H.R. 4273: Resolving Environmental and Grid Reliability Conflicts Act of 2012

H.R. 4273

Resolving Environmental and Grid Reliability Conflicts Act of 2012

Sponsor
Rep. Pete Olson

Date
August 1, 2012 (112th Congress, 2nd Session)

Staff Contact
Sarah Makin

Floor Situation

On Wednesday, August 1, 2012, the House is scheduled to consider H.R. 4273, the Resolving Environmental and Grid Reliability Conflicts Act of 2012, under a suspension of the rules requiring a two-thirds majority vote for approval.  H.R. 4273 was introduced by Rep. Pete Olson (R-TX) on March 28, 2012, and was referred to the Committee on Energy and Commerce, which held a mark-up and reported the bill, as amended, on June 20, 2012. 

Bill Summary

H.R. 4273 would amend the Federal Power Act to provide the following:

  1. An emergency order issued under the Act should require generation, delivery, interchange, or transmission of electric energy only during times necessary to meet such emergency and serve the public interest, should, to the extent reasonable, be consistent with any other applicable federal law, including any environmental law or regulation, and should endeavor to minimize any adverse environmental impacts; and
  2. Any omission or action taken by a party to comply with such an order that results in noncompliance with any federal, state, or local environmental law or regulation shall not be considered a violation of, or subject such party to any civil or criminal liability under, such law or regulation.

Cost

According to CBO, “H.R. 4273 would amend existing law regarding actions taken by electric utilities when the Department of Energy (DOE) determines that the electric power system is experiencing emergency conditions.  Under current law, during a designated emergency, DOE can require firms to produce or supply electricity to avoid or resolve blackouts or other risks to the electric power system.  If those actions violate other regulatory requirements, such as air pollution limits, the affected firms may be liable for penalties under those laws.  H.R. 4273 would revise this framework by establishing new procedures for ensuring compliance with environmental standards during designated emergencies.  The bill also would exempt firms from certain civil and criminal liability if the actions taken to comply with DOE's emergency orders violate environmental or other regulatory standards.

“Pay-as-you-go procedures apply to this legislation because it could affect revenues and direct spending.  CBO estimates, however, that the impact on the federal budget would be insignificant over the 2012-2022 period. According to DOE, it has issued emergency orders to electric utilities six times since 1978, and none of those transactions resulted in the payment of penalties.  Based on that historical experience, CBO estimates that revenues from such penalties would not be significant over the next 10 years under current law; as a result, CBO estimates that reducing firms' liability for such penalties would not result in any significant loss of federal revenues.

“Similarly, CBO estimates that enacting H.R. 4273 would have no significant net effect on direct spending by the federal power agencies (such as the Tennessee Valley Authority) that could be liable for such penalties.  Finally, we estimate that implementing the bill would have no significant effect on spending subject to appropriation.

“The bill would impose an intergovernmental mandate by preempting state and local environmental and liability laws.  Energy facilities would be exempt from complying with such laws if those laws conflict with an emergency order issued by DOE.  Because the preemption of those laws would impose no duty on state and local governments that would result in additional spending or the direct loss of revenues, CBO estimates that the cost of that mandate would fall well below the annual threshold established in UMRA for intergovernmental mandates ($73 million in 2012, adjusted annually for inflation).

“The bill would impose a private-sector mandate to the extent that it eliminates an existing right to seek compensation for damages under environmental laws from utilities operating in compliance with a federal emergency order issued by DOE.  The cost of the mandate would be the forgone value of awards and settlements in such claims.  Because DOE has issued emergency orders infrequently, CBO expects that claims would be uncommon in the future. Consequently, CBO expects that the cost of the mandates would be small and fall below the annual threshold for private-sector mandates ($146 million in 2012, adjusted annually for inflation).”