The U.S. Supreme Court refused Tuesday to review a ruling that blocked federal regulators from expanding their authority over the location and construction of high-voltage power lines, dealing a blow to the utility industry that favors federal oversight.

The industry sees an overwhelming need to upgrade the nation's aging electric grid and expand the network to access wind and other renewable sources of generation in rural areas. The traditional obstacle to transmission projects is local opposition, since residents often don't reap benefits from the new lines running through their communities.

Energy legislation passed in 2005 appeared to give the Federal Energy Regulatory Commission new powers over the siting of lines in places such as California and the Mid-Atlantic region where the grid faces congestion problems. But in a February 2009 ruling the 4th U.S. Circuit Court of Appeals rejected FERC's interpretation after states and community groups protested. The Richmond, Va.-based appeals court ruled FERC could not step in and approve a transmission project a state had rejected.

Opponents of broadening federal powers argued that states, which historically have sited transmission lines, are in a better position to make those decisions. Supporters of increasing FERC's authority say the federal government should have a greater role in determining where lines go for a variety of reasons, including energy security and a national effort to expand renewable generation.

Although stating the appeals court erred in its ruling, FERC did not support the Supreme Court taking up the case. The request for high court review was led by the Edison Electric Institute, which is the major trading group for utility companies.

The Supreme Court let the 4th Circuit ruling stand without comment.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall@dowjones.com

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