NOTE: This document has been modified from its original version prepared for the National League of Cities. For the entire document or additional information, please contact Nancy Skancke at 202.408.5400 or njskancke@gkrse-law.com
National League of Cities
Energy, Environment and Natural Resources (EENR)
Steering Committee Meeting – October 2005
The Energy Policy Act of 2005
Nancy J. Skancke
Law Offices of GKRSE
1500 K Street, N.W.; Washington, D.C. 20005
(202) 408-5400 njskancke@gkrse-law.com
Areas of Federal Preemption in EPAct:
Title III – Oil and Gas
· FERC “exclusive authority” over siting/construction/expansion/operation of LNG terminals; States to perform safety analysis as input to FERC decision. Rights of States under Coastal Zone Management Act (1972), Clean Air Act, and Federal Water Pollution Control Act not affected. LNG terminal approval must require Emergency Response Plan, in coordination with State/local officials, and must provide for cost-sharing. See, “Pre-Filing Procedures for Review of LNG Terminals and Other Natural Gas Facilities, Order No. 665 , issued October 7, 2005 (FERC Docket No. RM05-31).
· FERC as lead agency for review of Federal issues in NEPA analysis of LNG terminals and interstate natural gas pipelines; applicant may seek remedies if State agency does not comply with FERC schedule (other than Coastal Zone Management Act); venue is U.S. Court of Appeals for D.C. Circuit. See, “Consolidated Record in Natural Gas Proceedings,” Policy Statement issued September 26, 2005 (FERC Docket No. PL05-13; 112 FERC ¶ 61,334) (rules to be issued in the future).
· U.S. Court of Appeals in locality of facilities authorized under the Natural Gas Act to be venue for any court review of State agency action under Federal law.
Title XII – Electricity
· FERC “back-stop” siting authority (with eminent domain) for electric transmission in congested/national interest corridors, subject to formation of state-compacts; DOE study on electric transmission congestion areas.
· FERC-lite regulation over unregulated transmission utilities (public power systems, rural electric cooperatives, TVA, Power Marketing Administrations) to ensure open-access at comparable rates; certain exemptions; limits on actions FERC can take that would affect private use rules on tax-exempt bonds. FERC issued Notice of Inquiry which includes questions on this issue (Docket No. RM05-25, issued September 16, 2005).
Matters Not Included in EPAct:
· No bar to local governments suing MTBE producers and suppliers for contamination; only contains provision allowing lawsuits in Federal courts, as well as State courts.
· No mandatory RPS of 10% required (was to be by 2020).
· No provision redefining what is required to abrogate power supply contracts (i.e., “sanctity of contract issue”).
· No studies on the impact of non-jurisdictional entities on competitive power markets.
Other Areas of Potential Interest to NLC Members:
Title I – Energy Efficiency
· Extends Daylight Savings Time by 4 weeks (effective 1 year after enactment – second Sunday in March to first Sunday in November), subject to right of Congress to revert based on DOE study.
· DOE to make grants to States to assist local governments on improving energy efficiency.
· Grants to local governments for efficiency/reliability projects in low-income housing.
· Encourages States to upgrade energy conservation plans.
Title II – Renewable Energy
· Reauthorizes/reforms the Renewable Energy Production Incentive (expands eligibility to municipal utilities and cooperatives).
· Grants for biomass to entities in “Preferred Communities” (e.g., population < 50,000).
· Hydroelectric regulatory reforms (alternatives to mandatory conditions, balancing of factors by resource agencies, hearings on issues of material fact); production incentives for additions to existing dams/conduits (1.8 cents/kWH; subject to appropriations); efficiency improvements (incentive payments to owners/operators, subject to appropriations); affirmation of Alaska jurisdiction over small hydro.
Title III – Oil and Natural Gas
· Natural gas market manipulation and market transparency authority to FERC.
· Penalties under the Natural Gas Act expanded to $1 million/imprisonment up to 5 years.
· FERC may not deny LNG application based on applicant-sole use of facility, or require open access to LNG terminal facilities.
· FERC may permit natural gas storage at market-based rates.
· Designation of utility corridors (oil, natural gas and hydrogen pipelines and electric transmission/distribution lines) on Federal lands, in consultation with local governments and others.
· Production incentives offshore/onshore.
· Coastal Impact Assistance Program, with funding to eligible States.
· Survey of OCS oil and gas reserves.
Title IV – Coal
· Loan guarantees/grants for clean coal generation.
Title VI – Nuclear Matters
· Safety and technology provisions.
· New construction enhancements.
· Extension of Price-Anderson Act liability protection against catastrophic accidents.
· Clean Cities Program (grants to state and local governments; alternative fueled vehicles).
· Fuel cell bus program with local governments.
· Clean school bus program.
· Enhanced hydrogen fuel development/use.
· Advanced vehicle research.
Title XII – Electricity
· Establishes mandatory reliability standards for transmission systems, with regional input.
· FERC to establish incentives for transmission infrastructure investments/funding.
· PUHCA repeal with expanded FERC jurisdiction over acquisition of generation facilities, mergers.
Title XIII – Energy Policy Tax Incentives
· Renewable/Clean Energy Incentives, including Clean Renewable Energy Bonds (i.e., new incentives for public power systems and rural electric cooperatives to build certain types of renewable generation facilities).
· Oil/Gas, including (i) Depreciation rate on natural gas distribution lines; and (ii) Prepayments of natural gas (tax-exempt bonds) not subject to arbitrage rules (municipal power system must be within service territory of municipal gas system to apply).
· Clean Coal.
· Energy Efficiency and Conservation Measures.
Title XV – Ethanol and Motor Fuels
· Loan guarantees and grants for the construction of facilities to process and convert municipal solid waste and cellulosic biomass into fuel ethanol and other commercial byproducts.
· Funding for improving CAFE (Corporate Average Fuel Economy) standards, increased studies on CAFE standards.
· Enhancements to Federal leaking underground storage tank program.
· Authority to EPA to grant temporary waivers or requirements for extreme/unusual supply emergency (e.g., significant hurricane events).
Title XVI – Climate Change
· National strategy development.
· Program to assist deployment of technologies.
Title XVII – Incentives for Innovative Technologies
· Loan guarantee program for commercialization of clean, renewable energy.
Title XVIII – Studies (68 provisions; only potentially relevant to municipal listed below)
· Transmission system monitoring study.
· Interagency review of competition in wholesale/retail markets for electric energy.
· Benefits of economic dispatch.
· Development of cogeneration.
· Inventory of petroleum and natural gas storage.
· Energy efficiency standards.
· LIHEAP report.
· Rapid electrical grid restoration.
· Distributed generation.
· Natural gas supply shortage report.
· LNG facilities.
· Economic dispatch.
· Potential hydropower facilities.
Web Resources on the EPAct:
The White House – see http://www.whitehouse.gov/news/releases/2005/08/20050808-6.html.
Department of Energy – see http://www.energy.gov/engine/content.do?BT_CODE=EDG1760.
U.S. Congress – see http://thomas.loc.gov/cgi-bin/bdquery/z?d109:H.6 (Pub. Law 109-58).
Senate Committee on Energy and Natural Resources – see http://energy.senate.gov/public.
House Committee on Energy and Commerce – see http://energycommerce.house.gov.
FERC – see http://www.ferc.gov/legal/maj-ord-reg/fed-sta/ene-pol-act.asp
APPA website – see http://www.appanet.org/legislative/index.cfm?ItemNumber=13734.