In a decision with significant implication for international organizations as well as project opponents and counterparties, the US Supreme Court ruled on February 27 that, rather than an international organization’s immunities being at the zenith of those ever held by any foreign government, an international organization’s immunities can be no greater than those held by foreign governments, under US law, when those immunities are asserted.
FERC adopted a new rulemaking on February 21 that will substantially simplify requirements applicable to persons holding “interlocking” director and/or officer positions involving more than one public utility, or a public utility and an electric equipment supplier.
Under the Federal Power Act, a person may not hold a director or officer position with one public utility and simultaneously hold another “interlocking” director or officer position with (1) any other public utility; or (2) certain suppliers of electrical equipment, without first receiving FERC authorization. Pre-incumbency applications to FERC are required for interlocks, except in cases in which only certain positions with affiliated public utilities are held, and in those cases pre-appointment affidavit filings and disclosures must be publicly submitted to FERC as “informational reports.” In general, even affiliated utility appointments must also be annually reported to FERC; FERC’s interlock requirements include both initial application (or informational reports) and annual disclosure filings. If an incumbent position-holder is to be appointed to a new entity within a group of affiliated public utilities, then new affidavit filings and “informational reports” will typically be required.
An amendment to FERC’s M&A statute, Section 203 of the Federal Power Act (FPA), was signed into law on September 28, 2018. (See our prior blog post.) Public Law 115-247 (PL 115-347 or the Amendment) makes a minor but helpful change to one provision of FPA Section 203 by immunizing one particular class of transactions from pre-consummation FERC M&A application and approval requirements.
On February 21, 2019, FERC adopted the rulemaking that the Amendment directs:
- Mergers or consolidations of public utility facilities that are valued at under $1 million may be undertaken without the parties first obtaining FPA Section 203 authorization from FERC
- Likewise, mergers or consolidations of public utility facilities that are valued above $1 million but not above $10 million may be undertaken without the parties first obtaining FPA Section 203 authorization from FERC, but are subject to a reporting requirement
- The reporting requirement applicable to those merger transactions falling within the $1 million to $10 million range directs that the form of notice to the Commission be submitted within 30 days following the facility merger or consolidation, and include the following information:
- The exact name of the public utility and its principal business address
- A narrative description of the transaction, including
- the identity of all parties involved in the transaction, whether such parties are affiliates, and all jurisdictional facilities associated with or affected by the transaction;
- the location of such jurisdictional facilities involved in the transaction;
- the date on which the transaction was consummated;
- the consideration for the transaction; and
- the effect of the transaction on the ownership and control of such jurisdictional facilities.
- Mergers or consolidations of public utility facilities that are valued above $10 million will continue to require formal, pre-consummation FPA Section 203 applications and orders, unless some other exemption or blanket authorization applies in a particular case
- The new rulemaking will become effective 30 days after its publication in the Federal Register, or likely in late March 2019.
The new rulemaking will simplify certain asset transfers but does not in any way change or relax Commission Section 203 requirements relating to changes in the voting ownership interests of a public utility, and to direct and indirect “dispositions” of control. Those requirements were not affected by the Amendment.
The New Jersey Board of Public Utilities (BPU) recently released its first annual report on the development of offshore wind in New Jersey (the Report). The Report comes one year after Governor Phil Murphy released Executive Order No. 8, which directed the BPU and other agencies to implement the Offshore Wind Economic Development Act (OWEDA).
On February 19 and 21, the Federal Energy Regulatory Commission (FERC) issued several more determinations concerning whether jurisdictional natural gas service providers’ cost-of-service rates are just and reasonable given the recent reduction to the federal corporate income tax rate under the Tax Cuts and Jobs Act (TCJA). The recently released determinations ended approximately 21 separate “one-time report” proceedings without further action and initiated a Natural Gas Act Section 5 rate investigation into Southwest Gas Storage Company’s rates (RP19-257). FERC required the entities to file FERC Form No. 501-G, referred to as a “one-time report,” in light of the reduction from 35% to 21% of the federal corporate income tax rate. Morgan Lewis has developed several publications describing the “one-time report” proceedings, the most recent of which included a status update on the more than 100 proceedings that were initiated based on those submissions.
As discussed in our January 18 LawFlash, the Federal Energy Regulatory Commission is continuing to investigate whether jurisdictional natural gas pipelines’ current cost-of-service rates are appropriate in light of reductions to the federal corporate income tax rate under the Tax Cuts and Jobs Act.
That publication also included a table providing the status of numerous pipeline rate proceedings associated with the “One-time Report” the Commission requires pipelines to file in order to facilitate its investigations. Please feel free to reach out to the authors with any questions.
With many companies focused on analyzing transactions for applicability of the Committee on Foreign Investment in the United States’ pilot program mandatory declaration requirements, transacting parties should not lose sight of the need to continue to analyze deals under traditional CFIUS standards.
The US Energy Information Administration (EIA) updated its website on January 7 to report that, once all its data is finalized, natural gas prices, production, consumption, and exports will reflect record increases in 2018. According to the preliminary release, the average annual Henry Hub natural gas spot price in 2018 went up 15 cents from the 2017 average. Simultaneously, consumption, production, and exports all saw a rise in 2018.
The passing of Federal Energy Regulatory Commission (FERC) Commissioner and former Chair Kevin McIntyre on January 2 is noted with regret, and with sympathy for his family, colleagues, and friends.
The New Jersey Board of Public Utilities (BPU) approved the nation’s largest single-state offshore wind solicitation in the United States on September 17, 2018, with an Order opening up an application window for the solicitation of 1,100 megawatts (MW) of offshore wind capacity. Stakeholders anticipate additional procurements in light of the BPU’s announcement that it intends to solicit an additional 2,400 MW, in two tranches of 1,200 MW, by 2022.
The first application window closed on December 28, 2018. Three applications were submitted to the BPU. Successful applicants in the current procurement will receive state subsidies in the form of Offshore Wind Renewable Energy Credits (ORECs). To be eligible for BPU approval, applicants will need to demonstrate that, among other things, their project (i) will have a positive net in-state economic and environmental benefit; (ii) will have a “reasonable ratepayer impact;” and (iii) is likely to be constructed on time and on budget.