FERC, CFTC, and State Energy Law Developments

April 12, 2016
12:00 PM - 02:00 PM ET
11:00 AM - 01:00 PM CT
09:00 AM - 11:00 AM PT

Event Location
One Market, Spear Street Tower
San Francisco, CA 94105-1596
United States

We are proud to host the Energy Bar Association’s EBA Energizer: Mediating an Energy Case, in which panelists will discuss practical advice and mediation techniques.

The event will take place live in our Washington, DC, office and via video conference in our San Francisco office.

Panelists
Deborah M. Osborne
Director, Dispute Resolution Division, Federal Energy Regulatory Commission

Amy E. Wind
Chief Circuit Mediator, US District Court for the District of Columbia

Claudia L. Bernard
Chief Circuit Mediator, US Court of Appeals for the Ninth Circuit

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The 5-4 decision temporarily blocks further execution of the EPA’s new plan to cut carbon emissions from existing power plants.

On February 9, the US Supreme Court handed a potentially significant defeat to the Obama administration’s Clean Power Plan (CPP) regulations by staying the CPP’s implementation until court challenges to the plan’s legality conclude. The controversial plan seeks to slash carbon emissions from existing power plants by nearly a third in the coming decades through a wide-ranging effort to substitute new low-emission resources, such as wind and solar, for more traditional coal-based generation. Those challenging the CPP maintain that, in seeking to work such a fundamental change in the United States’ energy generation fleet, the US Environmental Protection Agency (EPA) has far exceeded the powers given to it under the Clean Air Act (CAA). The Supreme Court’s granting of a stay of the regulations comes after the US Court of Appeals for the District of Columbia (DC Circuit) rejected a similar request and comes over the Obama’s administration’s opposition, as well as that of some supporting states and industry participants. The decision signals that at least five members of the Supreme Court found the challengers’ arguments more convincing at this stage of the proceedings.

The D.C. Circuit concluded that sovereign immunity prevents FERC and NERC from imposing monetary penalties on federal agencies that violate Reliability Standards.

Resolving a dispute between the Federal Energy Regulatory Commission (FERC) and the Southwestern Power Administration (SWPA), the U.S. Court of Appeals for the District of Columbia Circuit concluded that federal sovereign immunity prevents FERC, as well as the North American Electric Reliability Corporation (NERC), from imposing monetary penalties on federal agencies that violate mandatory Reliability Standards. As a result of the August 22 decision, federal agencies that are users, owners, and operators of the bulk-power system, such as the various federal power marketing administrations, will not be subject to fines if they violate any of the dozens of Reliability Standards that regulate everything from real-time power system operations to electric utility cybersecurity. Although these agencies are still subject to other enforcement mechanisms, such as compliance directives, the major enforcement tool available to FERC and NERC no longer applies to them.

In this case, the SWPA, which markets hydroelectric power, was fined $19,500 for violating Reliability Standards. FERC upheld the penalty, which had been filed by NERC, on the grounds that section 215 of the Federal Power Act requires the SWPA to comply with Reliability Standards and FERC has the authority to enforce those standards, including through monetary fines, against any entities subject to FERC’s reliability jurisdiction.

On August 15, the U.S. Court of Appeals for the District of Columbia Circuit rejected the challenges filed By various utilities, industry groups, and state commissions that claimed that the Federal Energy Regulatory Commission (FERC or the Commission) overstepped its authority when promulgating Order No. 1000.[1] The court’s decision in South Carolina Public Service Authority v. FERC,[2] which FERC Chairman Cheryl LaFleur hailed as “critical to the Commission’s efforts to support efficient, competitive, and cost-effective transmission,”[3] substantially strengthens FERC’s ability to establish the structures necessary to encourage and facilitate competitive transmission planning and development.

In an order issued on March 30,[1] the Federal Energy Regulatory Commission (FERC or Commission) issued an order requiring "postage stamp" pricing to allocate the costs of new 500 kV and above transmission projects in the PJM Regional Transmission Organization Region. PJM Interconnection, L.L.C., 138 FERC ¶ 61,230 (2012). The Commission acknowledged that other just and reasonable cost allocation methodologies may exist to allocate the costs of high-voltage transmission facilities. It concluded, however, that PJM Interconnection, L.L.C.'s (PJM's) use of a static-flow-based model is unjust and unreasonable.

On October 24, the United States Court of Appeals for the Fifth Circuit in Texas Pipeline Association v. Federal Energy Regulatory Commission held that the Federal Energy Regulatory Commission (FERC) exceeded its statutory authority in issuing Order Nos. 720 and 720-A, which required certain intrastate natural gas pipelines to post information on scheduled flow and design capacity. These posting requirements were established to (1) improve market participants' ability to assess supply and demand and to price physical natural gas transactions, (2) help market participants better understand the impact of disruptions to the natural gas delivery system on the industry and economy, and (3) allow market participants to identify potentially manipulative activity.

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On June 20, 2011, the U.S. Supreme Court issued its much-anticipated decision in American Electric Power Co. v. Connecticut, reviewing whether federal common law would support a claim that greenhouse gas emissions could give rise to a public nuisance claim that would warrant injunctive relief against future emissions. The Court concluded that the federal common law cannot support such a claim.

The plaintiffs, including eight states, New York City, and three nonprofit land trusts, brought suit in the Southern District of New York against five electric power companies alleged to be the largest emitters of carbon dioxide in the United States. The complaint alleged that carbon dioxide emissions contributed to global warming and thereBy constituted a nuisance under federal common law. The plaintiffs requested an injunction limiting emissions in the future. No monetary damages were sought. The district court dismissed the case, finding that the complaint presented a nonjusticiable political question. The Second Circuit reinstated the case, holding that the plaintiffs were not barred By the political-question doctrine and had stated a federal common law nuisance claim.

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On January 7, 2011, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in Murray Energy Corp. v. FERC, No. 09-1207 (D.C. Cir. Jan. 7, 2011), denied a petition for review By Murray Energy Corporation (Murray) of Federal Energy Regulatory Commission (FERC) orders authorizing construction of Rockies Express Pipeline LLC’s (REX’s) REX-East pipeline. The court rejected arguments concerning agency delegation of authority, fulfillment of certificate conditions, and consideration of safety issues.

On January 13, 2010, the U.S. Supreme Court determined, in an 8-1 decision, that energy rates challenged by non-contracting parties are presumed to be just and reasonable, and may only be set aside if the rates seriously harm the public interest. In NRG Power Marketing v. Maine Public Utilities Commission, the Supreme Court reversed the U.S. Court of Appeals for the District of Columbia Circuit, which held that non-contracting parties challenging rates set forth in energy contracts need not establish that the rates upset the public interest in order to invalidate the challenged rates. The Supreme Court’s decision resolves an issue of first impression By reaffirming the Court’s Mobile-Sierra doctrine and its 2008 ruling in Morgan Stanley Capital Group, Inc. v. Public Utility District No. 1Read more…