The proposal furthers an ongoing effort to minimize Dodd-Frank burdens on commercial end users.
On April 4, the US Commodity Futures Trading Commission (CFTC) issued an order proposing guidance about the Dodd-Frank regulatory treatment of certain gas and power contracts. As issued, the CFTC’s proposed guidance would provide clarity and welcome relief concerning the application of the Dodd-Frank Act to capacity contracts and/or natural gas peaking supply contractual arrangements entered into by investor-owned utilities and independent power producers. The CFTC has requested that interested entities submit comments concerning the proposed guidance on or before 30 days after the CFTC’s April 4 issuance is published in the Federal Register.
FERC rejected a transmission developer’s request that binding revenue requirement transmission project bids should be deemed just and reasonable and subject to Mobile-Sierra protections, but announced a technical conference to address the policy implications of binding transmission project bids.
On March 17, the Federal Energy Regulatory Commission rejected a request for heightened rate protections for transmission developers that submit binding revenue requirement bids for projects identified through Order No. 1000 regional transmission planning. FERC recognized that binding revenue requirement bids (i.e., those where the bidder promises a cost cap) provide certain benefits. But FERC concluded that the policy implications of those bids and the issue of how it should review rates with binding revenue requirements resulting from a competitive bidding process would need to be addressed through a future proceeding that could evaluate the broader policy considerations. FERC plans to hold a technical conference to explore those issues, among others.
ITC Grid Development, LLC (ITC Development) had requested a declaratory order to protect the transmission rates resulting from its cost-capped transmission development bids in Order No. 1000 regional planning processes. ITC Development asked FERC to make two determinations: (a) that FERC would find winning bids with a cost cap to be “just and reasonable” when filed with FERC to commence the collection of those rates and (b) that FERC would consider those binding bids to be subject to Mobile-Sierra protection and therefore only subject to changes if FERC finds them to not meet the high “public interest” standard. In the event that FERC would not grant Mobile-Sierra protections on a generic basis, ITC Development asked that FERC be willing to grant those protections on a case-by-case basis based on FERC’s evaluation of the bidding process and the binding nature of the winning bid.
Movants must clear high hurdle once parties reach settlement in principle.
On March 9, the Federal Energy Regulatory Commission (FERC or the Commission) issued an order in Maritimes & Northeast Pipeline, LLC (Maritimes Order) rejecting a movant’s attempt to intervene in the final stages of an ongoing proceeding, in large part because granting party status “would seriously disrupt the proceeding, place unwarranted burdens on the active parties, and prejudice the interest of the settling parties.”1 FERC also expressed concern that granting the late intervention would “undermine the Commission’s policy of encouraging settlements as an effective means of resolving cases.”2
In Maritimes, FERC confirms the standards applicable to its review of untimely motions for leave to intervene and the Commission’s intent to apply “the strictest possible scrutiny” to any request filed after parties have reached a settlement in principle.3 As explained below, the Maritimes Order serves as a useful reminder for all practitioners appearing before FERC in either Natural Gas Act (NGA) or Federal Power Act proceedings to make every effort to timely file interventions or risk being excluded from a proceeding.
1Maritimes & Northeast Pipeline, LLC, Order Granting Interlocutory Appeal, Denying Intervention, and Approving Settlement, 154 FERC ¶ 61,182 at P 37 (Mar. 9, 2016) (Maritimes Order).
2Id. at P 28.
3Id. at P 32.
Decision establishes framework for future rulings that covenants in midstream agreements do not run with the land.
On March 8, Judge Shelley C. Chapman of the US Bankruptcy Court for the Southern District of New York issued an order determining that Sabine Oil & Gas Corp. (Sabine), an exploration and production (E&P) company in the natural gas and condensate sector, is permitted to reject three midstream gas and condensate gathering agreements. Although Judge Chapman’s opinion that the agreements do not contain covenants that “run with the land” under Texas law is not binding, the ruling may well reverberate throughout the midstream pipeline and shipping industry for the considerable future, and could ultimately lead to additional upstream bankruptcy filings by companies eager to either shed or renegotiate existing midstream agreements.
April 12, 2016
12:00 PM – 02:00 PM ET
11:00 AM – 01:00 PM CT
09:00 AM – 11:00 AM PT
One Market, Spear Street Tower
San Francisco, CA 94105-1596
We are proud to host the Energy Bar Association’s EBA Energizer: Mediating an Energy Case, in which panelists will discuss practical advice and mediation techniques.
The event will take place live in our Washington, DC, office and via video conference in our San Francisco office.
Deborah M. Osborne
Director, Dispute Resolution Division, Federal Energy Regulatory Commission
Amy E. Wind
Chief Circuit Mediator, US District Court for the District of Columbia
Claudia L. Bernard
Chief Circuit Mediator, US Court of Appeals for the Ninth Circuit
The 5-4 decision temporarily blocks further execution of the EPA’s new plan to cut carbon emissions from existing power plants.
On February 9, the US Supreme Court handed a potentially significant defeat to the Obama administration’s Clean Power Plan (CPP) regulations by staying the CPP’s implementation until court challenges to the plan’s legality conclude. The controversial plan seeks to slash carbon emissions from existing power plants by nearly a third in the coming decades through a wide-ranging effort to substitute new low-emission resources, such as wind and solar, for more traditional coal-based generation. Those challenging the CPP maintain that, in seeking to work such a fundamental change in the United States’ energy generation fleet, the US Environmental Protection Agency (EPA) has far exceeded the powers given to it under the Clean Air Act (CAA). The Supreme Court’s granting of a stay of the regulations comes after the US Court of Appeals for the District of Columbia (DC Circuit) rejected a similar request and comes over the Obama’s administration’s opposition, as well as that of some supporting states and industry participants. The decision signals that at least five members of the Supreme Court found the challengers’ arguments more convincing at this stage of the proceedings.
The new law establishes a council charged with identifying, tracking, and ultimately holding federal agencies accountable for completing complex reviews under NEPA.
On December 4, 2015, US President Barack Obama signed the FAST Act,1 the first significant surface transportation reauthorization in a decade.2 While the FAST Act is focused on highway, transit, and rail programs, it also contains an important provision for energy projects.3 Title XLI of the FAST Act establishes a new Federal Permitting Improvement Steering Council (Council), which is charged with identifying, tracking, and ultimately holding federal agencies accountable for the efficient completion of complex National Environmental Policy Act (NEPA) reviews. The US Congress has given the Council significant tools to hold agencies accountable for meeting specified timetables for new and existing projects.
1 PL 114-94, 129 Stat. 1312 (Dec. 4, 2015).
2 See Timothy P. Lynch, Bloomberg BNA, Daily Report for Executives, FAST Act Keeps Congress in Its Leading Role on Transportation (Jan. 27, 2016).
3 See Morgan Lewis LawFlash, Steven M. Spina and J. Daniel Skees, “Highway Bill Adds New Security Measures to Federal Power Act” (Dec. 4, 2015).
Decision brings more clarity to jurisdictional boundaries between state public utility regulatory commissions and FERC set forth by the Federal Power Act.
On January 25, the US Supreme Court, in a 6-2 decision, ruled in favor of the Federal Energy Regulatory Commission’s (FERC’s or the Commission’s) demand response rule. The rule requires FERC-regulated market operators to compensate customers at the same prices as other wholesale market generators (also referred to as the “locational marginal price” or LMP) for curtailing power consumption during high-demand periods of energy usage. Reversing the US Court of Appeals for the DC Circuit (DC Circuit), the Court supported both the Commission’s statutory authority to implement the demand response rule and the mandatory compensation scheme to which wholesale market operators must now adhere. The decision brings more clarity to the murky jurisdictional boundaries between state public utility regulatory commissions and FERC set forth by the Federal Power Act (FPA).
The electric utility industry has spent vast amounts of money on cybersecurity, an investment that has steadily escalated since the Critical Infrastructure Protection (CIP) Reliability Standards became effective in 2008. Those investments, and the increasingly strict CIP Reliability Standards, were intended to address fears that hackers could use the industrial control systems and other computer systems that control the electric system to cause a blackout. Until recently, that threat was hypothetical. Now, for the first time, public reports have emerged of hackers taking down part of an electric grid.
In late December 2015, hackers allegedly infected several of Ukraine’s power authorities, causing blackouts that lasted several hours and affected thousands of people. Ukrainian authorities confirmed that malicious software infected several control systems, which disabled those systems and resulted in a power outage. The malware, known to have been involved in attacks since 2007, was reportedly embedded in Microsoft Office documents and was retrofitted to include code targeting power stations and other critical infrastructure. Although the geopolitical circumstances in Ukraine are drastically different from those faced by electric utilities in the United States, the attack provides a “proof of concept,” demonstrating that it is possible for an attacker to cause a widespread blackout—the threat is no longer hypothetical.
Passive limited partner investors in private equity funds that make FERC-regulated investments are not themselves subject to FERC’s corporate regulatory regime.
Those that own interests in businesses that sell electricity in commerce and those that own interests in electric power generation, transmission, and distribution facilities are subject to extensive and microscopic federal corporate and financial regulation and disclosure obligations unique to the electric power sector. On December 22, the Federal Energy Regulatory Commission (FERC) issued an order confirming that passive limited partner investors (LPs) in private equity funds that make FERC-regulated investments are not themselves subject to FERC’s corporate regulatory regime.
 Starwood Energy Group Global, L.L.C., et al., Docket No. EL15-87-000, 153 FERC ¶ 61,332 (2015) (the Order).