The following letter was sent to all of the United States Governors:

July 5, 2005

Dear Governor:

On April 21, 2005, the U.S. House of Representative passed H.R. 6, the "Energy Policy Act of 2005.” The legislation contains a number of provisions which preempt, override, or result in the diminishment of existing States authorities, both procedural and substantive. The legislation also contains a liability waiver in section 1502 for Methyl Tertiary Butyl Ether (MTBE), which the Congressional Budget Office has determined constitutes an unfunded intergovernmental mandate on State and local entities. The attachment hereto identifies some of the most significant provisions in H.R. 6 affecting State authority. As we prepare to go to conference on H.R. 6, I would appreciate receiving your position with respect to each of these provisions.

Thank you for your cooperation with this request.

Sincerely,

JOHN D. DINGELL
RANKING MEMBER
COMMITTEE ON ENERGY AND COMMERCE

cc: The Honorable Joe Barton, Chairman
Committee on Energy and Commerce

Attachment:

1. The Refinery Revitalization Act (Sections 371-379)

Section 377(f) provides: “In the event any agency has denied a Federal authorization required for a refinery facility in a Refinery Revitalization Zone, or has failed to act by a deadline established by the Secretary (of Energy) . . . the Secretary (of Energy) may then either issue the necessary Federal authorization with appropriate conditions, or deny the appeal” from the applicant or any State.

Section 379 defines “Federal Authorization” as “any authorization required under Federal law (including the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Solid Waste Disposal Act, the Toxic Substances Control Act, the National Historic Preservation Act, and the National Environmental Policy Act of 1969) in order to site, construct, upgrade, or operate a refinery facility within a Refinery Revitalization Zone, including such permits, special use authorizations, certifications, opinions, or other approvals as may be required, whether issued by a Federal, State, or local agency.” (Emphasis added.)

States issue the predominant number of permits or authorizations required under the Federal environmental laws and perhaps many others pertaining to the siting, constructing, upgrading, or operating of a refinery.

The National Conference of State Legislatures, the Environmental Council of the States, the U.S. Conference of Mayors, the National League of Cities, and the National Association of Counties have already expressed their concerns that this provision would weaken and preempt State and local authorities.

2. Electric Transmission Line Siting (Section 1221)

Section 1221 amends the Federal Power Act to permit the Federal Energy Regulatory Commission (FERC) to preempt State decisions with respect to siting interstate electric transmission lines. For any line sited in an area the Department of Energy designates as a “national interest electric transmission corridor,” the section authorizes FERC to issue a preemptive construction permit for construction (or enlargement) of transmission lines if the State has (a) not approved a permit application within one year after it is filed, and (b) imposed conditions on an approval that does not meet specific new Federal criteria.

3. Liquefied Natural Gas (LNG) Terminal Siting (Title III, Subtitle B,
Section 320)

This section of the bill grants the Federal Energy Regulatory Commission exclusive authority for the construction, expansion, or operation of a LNG facility. It allows FERC to set a deadline for all Federal and State actions and to conclusively presume approval if such actions are not completed within one year.

This section also requires that FERC "shall consult with the State commission of the State in which the liquefaction or gasification natural gas terminal is located regarding State and local safety considerations . . ." and allows the State to inspect these facilities provided that (a) the State commission provides written notice to the Commission of its intention to do so and (b) "the inspections will be carried out in conformance with Federal regulations and guidelines."

It further states that ‟Enforcement of any safety violation discovered by a State commission pursuant to this clause shall be carried out by Federal officials. The Commission shall take appropriate action in response to a report of a violation not later tha[n] 90 days after receiving such report.”

The National Association of Counties, the National League of Cities, and the U.S. Conference of Mayors have expressed their opposition to the language that would allow FERC to preempt the state/local decisionmaking process when siting energy related facilities and infrastructure such as liquefied natural gas (LNG) facilities.

4. Hydroelectric Relicensing (Title II, Subtitle C, Section 231)

This section provides that with regard to licensing conditions under Section 4(e) and fishway prescriptions under Section 18 of the Federal Power Act that "The license applicant shall be entitled to a determination on the record, after opportunity for an expedited agency trial-type hearing of any disputed issues of material fact, with respect to such conditions. Such hearing may be conducted in accordance with procedures established by agency regulation in consultation with the Federal Energy Regulatory Commission."

In addition, Section 231 also adds a new section 33 to the Federal Power Act that would allow a license applicant to propose an alternative condition or fishway if one has been deemed necessary by the relevant Federal agency. The Secretary of the relevant agency is required to accept the alternative under certain conditions including that it costs less to implement and will result in improved operation of the project works for electricity production. While the bill states that other parties may also propose alternatives, their alternatives are not required to be accepted under certain conditions.

The National Association of Attorneys General and the Conference of Western Attorneys General have expressed their opposition to similar provisions in the past.

5. Limit on Number of Boutique Fuels (Section 1541(b))

This provision provides that "The Administrator shall have no authority, when considering a State implementation plan or a State implementation plan revision, to approve under this paragraph any fuel included in such plan or revision if the effect of such approval increases the total number of fuels approved under this paragraph as of September 1, 2004, in all State implementation plans." Section 1541(b) further states that:

"The Administrator shall have no authority under this paragraph, when considering any particular State's implementation plan or a revision to that State’s implementation plan, to approve any fuel unless that fuel was, as of the date of such consideration, approved in at least one State implementation plan in the applicable Petroleum Administration for Defense District."

The State and Territorial Air Pollution Program Administrators and the Association of Local Air Pollution Control Officials have opposed this provision on the grounds that it would "sharply curtail current state authority to adopt cleaner fuel programs."

6. Leaking Underground Storage Tanks Delivery Prohibition (Section 1527)

This provision adds a new Section 9002 to the Leaking Underground Storage Tank (LUST) provisions of the Solid Waste Disposal Act. In paragraph(a)(3) each State that receives any Federal funding from the LUST program must establish a very specific prescribed process for implementing the delivery prohibition. According to the Government Accountability Office, 24 states already have green tag or red tag delivery prohibition programs. This provision would override those existing programs unless they are identical to the requirements set out in paragraph(a)(3).