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Energy is the capacity of some object or system to do work. As such, it is essential for all of the activities we do as individuals and as a society. While virtually all of the energy potential on the Earth can be traced back to the sun, we use a variety of sources to power our everyday needs from transportation to industrial production to keeping the lights on at home. According to the U.S. Energy Information Administration, the United States consumed approximately 98 quadrillion British thermal units (Btu) of energy in 2010. Of this total, 83% comes from fossil fuels such as coal, crude oil, and natural gas, and some 22% represents net energy imports (see U.S. EIA's Energy Flow and ELI's Energy Flows in the United States graphics).

Legal Regime for Energy Production and Distribution
Federal Regulation of Energy

Like other areas of law related to the environment, energy production and distribution are governed by both federal and state law. However, federal authority is generally limited to a few areas, while most regulation occurs at the state level. At the federal level, the Federal Energy Regulatory Commission (FERC) is responsible for regulating interstate transmission and transportation of electricity, natural gas, and oil, as well as handling permits for constructing hydroelectric dams and liquefied natural gas (LNG) terminals. A separate entity, the Nuclear Regulatory Commission (NRC), is responsible for regulating nuclear power generation.

The federal government began regulating energy with the Federal Power Act of 1920, which has been amended several times in the past century. In 1977, Congress established the Department of Energy (DOE and reorganized energy regulation by creating FERC. FERC is governed by a five-member Commission and employs administrative law judges (ALJs) in its internal process for resolving disputes. Commissioners are appointed by the President for staggered 5-year terms, but as an independent agency, FERC decisions are not reviewed by the President or any cabinet agency, but instead are reviewable in federal courts in accordance with the Administrative Procedure Act.

State public utility commissions

At the state level, state public utility commissions are generally responsible for regulating production and distribution of electricity. Although federal authorities regulate interstate transmission of electricity, state regulation and electricity pricing can vary significantly. Electricity distribution is a good example of a “natural monopoly” in that it would be impractical to build overlapping distribution systems due to high cost. While the majority of electricity sold to end users (residential, commercial, etc.) in the U.S. grid is distributed by privately owned entities, state commissions regulate these utilities in order to ensure fair and reasonable pricing. States may, for example, regulate prices by supervising auctions between electricity suppliers (i.e., generators) and distributors.

Regulation of Energy Transmission and Distribution

The electricity “grid” includes three components: electricity generators, transmission networks, and electricity distributors (i.e., utilities that provide electricity to end users). Over the past century, the trend has been toward interconnection of transmission lines in an effort to lower costs and spread out electricity loads, although occasional large blackouts, such as the Northeast Blackout of 2003, illustrate the potential risks of this approach. Electricity transmission in the United States is divided into three independent transmission grids—the Western Interconnect, which generally covers the area west of the Rocky Mountains; the Texas Interconnect, which covers most of the state of Texas, and the Eastern Interconnect, which includes the rest of the country. Regional reliability councils (one each in the Western and Texas Interconnects, and six in the Eastern Interconnect) oversee monitoring and compliance with standards designed to ensure the reliability of electricity in the U.S. grid.

Since the 1970s, federal regulation has encouraged setting up competitive markets for electricity generators by requiring open access to transmission networks. In addition, for roughly two-thirds of the population of the United States, electricity transmission is now operated by independent system operators (ISOs) or regional transmission organizations (RTOs) that are independent of utilities and electricity generators. In other areas, vertically integrated utilities or government-owned or cooperative enterprises control transmission.

Renewable Energy

Concerns about pollution, climate change, and the finite nature of fossil fuel and nuclear power resources have led to demand for and development of energy from renewable resources. The most widespread form of renewable electricity generation is hydroelectric power, which is derived from energy that is replenished by the Earth’s water cycle. However, because hydroelectric dams have an impact on land and water environments, and because dams can only be efficiently located in a limited number of places, some newer laws have been designed to encourage electricity generation from other renewable sources, such as wind, tides, geothermal energy, solar energy (photovoltaic cells, concentrated solar power, and solar thermal energy), landfill gas, etc.

Many of these renewable sources present practical challenges. First, renewable electricity must be connected into existing transmission and distribution grids. Many renewable sources, particularly wind and solar, tend to be most plentiful in areas that are far from major population centers. Offshore sites provide potential wind resources closer to cities but are generally more expensive to develop and carry additional environmental risks. Second, because electricity cannot be easily stored—it must be transmitted and used immediately as it is generated—existing grids must be adapted in order to handle periodic generation. For example, solar energy is strongest during the middle of the day and varies according to seasons and weather conditions; these patterns generally do not match up with peak electricity demand periods that occur in the morning and evening as people wake up or return home from work. As a result, growth in renewable electricity does not necessarily translate to possibilities for reducing conventional capacity, because electricity providers must still turn to fossil fuel sources to meet demand at peak times.

As of 2012, 31 states and the District of Columbia have some form of mandate for renewable energy, although these vary widely both in the level of the mandate as well as the types of energy sources that can be counted toward the total. Most states use a percentage target for the state’s renewable portfolio by a certain year; a few states use targets measured in megawatts of capacity that the state must develop. An additional 7 states have non-binding renewable portfolio goals.

In many states, consumers can choose to pay an additional premium or opt to purchase electricity (distributed by the same utilities) from suppliers that use renewable sources. For example, in Maryland, many companies offer 100% renewable “green” electricity plans which are available for a higher price than conventional electricity supplies.

Environmental Impacts of Energy

What does energy have to do with the environment? Energy and environmental law are often interrelated because energy production and consumption represent a significant portion of human impact on air, water, and land resources, as well as the Earth’s climate.


Fossil fuels store useful energy potential in bonds between carbon atoms. Combustion reactions break these bonds, releasing energy, as well as carbon dioxide and water vapor as byproducts. However, when combustion is incomplete or impurities are present in the fuel, the reaction also leads to the emission of various other molecules that can adversely affect human health and the environment. Fossil fuels—especially coal in electricity generation and gasoline for transportation—are the biggest source of conventional air pollutants, such as sulfur dioxide (SO2), nitrous oxides (NOx), and carbon monoxide (CO). Fossil fuel burning also releases hazardous and toxic air pollutants; for example, coal-fired electricity generation accounts for over half of mercury emissions in the United States.

Emissions from energy production and consumption into the air are regulated under the Clean Air Act (CAA). Under the CAA, the EPA establishes nationwide air quality standards for each air pollutant and oversees state regulatory plans designed to meet those standards. Environmental authorities conduct reviews of major sources of air emissions, including power plants, in order to prevent significant deterioration of air quality or bring areas toward attainment of quality standards. In addition, Title II of the CAA regulates mobile sources of emissions, such as motor vehicles. Mobile source regulation includes standards for motor vehicle engine emission control systems as well as requirements for fuels and fuel additives.

Renewable energy sources can have additional or different air quality impacts. While wind energy does not produce any emissions of air pollutants, wind turbines can create air disturbances, noise, or hazards for birds and bats. Burning renewable fuels, such as ethanol, can reduce air pollutant emissions, but critics argue that gasoline blended with too much ethanol can interfere with emissions control systems in some automobiles and actually lead to higher emissions.


Energy production has an environmental impact on water resources both in terms of the quantity of water used, as well as effects on water quality, in the form of pollution or discharges that increase water temperature.

Many forms of energy production methods use water in various stages. Electricity generators typically use steam turbines to transform energy from the burning of fossil fuels such as coal into electricity that can be used for residential, commercial, industrial, or transportation purposes. Nuclear, fossil fuel, and concentrated solar power plants require methods for cooling plant equipment and/or cooling steam; this is often accomplished by cycling through large quantities of water, although technologies for “dry cooling” exist as well. In the United States, electricity generation accounts for roughly half of all water withdrawals. While some water used, especially in coastal areas, is saltwater, the majority comes from surface freshwater in lakes or rivers. Thus, energy production and consumption can have a tremendous impact on water availability in arid climates or other areas where freshwater resources are scarce.

In addition to the quantity of water used, energy production and electricity generation can affect the quality of water used or in surrounding areas. For fossil fuel and nuclear energy, processes for extracting raw materials, such as mining and drilling, can discharge pollutants into nearby waterways. Power plants, after using water to cool equipment or in other stages of electricity generation, must discharge the water back into oceans, rivers, or lakes. Excess heat from power-generating reactions increase the temperature of the water as it is discharged, which in turn raises the temperature of the overall aquatic environment. Significant temperature increases can make surrounding areas inhospitable for fish and other animals or plants.

The Clean Water Act regulates the environmental effects of energy production on water resources. Under the Act, energy production facilities must obtain permits that are regulated by the EPA and state authorities for any discharges they make into waterways subject to the Act’s jurisdiction. One current issue is the EPA’s proposed standards for the design and location of cooling water intake structures under Section 316(b) of the Act (See EPA's webpage and Cornell's webpage with the statute).


One key issue in energy production is siting—that is, determining where power plants or other facilities should be located. Energy generating facilities can have a direct environmental impact on existing ecosystems, such as wetlands, that occupy the land converted for use in energy production. Hydroelectric power plants can disturb upstream land by creating reservoirs as well as downstream land by controlling or limiting water flow and changing water temperature. Nuclear power plants have the potential to disturb surrounding land in the event that radioactive material escapes and generate radioactive waste that must be carefully transported and stored.

For other types of facilities, environmental factors to be considered include air and water quality in surrounding areas that may be affected by emissions or discharges. Land impacts for fossil fuel energy also include disturbances associated with resource extraction, such as land used for mining coal and drilling for natural gas or oil. Siting for electricity generation or other facilities can also raise issues of environmental justice if it causes a group of people to bear a disproportionate burden of negative effects that result from proximity to those facilities.

When the federal government is involved in developing an energy project, the National Environmental Policy Act (NEPA) requires a review of the project’s impacts on the environment, including consideration of potential alternatives. Impacts on wetlands are governed by the Clean Water Act.


Energy production raises specific issues regarding the handling and treatment of waste. Nuclear power generation produces extremely hazardous radioactive byproducts that must be safely handled, transported, and stored for long periods of time. The NRC is responsible for regulating the processing of radioactive source material, such as uranium, as well as radioactive byproducts, although many states have agreements with the NRC under which they exercise their own regulatory authority (see NRC's Regulation of Radioactive Materials and Agreement State Program webpages). The EPA, on the other hand, sets standards for radioactive air emissions and drinking water contamination.

One current controversy in managing waste from energy production involves coal combustion residuals, or coal ash—a byproduct of coal-fired power plants. Coal ash contains a variety of toxic compounds and can present a health concern if it leaches into groundwater or escapes from storage sites. A major spill of coal ash in Tennessee in 2008 drew attention to the issue, and in 2010, the EPA proposed regulating coal ash under the Resource Conservation and Recovery Act (RCRA), either under RCRA’s hazardous waste provisions, which would give EPA more extensive authority, or under the non-hazardous waste provisions.


In advanced industrialized economies such as the United States, energy consumption is the main driver of greenhouse gas (GHG) emissions that contribute to global climate change. Fossil fuel combustion (including transportation and electricity generation) accounts for nearly three-fourths of U.S. emissions of the most significant GHG, carbon dioxide (CO2). While the United States does not have a comprehensive national plan for mitigating climate change or addressing GHG emissions, federal and state governments have developed a number of regulatory programs designed to limit the climate impacts of energy generation and consumption.

Since 2009, when the EPA issued its endangerment finding regarding CO2, the Agency has taken steps toward regulating GHG emissions under the Clean Air Act. Regulating GHGs under the CAA includes mobile sources as well as stationary sources, such as power plants, that emit large quantities of CO2. Setting standards for stationary sources will be challenging because the CAA uses technology-based standards for setting emissions levels. Unlike other air pollutants, CO2 is an intended and necessary product of combustion, which means that CO2 emissions cannot be “reduced” in the same way that SO2 can, for example, by eliminating impurities or scrubbing flue gas at power plants; rather, reducing emissions will likely require efficiency improvements or some method of CO2 capture for storage or reuse.

In addition, the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007 added renewable fuels mandates to the CAA with the goal of reducing net CO2 emissions from the transportation sector. The Renewable Fuels Standard (RFS) program requires fuel suppliers to incorporate a minimum quantity of renewable, biomass-based ethanol or biodiesel into gasoline supplies.


National Association of Regulatory Utility Commissioners – www.naruc.org

North American Electric Reliability Corporation (NERC) – www.nerc.com

Electric Power Research Institute – www.epri.com

Edison Electric Institute – www.eei.org

-Public Policy Advocacy page – information on federal and state legislation and regulation – http://www.eei.org/whatwedo/PublicPolicyAdvocacy/Pages/default.aspx

U.S. Energy Information Administration – www.eia.gov

Federal Energy Regulatory Commission (FERC) – www.ferc.gov

MIT Study on the Future of the Electric Grid – http://web.mit.edu/mitei/research/studies/documents/electric-grid-2011/Electric_Grid_Full_Report.pdf

NPR, Visualizing the U.S. Electric Grid – http://www.npr.org/templates/story/story.php?storyId=110997398