
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 16USC824a-3]

 
                         TITLE 16--CONSERVATION
 
         CHAPTER 12--FEDERAL REGULATION AND DEVELOPMENT OF POWER
 
   SUBCHAPTER II--REGULATION OF ELECTRIC UTILITY COMPANIES ENGAGED IN 
                           INTERSTATE COMMERCE
 
Sec. 824a-3. Cogeneration and small power production


(a) Cogeneration and small power production rules

    Not later than 1 year after November 9, 1978, the Commission shall 
prescribe, and from time to time thereafter revise, such rules as it 
determines necessary to encourage cogeneration and small power 
production, and to encourage geothermal small power production 
facilities of not more than 80 megawatts capacity, which rules require 
electric utilities to offer to--
        (1) sell electric energy to qualifying cogeneration facilities 
    and qualifying small power production facilities \1\ and
---------------------------------------------------------------------------
    \1\ So in original. Probably should be followed by a comma.
---------------------------------------------------------------------------
        (2) purchase electric energy from such facilities.

Such rules shall be prescribed, after consultation with representatives 
of Federal and State regulatory agencies having ratemaking authority for 
electric utilities, and after public notice and a reasonable opportunity 
for interested persons (including State and Federal agencies) to submit 
oral as well as written data, views, and arguments. Such rules shall 
include provisions respecting minimum reliability of qualifying 
cogeneration facilities and qualifying small power production facilities 
(including reliability of such facilities during emergencies) and rules 
respecting reliability of electric energy service to be available to 
such facilities from electric utilities during emergencies. Such rules 
may not authorize a qualifying cogeneration facility or qualifying small 
power production facility to make any sale for purposes other than 
resale.

(b) Rates for purchases by electric utilities

    The rules prescribed under subsection (a) of this section shall 
insure that, in requiring any electric utility to offer to purchase 
electric energy from any qualifying cogeneration facility or qualifying 
small power production facility, the rates for such purchase--
        (1) shall be just and reasonable to the electric consumers of 
    the electric utility and in the public interest, and
        (2) shall not discriminate against qualifying cogenerators or 
    qualifying small power producers.

No such rule prescribed under subsection (a) of this section shall 
provide for a rate which exceeds the incremental cost to the electric 
utility of alternative electric energy.

(c) Rates for sales by utilities

    The rules prescribed under subsection (a) of this section shall 
insure that, in requiring any electric utility to offer to sell electric 
energy to any qualifying cogeneration facility or qualifying small power 
production facility, the rates for such sale--
        (1) shall be just and reasonable and in the public interest, and
        (2) shall not discriminate against the qualifying cogenerators 
    or qualifying small power producers.

(d) ``Incremental cost of alternative electric energy'' defined

    For purposes of this section, the term ``incremental cost of 
alternative electric energy'' means, with respect to electric energy 
purchased from a qualifying cogenerator or qualifying small power 
producer, the cost to the electric utility of the electric energy which, 
but for the purchase from such cogenerator or small power producer, such 
utility would generate or purchase from another source.

(e) Exemptions

    (1) Not later than 1 year after November 9, 1978, and from time to 
time thereafter, the Commission shall, after consultation with 
representatives of State regulatory authorities, electric utilities, 
owners of cogeneration facilities and owners of small power production 
facilities, and after public notice and a reasonable opportunity for 
interested persons (including State and Federal agencies) to submit oral 
as well as written data, views, and arguments, prescribe rules under 
which geothermal small power production facilities of not more than 80 
megawatts capacity, qualifying cogeneration facilities, and qualifying 
small power production facilities are exempted in whole or part from the 
Federal Power Act [16 U.S.C. 791a et seq.], from the Public Utility 
Holding Company Act [15 U.S.C. 79 et seq.], from State laws and 
regulations respecting the rates, or respecting the financial or 
organizational regulation, of electric utilities, or from any 
combination of the foregoing, if the Commission determines such 
exemption is necessary to encourage cogeneration and small power 
production.
    (2) No qualifying small power production facility (other than a 
qualifying small power production facility which is an eligible solar, 
wind, waste, or geothermal facility as defined in section 3(17)(E) of 
the Federal Power Act [16 U.S.C. 796(17)(E)]) which has a power 
production capacity which, together with any other facilities located at 
the same site (as determined by the Commission), exceeds 30 megawatts, 
or 80 megawatts for a qualifying small power production facility using 
geothermal energy as the primary energy source, may be exempted under 
rules under paragraph (1) from any provision of law or regulation 
referred to in paragraph (1), except that any qualifying small power 
production facility which produces electric energy solely by the use of 
biomass as a primary energy source, may be exempted by the Commission 
under such rules from the Public Utility Holding Company Act [15 U.S.C. 
79 et seq.] and from State laws and regulations referred to in such 
paragraph (1).
    (3) No qualifying small power production facility or qualifying 
cogeneration facility may be exempted under this subsection from--
        (A) any State law or regulation in effect in a State pursuant to 
    subsection (f) of this section,
        (B) the provisions of section 210, 211, or 212 of the Federal 
    Power Act [16 U.S.C. 824i, 824j, or 824k] or the necessary 
    authorities for enforcement of any such provision under the Federal 
    Power Act [16 U.S.C. 791a et seq.], or
        (C) any license or permit requirement under part I of the 
    Federal Power Act [16 U.S.C. 791a et seq.] any provision under such 
    Act related to such a license or permit requirement, or the 
    necessary authorities for enforcement of any such requirement.

(f) Implementation of rules for qualifying cogeneration and qualifying 
        small power production facilities

    (1) Beginning on or before the date one year after any rule is 
prescribed by the Commission under subsection (a) of this section or 
revised under such subsection, each State regulatory authority shall, 
after notice and opportunity for public hearing, implement such rule (or 
revised rule) for each electric utility for which it has ratemaking 
authority.
    (2) Beginning on or before the date one year after any rule is 
prescribed by the Commission under subsection (a) of this section or 
revised under such subsection, each nonregulated electric utility shall, 
after notice and opportunity for public hearing, implement such rule (or 
revised rule).

(g) Judicial review and enforcement

    (1) Judicial review may be obtained respecting any proceeding 
conducted by a State regulatory authority or nonregulated electric 
utility for purposes of implementing any requirement of a rule under 
subsection (a) of this section in the same manner, and under the same 
requirements, as judicial review may be obtained under section 2633 of 
this title in the case of a proceeding to which section 2633 of this 
title applies.
    (2) Any person (including the Secretary) may bring an action against 
any electric utility, qualifying small power producer, or qualifying 
cogenerator to enforce any requirement established by a State regulatory 
authority or nonregulated electric utility pursuant to subsection (f) of 
this section. Any such action shall be brought only in the manner, and 
under the requirements, as provided under section 2633 of this title 
with respect to an action to which section 2633 of this title applies.

(h) Commission enforcement

    (1) For purposes of enforcement of any rule prescribed by the 
Commission under subsection (a) of this section with respect to any 
operations of an electric utility, a qualifying cogeneration facility or 
a qualifying small power production facility which are subject to the 
jurisdiction of the Commission under part II of the Federal Power Act 
[16 U.S.C. 824 et seq.], such rule shall be treated as a rule under the 
Federal Power Act [16 U.S.C. 791a et seq.]. Nothing in subsection (g) of 
this section shall apply to so much of the operations of an electric 
utility, a qualifying cogeneration facility or a qualifying small power 
production facility as are subject to the jurisdiction of the Commission 
under part II of the Federal Power Act.
    (2)(A) The Commission may enforce the requirements of subsection (f) 
of this section against any State regulatory authority or nonregulated 
electric utility. For purposes of any such enforcement, the requirements 
of subsection (f)(1) of this section shall be treated as a rule 
enforceable under the Federal Power Act [16 U.S.C. 791a et seq.]. For 
purposes of any such action, a State regulatory authority or 
nonregulated electric utility shall be treated as a person within the 
meaning of the Federal Power Act. No enforcement action may be brought 
by the Commission under this section other than--
        (i) an action against the State regulatory authority or 
    nonregulated electric utility for failure to comply with the 
    requirements of subsection (f) of this section \2\ or
---------------------------------------------------------------------------
    \2\ So in original. Probably should be followed by a comma.
---------------------------------------------------------------------------
        (ii) an action under paragraph (1).

    (B) Any electric utility, qualifying cogenerator, or qualifying 
small power producer may petition the Commission to enforce the 
requirements of subsection (f) of this section as provided in 
subparagraph (A) of this paragraph. If the Commission does not initiate 
an enforcement action under subparagraph (A) against a State regulatory 
authority or nonregulated electric utility within 60 days following the 
date on which a petition is filed under this subparagraph with respect 
to such authority, the petitioner may bring an action in the appropriate 
United States district court to require such State regulatory authority 
or nonregulated electric utility to comply with such requirements, and 
such court may issue such injunctive or other relief as may be 
appropriate. The Commission may intervene as a matter of right in any 
such action.

(i) Federal contracts

    No contract between a Federal agency and any electric utility for 
the sale of electric energy by such Federal agency for resale which is 
entered into after November 9, 1978, may contain any provision which 
will have the effect of preventing the implementation of any rule under 
this section with respect to such utility. Any provision in any such 
contract which has such effect shall be null and void.

(j) New dams and diversions

    Except for a hydroelectric project located at a Government dam (as 
defined in section 3(10) of the Federal Power Act [16 U.S.C. 796(10)]) 
at which non-Federal hydroelectric development is permissible, this 
section shall not apply to any hydroelectric project which impounds or 
diverts the water of a natural watercourse by means of a new dam or 
diversion unless the project meets each of the following requirements:

                 (1) No substantial adverse effects

        At the time of issuance of the license or exemption for the 
    project, the Commission finds that the project will not have 
    substantial adverse effects on the environment, including recreation 
    and water quality. Such finding shall be made by the Commission 
    after taking into consideration terms and conditions imposed under 
    either paragraph (3) of this subsection or section 10 of the Federal 
    Power Act [16 U.S.C. 803] (whichever is appropriate as required by 
    that Act [16 U.S.C. 791a et seq.] or the Electric Consumers 
    Protection Act of 1986) and compliance with other environmental 
    requirements applicable to the project.

                        (2) Protected rivers

        At the time the application for a license or exemption for the 
    project is accepted by the Commission (in accordance with the 
    Commission's regulations and procedures in effect on January 1, 
    1986, including those relating to environmental consultation), such 
    project is not located on either of the following:
            (A) Any segment of a natural watercourse which is included 
        in (or designated for potential inclusion in) a State or 
        national wild and scenic river system.
            (B) Any segment of a natural watercourse which the State has 
        determined, in accordance with applicable State law, to possess 
        unique natural, recreational, cultural, or scenic attributes 
        which would be adversely affected by hydroelectric development.

             (3) Fish and wildlife terms and conditions

        The project meets the terms and conditions set by fish and 
    wildlife agencies under the same procedures as provided for under 
    section 30(c) of the Federal Power Act [16 U.S.C. 823a(c)].

(k) ``New dam or diversion'' defined

    For purposes of this section, the term ``new dam or diversion'' 
means a dam or diversion which requires, for purposes of installing any 
hydroelectric power project, any construction, or enlargement of any 
impoundment or diversion structure (other than repairs or reconstruction 
or the addition of flashboards or similar adjustable devices).

(l) Definitions

    For purposes of this section, the terms ``small power production 
facility'', ``qualifying small power production facility'', ``qualifying 
small power producer'', ``primary energy source'', ``cogeneration 
facility'', ``qualifying cogeneration facility'', and ``qualifying 
cogenerator'' have the respective meanings provided for such terms under 
section 3(17) and (18) of the Federal Power Act [16 U.S.C. 796(17), 
(18)].

(Pub. L. 95-617, title II, Sec. 210, Nov. 9, 1978, 92 Stat. 3144; Pub. 
L. 96-294, title VI, Sec. 643(b), June 30, 1980, 94 Stat. 770; Pub. L. 
99-495, Sec. 8(a), Oct. 16, 1986, 100 Stat. 1249; Pub. L. 101-575, 
Sec. 2, Nov. 15, 1990, 104 Stat. 2834.)

                       References in Text

    The Commission, referred to in subsecs. (a), (e)(1), (2), (f), (h), 
and (j)(1), (2), means the Federal Energy Regulatory Commission. See 
section 2602(3) of this title.
    The Secretary, referred to in subsec. (g)(2), means the Secretary of 
Energy. See section 2602(14) of this title.
    The Federal Power Act, referred to in subsecs. (e), (h), and (j)(1), 
is act June 10, 1920, ch. 285, 41 Stat. 1063, as amended, which is 
classified generally to this chapter (Sec. 791a et seq.). Part I of the 
Federal Power Act is classified generally to subchapter I (Sec. 791a et 
seq.) of this chapter. Part II of the Federal Power Act is classified 
generally to this subchapter (Sec. 824 et seq.). For complete 
classification of this Act to the Code, see section 791a of this title 
and Tables.
    The Public Utility Holding Company Act, referred to in subsec. (e), 
probably means the Public Utility Holding Company Act of 1935, act Aug. 
26, 1935, ch. 687, title I, 49 Stat. 838, as amended, which is 
classified generally to chapter 2C (Sec. 79 et seq.) of Title 15, 
Commerce and Trade. For complete classification of this Act to the Code, 
see section 79 of Title 15 and Tables.
    The Electric Consumers Protection Act of 1986, referred to in 
subsec. (j)(1), is Pub. L. 99-495, Oct. 16, 1986, 100 Stat. 1243. For 
complete classification of this Act to the Code, see Short Title of 1986 
Amendment note set out under section 791a of this title and Tables.

                          Codification

    Section was enacted as part of the Public Utility Regulatory 
Policies Act of 1978, and not as part of the Federal Power Act which 
generally comprises this chapter.


                               Amendments

    1990--Subsec. (e)(2). Pub. L. 101-575 inserted ``(other than a 
qualifying small power production facility which is an eligible solar, 
wind, waste, or geothermal facility as defined in section 3(17)(E) of 
the Federal Power Act)'' after first reference to ``facility''.
    1986--Subsecs. (j) to (l). Pub. L. 99-495 added subsecs. (j) and (k) 
and redesignated former subsec. (j) as (l).
    1980--Subsec. (a). Pub. L. 96-294, Sec. 643(b)(1), inserted 
provisions relating to encouragement of geothermal small power 
production facilities.
    Subsec. (e)(1). Pub. L. 96-294, Sec. 643(b)(2), inserted provisions 
relating to applicability to geothermal small power production 
facilities.
    Subsec. (e)(2). Pub. L. 96-294, Sec. 643(b)(3), inserted provisions 
respecting a qualifying small power production facility using geothermal 
energy as the primary energy source.


                    Effective Date of 1986 Amendment

    Section 8(b) of Pub. L. 99-495 provided that:
    ``(1) Subsection (j) of section 210 of the Public Utility Regulatory 
Policies Act of 1978 (as amended by subsection (a) of this section) [16 
U.S.C. 824a-3(j)] shall apply to any project for which benefits under 
section 210 of the Public Utility Regulatory Policies Act of 1978 are 
sought and for which a license or exemption is issued by the Federal 
Energy Regulatory Commission after the enactment of this Act [Oct. 16, 
1986], except as otherwise provided in paragraph (2), (3) or (4) of this 
subsection.
    ``(2) Subsection (j) shall not apply to the project if the 
application for license or exemption for the project was filed, and 
accepted for filing by the Commission, before the enactment of this Act 
[Oct. 16, 1986].
    ``(3) Paragraphs (1) and (3) of such subsection (j) shall not apply 
if the application for the license or exemption for the project was 
filed before the enactment of this Act [Oct. 16, 1986] and accepted for 
filing by the Commission (in accordance with the Commission's 
regulations and procedures in effect on January 1, 1986, including those 
relating to the requirement for environmental consultation) within 3 
years after such enactment.
    ``(4)(A) Paragraph (3) of subsection (j) shall not apply for 
projects where the license or exemption application was filed after 
enactment of this Act [Oct. 16, 1986] if, based on a petition filed by 
the applicant for such project within 18 months after such enactment, 
the Commission determines (after public notice and opportunity for 
public comment of at least 45 days) that the applicant has demonstrated 
that he had committed (prior to the enactment of this Act) substantial 
monetary resources directly related to the development of the project 
and to the diligent and timely completion of all requirements of the 
Commission for filing an acceptable application for license or 
exemption. Such petition shall be publicly available and shall be filed 
in such form as the Commission shall require by rule issued within 120 
days after the enactment of this Act. The public notice required under 
this subparagraph shall include written notice by the petitioner to 
affected Federal and State agencies.
    ``(B) In the case of any petition referred to in subparagraph (A), 
if the applicant had a preliminary permit and had completed 
environmental consultations (required by Commission regulations and 
procedures in effect on January 1, 1986) prior to enactment, there shall 
be a rebuttable presumption that such applicant had committed 
substantial monetary resources prior to enactment.
    ``(C) The applicant for a license or exemption for a project 
described in subparagraph (A) may petition the Commission for an initial 
determination under paragraph (1) of section 210(j) of the Public 
Utility Regulatory Policies Act of 1978 [16 U.S.C. 824a-3(j)(1)] prior 
to the time the license or exemption is issued. If the Commission 
initially finds that the project will have substantial adverse effects 
on the environment within the meaning of such paragraph (1), prior to 
making a final finding under that paragraph the Commission shall afford 
the applicant a reasonable opportunity to provide for mitigation of such 
adverse effects. The Commission shall make a final finding under such 
paragraph (1) at the time the license or exemption is issued. If the 
Federal Energy Regulatory Commission has notified the State of its 
initial finding and the State has not taken any action described in 
paragraph (2) of section 210(j) before such final finding, the failure 
to take such action shall be the basis for a rebuttable presumption that 
there is not a substantial adverse effect on the environment related to 
natural, recreational, cultural, or scenic attributes for purposes of 
such finding.
    ``(D) If a petition under subparagraph (A) is denied, all provisions 
of section 210(j) of the Public Utility Regulatory Policies Act of 1978 
[16 U.S.C. 824a-3(j)] shall apply to the project regardless of when the 
license or exemption is issued.''
    Amendment by Pub. L. 99-495 effective with respect to each license, 
permit, or exemption issued under this chapter after Oct. 16, 1986, see 
section 18 of Pub. L. 99-495, set out as a note under section 797 of 
this title.


                       Calculation of Avoided Cost

    Pub. L. 102-486, title XIII, Sec. 1335, Oct. 24, 1992, 106 Stat. 
2984, provided that: ``Nothing in section 210 of the Public Utility 
Regulatory Policies Act of 1978 (Public Law 95-617) [16 U.S.C. 824a-3] 
requires a State regulatory authority or nonregulated electric utility 
to treat a cost reasonably identified to be incurred or to have been 
incurred in the construction or operation of a facility or a project 
which has been selected by the Department of Energy and provided Federal 
funding pursuant to the Clean Coal Program authorized by Public Law 98-
473 [see Tables for classification] as an incremental cost of 
alternative electric energy.''


  Applicability of 1980 Amendment to Facilities Using Solar Energy as 
                          Primary Energy Source

    Pub. L. 100-202, Sec. 101(d) [title III, Sec. 310], Dec. 22, 1987, 
101 Stat. 1329-104, 1329-126, provided that:
    ``(a) The amendments made by section 643(b) of the Energy Security 
Act (Public Law 96-294) [amending this section] and any regulations 
issued to implement such amendment shall apply to qualifying small power 
production facilities (as such term is defined in the Federal Power Act 
[16 U.S.C. 791a et seq.]) using solar energy as the primary energy 
source to the same extent such amendments and regulations apply to 
qualifying small power production facilities using geothermal energy as 
the primary energy source, except that nothing in this Act [see Tables 
for classification] shall preclude the Federal Energy Regulatory 
Commission from revising its regulations to limit the availability of 
exemptions authorized under this Act as it determines to be required in 
the public interest and consistent with its obligations and duties under 
section 210 of the Public Utility Regulatory Policies Act of 1978 [this 
section].
    ``(b) The provisions of subsection (a) shall apply to a facility 
using solar energy as the primary energy source only if either of the 
following is submitted to the Federal Energy Regulatory Commission 
during the two-year period beginning on the date of enactment of this 
Act [Dec. 22, 1987]:
        ``(1) An application for certification of the facility as a 
    qualifying small power production facility.
        ``(2) Notice that the facility meets the requirements for 
    qualification.''


     Study and Report to Congressional Committees on Application of 
    Provisions Relating to Cogeneration, Small Power Production, and 
       Interconnection Authority to Hydroelectric Power Facilities

    Section 8(d) of Pub. L. 99-495 provided that:
    ``(1) The Commission shall conduct a study (in accordance with 
section 102(2)(C) of the National Environmental Policy Act of 1969 [42 
U.S.C. 4332(2)(C)]) of whether the benefits of section 210 of the Public 
Utility Regulatory Policies Act of 1978 [16 U.S.C. 824a-3] and section 
210 of the Federal Power Act [16 U.S.C. 824i] should be applied to 
hydroelectric power facilities utilizing new dams or diversions (within 
the meaning of section 210(k) of the Public Utility Regulatory Policies 
Act of 1978).
    ``(2) The study under this subsection shall take into consideration 
the need for such new dams or diversions for power purposes, the 
environmental impacts of such new dams and diversions (both with and 
without the application of the amendments made by this Act to sections 
4, 10, and 30 of the Federal Power Act [16 U.S.C. 797, 803, 823a] and 
section 210 of the Public Utility Regulatory Policies Act of 1978 [16 
U.S.C. 824a-3]), the environmental effects of such facilities alone and 
in combination with other existing or proposed dams or diversions on the 
same waterway, the intent of Congress to encourage and give priority to 
the application of section 210 of Public Utility Regulatory Policies Act 
of 1978 to existing dams and diversions rather than such new dams or 
diversions, and the impact of such section 210 on the rates paid by 
electric power consumers.
    ``(3) The study under this subsection shall be initiated within 3 
months after enactment of this Act [Oct. 16, 1986] and completed as 
promptly as practicable.
    ``(4) A report containing the results of the study conducted under 
this subsection shall be submitted to the Committee on Energy and 
Commerce of the United States House of Representatives and the Committee 
on Energy and Natural Resources of the United States Senate while both 
Houses are in session.
    ``(5) The report submitted under paragraph (4) shall include a 
determination (and the basis thereof) by the Commission, based on the 
study and a public hearing and subject to review under section 313(b) of 
the Federal Power Act [16 U.S.C. 825l(b)], whether any of the benefits 
referred to in paragraph (1) should be available for such facilities and 
whether applications for preliminary permits (or licenses where no 
preliminary permit has been issued) for such small power production 
facilities utilizing new dams or diversions should be accepted by the 
Commission after the moratorium period specified in subsection (e). The 
report shall include such other administrative and legislative 
recommendations as the Commission deems appropriate.
    ``(6) If the study under this subsection has not been completed 
within 18 months after its initiation, the Commission shall notify the 
Committees referred to in paragraph (4) of the reasons for the delay and 
specify a date when it will be completed and a report submitted.''


          Moratorium on Application of This Section to New Dams

    Section 8(e) of Pub. L. 99-495 provided that: ``Notwithstanding the 
amendments made by subsection (a) of this section [amending section 
824a-3 of this title], in the case of a project for which a license or 
exemption is issued after the enactment of this Act [Oct. 16, 1986], 
section 210 of the Public Utility Regulatory Policies Act of 1978 [16 
U.S.C. 824a-3] shall not apply during the moratorium period if the 
project utilizes a new dam or diversion (as defined in section 210(k) of 
such Act) unless the project is either--
        ``(1) a project located at a Government dam (as defined in 
    section 3(10) of the Federal Power Act [16 U.S.C. 796(10)]) at which 
    non-Federal hydroelectric development is permissible, or
        ``(2) a project described in paragraphs (2), (3), or (4) of 
    subsection (b) [set out as a note above].
For purposes of this subsection, the term `moratorium period' means the 
period beginning on the date of the enactment of this Act and ending at 
the expiration of the first full session of Congress after the session 
during which the report under subsection (d) [set out as a note above] 
has been submitted to the Congress.''

                  Section Referred to in Other Sections

    This section is referred to in title 26 section 136; title 42 
section 6807.
