Congress Eyes Expanded FERC Authority Over Transmission Planning and Permitting

By Ryan J. Regula and Sukhmani K. Singh

On September 30, 2026, Senators Capito, Lee, Whitehouse, and Heinrich introduced the Bipartisan American Affordability and Jobs Act of 2026 (S. 5653) (the “Act”), a bipartisan permitting reform bill now before the Senate Committee on Energy and Natural Resources. Its transmission title would give the Federal Energy Regulatory Commission (“FERC” or the Commission) a new, state-triggered enforcement role over local transmission planning, broaden FERC’s backstop siting authority, mandate regional and interregional planning, ban federal rights of first refusal for certain projects, and add new ratepayer protections, including for data centers.

The practical message is clear: Transmission planning is no longer only a matter between a utility and its state commission. If enacted, the Act would put utility planning judgments within reach of federal enforcement, while giving developers new tools to build interstate lines. Affected parties should begin assessing its effects now.

Why It Matters

The Act is proposed legislation. It does not change current law, and it may be amended. But this is not a messaging bill. Its bipartisan sponsorship and firm deadlines make it worth watching. Measured from enactment, FERC would have 180 days to issue a regional planning rule, 270 days to revise transmission pricing for computational loads, one year for state-referral and advanced-technology rules, and 18 months for a consolidated interconnection and planning rule. If the bill passes, obligations would follow quickly.

A New Federal Check on Local Transmission Planning

Section 2104 would add a new Section 226 to the Federal Power Act (FPA), allowing one or more states to refer a public utility to FERC for investigation of how it plans and develops “local transmission facilities,” meaning facilities located entirely within one utility’s service territory and paid for entirely by its customers. A referral would describe the challenged processes, the resulting harm to customers, and the state’s prior efforts to resolve its concerns. FERC would then notice the investigation and certify a team of FERC enforcement staff and up to three state appointees, with the investigative powers available under FPA Section 222.

If the team concludes that the utility’s processes “are not resulting in the selection of the more efficient or cost-effective local transmission facilities,” or are interfering with regional planning, FERC could, after notice and comment, (1) require process changes; (2) reduce the utility’s return on equity for local facilities; (3) eliminate the presumption of prudence for those facilities; (4) impose a fine, payable to the referring state, of up to $5 million per facility developed or energized from 60 days before the referral through FERC’s order, if the facility was imprudent and harmed customers; or (5) order any other appropriate remedy.

This is a meaningful departure from traditional FERC enforcement, which targets violations of established rules and tariffs — not the wisdom of planning choices. Losing the presumption of prudence would shift the burden to utilities to justify their spending, and because the fine reaches back before the referral, a utility may have little room to change course once a state signals concern. The framework also leaves open questions that will likely be contested. The bill does not define what makes a facility “more efficient or cost-effective,” and the referring state would both initiate the investigation and appoint up to three members of the team conducting it. Utilities can be expected to raise neutrality and due-process concerns, though the requirement of a state referral does preserve a gatekeeping role for state regulators.

Broader Federal Authority Over Transmission Siting

Section 2101 would rewrite FPA Section 216, FERC’s “backstop” siting authority, by removing its link to Department of Energy National Interest Electric Transmission Corridors. FERC would instead issue permits for lines “necessary in the national interest” after at least 45 days of public comment, so long as a threshold condition is met, such as a state withholding approval beyond the statutory period, and the project serves interstate commerce, benefits consumers, improves reliability, and is in the public interest.

Eligible lines generally would operate at 230 kilovolts (kV) or more, with other thresholds possible for advanced conductors. For lines of 345 kV or more, federal and state reviews would run simultaneously. FERC would serve as lead agency for federal authorizations, related permitting decisions would be reviewed in the courts that review FERC orders, and customers receiving no or only trivial benefits could not be involuntarily allocated costs. The provision would not apply within the Electric Reliability Council of Texas (ERCOT).

New Mandates for Regional and Interregional Planning

Section 2103 would require FERC to direct each transmission planning region to adopt a regional planning process, and neighboring regions to adopt joint interregional processes, using common assumptions, benefits, and selection criteria. Regions would file within two years and update every four. Notably, compliance with FERC planning orders in effect at enactment would satisfy the regional requirements — a safe harbor that may blunt the mandate’s practical effect for regions already in compliance. Projects selected in a plan would also be deemed to meet most Section 216 permitting findings. The Act would further prohibit federal rights of first refusal for projects selected for regional or interregional cost allocation (Section 2105) and require a consolidated 20-year interconnection and transmission planning process with fixed zonal interconnection costs and penalties to deter speculative projects (Section 2106).

Ratepayer Protections and Other Notable Provisions

Section 2107 would require transmission service for data centers and other computational loads to be priced at both embedded and incremental cost, with a lower rate for non-firm service. A new FPA Section 228 would bar shifting the incremental cost of serving loads of 20 megawatts or more to other customers, require financial assurances before utilities build to serve them, and confirm state authority to charge them above-cost rates and require them to secure new generation. Previously approved arrangements would remain in effect.

The Act would also require public utilities to deploy cost-effective advanced transmission technologies, with penalties for failing to do so (Section 2109); require faster grid data sharing (Section 2111); and exempt reconductoring and similar work in existing rights-of-way from National Environmental Policy Act review (Section 2102). It would grant FERC no authority over retail sales or local distribution.

Who Could Be Affected

Investor-owned utilities with significant local transmission spending face the most direct exposure. Independent developers could benefit from the ban on rights of first refusal and broader backstop siting. Planning regions would face new filing deadlines, large-load customers would bear more of their service costs, and state commissions would gain a new referral tool. State and municipal utilities and smaller cooperatives would be exempt from the planning mandates unless they opt in, and ERCOT is excluded.

What Companies Should Consider Doing Now

Utilities should inventory local transmission projects and confirm that each planning record documents alternatives, regional coordination, and the basis for selection, because the fine can reach projects energized before a referral. Developers should assess whether projects of 230 kV or more could qualify for federal permitting. Large-load customers and their utilities should review service and financing agreements for cost-responsibility and financial-security terms. All stakeholders should track committee action and consider engaging while the text remains open.

The Bottom Line

The Act would pair faster federal permitting and mandatory regional planning with a new federal check on local utility planning and stronger ratepayer protections. That combination would shift the question from whether a utility followed the rules to whether its planning choices were the right ones — and would let states ask FERC to answer it. The bill remains proposed legislation, but its bipartisan support and tight deadlines mean obligations could arrive quickly. Companies that treat it as a present planning issue may be better positioned to manage risk, protect cost recovery, and capture new opportunities.

***Opinions expressed are those of the authors and not necessarily the firm’s or their colleagues’.