Energy and Environmental Law

40 Pages·2017·5.69 MB·English

University of Richmond
UR Scholarship Repository
Law Faculty Publications School of Law
2013
Energy and Environmental Law
Joel B. Eisen
University of Richmond, [email protected]
Follow this and additional works at:http://scholarship.richmond.edu/law-faculty-publications
Part of theEnergy and Utilities Law Commons, and theEnvironmental Law Commons
Recommended Citation
Joel B. Eisen,Energy and EnvironmentalLaw, in Perspectives on American Law (Peking University Press, 2013).
This Book Chapter is brought to you for free and open access by the School of Law at UR Scholarship Repository. It has been accepted for inclusion in
Law Faculty Publications by an authorized administrator of UR Scholarship Repository. For more information, please contact
[email protected].
-
~ i. ~ Jtli:'f±
PEKING UNIVERSITY PRESS
~ 00 ~ ~ 00 00 :XJJl = Perspectives on American Law ( ~ X Jt1Z ) I ( ~ ) ft · ~ 1,~
(Guttman, Dan), (~)ti}ff>][::fE; (Shive, Glenn), (~)£"1~· pg;j:~}J\(Nagle,John)
£~. -::ft;it: ::ftJit:7c¥1±\JtJZ1±, 2013.l
............................................
C *>1U) Preface
ij;·ti:~OO
I.
ISBN 978-7-301-21788-7
General Introduction · · · · · · · · · · · · · · · · · ·
I. CD~··· II. CD~···®][··· ®11'J··· m.CD~~-~Jtt£-~OO-~x Translating Between China and Ame1
IV .CDD971.2
II. Lawyers and the Law in America··
1 Law and Lawyers in the U.S.: The•
2 American Publi.c Interest Law · · · · ·
3 An Overview of Cli.nical Legal Edu
III. The Court System and the
4 Constraining Judicial Discretion: Tl
5 The American Jury System and the
=11 ~: ~OO)t~WWxJi'. =Perspectives on American Law(~)(#.&)
6 Expert and Scientific Evidence · · · ·
~ftJ!f 1±~: [~J:R-· i!ii(Guttman, Dan) [~Jfilrffi· J[jt (Shive, Glenn)
C~WJ~· P'li'4:r4\(Nagle,John) ±~ 7 Civil Litigation in the U.S. ·· · · · ·· · ·
Jlf 1± ~ ~: _:E ft}f :XtJ 5i 8 Judicial Supervision in the U.S. · · ·
t°F ffE ~ % : ISBN 978-7-301-21788-7/H·3200
tl:J If& '!X 1T: :ltJ?::k~tl:llf&*± IV. Private and Public in American L:
±fil hl: :ltJ?:m;¥itt!EIRmJ&~205% 100811 9 New Technologies and Regulatory
IXXJ :f1l:: http://www.pup.~n ¥,/f¥~'§j[{~tf: @:ltJ?::k~tl:llf&*± Opportunity for Copyright and Tr<
Jt!. T 11'f 5ff'i: [email protected]
10 Energy and Environmental Law
iti, i:l!i = m~Jl!kJW 62152015 '!X1TW 62150612
11 Using Environmental Law········
~~$ 62754143 tl:J#&$62754962
f/J ,ffitl ~: M:lt1*!!-ii:~4H!Jf/Jhtltll 12 Eminent Domain: The Two Edgt
g,_ f~ ~: ¥,If$~$ Property Law · · · · · · · · · · · · · · .. · · · · · · ·
650~*x980~* 16;zjs:: 20.25 fP5iE 280'f'¥
13 Labor Law in the U.S. . ......... .
2013 ~ l JJ ~ 1 If& 2013 ~ 1 JJ ~ l Jkf/J,ffitl
fir: 38.00J'G 14 Labor & Employment Dispute R1
15 American Criminal Justice Systerr
*~2i/fP f , ::f1 ~ L2A 1f1PJ::tr:rt!'L )jjtl !!X;tJ;~;zjs:: ~ ~ $71-1!X: ~pg!@:
0 V. Tools fo:r Research in l
Jl!ittJiJT::tf .-iitt&Hl *11iE!!iili: 010-62752024
16 A Brieflntroduction to U.S. Leg:
Ef!-=fffi~: [email protected]
me transferred to the complainant
p l. or can l
pane is not legally binding on th .ce
rmal d. d. . e Parties·
. court a ~u icat10n of the di spute b , .
ts m a decision that is not sub ' Ut
Th sequent]
e UDRP has one added d y This chapter covers energy law, which focuses on the production, distribution,
a vantage th
o ~ court of mutual jurisdiction located e ~onservation, and development of energy resources. State and federal energy laws
egistrar (provided the d omam. -name hold at and regulations are desigiied to keep prices to consumers down (particularly in
eement to that jurisdiction co er c.ertain energy industries which state and federal governments monitor to keep
. . ii r court
smg from the use of the d . J)larkets as competitive as possible) and to address economic, environmental, and
omam name)
0
shown for the registration of the d . r national security issues.
h . Omain
e time the complaint is submitted " A Energy sources consist of two groups: nonrenewable (sources used and
t least a subset of court' f ... t depleted over time) and renewable (sources replenished in a short period of time)~
s o competent
Today, the United States gets most of its energy from nonrenewable energy sources,
which include fossil fuels-oil, natural gas, and coal. Renewable energy sources
mclude solar energy, which comes from the sun and can be turned into electricity
public policy choices and goals th l and heat, wind, geothermal energy from inside the earth, biomass from plants, and
. . ' e aw
pnnnples sufficiently general and b hydropower and ocean energy from water. Electricity generation and transportation
th bli · ro ust
.e pu c policy concerns motivating the account for a large share of the primary energy consumption in the U.S. The fuel
atlon. There is story, probably apocryphal mix is different for these two end uses: coal, natural gas, and nuclear power make
logy (MIT), famous American scho l f, up the majority of electricity generation, while gasoline and other petroleum
d . 0 0
d oes not unmediately install sidewalks- products continue to power most transportation uses. The subject of energy law
own the g~ass, and only then following focuses on laws and regulations affecting all of these energy resources and end uses.
d staff does mstall sidewalks G It is an exciting time to study energy law in the U.S .. Rapidly fluctuating oil
· ovemment
ould follow the "MIT" mo d e1. Modem prices have focused public attention on American dependence on imported oil and
crafted to first do no harm R u1 techniques for curbing consumption of petroleum. V!ith competition increasingly
. · eg ators
e disorder in the marketplace d taking the place of government laws and policies in many energy sectors, the state
h , an not
t at markets .a nd private ordering of the and federal regulatory environment for the electricity, natural gas, and other
he law provides an optimal solution. By industries is changing rapidly. In recent years, the intersection between environmental
a .new technology are known and it is and energy law has attracted increased attention, as the climate change debate has
gislatures may avoid ineffic1.ent brought a national discussion of changing the energy sources used to generate
. . over- or
tlon nsks destroying the benefits f th electricity and power transportation and curbing our wasteful energy habits. Since
h · o e
e mventors of the technology . 1973, the average amount of electricity each American uses has tripled, so there are
bl may not
pro em and may even exacerbate the many opportunities to improve the efficiency of the system and reduce energy use.
any corresponding public benefit. Often However, there is no 'one solution to U.S. energy issues, and most policymakers
ustry .regulate itself under the threat of (including President Obama) call for a sustained effort on a variety of fronts to
ere .i s . no 0 ne s1· mp l e soluti. on to the diversify our energy sources and to improve our existing system's performance.
e existmg intellectual property r .
. . egime,
ns1stently either maximize the b fi A. What Is Energy Law?
. · ene ts
nologies. Laws and regulations involving the production and distribution of energy
1 University of Richmond School of Law, Richmond, VA, USA, [email protected].
10
resources have e:icisted for well over one hundred years in the U.S.. Until the 1970s
petroleum and called for "energy independe1
these laws focused on economic regulation. The dmninant model of energy law wa;
of its petroleum from abroad than it did in ·
~egulation of industries made up of companies that served a public
energy at home to meet domestic needs is fi:
mterest, such as electric and gas companies. The central question during this time
Arab oil embargo.
was whether companies that produced and distributed energy . resources should
Since the 1970s, there have been nun
operate with government oversight to ensure that they served the public interest, or
changed this outcome. However, in much
whether they should be allowed to operate in an unregulated market.
relatively low and supplies plentiful, so deve
Economists believed that some regulation of public utilities was necessary
because most energy industries can have natural where a single back seat to other concerns. This in turn It
laws enacted. Unfortunately, good proposals
company can exploit the energy resource at a lower average cost than two or more
result is that ideas that might lead to a compr,
companies. There is a substantial body of literature on the economic case for
"ignored, missed or deliberately blocked,
regulating natural monopolies. Public utility regulation took place mostly at the
veterans of the oil and automobile industries.'
state level, where administrative agencies known as commissions
An example of the U.S.' lack of corr
(PUCs) regulated energy companies' rates and services. Regulation was designed to
legislation to increase fuel economy standan
guard against monopolistic abuses.
"C orporate Av erage Fuel Economy, "o"r C
A second historical component of U.S. energy law is natural resources laws
standards were proposed throughout the 199
that govern the granting and regulation of rights to produce minerals and other
Congress. A recent amendment finally passe<
mtural resources in the U.S. and abroad. For example, a web of state and federal
through the year 2020 to 35 miles per gallon
laws governs the structure of leases for the extraction of oil and gas. The laws
2009 increasing these numbers still further, 1
relating to production of individual energy resources are often the subjects of
economy of the U.S. fleet well behind its c
focused study in the law school curriculum. A school may offer a course in Oil and
Another example is that laws to encourag
Gas Law, or one in Mining Law, for example.
vehicles, have not been widely adopted. At
Beginning in the 1970s, three major trends broadened modem
drivers continue to rely on gasoline-power
beyond its narrower base in public utility and natural resources laws.
efficient than they were in 1985.
U.S. oil prices have at times exceeded$
1. Supply and Demand Fluctuations, and Clamor for an "Energy Policy"
much as $4 per gallon. Although Americans
In 1972, Americans paid an average price of $0.36 for a gallon of regular
high gas costs are still a shock to many
gasoline. This changed virtually overnight with the Arab oil embargo of 1973,
which caused shortages and higher prices at the pump. Another supply shortage ill vehicles. The higher prices of petroleum 1
surprise given that, since the 1970s, there ha
1979 caused further economic hardship in the U.S. As a result of these events,
adverse consequences of Americans' overco
Americans demanded a national "energy policy." The 1970s saw the Department
once again attracting popular attention, tht
of Energy' s creation and the enactment of several major energy laws, but
what to do. Should there be increased ofl
comprehensive laws or energy policy emerged.
ecologically sensitive Arctic National W
This discussion also set a tone for decades to come. Popular attention to
development of alternatives to gasoline-pm)\
need for energy laws tends to increase and decrease cyclically in direct relationshif
construction of public transit, higher fuel eco1
to public perceptions about energy supplies and prices. When prices are high
of the above? Americans continue to disagre
shortages exist, there is a public clamor to do something, and the result is often
law tailored to U.S. needs in the short term. On the whole, energy laws and.,. predicting the ultimate national response to r
tricky at best.
policies have failed to meet many goals first articulated in the 1970s, most notably'
that of reducing Jl.unerican dependence on foreign oil. For the past several decades,
environmentalists, governmental officials, public interest organizations, and politi .
from both political parties have cautioned against America' s increasing appetite 1 ~e~son D. Schwartz, Asleep at the Spigot, N.Y. TIMES, Ji
Ytimes.com/2008/07 /06/business/06oil.html).
10
n~ hundred years in the U.S .. Until the 197
etroleum and called for "energy independence." The United States imports more
at10n. The dommant model of energy law
bfits petroleum from abroad than it did in 1970, so the goal of producing enough
m~de up of companies that served a pu
at home to meet domestic needs is further off than it was at the time of the
pames. The central question during this ti
ced and distributed energy resources sho oil embargo.
Since the 1970s, there have been numerous proposals that might well have
ensure that they served the public int
er est
erate in an unregulated market. ' changed this outcome. However, in much of the 1980s and 1990s, prices were
regulation of public utilities was n relatively low and supplies plentiful, so developing a national energy policy took a
ecessa
have natural where . back seat to other concerns. This in tum led to difficulties in getting appropriate
a Single.
rce at a lower average cost than two laws enacted. Unfortunately, good proposals also met fierce political resistance. The
r . or more
dy 01 literature on the econorn;c result is that ideas that might lead to a comprehensive energy policy have often been
case
· u.u
"ignored, missed or deliberately blocked, according to analysts, politicians and
utility regulation took place mostly at
ncies known as veterans of the oil and automobile industries. m
An example of the U.S.' lack of comprehensive energy laws is the fate of
ates and services. Regulation was designed
legislation to increase fuel economy standards for the automotive fleet (known as
"Corporate Average Fuel Economy," or "CAFE" standards). Bills to increase these
of U.S. energy law is natural resources 1
r . aws
standards were proposed throughout the 1990s, but each failed to advance through
on o1 nghts to produce minerals and other
Congress. A recent amendment finally passed and increased the standards gradually
ad. For example, a web of state and federal
or the extraction of oil and gas Th l through the year 2020 to 35 miles per gallon. Two federal agencies issued a rule in
· e aws
2009 increasing these numbers still further, but this gain would still leave the fuel
energy resources are often the subjects of
economy of the U.S. fleet well behind its counterparts in Europe and elsewhere.
um. A school may offer a course in Oil and
ample. Another example is that laws to encourage new technologies, such as electric
ajor trends broadened modem vehicles, have not been widely adopted. At present, the vast majority of American
and natural resources laws. drivers continue to rely on gasoline-powered vehicles that are not much more
efficient than they were in 1985.
and Clamor for an "Energy Policy" U.S. oil prices have at times exceeded $100 a barrel and gasoline has sold for as
much as $4 per gallon. Although Americans pay less than those in other countries,
age p~ce of $0.36 for a gallon of regular
high gas costs are still a shock to many Americans who purchased inefficient
ght with the Arab oil embargo of 1973,
es at the pump. Another supply shortage in vehicles. The higher prices of petroleum products should not have come as a
surprise given that, since the 1970s, there have been numerous warnings about. the
in the U.S. As a result of these events
adverse consequences of Americans' overconsumption of oil. With energy policy
policy." The 1970s saw the Departrnen;
once again attracting popular attention, there is considerable disagreement over
ent of several major energy laws, but no
erged. what to do. Should there be increased offshore drilling for oil, drilling in the
ecologically sensitive Arctic National Wildlife Refuge, rapid research and
decades to come. Popular attention to the
development of alternatives to gasoline-powered vehicles, increased funding and
n~ decrease cyclically in direct relationship
construction of public transit, higher fuel economy standards for new vehicles, or all
plies and prices. When prices are high or
of the above? Americans continue to disagree about the merits of these ideas, and
to do something, and the result is often a
predicting the ultimate national response to higher petroleum prices and demand is
term. On the whole, energy laws and
first articulated in the 1970s, most notably tricky at best.
n foreign oil. For the past several decades,
ublic interest organizations, and politicians
d against America' s increasing appetite for
1 Nelson D. Schwartz, Asleep at the Spigot, N.Y. TIMES, July 6, 2008 at sec. 3, p. 6 (available at http://www.
nytimes.com/2008/07/ 06/business/06oil.html).
10
2. Energy Law Intersects with Environmental Law
Beginning in the 1970s, the modern environmental movement, with its (where one company controlled the . ~ntin
separate businesses. This created competition :
emphasis on conservation of resources and pollution control, brought Americans a
from resource extraction to production to const
fuller sense of society's responsibility for protecting the environment. Writers such
of deregulation, aims to increase market
as Ganett Hardin, who described the famous ({ trage dy o f t h e commons "1 resource
expensive, more reliable energy. "Restruc~
paradigm, brought attention to the need for sustainable development of resources
state and federal government oversight contn
rather than unchecked extraction. As Americans demanded cleaner air and water,
Restructuring of the natural gas indust1
environmental laws had a dramatic impact on the energy sector. Energy extraction
with direction from the Federal Energy
and use is responsible for a large share of environmental degradation, and
federal agency with jurisdiction over the ind
environmental issues have become central to any study of energy law.
largely deregulated, but FERC retains
The federal and state environmental laws developed since the 1970s have had a
transformation of the electric utility industr
profound impact on the extraction, production and distribution of energy resources.
to a partially deregulated industry began ir
These laws include the federal Clean Air Act, Clean Water Act, Resource
natural gas was ongoing, but it has been far
Conservation and Recovery Act, and numerous others administered by the
natural gas industry.
Environmental Protection Agency, together with regulations that build on these
In summary, energy law in the U.S. is
statutes, and parallel state and local laws. Environmental laws have affected pollution
natural resources laws, public utility laws, a1
emissions by energy facilities and controlled siting and operations of new and
policies govern the extraction, production,
existing facilities. Other laws developed specifically to apply to energy industries
resources. As individual energy industries a1
(such as the Energy Policy Acts of 1992 and 2005 and the Energy Independence
of energy laws was on correcting abuses oft:
and Security Act of 2007) are not typically thought of as "environmental" laws.
that justification for regulation remains s1
However, these laws often have an explicit environmental focus of their own. For
environmental and other matters. Laws tailc
example, federal policies promoting the use of renewable resources over polluting
natural gas, and electricity) were develof
fossil fuel resources are usually found in energy policy acts.
between laws or coordination, with the
The debate over national energy policy is likely to continue to feature sharp
electricity restructuring regulation being a so
debate between advocates of increasing use of fossil fuels and those who propose
addressing global warming through a transformation to a new clean-energy and
B. Energy Laws, and Juris
post-carbon economy. As a result of all this activity, public awareness of the
Energy laws include the following type:
environmental impacts of the energy sector is likely to increase over time.
1. Federal statutes and regulations adr
3. Movement toward Market-Based Mechanisms for Regulating Energy Industries
(especially the Federal Energy Reg
The third major trend in energy law and policy has taken place in roughly the
agencies.
past 20 years as several energy industries have moved away from the natural
Until the 1930s, the federal government J
monopoly structure toward market-based mechanisms and increased competition.
industries, with the states being the primary
This movement challenged the underpinnings of the traditional model of regulating
1930s and early 1940s, the federal govt
energy industries as natural monopolies. It required the development of a new
regulations governing energy industries. Or:
system of regulation that frequently went beyond the narrow context of traditional
the 1935 eipansion of the Federal Power A1
public utility law. .
in 1920 and gave greatly expanded regulator:
Laws encouraging restructuring brought about an era of dramatic transformation
Federal Power Cmmnission. Another Nev
of the natural gas and electric utility industries. Vertically integrated power companies
Authority Act, created a federally owned c
control, electricity generation, fertilizer man
1 Garrett Hardin, The Tragedy of the Commons, 162 SCIENCE 1243 (1968) (available at http://www.jstor. in the Tennessee Valley. Today, the TVA
org/stable/1724745).
provider of electricity.
10
onmental Law
(where one company controlled the entire supply chain) began to break up into
dern environmental movement with .
' Its separate businesses. This created competition at most steps of the energy supply chain,
d pollution control, brought Americans a
fro111 resource extraction to production to consumption. Restructuring, like other forms
protectmg the environment. Writers such
of deregulation, aims to increase market competition to bring consumers less
ous " trage dy of the commo.n s" 1 reso urce expensive, more reliable energy. "Restructuring" is not "deregulation"; in restructuring,
for sustainable development of resou
. - rces state and federal government oversight continue to play important roles. ..
1encans demanded cleaner air and water,
Restructuring of the natural gas industry began to take shape in the mid-1980s
ct on the energy sector. Energy extraction
with direction from the Federal Energy Regulatory Commission (FERC), the
are of environmental degradation, and
federal agency with jurisdiction over the industry. Today, the natural gas industry is
to any study of energy law.
largely deregulated, but FERC retains considerable regulatory powers. The
laws developed since the 1970s have had a
transformation of the electric utility industry from a regulated monopoly structure
ction and distribution of energy resourc es. to a partially deregulated industry began in the early 1990s after restructuring in
Air Act, Clean Water Act, Resource
natural gas was ongoing, but it has been far less successful than restructuring in the
numerous others administered by the
natural gas industry.
her with regulations that build on these
In summary, energy law in the U.S. is a unique hybrid of three types of laws:
nvironmental laws have affected pollution
natural resources laws, public utility laws, and environmental laws. These laws and
oiled siting and operations of new and
policies govern the extraction, production, transmission and distribution of energy
specifically to apply to energy industries
resources. As individual energy industries arose, grew, and matured, the first focus
and 2005 and the Energy Independence
of energy laws was on correcting abuses of the market by specific producers. Today,
ally thought of as "environmental" lq,ws.
that justification for regulation remains strong, but is joined by concerns for
it environmental focus of their own. For
environmental and other matters. Laws tailored to each specific industry (oil, coal,
se of renewable resources over polluting
natural gas, and electricity) were developed separately. There is little overlap
ergy policy acts.
between laws or coordination, with the similarities between natural gas and
licy is likely to continue to feature sharp
electricity restructuring regulation being a somewhat notable exception.
se of fossil fuels and those who propose
nsformation to a new clean-energy and
B. Energy Laws, \2~mcies, and
this activity, public awareness of the
Energy laws include the following types oflaws:
is likely to increase over time.
1. Federal statutes and regulations administered by the Department of Energy
echanisms for Regulating Energy Industries
(especially the Federal Energy Regulatory Commission) and other federal
and policy has taken place in roughly the
agenoes.
es have moved away from the natural
Until the 1930s, the federal government played a minimal role in regulating energy
mechanisms and increased competition.
industries, with the states being the primary regulators. During the New Deal of the
ings of the traditional model of regulating
1930s and early 1940s, the federal government began to enact statutes and
It required the development of a new
regulations governing energy industries. One landmark statute of this time period,
beyond the narrow context of traditional
the 1935 expansion of the Federal Power Act, broadened a limited law first enacted
in 1920 and gave greatly expanded regulatory powers to an existing federal agency, the
ht about an era of dramatic transformation
Federal Power Commission. Another New Deal statute, the Tennessee Valley
·es. Vertically integrated power companies
Authority Act, created a federally owned corporation to provide navigation, flood
control, electricity generation, fertilizer manufacturing, and economic development
in the Tennessee Valley. Today, the TVA is the nation' s largest publicly-owned
provider of electricity.
The energy crises of the 1970s prompted the federal government to create a
fuilure to comply with reclamation require1w
more centralized regulatory framework for energy industries, compared to the
govern how these agency proceedings take
piecemeal framework of the previous decades. In 1977, the Department of Energy
AP A contains rules relevant to formal adj u,
Organization Act established the federal Department of Energy (DoE). The Federal
and other means of trying tl:
Energy Regulatory Commission (FERC) was established within the DoE and took
courtroom.
on the functions of several agencies, including the Federal Power Commission.
FERC is an independent regulatory agency that oversees the natural gas, oil, and
2. State laws and regulations, including
electricity markets in the U.S. FERC only regulates the transmission and sale of
The Constitutional foundation for state
natural gas and electricity in interstate commerce, which means transactions that
to the early years of the U.S. In the famous
1
cross state lines. Transactions that arise wholly within the borders of one state are
U.S. Supreme Court rejected a challenge
subject to regulation by state PUCs. FERC also issues licenses for hydroelectric
authority) issued by Massachusetts to a bri,
plants, and addresses environmental matters that affect industries under its
second bridge over the Charles River in ck
jurisdiction.
chartered by the state. The message of Chm
Some federal agencies with regulatory powers over energy industries are not
confer privileges on monopoly companies,
based within the DoE. The nuclear power industry is regulated by the Nuclear
privileges to snit changing times.
Regulatory Commission (NRC), another independent regulatory agency. The
In the equally famous 1876 case of Mui
NRC issues construction permits and operating licenses for nuclear power plants. Its
held that states could regulate businesses "aff(
mission is to protect the health and safety at nuclear plants. As noted above,
claim that regulating grain warehouses in (
the Environmental Protection Agency (EPA) administers environmental statutes and
"taking" of private property without just c•
regulations and has a major regulatory role in energy industries. A number of
possible for states to regulate public utilities
agencies within the Department of the Interior (Dol) also have jurisdiction over
state regulation to come into existence.
particular aspects of the energy sector.
States typically granted exclusive fo
A wide variety of federal statutes play central roles in energy law. These
distribute electricity within state borders.
include (among many others) the Federal Power Act, Natural Gas Act,. ~nd
franchises (as in Charles River Bridge) bee
Interstate Commerce Act, which give regulatory powers to FERC over electncity,
establish separate administrative agencies,
natural gas, and oil shipments by pipelines. In addition to these federal statutes,
{PUCs). By the 1920s, most states had
several laws enacted in the past two decades attempted to create comprehensive
electric, gas, light, telephone, and/ or railroac
national energy policies. These include the Energy Policy Act of 1992, the Energy ';tram
state to state (to take just a few exam
Policy Act of 2005, and the Energy Independence and Security Act of 2007. ~~ese
:California Public Utilities Commission,
statutes are lengthy and their provisions affect every energy industry. The provisions
'Commission), but most have similar powers a
of these statutes, among others, include sections promoting conservation and grants
PUCs operate under state statutes 1
and tax incentives for development of renewable and non-renewable energy
anchises, issue "certificates of public con
resources. While these laws fall short of creating a comprehensive energy policy,
erating licenses), and regulate rates and ot
their impacts are far-reaching.
electric utility proposes to increase the r
The federal agencies that regulate energy industries are administrative ..
ically must apply to the state PUC for <
subject to the federal Administrative. Procedure Act (APA) and court decisions ..
ederal energy agencies, PUCs are also adn
interpreting the APA . An agency ' s own statutes or regu1 a t1. 0ns ca n reqw.r e
sponsibilities assigned to them under stat
additional administrative processes. The principal functions of administrative agenci
om.parable to the APA , 3 and regulations arn
are adjudication (deciding the rights and responsibilities of an individual litigant
class of litigants) and rulemaking (implementing broad policies). An example ~fa
would be the procedures under SMCRA to be undertaken to rec1 a i·. m a nune · fj Charles River Bridge v. Warren Bridge, 36 U.S. (11 Pet.)
example of adjudication would be a trial-like proceeding against a rrune operator Iv:lunn v. Illinois, 94 U.S. 113 (1876).
e.g., California Administrative Procedure Act, CAL.
10
prompted the federal government to create a
IJilure to comply with reclamation requirements. The APA and relevant case law
rk for energy industries, compared to the
govern how these agency proceedings take place. For example, section 554 of the
decades. In 1977, the Department of Energy
_APA contains rules relevant to formal adjudications, requiring discovery, trial-like
al Departmen~ of Energy (DoE). The Federal
procedures and other means of trying the case similar to those used in the
C) was established within the DoE and t k
. oo
courtromn.
mcluding the Federal Power Cor rm11·s s1· on.
gency that oversees the natural gas, oil, and
2. State laws and regulations, including those administered by PUCs.
only regulates the transmission and sale of
The Constitutional foundation for state regulation of public utilities goes back
te commerce, which means transactions that
to the early years of the U.S. In the famous Charles River case of 183 7, 1 the
e wholly within the borders of one state are
U.S. Supreme Court rejected a challenge to a charter (governmental grnnt of
FERC also issues licenses for hydroelectric
authority) issued by Massachusetts to a bridge company that intended to build a
matters that affect industries under its
second bridge over the Charles River in close proximity to an existing bridge also
chartered by the state. The message of Charles River was that a state could
atoq powers over energy industries are not
confer privileges on monopoly companies, but could also adjust their grants of
ower industr1 is regulated by the Nuclear
privileges to snit changing times.
ther independent regulatory agency. The
In the equally famous 1876 case of Munn v. 2 the U.S. Supreme Court
perating licenses for nuclear power plants. Its
held that states could regulate businesses "affected with a public interest," rejecting a
and safety at nuclear plants. As noted above
and claim that regulating grain warehouses in Chicago, Illinois was an impermissible
(EPA) administers environmental statutes
"taking" of private property without just compensation. Munn v. Illinois made it
role in energy industries. A number of
possible for states to regulate public utilities, but it took many years thereafter for
e Interior (Doi) also have jurisdiction over
state regulation to come into existence.
States typically granted exclusive :franchises to utilities to transmit and
s play central roles in energy law. These
distribute electricity within state borders. When direct legislative regulation of
ederal Power Act, Natural Gas Act, and
franchises (as in Charles River Bridge) became too cumbersome, states began to
e_gulatoq powers to FERC over electricity,
establish separate administrative agencies, known as public utility conunissions
lines. In addition to these federal statutes
(PUCs). By the 1920s, most states had administrative agencies that regulated
ecades attempted to create comprehensiv~
electric, gas, light, telephone, and/ or railroad companies. The names of PUC s vary
the Energy Policy Act of 1992, the Energy
from state to state (to take just a few examples, the Texas Railroad Commission,
ependence and Security Act of 2007. These
California Public Utilities Commission, and Virginia State Corporation
affect eveq energy industry. The provisions
Commission), but most have similar powers and functions.
sections promoting conservation and grants
PUCs operate under state statutes that grant them authority to create
of ren~wable and non-renewable energy
franchises, issue "certificates of public convenience and necessity" (CPCNs, or
f creatmg a comprehensive energy policy,
operating licenses), and regulate rates and other terms of service. As an example, if
an electric utility proposes to increase the rates it charges residential customers, it
nergy industries are administrative agencies
typically must apply to the state PUC for approval of the rate increase. Like the
rocedure Act (APA ) and court decisions
federal energy agencies, PUCs are also administrative agencies, with powers and
o_w~ s~atutes . or regulations can require
responsibilities assigned to them under state administrative law statutes that are
nncipai. functwns of administrative agencies
comparable to the APA , 3 and regulations and case law implementing these statutes.
res~onsibilities of an individual litigant or
entmg broad policies). An example of a rule
to be undertaken to reclaim a mine. An
1 Charles River Bridge v. Warren Bridge, 36 U.S. (11Pet.)420 (1837).
al-like proceeding against a mine operator for 2 Munn v. Illinois, 94 U.S. 113 (1876).
3See, e.g., California Administrative Procedure Act, CAL. GOV' T CODE § 11340 to 11365 (West 2008).