Energy Law: An Overview

For most of American history, the federal government did not play an active role in the energy industries. (This history is often explained by the widespread belief in the unlimited supply of energy). During the Great Depression and into the years of WWII, the federal government began to establish a fragmented regulatory framework, with many agencies participating. Furthermore, the Manhattan Project to develop nuclear weapons initiated the era of nuclear regulation. However, the energy crises of the 1970s forced the federal government to consolidate its scattered regulatory framework that had developed piecemeal in the previous decades. With the creation of the Department of Energy in 1977, a national energy plan emerged for the first time. The stated purpose of federal energy laws and regulations is to provide affordable energy by sustaining competitive markets, while protecting the economic, environmental, and security interests of the United States.

Early regulation began with the Federal Power Act of 1920, which created the Federal Power Commission. Amended in 1935, and 1986, the Federal Power Act allowed a regulatory framework to develop. In 1977, The Federal Energy Regulatory Commission (FERC) was established within the newly created Department of Energy and assumed the functions several agencies, including the Federal Power Commission. FERC is an independent regulatory agency that oversees the natural gas, oil, and electricity markets in the U.S. FERC regulates the transmission and sale of these energies (except the sale of oil), provides licenses for hydroelectric plants, and reacts to environmental matters that arise. The Commission is headed by five presidential appointees, only three of which can be from the same political party, who serve five year terms. FERC utilizes an internal dispute resolution system, reducing the number of disputes that reach the federal courts. The nuclear power industry is regulated by the U.S. Nuclear Regulatory Commission (NRC), whose mission it is to protect the public health and safety from nuclear radiation and waste. The NRC also promotes the common defense through a regime of rulemaking, inspection, and licensing.

In recent years there has been a shift towards deregulation of various energy industries. Deregulation aims to increase market competition in order, ultimately, to serve the goal of cheap, reliable energy. The trend is most progressed in the electricity market, where in many states consumers can now choose their suppliers. To label this as 'deregulation' is somewhat of a misnomer, however, since government oversight still plays a central role. Rather, historically vertically integrated power companies are breaking apart to create competition at every step of the chain from production to consumption.

Title 42 of the U.S. Code entitled 'The Public Health and Welfare' has many chapters devoted to energy issues, as does Title 16, and Title 30 of the U.S. Code. See also Title 10 of the Code of Federal Regulations, which deals with various energy matters.

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