A change of control provision gives a party certain rights under a contract, such as the right to receive payment, require consent, or terminate the contract, in the event of a specified trigger. Triggers can relate to a change in ownership or control of a counterparty, changes in policies or key personnel, etc. Change of control provisions help to ensure that an agreement does not devolve into a disadvantageous relationship between parties. Because of the significant impact a change of control provision can have on both parties, it is important that these provisions be strategically negotiated and that appropriate diligence is taken to understand any existing provisions before they are triggered.

On March 16, FERC approved North American Electric Reliability Corporation (NERC) Reliability Standard CIP-003-9, Cyber Security – Security Management Controls, which introduces two new requirements to the suite of cybersecurity protections for low-impact bulk electric system (BES) cyber systems. The requirements focus on mitigating a supply chain risk that continues to challenge the electric industry: vendor remote access to critical electronic systems. The new rule will ensure these vendor risk mitigation requirements apply across every BES facility in the continental United States.

The Hydrogen and Fuel Cell Technologies Office issued a funding opportunity announcement (FOA) on March 15, 2023 that makes available up to $750 million to support the development of electrolyzer technology, domestic supply chains, and high-throughput manufacturing of electrolyzers and fuel cells. The funding is intended to improve the efficiency, durability, and cost of producing clean hydrogen using electrolyzers; to advance new manufacturing technologies for both electrolyzer and fuel cell technologies; and to create innovative approaches to increase reuse and recycling of clean hydrogen and fuel cell technologies.

In recent remarks, Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero proposed that the CFTC promote market resilience to climate-related risk by adopting an approach for environmental/climate-related products, such as carbon offsets, similar to the CFTC’s regulatory response to virtual currencies.

Care and diligence must be used when crafting disclosure schedules in merger and acquisition documents. Unclear or incomplete disclosure schedules can have drastic implications for future litigation. Poorly crafted disclosure schedules can lead not only to indemnity litigation, but often lead to fraud and breach of warranty claims.

On March 2, the White House issued the National Cybersecurity Strategy (the Strategy), a broad vision to reinvigorate the federal government’s approach to cybersecurity and address a wide spectrum of long-term challenges. The Strategy reflects the latest significant cybersecurity-focused activity from the Biden administration and contains an ambitious set of goals and initiatives.

In energy contracts, there is a need for specificity in arbitration provisions, particularly in the delegation of arbitrability questions to the arbitrator. Because of the high stakes involved in contracts for energy production, transportation, refining, fractionation, mergers and acquisitions, and so on, parties are frequently willing to devote substantial resources to determine how a potential dispute should be resolved.

The US Department of Energy (DOE) recently issued two funding opportunities for the development of carbon capture large-scale pilot projects and integrated carbon capture and storage projects at coal or natural gas generation facilities and at industrial facilities that are not purposed for electric generation.

An earnout provision in mergers and acquisitions contracts entitles the seller of the target company to additional compensation in the future if the target performs well after closing. Such a provision is often used when a gap exists between the buyer’s lower valuation and the seller’s higher valuation. Essentially, it is a way for the buyer to say, “if you think your company is really worth as much as you say it is, prove it.”

ESG. Net zero. Carbon sequestration. In 2023, all of these terms will continue to be widely referenced in mainstream media publications, corporate governance and shareholder materials, and regulatory filings and issuances. Although the terms are technically unrelated, at their core they reflect a growing social consciousness, both in the United States and abroad, concerning carbon dioxide (CO2) presence in the atmosphere and the impact of individual and corporate actions on greenhouse gas (GHG) emissions.