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Downwind LLC v. United States Department of Energy

United States District Court, E.D. Arkansas, Jonesboro Division

December 21, 2017

UNITED STATES DEPARTMENT OF ENERGY; RICK PERRY, in his official capacity as Secretary of the United States Department of Energy; SOUTHWESTERN POWER ADMINISTRATE and SCOTT CARPENTER, in his official capacity as Administrator of the Southwestern Power Administration DEFENDANTS PLAINS & EASTERN CLEAN LINE HOLDINGS LLC INTERVENOR


          D.P. Marshall Jr. United States District Judge

         1. Summary.

         A dozen years ago, Congress passed and the President signed the Energy Policy Act of 2005. Public Law 109-58. If you've gotten a rebate for replacing your hot water heater with a more efficient one, or gotten a tax credit for buying a hybrid vehicle, it was thanks to this law. 42 U.S.C. § 15821; 26 U.S.C. § 30B. The statute also addressed electricity and, in particular, modernizing our nation's infrastructure for transmitting electricity - the grid. One provision authorized the United States to use someone else's money to upgrade or expand the grid. 119 Stat. 952, codified at 42 U.S.C. § 16421.[*]A proposed new transmission line prompts this case. It pits some affected landowners against a group of investors and the United States.

         The Clean Line entities propose to build a high-voltage direct-current transmission line to bring wind power east from the Oklahoma and Texas panhandles. The line would be approximately seven hundred miles long. Some of the electricity would be available in Oklahoma and Arkansas. This would happen through converter stations, which would change the current from direct to alternating. Most of the electricity, though, would flow through to a converter station in Tennessee. The dotted line on this map, DOE0063121, shows the proposal.

         (Image Omitted)

         After six years of study - including public notice and public comment, but no adversary proceedings - the Department of Energy decided to participate. Oklahoma and Tennessee, through their respective regulatory bodies, have approved the project. Arkansas has not. Early on, Clean Line sought approval from the Arkansas Public Service Commission, which denied the request without prejudice. DOE0024855A-0001 to 0012. At that point, the proposal didn't include an Arkansas converter station, and all the power was just passing through. The APSC concluded that, in those circumstances, Clean Line wasn't a public utility under Arkansas law. The project evolved. Now there's a converter station planned in Pope County. Although Clean Line will pay for building everything, the United States will own all the facilities in Arkansas and get a small share of the profits from the entire line's capacity. DOE0000183. The plan is for Clean Line to enter into agreements with the Southwest Power Pool, the Midcontinent Independent System Operator, and the Tennessee Valley Authority to coordinate the line's operation. Clean Line, though, will operate and maintain all related facilities. In return for doing all this, Clean Line will own most of the line's capacity and reap what it hopes will be a profit on an approximately $2.5 billion investment.

         Two groups of Arkansas landowners - Downwind and Golden Bridge-filed this case to stop the project. (From now on, when the Court writes Downwind it means both groups.) These landowners make several claims. They say the United States has overreached its statutory authority in two ways: the Arkansas Public Service Commission hasn't approved the project, and it must; plus the statute doesn't authorize the United States to take property for the line by condemnation if a landowner doesn't agree to sell an easement. Next, the landowners say the Department acted arbitrarily and capriciously in deciding to participate in this project. Last, the landowners contend they were due more process -a hearing with trial-like procedures, what would have occurred before the APSC if a state-approved utility had proposed the line. The practical thrust of the landowners' case is that this project is mostly about Clean Line making money and very little about the United States improving the grid. The Court allowed Clean Line to intervene and be heard. The parties agree that one side or the other is entitled to judgment as a matter of law.

         2. Statutory Authority.

         The United States didn't act beyond its statutory power in approving this project. In the circumstances presented, Arkansas doesn't get to decide where the transmission line is located. And the State doesn't have a veto over whether this line gets built.

         Section 1222 authorizes the Department of Energy to build transmission lines with private money. In doing so, it's the Department's responsibility to identify grid needs, develop responsive projects, and decide where to improve existing lines and put new ones. 42 U.S.C. § 16421(a) & (b). That's what happened here. The Department identified a grid shortcoming and, through a deliberative process, designed a new power line to address it. Clean Line's dollars will pay for the line. DOE0000176-84; DOE0000221-30. Nonetheless, as § 1222 contemplates, the project is the United States' sovereign action. The Energy Policy Act envisions and authorizes this way of modernizing our electrical grid. Third-party financing is what § 1222 is all about.

         When the United States acts pursuant to its constitutional powers, a state may not block the action unless Congress has clearly and unambiguously authorized plenary state regulation. Hancock v. Train, 426 U.S. 167, 178-79 (1976). The Supremacy Clause requires nothing less. M'CuZZocfrz;. Mary/and, 17 U.S. 316, 426-27 (1819). These principles are common ground among all the parties. Downwind contends, though, that § 1222 requires the Department to get state regulatory approval to build this new line. That requirement would give Arkansas a de facto veto over whether this transmission line gets built. But there is no waiver of federal supremacy here. This statute doesn't make unambiguously clear that the federal government, which is usually exempt from state control, is subject to that control when building electrical lines paid for by third parties.

         Downwind argues that § 1222(d)'s "[relationship to other laws" provision contains the needed waiver. The statute says that "[n]othing in this section affects any requirement of . . . any Federal or State law relating to the siting of energy facilities[.]" Downwind underlines the repeated "any/7 It shows, the landowners continue, Congress7 intention to give state regulators the last word on siting, the definitive say which states have long had for most transmission lines. But that word isn't enough. State control doesn't arise by implication. Hancock, 426 U.S. at 180-81. And the Court of Appeals has concluded, in strikingly similar circumstances, that even specific language "requiring] compliance with [s]tate standards" doesn't mean the Department must "obtain a state siting certificate" for a new line. Citizens & Landowners Against the Miles City/New Underwood Powerline v. Secretary, United States Department of Energy, 683 F.2d 1171, 1179 (8th Cir. 1982). Just as South Dakota regulators did not have the final say over the route of the federal transmission line between Miles City, Montana and New Underwood, South Dakota, Arkansas regulators do not have that power over this line.

         Plus, there's a better reading of § 1222(d). It preserves the regulatory status quo. The Energy Policy Act doesn't disturb current law; the Department can't preempt-and energy actors can't ignore - the many existing state regulations about transmission lines and facilities. Nowhere in the status quo, however, is federal action about those lines and facilities subject to state approval. Miles City, 683 F.2d at 1181. Section 1222 doesn't change that. In fact, the statute makes clear, by authorizing the Department to build interstate transmission lines with the help of non-federal funding, that the federal government can take on a larger role in electrical transmission.

         3. Condemnation.

         Whether the Energy Policy Act authorizes the United States to acquire needed easements by condemnation is a vexed question. There's a tension in the government's arguments here. On the one hand, to forestall a decision on the deep issue, the government deploys just about every justiciability doctrine known to our law- standing, exhaustion, ripeness. The Department argues several points hard: the landowners haven't really been injured yet; it's uncertain whether any property will actually be condemned; and the landowners can assert the United States7 lack of statutory authority to condemn later in any condemnation action that may occur. On the other hand, the government says the power to condemn is essential to this project, necessarily implied in § 1222's grant of authority to develop and own transmission lines and facilities.

         Notwithstanding the tension between these arguments, the government's embedded concern about an advisory opinion is solid. This Court may not decide a dispute that isn't ripe. An available alternative remedy usually signals a premature claim. This is true in general, National Park Hospitality Association v. Department of the Interior, 538 U.S. 803, 807-08 (2003), and for an Administrative Procedure Act claim in particular. 5 U.S.C. § 704. Here, there is an alternative remedy. Any landowner who doesn't convey an easement will have the opportunity to contest any resulting condemnation. United States v. Herring, 750 F.2d 669, 674 (8th Cir. 1984). The landowner will be free to argue then against statutory authorization, public necessity, and public use. Ibid. That opportunity makes any decision about condemnation now advisory. The parties' cases make this point from another direction. Every one of these precedents is a condemnation action. E.g., Albert Hanson Lumber Company v. United States, 261 U.S. 581 (1923); Barnidge v. United States, 101 F.2d 295 (8th Cir. 1939); Poison Logging Company v. United States, 160 F.2d 712 (9th Cir. 1947); United States v. 14.02 Acres of Land More or Less in Fresno County, 547 F.3d 943 (9th Cir. 2008). The landowners will have their day in court on these issues if and when the injury - having their property taken-has actually occurred.

         Neither Downwind's reliance on the Supreme Court's recent Hawkes decision nor its eloquent invocation of all the uncertainties now facing the landowners changes the analysis. The Department's decision to participate in the Clean Line project lacks the jurisdictional immediacy of the "your property is a wetland" determination in United States Army Corps of Engineers v. Hawkes Company, 136 S.Ct. 1807 (2016). That determination affected a particular landowner's legal rights instantly; it changed the applicable law. 136 S.Ct. at 1811-13. Here, the Department's decision raises the prospect of eminent domain later. This surely casts a shadow. As frustrating as that shadow is, uncertainty isn't injury-in-fact. Friends of the Earth, Inc. v. Laidlaw Environmental Services (IOC), Inc., 528 U.S. 167, 180-81 (2000). The law requires concrete injury, actual or imminent. Ibid. While the landowners have a strong imminence argument that condemnation of some parcels in the several-hundred-mile path across Arkansas is a near certainty, it's unclear at this point exactly which parcel or parcels might be taken. As far as the Court can see, for example, no Downwind or Golden Bridge member has filed an "I'll never sell" affidavit. No. 63-1; No. 73-1; No. 73-2. And it is clear, on the other hand, that any landowner who wants to challenge the United States' statutory authority to condemn property for this particular transmission line can do so later.

         4. Administrative Procedures.

         The Department of Energy acted reasonably and carefully, not arbitrarily and capriciously, in deciding to participate in this project. The law asks "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Manufacturers Association of the United States, Inc. v. State Farm Mutual Automobile Insurance Company, 463 U.S. 29, 43 (1983); see also Lion Oil Company v. Environmental Protection Agency, 792 F.3d 978, 982 (8th Cir. 2015). The Department didn't fall foul along any of these lines.

         Statutory Criteria.

         Congress prescribed five criteria for evaluating § 1222 projects.

• Necessity - the project must be needed to accommodate actual or projected demand for electric transmission capacity;
• Consistency - the project must be consistent with transmission needs identified by an appropriate entity, as well as with ...

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