical transmission line sys- tem in the United States and then describes the progression of the devel- opment of the regulatory structure surrounding the electrical transmis- sion line industry. The development of the natural gas pipeline system is then laid out, followed by a history of the natural gas pipeline regulatory scheme. A. Electrical Transmission Lines in the United States This Section lays out the development of the electrical transmission line system in the United States, beginning first with the history of elec- trical transmission, and then outlining the development of the regulatory structure surrounding electrical transmission siting. Finally, the current electrical transmission line regulatory siting scheme is presented. 1. History of Electrical Transmission This Subsection describes the history of the electrical transmission line system, starting with the invention of the electrical distribution sys- tem centered on localized generation, and then detailing the develop- ment of extensive transmission systems able to span great distances to carry power from energy sources to wherever the electricity is needed by consumers. a. Development of the United States’ Electrical Transmission System The U.S. electric industry began in the 1880s, when inventors began to harness electricity by putting small generators next to the machines that used the electricity.5 The earliest distribution system arose in con- junction with Thomas Edison’s Pearl Street electricity generating station 5. MATTHEW H. BROWN & RICHARD P. SEDANO, NAT’L COUNCIL ON ELEC. POLICY, ELECTRICITY TRANSMISSION: A PRIMER 2 (2004), available at http://energy.gov/sites/prod/files/oeprod/ DocumentsandMedia/primer.pdf. VEKILOV.DOCX (DO NOT DELETE) 3/29/2013 2:23 PM 698 UNIVERSITY OF ILLINOIS LAW REVIEW [Vol. 2013 in Manhattan, which opened September 4, 1882.6 This first system dis- tributed power over copper lines using direct current, a highly inefficient method of transmitting electricity because of the inability to increase the voltage for long-distance transmission.7 This required placing the power plant within a mile of the final user of the energy, called the “load.”8 At the time, however, Pearl Street Station was idolized as “a model of effi- ciency,” serving fifty-nine customers from one generation unit.9 As other power stations appeared, they all took on the same distribution structure of power generators located close to the machines they powered, and consequentially the stations were limited to each only serving a few city blocks’ worth of load.10 Thus, “the electric power industry was composed of largely self-sufficient utilities with their own generation, transmission, and distribution facilities. Because electric energy could not yet be transmitted efficiently over long distances, local utilities were not linked into large, centralized systems,” and each population center had its own local supply of electricity to meet its energy needs.11 b. Transmission Lines Developed to Expand Reach By the 1890s, this localized system
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