FERC, CFTC, and State Energy Law Developments

On August 1, the Federal Energy Regulatory Commission (FERC or the Commission) issued a notice establishing the dates by which certain jurisdictional natural gas pipeline companies must file FERC Form No. 501-G, the “one-time” informational filing the Commission plans to review to ascertain whether the pipelines have, in light of the Tax Cuts and Jobs Act, accounted for reduced federal corporate income taxes in their cost-of-service rates (one-time report). The notice revises the submission dates in FERC Form No. 501-G’s Implementation Guide, which was released alongside FERC’s final rule in Order No. 849, the decision directing the natural gas companies to submit the one-time reports. The final rule is described in more detail in our previous LawFlash.

Under the revised Implementation Guide, natural gas pipeline companies that are required to FERC Form No. 2 or 2-A for calendar year 2017 are organized into three distinct groups. Group I must file FERC Form No. 501-G by October 11, 2018; Group II, by November 8, 2018; and Group III, by December 6, 2018. In its final rule, FERC explained that if a pipeline refuses to promptly submit the one-time report, or fails to correct a patently erroneous or incomplete one-time report, the Commission could consider the pipeline to be in violation of its reporting obligation under FERC’s rules and regulations, provided the Commission does not otherwise grant a waiver for good cause. FERC also emphasized that pipelines may file FERC Form No. 501-G earlier than these dates.

FERC is allowing interested parties to file interventions, protests, and comments in response to the submissions. Those filings will be due 12 days after each pipeline’s one-time report due date.

The Federal Energy Regulatory Commission (FERC or the Commission) issued Order No. 848 on July 19, directing the North American Electric Reliability Corporation (NERC) to augment the cyber incident reporting requirements under the Critical Infrastructure Protection (CIP) reliability standards. The directive adopts the proposals from the December 2017 Notice of Proposed Rulemaking (NOPR) and reflects the Commission’s view that FERC and NERC need to significantly improve their awareness of the breadth and frequency of the cybersecurity risks that electric utilities encounter.

Read the full Lawflash.

On July 19, the Federal Energy Regulatory Commission (FERC or Commission) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its regulations restricting certain officers and directors of public utilities from holding “interlocking” positions (i.e., positions in which an individual is simultaneously a director or officer of two different types of business entities covered by the regulations). The NOPR proposes a limited measure of relief from some of the Commission’s longstanding regulatory hurdles for public utility executives.

FERC’s interlock rules implement Section 305(b) of the Federal Power Act, which was enacted to ensure arm’s-length dealings between public utilities and the organizations furnishing financial services or electrical equipment to those utilities. Under the regulations, any person seeking to hold any of the following interlocking positions must file an application for approval from FERC before being appointed:

President Donald Trump signed an executive order on July 10 to except the position of Administrative Law Judge (ALJ) from the federal government’s competitive service. This removes ALJs from the traditional “merit” selection process used for most federal government employees.

ALJs had been appointed through a competitive examination and competitive service selection process. However, pointing to the “expanding responsibility” that ALJs have for federal agency adjudications, and expanding on the US Supreme Court’s recent decision in Lucia v. Securities and Exchange Commission, the president concluded that all ALJs should be considered “Officers of the United States” subject to the Appointments Clause of the US Constitution and therefore be appointed by and serve at the discretion of the president or the head of the relevant agency. In Lucia, the Court had held that Securities and Exchange Commission ALJs are “Officers of the United States,” and are thus subject to the Appointments Clause.

Commissioner Robert Powelson announced on June 28 that he will step down from his position at the Federal Energy Regulatory Commission to lead the National Association of Water Companies. Commissioner Powelson was sworn in on August 10, 2017 for a term that was intended to last through June 30, 2020, but will be leaving this August.

One of three Republican appointees on the five-member Commission, Commissioner Powelson’s departure will leave FERC with two Republicans and two Democrats until another Republican is confirmed by the US Senate to assume the vacated seat (the majority of seats must be held by the party of the US president).

Given the number of high-profile issues under consideration at the Commission, including the emerging issue of resiliency (Docket No. AD18-7) and the hotly disputed reconsideration of FERC’s existing policy on certificating new interstate natural gas facilities (Docket No. PL18-1), an even split between the parties could make it difficult to issue a final policy or rule in these proceedings.

The Council on Environmental Quality (CEQ)—the US federal agency responsible for coordinating and overseeing federal agency implementation of the National Environmental Policy Act (NEPA)—moved one step closer on June 20 towards revising its longstanding NEPA-implementing regulations. Those regulations, which last underwent a major revision in 1986, govern the environmental review process for all “major federal actions,” including Federal Energy Regulatory Commission (FERC) license reviews for hydroelectric projects and certificates for natural gas facilities.

Now, in an Advance Notice of Proposed Rulemaking (ANPR), the CEQ signaled that it is ready to receive public comments on potential revisions that it hopes will “ensure a more efficient, timely, and effective NEPA process consistent with the national environmental policy stated in NEPA.” Comments are due July 20, 2018.