2021 Year End Round Up: What is in the Infrastructure Investment and Jobs Act?

At the end of the year, Arnold & Porter is doing a series of blog posts focused on some of the key environmental and energy provisions in the Infrastructure Investment and Jobs Act.

The Infrastructure Investment and Jobs Act—Transmission Lines

The current US electric grid largely was not designed with the demands of renewable energy and smart grid technology in mind. Wind and solar power generation, for example, may be quite remote from populated areas, and must be moved from the point of generation to the point of delivery to a customer. Transmission lines will be critical to a transition to less carbon intensive economy. According to a Princeton University analysis, American transmission capacity needs are expected to grow by about 60% by 2030 to get close to net-zero emissions by 2050.

Building transmission lines in the United States is challenging. To help with this issue, the recently-passed Infrastructure Investment and Jobs Act (IIJA) seeks to update and enhance the electric grid to cope with decarbonization and electrification efforts. The IIJA changes the energy transmission landscape in two primary ways: firstly, through massive investments in new transmission infrastructure and technology, and secondly, by enhancing the DOE’s regulatory authority in building new transmission lines.

Of the roughly $550 billion in new spending over the next five years, approximately $73 billion funds energy transmission infrastructure and grid automation. This spending includes:

• $5 billion in grants for electricity transmission, storage, and distribution projects, with another $1 billion specifically for projects in rural areas;
• $3 billion in grants for deploying smart grid technologies;
• $2.5 billion for a “revolving loan fund,” allowing the DOE to serve as an anchor tenant for new and updated transmission lines to improve the financial viability of such projects;
• $500 million for a state-level transmission and distribution infrastructure program.

Besides significant infrastructure spending, the IIJA attempts to ease the process of building transmission lines by expanding the US Department of Energy’s (DOE) regulatory authority regarding energy transmission. While DOE previously could designate “National Interest Electric Transmission Corridors” for rapid development and permitting for new transmission projects, the IIJA made changes to make the existing law more expansive, including allowing the Federal Energy Regulatory Commission, which processes applications in designated corridors, to move forward when a state denies a permit and not only when it fails to act on a timely basis to grant a permit energy corridors.

Notably, FERC was granted this expanded regulatory authority the same week in which Maine voters rejected a new transmission line in a referendum. The transmission line, which is already under construction, would provide up to 1,200 megawatts of Canadian hydropower from Quebec to New England. Supporters of the transmission line emphasized that the transmission line would bring renewable, carbon-free energy to New England and help reach climate goals.

*Lucas Gorak contributed to this blog post. 

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.