Energy Enforcement Update

In our first enforcement update for 2019, we cover a range of issues (including some news from the end of 2018):

  • FERC opens investigations into rates charged by three interstate natural gas companies;
  • Powhatan and Chen file opening appellate brief;
  • Judge suspends CFTC case against Kraft because of the partial government shutdown;
  • FERC increases maximum civil penalties for violations;
  • FERC approves settlement between FERC Enforcement and Algonquin;
  • Judge rules that FERC action against Silkman/CES is not time-barred by statute of limitations; and
  • Judge finds CFTC fails to meet burden on manipulation claims against DRW and Wilson.

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2019: Top Five Things to Watch in the FERC-Regulated Pipeline Space

1 – Make-up of FERC Commissioners – FERC’s leadership already was uncertain heading into 2019 before the tragic passing of Commissioner and former Chairman Kevin McIntyre on January 3, 2019. Prior to his passing, the Commission achieved a full complement of five commissioners in December 2018, following the confirmation of Bernard McNamee who filled a spot made vacant by the August 2018 resignation of former Commissioner Robert Powelson. Commissioner McNamee is facing calls to recuse himself from certain FERC electric generation proceedings given positions he took on grid resiliency in his prior position at the Department of Energy, and he is certain to be scrutinized by environmental groups for positions he is anticipated to take on pipeline matters as a FERC commissioner. 

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Implementation of Amended Section 203(a)(1)(B) of the Federal Power Act

On November 15, 2018, the Federal Energy Regulatory Commission (FERC) issued a rulemaking to revise its regulations relating to mergers or consolidations by a public utility.  See Implementation of Amended Section 203(a)(1)(B) of the Federal Power Act, 165 FERC ¶ 61,091 (2018).  These regulations would implement a law signed on September 28, 2018 establishing a $10 million threshold on transactions that will be subject to FERC’s review and authorization under section 203(a)(1)(B) of the Federal Power Act (FPA).  Previously, there was no dollar value threshold for FERC review of public utility “merge or consolidate” transactions under FPA section 203(a)(1)(B).  See 16 U.S.C. § 824b(a)(1)(B). 

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Sidley Environmental Trends

Topics discussed this week include:

  • EPA and Corps propose new definition of Waters of the United States.
  • EPA proposes to eliminate carbon capture requirements for coal plants.
  • EPA releases draft rule rescinding power plant mercury rule.
  • EPA issues final pharmaceutical waste rule.
  • Senate confirms key environmental posts.
  • Shutdown slows EPA and Justice Department.
  • Northeastern states unveil “cap and invest” greenhouse gas program.
  • New York proposes fluorinated chemical drinking water standards.
  • California splits with Interior over Migratory Bird Treaty Act.

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U.S. Department of Energy issues policy statement eliminating the “end use” reporting provision in authorizations for the export of liquefied natural gas

On December 19, 2018, the U.S. Department of Energy issued a policy statement eliminating from any future export authorization orders the requirement that exporters report where LNG was “received for end use.’’  The relief is a nod to market participants who expressed concerns that exporters often have limited visibility into where their natural gas is ultimately consumed.  The policy now will only require that exporters report where the natural gas was “actually delivered.”  DOE issued an accompanying blanket order, DOE/FE Order No. 4322, to remove the end use provision from existing authorizations.

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U.S. Election Results 2018: Preliminary Considerations for the Energy Industry

Democrats’ regaining the majority in the U.S. House of Representatives assures an interesting upcoming two years of policy debates for the energy industry. Expect House Democrats to push initiatives on clean energy and address the effects of climate change through hearings or possible legislation, along with further scrutiny on the White House, Cabinet secretaries and federal agencies.

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