Cooperative Federalism and

Energy Law

Carolyn ElefantLaw Office of Carolyn Elefant

Washington DCwww.carolynelefant.com

carolyn@carolynelefant.com202-297-6100

What accounts for the persistent conflict between federal and state interests in the energy industry?

Statutory Imperatives

·FERC regulates wholesale rates ·States regulate retail rates and siting

Geographic Imperatives

Offshore wind is located on federal OCS, but transmission runs through state submerged lands

Inevitable Tension

National interest (FERC energy siting) has local impacts

Trends and Solutions

Siting:  LNG

Federal/state conflict resolved with EPAct 2005 which FERC's "exclusive authority" (15 USC § 717b)

States retain authority under CZMA, CWA

Siting:  LNG

"while the EPAct of 2005 might have streamlined the federal [LNG siting] review process in some respects and changed the rules under which the review takes place, it has notdramatically changed the balance of power between the federal government and states."

--J. Dweck, Siting LNG Facilities, 27 Energy Law Journal (2006) at 475

Siting:  Conditional Licenses

FERC grants license or certificate, but commencement of construction made contingent upon applicant obtaining necessary state authorizations

Lawfulness subject

States have to veto

Siting:  MOUs for Offshore Wind & MHK

MOU between DOI and and 10 states to create Atlantic Offshore Wind Consortium for "efficient, expeditious and responsible" development of offshore wind on OCS April 2009, online at http://tinyurl.com/27p36mt

MOUs between FERC and select states to coordinate MHK (online at http://www.ferc.gov/industries/hydropower/indus-act/hydrokinetics.asp)

Siting:  Coastal & State Marine Spatial Planning

Regional planning approach for ocean siting, with review by National Oceans Council (NOC)

Obama Executive CMSP Plan will leverage existing state efforts

Plan online at http://www.whitehouse.gov/administration/eop/oceans/cmsp

Siting:  Interstate compacts

NGA and FPA allow states to create "interstate compacts" to site electric transmission or gas pipelines subject to Congressional approval of compact (15 USC § 717j, Section 216, FPA)

Proposed HB1817  Pennsylvania House of Representatives would create MidAtlantic Council to site pipelines instead of FERC (online at http://www.pahousegop.com/NewsItemPrint.aspx?NewsID=9510)

Renewables Policy:  State RPS

Issue: States need to meet RPS, but need transmission to import renewables•FERC NOPR:  RTOs and transmission utilities must take account of state renewables policy goals during transmission planning RM 10-23, June 17, 2010 (online at www.ferc.gov/whats-new/comm-meet/2010/061710/E-9.pdf)

Renewables Policy:  Feed-In TariffIssue; States want to set feed-in rates to encourage renewables, but FERC has exclusive jurisdiction over wholesale ratemaking

•FERC Solution:  States can use PURPA authority to set feed-in rates (FERC Docket 10-64, 66, (July 15, 2010) online at http://www.troutmansandersenergyreport.com/wp-content/uploads/2010/07/CPUC.pdf

•Rejected proposal: Allow states to set feed-in rates and obtain blanket FERC approval for program (see NREL Paper, S. Hempling, C. Elefant, K. Corey (online at http://www.nrel.gov/docs/fy10osti/47408.pdf)

Renewables Policy: National versus state benefits

·Energy Bill - national RPS (would create national market for RECs, necessitate transmission)

·Inslee feed-in proposals - nationally structured feed-in tariffs

State push back:  RPS programs that favor state projects

(Canadian wind developer sues Massachusetts for solar carve out and preferential contracts, claiming commerce clause violations (partial settlement online at: http://tinyurl.com/2urv9vs

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carolyn@carolynelefant.com