FERC, CFTC, and State Energy Law Developments

The Nuclear Regulatory Commission (NRC) and the Federal Energy Regulatory Commission (FERC) entered into a Memorandum of Understanding (MOU) on June 6 regarding the care and protection of critical energy/electric infrastructure information (CEII). The MOU delineates how the two agencies will cooperate to identify, process, and protect CEII that the NRC holds, explaining that the two independent agencies “mutually agree that it is important to protect CEII to ensure the safety and security of the electric grid.” Under the MOU, the NRC will be able to consult with FERC to designate certain NRC-held information as CEII—and therefore FOIA-exempt—if requested by a third-party under that open records law.

The MOU is another step in the US government’s attempt to address growing concerns about physical and cybersecurity threats to the electricity grid. Congress, recognizing these threats, directed the US Department of Energy and FERC to identify and protect CEII when it passed the “Fixing America’s Surface Transportation Act” (FAST Act) in 2015. FERC issued its CEII regulations in late 2016.

The commissioners from the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC) held a joint meeting on June 7 to discuss grid reliability and cybersecurity. FERC and NRC staff provided presentations on the recent and ongoing activities of both agencies to promote a stable, resilient, and secure grid. The presentations were largely a summary of recent agency activities and served to continue the practice of both independent regulatory agencies meeting to discuss items of common interest.

The White House announced late last week that President Donald Trump has directed Energy Secretary Rick Perry to “prepare immediate steps to stop the loss” of “fuel-secure power facilities,” noting that near-term retirements of these facilities could lead to “a rapid depletion of a critical part of our nation’s energy mix, and impact the resilience of our power grid.” Although the federal government has not yet disclosed what those steps might be or which generators are at issue, press reports from CNN and Bloomberg, among others, have emerged suggesting that the US Department of Energy (DOE) is considering a directive that would require Independent System Operators and Regional Transmission Operators (ISOs/RTOs) to purchase energy from designated “fuel-secure” plants for a period of up to, and possibly more than, 24 months to avoid any near-term decommissioning.

The US Department of Justice (DOJ) and the Federal Energy Regulatory Commission (FERC) filed a joint brief on May 29 in the US Court of Appeals for the Seventh Circuit, stating that Illinois’ zero emission credit (ZEC) program for eligible nuclear plants in Illinois is not preempted by the Federal Power Act (FPA). Because the panel in a substantially similar case pending in the Second Circuit has indicated that it would review the government’s filing in the Seventh Circuit case, the views of FERC and DOJ could be critical as this issue plays out in the federal court system.

The Illinois legislature passed a law in 2016 requiring utilities to purchase ZECs at administratively set prices from nuclear plants in the state. Generators that compete with the ZEC-receiving nuclear plants challenged the law, arguing that the ZEC program is preempted by the FPA. The district court upheld the program, and the generators appealed the decision to the Seventh Circuit. FERC did not take a position in the trial court but has now done so after the Seventh Circuit invited the US government to file a brief.

Recent statements by the Antitrust Division at the US Department of Justice (DOJ) confirm that the DOJ is continuing to focus on “no-poaching” and wage-fixing agreements with more enforcement actions expected to be announced in the near future. Recent criminal investigations target the healthcare industry, but all employers should be aware of the application of antitrust laws to human-resource decisions.

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The Council on Environmental Quality (CEQ), the US federal agency tasked with coordinating and overseeing the implementation of the National Environmental Policy Act (NEPA), has announced its intention to update the CEQ’s longstanding NEPA-implementing regulations. Those regulations establish the core process used by agencies across the federal government to satisfy their NEPA obligations. According to the CEQ’s statement in the semiannual Unified Agenda of Federal Regulatory and Deregulatory Actions, “[w]hile CEQ has issued memoranda and guidance documents over the years, CEQ believes it is appropriate at this time to consider updating the implementing regulations.”

The Federal Energy Regulatory Commission issued a final rule revising the Large Generator Interconnection Procedures and Large Generator Interconnection Agreement. The changes are intended to provide increased certainty and additional interconnection service options to generation interconnection customers, while also enhancing the information available for interconnection decisionmaking. Transmission providers will be required to submit compliance filings. Read the full LawFlash.

The Federal Energy Regulatory Commission is seeking stakeholder comments through a Notice of Inquiry as it contemplates updating its policy statement on how FERC-jurisdictional facilities are reviewed and authorized, a move that could revamp the FERC’s 19-year-old policy statement on its certification of new natural gas transportation facilities.

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The heads of 12 federal agencies signed an MOU on April 9 committing to “a more predictable, transparent and timely Federal review and authorization process for delivering major infrastructure projects.” The signatory agencies, all of which have responsibilities to review or authorize infrastructure projects, agreed to take certain steps to create a more coordinated and streamlined federal environmental review process. Although the commitments in the MOU are voluntary and not mandated by statute, adherence to them could shorten the period of time required by the Federal Energy Regulatory Commission (FERC) to perform National Environmental Policy Act (NEPA) reviews.

Background

President Donald Trump signed Executive Order (EO) 13807 (“Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects”) in August 2017. This EO was intended to speed up the environmental reviews required for major infrastructure projects by mandating additional coordination and planning activities among various federal agencies. The EO defines “major infrastructure project” as “an infrastructure project for which multiple authorizations by Federal agencies will be required to proceed with construction, the lead Federal agency has determined that it will prepare an Environmental Impact Statement (EIS) under [NEPA] . . . and the project sponsor has identified the reasonable availability of funds sufficient to complete the project.”

Revised Reliability Standard clarifies obligations for electronic access controls at less critical assets and places more focus on risks posed by certain portable electronic devices.

The Federal Energy Regulatory Commission (the Commission) issued a final rule (Order No. 843) on April 19, approving proposed reliability standard CIP-003-7. The currently-effective version of the standard, CIP-003-6, contains the cybersecurity requirements applicable to low impact BES Cyber Systems. The low impact category covers the BES Cyber Systems associated with less critical substations, generators, and other BES facilities. The final rule adopts NERC’s proposed reliability standard CIP-003-7, which revises the existing standard by clarifying a utility’s obligations for implementing electronic access controls for low impact BES Cyber Systems, introduces security requirements for certain portable devices, and requires utilities to have a policy for reliability-related emergencies known as CIP Exceptional Circumstances that involve low impact BES Cyber Systems.