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FERC, CFTC, and State Energy Law Developments

The US Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corp. (NERC) jointly authored a report regarding the February 2021 power outages in Texas and the US Midwest caused by extreme cold weather. The report identifies the causes of the outages and outlines a series of recommendations focusing on enhanced protection against cold weather for critical generation as well as the natural gas assets supplying gas-fired generation so that this infrastructure remains operational even in extreme cold weather.

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Nearly 200 comments were filed in response to FERC’s February 18, 2021 Notice of Inquiry (NOI) that sought new information and perspectives on whether it should revise its policy statement on the certification of new interstate natural gas transportation facilities (Policy Statement). As we discussed in our February 19 LawFlash, FERC sought comments on several areas, including potential adjustments to its determination of need, the exercise of eminent domain and landowner interests, FERC’s considerations of environmental impacts, and its consideration of effects on environmental justice communities. Commenters provided a wide range of perspectives, which we discuss below.
As has been reported, a recent ransomware attack has caused an interstate pipeline and fuel supplier to much of the eastern United States to shut down its operations. Although the attack did not compromise operational systems, the company opted to cease operations as a precautionary measure.
FERC issued a final rule on March 18 amending its regulations to establish a one-year period for state agencies or other certifying authorities to act on requests for water quality certifications required for a certificate of public convenience and necessity for a natural gas pipeline or an authorization for an liquefied natural gas (LNG) terminal.
The Delaware River Basin Commission (DRBC) on February 25, 2021, approved a new regulation formally prohibiting high-volume hydraulic fracturing (HVHF), or fracking, in the Delaware River Basin. The final rule makes permanent a drilling moratorium imposed by the DRBC in 2010.
FERC announced on February 22 that it will open a new proceeding to examine the threats of climate change and extreme weather to electric reliability. The investigation will assess how grid operators prepare for and respond to extreme weather events, including, droughts, extreme cold, wildfires, hurricanes, and prolonged heat waves. The proceeding will include a technical conference with an opportunity for parties to submit comments in advance of that conference.
The Federal Energy Regulatory Commission (FERC) announced on February 22 that its Office of Enforcement would examine wholesale natural gas and electricity market activity during last week’s extreme cold weather “to determine if any market participants engaged in market manipulation or other violations.” FERC’s brief press release explained that its examination is part of its existing surveillance program for market participant behaviors in the wholesale natural gas and electric markets.
Is a midstream contract treated the same as other executory contracts in bankruptcy, subject to assumption and rejection pursuant to the US Bankruptcy Code? An executory contract is any contract of the debtor where both the debtor and the contract counterparty have ongoing performance obligations on the date of the bankruptcy filing. A midstream contract, if considered by the court to be an executory contract, may be assumed or rejected under 11 USC § 365.
A LawFlash prepared by our energy lawyers discusses the Federal Energy Regulatory Commission’s Notice of Inquiry regarding the certification of new interstate natural gas transportation facilities and the potential addition of environmental justice as an additional area of examination.
A LawFlash prepared by our energy team discusses likely results of the Texas power outages and blackouts during the recent winter storm, which include federal and state investigations into the outages, federal investigations into commodity and futures price spikes during the storm, force majeure inquiries, and demands for corrective actions to ensure future reliability of the grid system.