FALLOUT FROM THE ENERGY POLICY ACT OF 2005 -A Synopsis-

By Diane M. Grassi

“Energy independence from foreign sources.” A mantra repeated over and over again by those responsible for establishing United States energy policy. But it remains a contradiction in terms as the topic is never broached candidly by lawmakers as to how much of the U.S. energy infrastructure and lines of transmission have been consumed by a constant stream of foreign direct investors and diversified holding companies.

Also unbeknownst to most consumers is that legislation which led to such deregulation of U.S. public utilities is hailed from Wall Street to Capitol Hill as the answer to resolving U.S. energy woes.

Now, foreign investors have been granted even greater leeway as now realized by such mandates of the Energy Policy Act of 2005 (EPAct 2005) which essentially eliminated the Public Utilities Holding Company Act (PUHCA) of 1935. Yet, EPAct 2005 has continually escaped public scrutiny and a lack of accountability in both houses of the U.S. Congress.

U.S. energy policy and the generation of power is a complex web of public policy, law, economics, infrastructure and ever-present globalization. So for purposes of this report, and in order to best comprehend current U.S. energy policy, it is helpful to take stock of the more recent evolution of such and to examine its many and varied elements which have changed post-2005.

EPAct 2005 amended Section 203 of the Federal Power Act (FPA) which mandated how future transactions in the energy industry will be handled by the U.S. federal government and will impact matters of states’ sovereignty and ultimately regulating costs to consumers.

For over 70 years, federal laws have played a vital and critical role in the operation, production, distribution and protection of the U.S. electrical power grid. Federal laws in concert with state laws and regulations have necessarily dictated that the power grid be shielded from market manipulation and criminal behavior.

Yet, the 100 year old power grid is faced with increased power demands simultaneously with deregulation by mandate. And deregulation has led to less and less necessary preventative maintenance, upgrades in technology as well as necessary investment in research and development.

The basic structure of the North American transmission system is made up of over 140 control centers and approximately 3500 utility providers covering over 200,000 miles. Utility generating plants, transmission and sub-transmission systems, distribution systems and customer loads traveling over a two-part power grid; one in the east and one in the west. Texas has its own grid.

Compounding the vast network and intricacy of the grid is the interconnectivity and delivery of power that in many cases is incompatible with widely varying levels of equipment integrity, data systems and personnel training.

It is the secondary system which supplies the distribution of electricity to consumers, where most of the power failures occur, and that which require time to repair. And the network of sub-stations feeding electricity to neighborhoods, via feeders which flow to transformers, is where most problems arise during local outages, further exacerbated by ill-maintained equipment.

U.S. deregulation of the utility industry began over two decades ago, and it was the 1992 Energy Policy Act which changed the way electricity was sold to local consumers for the first time. Energy companies were permitted to install their own plants and sought customers throughout the country, but not necessarily in the same geographic region. Energy brokers then entered into the picture and utilized the open market to buy and sell power. And thus came the onset of potential unreliability of energy delivery.

Purchasing power from plants hundreds of miles away from a respective region put unprecedented burdens upon the transmission system, raising the likelihood of power failures at the local level. Most importantly, the U.S. electrical grid was not originally designed to absorb the transmission of high voltage capacity across the continent, especially in absence of comparable and upgraded systems in place.

Although Enron became the poster-child for electrical power market manipulation, which came to light after the rolling blackouts of California in 2000 and 2001, U.S. public policy and lawmakers must be held responsible for even further erosion of federal regulations and mandates now realized in EPAct 2005.

Instead of increasing the odds that such market threats would not reappear, the U.S. government has but relaxed the law, its regulations and oversight even more, with the repeal of PUHCA 1935.

PUHCA 1935 became law after the height of the Great Depression and after the stock market crash of 1929 and was a cornerstone of President Franklin D. Roosevelt’s New Deal industry legislation. It called for the prohibition of market manipulation, specifically to curtail then super-sized utility conglomerates, and to prevent monopolies from overtaking geographic regions. And just as importantly, PUHCA 1935 made it unfeasible for non-energy corporations to purchase a public utility.

The emergence and formation of the Securities Exchange Commission (SEC) in 1934, together with PUHCA 1935 became essential in safe-guarding the public trust and in protecting consumers and investors alike, as PUHCA 1935 delegated multi-state utility ownership regulation to the SEC.
With the official repeal of PUHCA 1935, in EPAct 2005, the SEC vacated its regulatory authority over multi-state utility ownership by holding companies and only retains the ability to protect investors, not utility consumers and will carry little weight over multinational holding companies.

It is the Federal Energy Regulatory Commission (FERC) that will now hold individual utilities accountable through self-policing and self-reporting policies of any irregularities such as cross-subsidization.
EPAct 2005 now allows multi-state transactions and mergers of distribution facilities, utilities merging with non-utility corporations, and including foreign ownership over domestic utilities. Oil companies may now own electricity and natural gas utilities, paving the way, yet again, for the formation of cartels. Construction and infrastructure companies, from abroad, are eager to partake in being afforded acquisition of U.S. public utility operations as well.

No individual state or federal agency will have the jurisdictional efficacy to regulate the finances of U.S. public utility assets. Required oversight of parent holding companies such as investment banks, which speculate and invest in far riskier businesses with utility rate-payer revenues, is not established nor mandated in EPAct 2005.

The cost? The reliability standards of U.S. public utilities, which could have grave ramifications on U.S. national security, the U.S. economy and the well-being and safety of the American people; all with the blessings of the U.S. Department of Energy (DOE), the U.S. Congress and the global stock market.

EPAct 2005 does set forth specific mandates, unprecedented with respect to U.S. energy law, states’ constitutional rights and sovereignty, as well as interstate commerce. Specifically, Section 1221 of EPAct 2005 updates Section 216 of the Federal Power Act (FPA) for a National Transmission Congestion Study which paved the way for the mandated National Interest Electric Transmission Corridors (NIETC). The Secretary of Energy may designate “any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor.”

The DOE then created as a direct result of the study two transmission corridors which consist of the Mid-Atlantic Area National Corridor and the Southwest Area National Corridor and finalized in October 2007.
Many state governors, state representatives, many federally elected members of the U.S. Congress, consumer advocacy organizations, and environmental and historic preservation organizations, oppose such corridors.

The enormity of the construct of the Mid-Atlantic Area National Corridor will impact states legislatively, constitutionally, economically, environmentally and historically. The Mid-Atlantic Area National Corridor states include the entireties of New Jersey, Delaware, and Washington, D.C., most of Maryland, most of New York; most of Pennsylvania, most of West Virginia, and major areas of Ohio, and major areas of Virginia.
In contrast, the Southwest Area National Corridor includes parts of California and parts of Arizona, albeit the most heavily populated areas of these states.

The NIETC lays the groundwork for supplemental transmission siting approval in the construction of High-Voltage Direct-Current (HVDC) Transmission lines, above ground, throughout all the NIETC designated states, whether or not that particular state in fact has an electricity congestion problem itself. Additionally, the entirety of the U.S. power grid, as it presently exists, uses High-Voltage Alternating-Current (HVAC) Transmission lines.

Only 2% of the 200,000 electrical transmission line miles throughout the U.S. are HVDC. According to the Government Accountability Office Report of February 1, 2008, (GAO-08-347R) with respect to HVDC, there will be “higher costs for short-distance lines due to the cost of equipment needed to convert DC into AC electricity used by residents and a lack of electricity benefits to consumers living along these lines –unless converter stations are installed at intermediate locations – because such lines are generally not connected to local electricity lines.”

The rationale for designation corridors is not to facilitate or dictate how the states’ regions, transmission providers or electric utilities should meet their own energy challenges, according to the DOE. But the truth is quite the opposite.

“The process is geared more toward expediting the approval and siting of transmission corridors than it is geared toward respecting states’ rights about their residents’ energy future and needs…and by a heavy-handed centralized one-size fits all approach..,” according to Congressman Maurice Hinchey (D-NY). And it is precisely such sentiments that have been raised to the Secretary of Energy, Samuel Bodman, by both federal and state lawmakers on both sides of the aisle in all 10 states and Washington, D.C. that will be directly impacted by the NIETC.

This EPAct 2005 legislation enables eminent domain law over states by the federal government on a scale unlike the U.S. has ever seen and is historically unprecedented, and with respect to the federalization of U.S. power transmission.

As such, the law provides for the DOE to assign the FERC siting authority. In other words, the U.S. federal government shall dictate to individual states the transmission of their own energy and by extension, the loss of state price controls. For state Public Utility Commissions always represented consumers and oversaw pricing and maintenance standards.

The FERC is given authority “to issue permits for the construction or modification of transmission facilities in a National Interest Electric Transmission Corridor if FERC finds that: (1)(A) a state in which the facilities are to be constructed is without authority to approve the siting of the facilities or to consider the interstate benefits expected to be achieved by the project; (B) the applicant for a permit is a transmitting utility that does qualify for a permit federally but does not qualify for a permit under state law because it does not serve end-use customers; or (C) the state has siting authority but (i) it has withheld approval for the later of one year after the filing of an application; or (ii) conditioned approval in such a way that the proposed construction will not significantly reduce transmission congestion or is not economically feasible.”

And, “If a permit holder cannot obtain the necessary rights-of-way for the project, the permit holder can acquire the rights-of-way through an eminent domain proceeding in the federal district court where the property is located….A right-of-way acquired in an eminent domain proceeding is a taking of private property for which the landowner must receive just compensation, which is the fair market value on the date of exercise of eminent domain.”

However, any fluctuation or rise in real estate property values during the course of the proceeding and including any period of time due to litigation arising from such a proceeding to the time of completion of the project, if finally approved, would be locked in at the fair market value of the initial date of the proceeding, which could potentially take years to resolve.

Historically federal jurisdiction of the siting of transmission lines in states has been reserved solely for federal lands within respective states. Again, it is the state public utility commissions of each given state which have otherwise been the regulators of siting permits and applications.

Reasonably understood is the anger and angst that states’ governors and states’ legislators feel having recently learned of the fate of their states’ own power resources and transmission, and in such an injudicious way. In his letter to the U.S. Secretary of Energy, Samuel Bodman, in November 2007 after the NIETC was finalized, Pennsylvania Governor Ed Rendell wrote, “These transmission lines will be on our land and depreciate our property values, but they may not offer any benefit to Pennsylvania consumers. This designation and action by the federal government is a blatant abuse of states’ rights.”

Already the first official challenge to state transmission siting authority given to the FERC or federal government, as prescribed by such EPAct 2005 mandate, has been filed for appeal. A Southern California Edison (SCE) application to the Arizona Corporation Commission, (ACC) the public utility commission of Arizona, was rejected in May 2007 by the ACC. SCE merely wanted to run a 230-mile transmission line from Arizona to California at a cost of $242 million to Arizona ratepayers.

And the benefit to Arizona? None, as it would specifically serve only Californians and their growing energy needs, not the residents of Arizona. The ACC described SCE’s project as “a 230-mile extension cord” into Arizona’s generation supply.

This likely is just the beginning of struggles ahead, exemplifying a dysfunctional remedy, to “fix” the U.S. power grid’s growing national energy needs and the need for alternative power resources. EPAct 2005 will create an ultimate power grab for power both literally and figuratively, the sights of which the U.S. has never seen.

Now, the U.S. justice system, by use of its federal courts, will bear the brunt of such misguided energy policy, in which the American people had no role. Meanwhile, the infrastructure and power needs of Americans remain at risk from both corporate greed and political intimidation.

Copyright ©2008 Diane M. Grassi

Military Ballots Remain Problematic

November 30, 2008

By Diane M. Grassi

“At a time when these young people are defending our country and its free institutions, the least we at home can do is to make sure that they are able to enjoy the rights they are being asked to fight to preserve.”

These words were penned to members of the United States Congress during the Korean War when then President Harry S. Truman was expressing his discontent that the votes of active duty soldiers in theater overseas were in jeopardy of their votes not being counted in the Presidential election of 1952.

And although the Presidential election of November 4, 2008 will be official come December 15, 2008 when the Electoral College casts its votes and later tallied by the U.S. Congress on January 6, 2009, remnants of the November 4th election remain with a few states yet to certify their Congressional district vote counts, while a runoff election is set for December 2, 2008 in Georgia’s U.S. Senate District 1.

And in that regard, absentee overseas ballots of serving U.S. military members could ultimately be far more meaningful. With several close races not officially certified, military absentee ballots now play a greater role in those last few razor-thin vote counts ongoing in Minnesota’s Senate District 63 between Republican incumbent Norm Coleman and comedian, Al Franken; Virginia’s 5th Congressional District, presently involved in a court decision, between six-term Republican Virgil Goode and Democrat Tom Perriello; California’s 4th Congressional District between Democrat Tom McClintock and Republican Charlie Brown, who has not yet conceded; and the runoff election in Georgia, featuring incumbent Republican, Saxby Chambliss and Democrat Jim Martin.

Unfortunately, the Minnesota election may either be decided by the courts, similar to the case in Virginia, or could even wind up determined by the U.S. Senate itself, due to contested absentee ballot vote counts and their legal status.

But once again, 8 years removed from the controversial and unprecedented Presidential election of 2000 and its involvement of the U.S. Supreme Court over a disputed Florida ballot count, and 56 years since Harry Truman’s plea to the Congress, the overseas absentee military ballot election process remains terribly flawed and needlessly archaic.

And although the Congress in 1952 did not heed the outcry from President Truman, the 110th U.S. Congress also gets a failing grade in that regard. Legislation designed to specifically expedite the mailing and transit process for troops serving in Iraq and Afghanistan for the November 4th election was passed by the Senate on October 1, 2008.

The Military Voting Protection Act (MVP Act) S. 3073, was introduced by Senator John Cornyn (R-TX), of the Senate Armed Services Committee, in May 2008. The Act’s purpose is, “To amend the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) of 1986, to improve procedures for the collection and delivery of absentee ballots of absent uniformed overseas service members and overseas voters and for other purposes.” It would ensure that U.S. military service members be fully able to participate in the electoral process.

The legislation would also require the Department of Defense (DoD) to track each ballot and materials sent between serving military and the various U.S. states to make sure that they properly arrive. And the DoD would be mandated to research the implementation of secure electronic voting mechanisms, most likely via the internet. More specifically, as in its companion bill, H.R. 5673, introduced in the House of Representatives on April 1, 2008, by Representative Kevin McCarthy (R-CA), it allows for the use of private contractors for express shipping instead of the U.S. Postal Service.

Over 500,000 military service members are presently deployed outside the continental U.S. and about 200,000 make up the total serving in Iraq, Afghanistan and other unaccompanied tours of duty. However, that number does not include the spouses of military service members who total approximately 120,000. They, too, face the same hurdles given the present voting process for personnel overseas.

On October 8, 2008, Representative Roscoe Bartlett (R-MD) along with 30 other co-sponsors of H.R. 5673, sent a letter to House Speaker, Nancy Pelosi, imploring her to move quickly for passage of H.R. 5673, in order to ensure that overseas military votes in this year’s election be received for the November 4th election.

Rather than ratifying passage of the legislation that would have been the best guarantee that self-sacrificing military service members fighting for U.S. liberty abroad could have had, Speaker Pelosi left the legislation on the table as she did its companion bill, S. 3073, passed by the Senate on October 1, 2008.

Interestingly, but sadly so, out of the 54 sponsors of H.R. 5673, 53 were Republican members of the House. And of the 30 co-sponsors of S. 3073, all were Republican members of the Senate. It clearly speaks volumes about the Democrats’ lack of concern about the rights of the U.S. fighting military. And if such lawmakers on Capitol Hill had hoped to correct such a public impression, they have but failed in that regard as well.

As stated by Congressman Bartlett, “It’s very sad that the House leadership blocked a vote on a bill approved by the Senate that would make it easier for American soldiers deployed in harm’s way to vote in federal elections. In 2006, only one-third of the absentee ballots requested were counted because the current system is too cumbersome and complicated.” And Congressman Trent Franks (R-AZ) added, “Knowing that we have experienced problems with counting the absentee ballots from our soldiers, Speaker Pelosi and Democrat leadership have no excuse for disenfranchising our overseas military.”

The complex system that offshore military personnel endure involves 50 states and select territories all with their own unique voting statutes that cover everything from voting registration to obtaining military absentee ballot applications and materials, to the receipt and delivery of the actual voting ballot. For example, some states do not send out absentee ballots until 35-40 days prior to the day of election. Other states such as Rhode Island and Massachusetts send ballots out just 21 days prior to the election, and is certainly not enough time for troops serving in the Middle East or even for troops changing posts stateside, to cast their votes.

In addition, each state has varying rules on how many days past Election Day they allow in order for received ballots to be counted and if the date of receipt is the controlling date or the postmark on the ballot is the date used. In Florida, where 10 days post-election is allowed, only federal races count for those ballots received and not for state or local races, which is the case for all states receiving a Federal Voting Absentee Ballot (FVAB) returned in the mail in lieu of a state produced ballot.

Making it more cumbersome is the combination of the Military Mail Service Agency with the U.S. Postal Service that is used for all mailed overseas military ballots. It is a requirement of all states with the exception of those states who accept faxed ballots, but in outposts in the Middle East, fax machines are not used.

Yet, the U.S. Postal Service and its representative union, the National Association for U.S. Postal Inspectors (NAPUS) has lobbied Speaker Pelosi and members of the Congress in an effort to prevent private contractors from being used for expediting the delivery of military ballots as proposed in both H.R. 5673 and S. 3073. And other members of Congress believe that it directly influenced Speaker Pelosi’s decision to completely drop the legislation.

The number of possible obstacles in the mailing process can be exacerbated by mail getting lost between the U.S. Postal Service and the Military Postal Agency. Mail is initially shipped by military channels and can prove undeliverable based upon periods of heavy combat, that can obstruct supply convoys, as well as replacing mail with higher priority cargo such as weaponry.

The DoD is expressly responsible for the adequate flow of getting essential voting information to troops in addition to overseeing the mail delivery process, known as the Federal Voting Assistance Program (FVAP). And unfortunately, according to the Government Accountability Office (GAO) in a June 2007 report, the Election Assistance Commission under the purview of the DoD failed to proceed with an internet based absentee voting system as requested by the Congress, although $25 million was allocated for it.

In the 2006 election, of the 6 million overseas military service members and eligible overseas voters, only 16.5% of them were able to request an absentee ballot. And of the one-third of the total ballots requested by such voters, only 5.5% were able to cast absentee ballots. This was according to the DoD Inspector General and the Election Assistance Commission Report, available in 2007.

Yet, in spite of the tabled legislation earlier this year, the Pew Center on the States has several initiatives it has been working on over several years such as the “adoption of a uniform state law on military and overseas voting” using the Uniform Commercial Code as a basis.

And going forward, Senator Bill Nelson (D-FL) currently is preparing legislation, for the next session of Congress, requiring federal funding for states and counties in order to provide internet voting to U.S. citizens overseas. It is the opinion of proponents of electronic voting that since the military depends upon electronic transmission for high security data that certainly a like type of system could be used for the security of electronic voting.

With regard to Virginia’s 5th District seat in the House of Representatives between Republican incumbent Virgil Goode and challenger, Democrat Tom Perriello, Perriello has been certified as the winner by a 745 vote margin. However, Goode has filed for a recount which has yet to be completed for certification.

However, on November 3, 2008, the McCain-Palin Campaign filed a lawsuit against the Virginia Board of Elections and 8 counties, over 4,750 absentee ballots. The issue is pertinent to the inclusion of military and overseas absentee ballots which remain uncounted. The suit contends that UOCAVA requires that ballots be mailed to military voters in foreign countries at least 45 days prior to Election Day, which this year would have been September 20, 2008. It also alleges that Virginia did not mail out the ballots until 35 days prior to the election, or in October, thus preventing sufficient time for voters to mail them back in time for Election Day.

But the state of Virginia contends in the lawsuit that, “There is no federal right to have absentee ballots mailed out 45 days before an election. The plaintiff’s claim is based on mere suggestion by federal officials, and suggestions are not enforceable under 42 U.S.C. § 1983.”

Virginia law requires that overseas absentee ballots be postmarked by Election Day and received no later than 10 days thereafter. Yet, the Virginia Board of Elections, as well as most states, does not keep data on how many overseas military members are even registered to vote.

Secondly, the McCain campaign claims that a federal law overrules Virginia state law that requires that a witness address be listed on absentee ballots. Both the state and federal forms issued by the state call for the signature of the witness to provide verification that the signature on the ballot is that of the registered voter. But the FVAB, which may be used in place of the state ballot, does not require the address of a witness, nor is there a space for it, causing even further confusion.

At a hearing on November 4, 2008, U.S. District Court Judge Richard Williams ordered all tardy ballots, in the 8 Virginia counties receiving overseas absentee ballots, be preserved. And on November 17, 2008 he removed McCain-Palin 2008 Inc. as the plaintiff and replaced it with the U.S. Department of Justice. So it will now be up to the U.S. Attorney General’s Office to pursue the contention that the nearly 5,000 ballots be counted. However, the exact number of military ballots remains unknown.

And Tuesday, December 2, 2008, as multi-million more dollars have been doled out for both candidates in Georgia, the remaining contest in 2008 for the U.S. Senate, between Republican incumbent, Saxby Chambliss and newcomer Democrat, Jim Martin, will hopefully be decided.

But the short turnaround time between November 4th and December 2nd in order to mail out ballots again to overseas destinations or even for the return mailing for those soldiers who were able to at least download the form either through the Overseas Vote Foundation website or from the Georgia Board of elections website, time may be too short. All ballots have to be postmarked by December 2, 2008 and received no later than December 5, 2008.

And prognosticators do not believe the Georgia election to necessarily be finalized on December 2nd, either. For short of its certification date, if it too proves to be a razor-thin count margin, expect military and overseas absentee ballots to again be thrown into the mix.

Finally, U.S. voters will be glad to know that NASA astronauts were able to cast their votes on time for this year’s November 4th elections onboard the International Space Station. In fact, a U.S. astronaut voted from the Russian Space Station as far back as 1997. And before this year, 4 different astronauts have successfully voted from outer space.

Digital ballot files are sent to NASA’s Johnson Space Center Mission Control Center which then sends them to the Space Station. The astronauts are then directly e-mailed encrypted credentials and passwords. When completed the encrypted ballots are e-mailed back to Mission Control.

– And for U.S troops overseas protecting the voting rights of Americans stateside? They can only hope.

Copyright ©2008 Diane M. Grassi

Freedom Of the Press

“The only security of all is in a free press. The force of public opinion cannot be resisted when permitted freely to be expressed. The agitation it produces must be submitted to. It is necessary, to keep the waters pure.”

–Thomas Jefferson (1823)

It is important to note that democracy has never guaranteed freedom nor specific rights to a people. And in United States history, the misconception has been that the United States Constitution, signed in 1787, in particular, did not give people the right of free speech or freedom of the press, for example, and in fact did not give people any rights at all.

Rather, the U.S. Constitution protected pre-existing fundamental rights and provided for democratically elected officials, vulnerable to abuse their power, over such fundamental rights.

Therefore, it was with the construct of the U.S. Bill of Rights, ratified in 1791, known as the first ten amendments to the U.S. Constitution, which provided for express restrictions on the interference with those rights, which pre-existed both the formation of the U.S. government or its Constitution.

Although the U.S. Bill of Rights rests on the principle that a democracy does not dictate that freedom is guaranteed, it does serve as a buffer from the government and its officials from censorship over private entities, for they may exercise their rights of private ownership and liberty, fundamental rights the government is required to protect, not that of what they may or may not publish.

And in 18th century America, it was newspapers and the printed word which framed the U.S. Bill of Rights, and specifically the First Amendment, and was a key component in the argument that the Bill of Rights should become a part of the U.S. Constitution.

Primarily, it was Thomas Jefferson, the 3rd U.S. President (1801-1809) and the primary author the U.S. Declaration of Independence, who was insistent that a Bill of Rights was necessary to prevent the government wielding too much power, without any amendments to the Constitution.

And it was perhaps Jefferson who said it best, “Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.”
–Thomas Jefferson (1787)

Written by Diane M. Grassi
Copyright © 2008 Diane M. Grassi

Fallout from '05 Energy Policy Act Pt. 3: The Nuclear Option

June 18, 2008

By Diane M. Grassi

In this third chapter of this ongoing discussion and analysis of United States energy policy and its ramifications both realized directly and indirectly from the U.S. Energy Policy Act of 2005, (EPAct 2005) it would be irresponsible not to include U.S. nuclear energy policy in such analysis.

As such, the EPAct 2005 and its previously referenced and unprecedented mandates, in prior chapters of this report, play a role with the reformulation of the regulation of U.S. nuclear energy and its projected and rather overwhelming imminent comeback.

The nuclear energy industry has become a global proposition given the changing geographic demands of energy needs in newly industrialized nations such as India and China. And it would be foolish for the U.S. to assume that it operates in a vacuum and that its future energy needs and demands will not be impacted by such changes in a global economy; one in which the U.S. is now primarily at the receiving end of offshore manufactured goods, including more and more of America’s food supply.

But the global economy has but given the U.S. government and in particular in this case, the U.S. Department of Energy, (DOE) an excuse to take the proverbial lid off of sound national security policy which has necessarily dictated U.S. energy policy for decades, until now, for the safety of the American people and the integrity of its critical infrastructure.

Although the first large scale civilian nuclear plant started providing electricity in 1957, it was basically between that time and the late 1970’s when all of the current operating nuclear reactor facilities were constructed. And with an average lifespan up to 60 years for each, most of the currently operating 104 U.S. nuclear plants are either in or have applied for their 2nd 20-year licensing period extensions.

Since the last U.S. nuclear reactor was ordered in 1973, those handful that were completed, after 1978 and post-3 Mile Island, were ordered prior to 1973. To wit, in 1996, the last U.S. plant constructed, the Tennessee Valley Authority’s Watts Bar 1 reactor in Tennessee, was the result of a revived dormant license from 1970. And there are plans to build the Watts Bar 2 from another previous license from dating back to1973.

Since U.S. nuclear energy policy has nearly come full circle today, it is important to take stock of its history. The Atomic Energy Commission, (AEC) was formed through the Atomic Energy Act of 1946, originally to specifically oversee the military’s and civic atomic energy programs. And it was given the expanded responsibility, for the first time, to assume dual oversight and regulation of atomic energy both militarily as well as commercially through the Atomic Energy Act of 1954.

But it was through the Energy Reorganization Act of 1974, that created the Nuclear Regulatory Commission (NRC), the present U.S. nuclear regulatory agency, to assume the oversight authority from the AEC. It now regulates most U.S. commercial nuclear activities, including nuclear power reactors and the use of radioactive materials in industry, medicine, agriculture and scientific research as well as fuel cycle facilities and nuclear waste management.

The 1974 law was seen as an opportunity to put trust back into the oversight agency which took on the dual task of both promoting nuclear power while safeguarding the American people, initially in 1954. And it was after that point in time that the American people had already begun to lose trust in the agency’s ability to do so. Apparently, the U.S. government thought that changing the acronym of the agency would calm the public’s displeasures.

But it was during the late 1960’s and early 1970’s when the nuclear plant construction boom was in full gear and simultaneous reassurances from the federal government to keep safeguards in place fell on the deaf ears of energy consumers. Most importantly, the agency was designated to walk a fine line of both promoting commercially viable nuclear energy as well as handling all of the required licensing for new construction of nuclear power plants.

And in this global economy, at a time when the U.S. is seeing extraordinary growth in the foreign direct investment and acquisition in U.S. critical infrastructure, it appears reaped with conflict for the licensing agency to also be able to independently assess potential security risks both civilly and criminally.

Unfortunately, the notorious Browns Ferry Nuclear Plant fire in 1975 in Decatur, AL could have been avoided and was the result of human error rather than an unexpected meltdown. A mechanical technician foolishly was looking for reported air leaks within the reactor with a lighted candle which ultimately started the fire.

But Three Mile Island Unit 2 (TMI-2) nuclear power plant near Middletown, Pennsylvania, on March 28, 1979, was the most serious nuclear plant fiasco in U.S. history. The reactor sustained the melting of half its core, which was later found to be a combination of technical and human error and allowed for released radioactive gases into the atmosphere and putting its employees immediately at risk.

The 3 Mile failure was followed in 1986 by the misfortune of Unit 4 of the nuclear power station at Chernobyl, Ukraine in the former USSR. It emitted radioactive material, far more deadly an accident that 3 Mile Island, affecting 52,000 people in the vicinity, immediately killing 30 people and possibly impacting up to 5 million others.

Nevertheless, it was 3 Mile Island that provided the final nail in the coffin for skittish investors in U.S. nuclear technology, although nuclear facilities throughout the U.S. still provide 20% of electrical power generation. It remains very low in greenhouse emissions and is considered a form of clean energy.

In spite of the NRC’s own damage control to restore safety measures in nuclear plant facilities over the past 30 years, its ill-repute remains along with remnants of trepidation in reinvesting in nuclear energy. Therefore, the apparent overnight reverse course by the DOE in lining up investors to submit license construction applications for nuclear energy plants, with some 20 expected by mid-2009, has set off alarm bells of another sort.

And that brings us back to the EPAct of 2005 which provides for a vast assortment of givebacks, subsidies and federally subsidized loan guarantees including risk insurance packages to the brokers and investors who come a-callin’, totaling billions of dollars worth of incentives. And once again, foreign owned holding companies, foreign government-owned entities and foreign-U.S. joint ventures, acquisitions and mergers will be the recipients of these U.S. taxpayer provided benefits.

The nuclear energy industry not only remains a hot-button issue because of its sullied past, but because of a heightened internal as well as public awareness of its ever-present national security risks it now poses in a post-9/11 world. In addition, there is the issue of the failing power grid infrastructure, which has not been improved in decades, and minimally maintained, along with a continued U.S. deregulation policy from which the American economy may never recover.

All of the aforementioned but creates for a perfect storm, all the while U.S. foreign policy dictates to other nations and regions on the ways in which they may engage or use nuclear material, whether for weaponry or for electrical power distribution.

The first step in trying to comprehend this multi-faceted and current energy policy, based upon both its history as well as current law, is to understand the revised NRC application process. Although the regulation revisions date back to 1989, the most recent and final rules were not certified and published in the Federal Register by the NRC until August 2007 (10 CFR Part 52).

The revisions have changed the entire regulatory review process and framework for the construction of new nuclear reactors and facilities. And over the next 18 months, such changes in the regulation process, with ink barely dry, will be tested in a paint-by-numbers fashion.

The EPAct 2005 while not intrinsic to the actual changes in NRC rule making, has played a consequential role in incentives for investors and ultimately the NRC’s seeming rush to finalize regulation revisions over a matter of months, after many years they were held in virtual abeyance.

And now the one time 2-step licensing process created for its thoroughness and for compliance with the Environmental Protection Agency (EPA) as well as providing enough time to have the appropriate number of public hearings, has been whittled down to a 1-step process; one that appears less investigative in scope and more equivalent to drive-through governance.

In order to supposedly bring an improved regulatory model for U.S. nuclear energy construction, which the NRC believes to be more efficient, the COL, or combined license application, early site permits (ESP), and standard design certifications pushes the process along more quickly. However, also cut in the process will be preoperational hearings on plant construction qualification that would be limited and not required by the NRC, and minimizing public input.

The ESP procedure includes site safety issues and emergency plans apart from the plant design. The NRC’s and nuclear industry’s reasoning is that the new process will cut down on delays, cost overruns and reduce the application process down to 42 months. In that regard, there is some speculation that the next nuclear plant could break ground in the U.S. by the end of 2010 and perhaps be completed by 2015.

In the final part of this series, the actual players or investors in new U.S. nuclear plants construction will be addressed as well as who and from where from these entities hale. And the mechanisms mandated in the EPAct 2005 for lucrative financial rewards to these corporations will be discussed. Whether or not such investors will be even remotely close to ensuring the fiscal as well as environmental health of the American people is an important question which will be asked.

And finally, that which is most crucial in this entire changing energy landscape, that being the national security of the U.S, was etched into law in the Atomic Energy Act of 1954 in 42 U.S.C. Sec. 2011 (1954) as follows: “Aliens and entities owned, controlled or dominated by aliens or foreign governments may not engage in operations involving the utilization of energy. This restriction applies primarily to nuclear reactors and reprocessing plants extracting plutonium.”

Yet, as will be analyzed in Part 4 of this series, we will see that through the use of joint ventures, foreign holding companies, license transfers and majority subsidiary investment mergers, rubber-stamped by virtually all branches of the U.S. government, historically held energy law no longer remains the watchdog it was once meant to be. Therefore, the best interests of the American people are now marginalized and the future national security interests of the U.S. may be forever compromised.

Copyright ©2008 Diane M. Grassi
Contact dgrassi@cox.net