Tag: power generation

Toward Greener FERC Regulation of the Power Industry

Photo credit: Nixdorf, Wikimedia Commons
Photo credit: Nixdorf, Wikimedia Commons

August 12, 2014 at 1:30pm

America’s electricity industry is at the heart of some of the nation’s and world’s biggest environmental challenges, including climate change. Yet the Federal Energy Regulatory Commission (“FERC”), which has regulatory jurisdiction over wholesale sales and transmission of electricity in interstate commerce and is charged with ensuring that rates and other aspects of the industry are “just and reasonable,” has an official policy of excluding environmental considerations from its oversight of the industry.

In “Toward Greener FERC Regulation of the Power Industry,” in the forthcoming issue of the Harvard Environmental Law Review, Harvard Law School alumnus Christopher Bateman and Environmental Defense Fund senior counsel James T.B. Tripp trace the evolution of this policy and argue that it is time for a new and better approach—one that integrates economic and environmental regulation of the industry, and helps the United States achieve a clean energy future, especially with respect to greenhouse gas emissions.

Bateman and Tripp explore the possibility of such an approach under the Federal Power Act (“FPA”), which provides FERC’s mandate. In doing so, they address FERC’s reasoning for its current policy and find these reasons unpersuasive. Contrary to FERC’s position, they argue, it is plausible to view the FPA alongside other federal laws as being silent or ambiguous about FERC’s environmental authority, thus permitting an environmentally inclusive approach within reasonable constraints. This reading of the FPA is reinforced by a host of policy considerations: the urgent need to address the U.S. electricity industry’s significant contribution to climate change; the inadequacy of and continuing uncertainty surrounding existing regulatory efforts on this front; FERC’s expertise in aspects of the electricity industry important to effective design and implementation of regulatory solutions; the unique nature of greenhouse gas emissions as pollutants and the feasibility of FERC regulation of carbon emissions in particular; and the glaring problems with our schizophrenic approach to energy regulation, in which environmental regulation and traditional utility regulation often undermine each other, creating inefficiencies.

The article offers concrete examples of the types of progressive industry reforms that would be possible under an environmentally inclusive approach, while also acknowledging and exploring the limits and challenges of this approach. On balance, Bateman and Tripp conclude, the rewards seem to far outweigh the risks. FERC’s current policy causes it to regulate essentially in the dark as to environmental costs and benefits. By incorporating environmental considerations into its oversight of areas such as transmission planning and organized wholesale electricity markets, and by approaching environmental problems in a coordinated way with EPA and other regulators, the Commission would make better informed decisions and could potentially help the nation achieve significant, welfare-maximizing reductions in greenhouse gas emissions.

The question of whether FERC is doing enough to address climate change is one that scholars and policymakers are increasingly starting to raise. Recently, a pair of Berkeley scholars proposed a set of reformsendorsed by United States Congressman Henry Waxman on the floor of the House–that FERC could undertake across its jurisdictional areas to do more. Focusing on FERC’s oversight of the electricity industry, Bateman and Tripp reach similar conclusions about the need for FERC to do more, and seek to provide the most sustained argument yet for a new approach to meet the defining energy and environmental challenges of our time.

New York v. U.S. Nuclear Regulatory Commission

By Hillary H. Harnett

The Nuclear Regulatory Commission (“NRC” or “the Commission”) licenses and regulates the nation’s commercial nuclear power plants. Over a span of several decades, it has grappled with its environmental obligations and faced recurrent litigation regarding its responsibilities under the National Environmental Policy Act (“NEPA”). In 2012, the D.C. Circuit heard another NEPA challenge, New York v. U.S. Nuclear Regulatory Commission, just after a series of political events left the future of nuclear waste disposal less certain than ever before. In its decision, the court vacated a recent NRC rulemaking, holding that the Commission had violated NEPA through its failure to adequately assess the environmental impacts of long-term nuclear waste storage. This decision will lead to the NRC’s first Environmental Impact Statement analyzing the effects of continued nuclear power generation in the event that the nation fails to eventually establish a permanent geologic repository for nuclear waste.

This Comment argues that the decision was an appropriate NEPA holding and a welcome departure from earlier decisions that displayed more extreme deference to the Nuclear Regulatory Commission despite similarly lackluster environmental analyses. The decision also highlights a larger issue: the active role that the judiciary must take in response to legislative inaction in the environmental arena.

Cite as: Hillary H. Harnett, New York v. U.S. Nuclear Regulatory Commission, 37 Harv. Envtl. L. Rev. 589 (2013).

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Smart Regulation and Federalism for the Smart Grid

By Joel B. Eisen

This Article examines the “Smart Grid,” a set of concepts, technologies, and operating practices that may transform America’s electric grid as much as the Internet has done, redefining every aspect of electricity generation, distribution, and use. While the Smart Grid’s promise is great, this Article examines numerous key barriers to its development, including early stage resistance, a lack of incentives for consumers, and the adverse impacts of the federal-state tension in energy regulation. Overcoming these barriers requires both new technologies and transformative regulatory change, beginning with the development of a foundation of interoperability standards (rules of the road governing interactions on the Smart Grid) that will influence development for many years. This Article describes the federally coordinated standard-setting process started in the 2007 Energy Independence and Security Act, leading to a collaborative dialogue among hundreds of participants, with leadership from the National Institute of Standards and Technology (“NIST”). After setting forth the need for interoperability standards and elaborating on the standard-setting process, the Article focuses on a 2011 order by the Federal Energy Regulatory Commission (“FERC”) that declined to adopt an initial group of standards. While this may appear a step backward, the Article argues to the contrary, finding that FERC’s order supports the flexibility of the Smart Grid Interoperability Panel, the NIST-led process that will produce interoperability standards critical to a wide range of energy saving technologies. FERC’s order allows this process, not a regulator’s imprimatur, to give standards credibility. By holding off on forcing adoption of the standards, but preserving the potential for more significant federal intervention later, it may lead to state adoption of the resulting standards. In this adaptive approach to energy law federalism, neither top-down federal regulation nor private sector standard setting is the exclusive means of overseeing Smart Grid development. FERC’s approach may promote a more positive federal-state relationship in the development of the Smart Grid, and may even portend a more collaborative relationship in energy law federalism generally, avoiding the disruptive jurisdictional clashes that have marked recent attempts to innovate in the electric grid.

Cite as: Joel B. Eisen, Smart Regulation and Federalism for the Smart Grid, 37 Harv. Envtl. L. Rev. 1 (2013).

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Comment: North Carolina v. Tennessee Valley Authority

By Nigel Barella

In North Carolina v. Tennessee Valley Authority, 615 F.3d 291 (4th Cir. 2010), the Court of Appeals for the Fourth Circuit held that the federal Clean Air Act preempted certain, if not all, applications of state nuisance law.  The court also ruled on the meaning of state nuisance laws and the scope of North Carolina’s air quality laws.  This Comment analyzes the court’s ruling, with particular attention to the aspects of the ruling that are likely to prove controversial.

Cite as: Nigel Barella, Comment, North Carolina v. Tennessee Valley Authority, 35 Harv. Envtl. L. Rev. 247 (2011).

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