The secretary of the US Department of Energy (DOE) issued an order on December 17 prohibiting electric utilities from installing equipment or components provided by Chinese companies in electric facilities serving designated “Critical Defense Facilities.” Relying on authority from Executive Order 13920 on Securing the United States Bulk-Power System, the order identified threats to the electric supply chain from China and concluded that prohibiting Chinese equipment in these sensitive facilities is necessary to respond to the Chinese government’s plans to undermine the bulk-power system.
Power & Pipes
FERC, CFTC, and State Energy Law Developments
Following its December 17 open meeting, FERC issued an order withdrawing and terminating a proceeding that had been opened earlier this year to examine oil pipeline affiliate contracts. FERC initiated that proceeding on October 15, 2020, when it issued a proposed policy statement outlining how FERC would evaluate whether a contract between an oil pipeline carrier and its affiliate resulting from an open season process is just and reasonable and not unduly discriminatory under the Interstate Commerce Act (ICA).
The Federal Energy Regulatory Commission (FERC) proposed revisions to its Policy Statement on Natural Gas and Electric Price Indices (Policy Statement) on December 17 to encourage market participants to report transactions to price index developers and to provide greater transparency into the natural gas price formation process. It also issued a Notice of Proposed Rulemaking (NOPR) proposing to amend three sections of its regulations to codify the Safe Harbor Policy set forth in its Policy Statement.
President-elect Joseph Biden announced on December 15 that he intends to nominate former Michigan Governor Jennifer Granholm to serve as secretary of energy in his new administration. Ms. Granholm previous served as the attorney general of Michigan and as Michigan’s governor from 2003 to 2011.
Our project finance, infrastructure, and natural resources practice has been named a Law360 Project Finance Group of the Year. The firm’s diversity and depth in multiple related practices, as well as it tendency to “stick[]with a project for its entire lifespan,” contribute to the success of the practice.
The US Department of Energy (DOE or Department) finalized a rulemaking proceeding last week that revises its National Environmental Policy Act (NEPA) implementing procedures pertaining to certain authorizations under the Natural Gas Act (NGA). This update limits DOE’s review of environmental impacts associated with natural gas exports to certain countries; DOE’s review will only consider the environmental effects of marine transportation, which DOE has also determined as not creating a significant environmental impact.
The Commodity Futures Trading Commission (CFTC or the Commission) Division of Enforcement filed the most enforcement actions in the Commission’s history in fiscal year 2020 (FY 2020). On December 2, 2020, DOE released its annual report on enforcement activities, which provides an overview of the CFTC’s enforcement activities between October 1, 2019, and September 30, 2020. Despite the ongoing coronavirus (COVID-19) pandemic, the CFTC’s Division of Enforcement initiated 113 investigations, higher than its previous high of 102 and nearly double its 30-year average of 58 per year. And the monetary relief ordered during that period, exceeding $1.3 billion, was the fourth largest in CFTC history.
The US Senate has confirmed the nominations of Mark Christie (R) and Allison Clements (D) to fill the remaining Republican and Democratic vacant seats on the Federal Energy Regulatory Commission. These confirmations restore FERC to its full capacity of five members for the first time in almost two years.
The Commodity Futures Trading Commission (CFTC) recently issued an interim report by CFTC Staff on the April 2020 price collapse of the West Texas Intermediate light sweet crude oil futures contract (WTI Futures Contract). Since May, CFTC Staff has been reviewing the $55 per barrel plunge in the WTI Futures Contract, which resulted in not only the lowest settlement price since trading began 37 years ago, but the first negative settlement price. Though this report may be better than nothing at all, at present, the CFTC has provided little guidance and comfort to those actively trading regulated crude oil derivatives or those impacted adversely by the April price crash. The CFTC Staff has not indicated when it will issue a final report.
The Federal Energy Regulatory Commission (FERC or the Commission) Office of Enforcement (OE) issued its 2020 Report on Enforcement on November 19. The report provides a review of OE’s activities during fiscal year 2020 (FY 2020), covering October 1, 2019, through September 30, 2020. At bottom, FERC opened and closed significantly fewer investigations this year as compared to the past three, likely due to the ongoing coronavirus (COVID-19) pandemic.