DOE Uses the Defense Production Act to Fund the Constitution Pipeline and Two Grid Projects, Up to $242 Million in Two Weeks

The Department of Energy has committed up to $242 million of Defense Production Act money to three energy projects since 5 October: a gas pipeline into New York, a second power line in Alaska and grid upgrades in Virginia. A law passed in 1950 for the Korean War is now paying for permits and power lines.

The biggest award came first. On 5 October DOE offered the Alaska Energy Authority up to $150 million for the Beluga-Healy line, about 223 miles of new transmission between Southcentral and Interior Alaska. Today a single intertie, built in the 1980s, carries power between Anchorage and Fairbanks, and most of the state’s military bases draw on it. The project is priced at $418 million, a preliminary estimate, with the other $268 million to come from non-federal sources. DOE’s release cites the state’s big military installations without naming one.

On 16 October DOE picked a Virginia Energy project with Appalachian Power and Potomac Edison for up to $50 million. It reconductors existing lines and adds dynamic line rating, which DOE says will free about 290 megawatts across Appalachian Power’s Virginia system, one to four years faster than conventional upgrades.

Then on 19 October came the one with the longest history. DOE will put up to $42 million into the Constitution Pipeline, a 125-mile gas line from Pennsylvania to New York, to pay for environmental reviews, engineering, site preparation and the cost of getting regulatory approvals. Later it may also fund related gas infrastructure.

A pipeline New York already stopped once

Constitution has been blocked before. New York refused it a Clean Water Act water quality certificate in 2016, the courts upheld the state, and Williams, which leads the project, let its federal certificate lapse in 2020. Williams revived it in late 2025 and asked the Federal Energy Regulatory Commission to reissue the certificate and to reaffirm that New York had waived its right to decide on the water permit. New York’s Department of Environmental Conservation and Governor Kathy Hochul have opposed that request at FERC. As of June the certificate still hadn’t been reissued.

So the federal government is now paying a private developer to get through a permitting fight with a state. Interior Secretary Doug Burgum, who chairs the National Energy Dominance Council, used DOE’s release to criticise New York’s energy policy. The $42 million leaves New York’s legal position untouched. What it buys is the developer’s case at FERC and in court.

How a defence law became an energy fund

Title III of the Defense Production Act lets the President use purchases, purchase commitments, loans, loan guarantees and grants to expand domestic capacity for national defence. The Pentagon runs most of it. On 20 April 2026 the President signed determinations under Section 303 covering the grid, natural gas, LNG, petroleum, coal and large energy projects, waiving some of the usual Title III preconditions. The two grid awards rest on Presidential Determination 2026-10, which names transmission lines, conductors, substations and protection equipment as essential to national defence. Constitution rests on 2026-12, which covers gas pipelines, processing and storage.

The money is from the 2025 reconciliation law, P.L. 119-21, which DOE calls the Working Families Tax Cut. It appropriated $1 billion for DPA activities in a single line added in the Senate Banking Committee’s part of the bill. These three awards alone take about a quarter of it.

DPA energy spending isn’t new; in 2022 the Biden administration used it for solar panels, heat pumps and grid components. The new part is paying permitting costs for named projects that face state opposition.

DOE’s 13 October grid award to the Tennessee Valley Authority, $250 million across eight states, came from a different programme, Grid Resilience and Innovation Partnerships, and isn’t DPA money.

Who is watching the money

Congress had doubts from the start. In July 2025 Senator John Kennedy, a Republican, tried to strike the $1 billion, describing it as industrial policy run by the government. His amendment failed 42 to 58. Republican Senators Shelley Moore Capito and Cynthia Lummis said they didn’t know what it was for.

Oversight runs through the Senate Banking and House Financial Services committees. Under current law, Section 303 actions above $50 million must be notified to Congress. The House Financial Services Committee voted 41 to 0 in April for H.R. 7688, the DPA Modernization Act, which would raise that threshold to $100 million, cap federal equity stakes below 15% and make each agency with DPA powers file an annual strategy. The House version of the defence authorisation bill would reauthorise the Act through 2031, as covered in our post on the stalled NDAA.

The sharpest legal fight is elsewhere. A Justice Department Office of Legal Counsel opinion of 3 March 2026 says a presidential DPA order can preempt state and local law. California sued on 23 March over a DPA order to restart the Sable oil pipeline near Santa Barbara. No court has accepted that reading yet, and DOE’s Constitution release doesn’t claim to override New York.

The pipeline awards also sit beside DOE’s loan shift toward gas and nuclear, described in our post on the Office of Energy Dominance Financing, and beside the Senate permitting bill that would set a 150-day clock for lawsuits, covered in our post on S. 5653. The aim is the same each time. Fewer places where a state can say no.