Category: Federal Energy Regulatory Commission

Council on Environmental Quality Seeks Public Comment on Draft NEPA Greenhouse Gas Emission Guidance

Brett A. Snyder and Lamiya N. Rahman

The Council on Environmental Quality has published Draft Guidance to federal agencies to evaluate the effects of greenhouse gas emissions under the National Environmental Policy Act. The Draft Guidance is largely consistent with the approach taken by the Federal Energy Regulatory Commission in recent natural gas infrastructure orders. Comments are due on July 26, 2019.

Introduction

On June 26, 2019, the Council on Environmental Quality (“CEQ”) published new draft guidance to clarify the scope of review federal agencies should undertake when considering the effects of greenhouse gas (“GHG”) emissions under the National Environmental Policy Act (“NEPA”) and related regulations.1 The Draft Guidance is intended to replace CEQ’s prior GHG-related guidance, which was adopted in 2016 and later rescinded pursuant to an Executive Order in 2017.2 The Draft Guidance is largely consistent with the approach taken by the Federal Energy Regulatory Commission (“FERC”) in recent natural gas infrastructure orders.

CEQ’s Draft Guidance

NEPA is a procedural statute that requires federal agencies to analyze the environmental impacts of any major federal action significantly affecting the quality of the human environment.3 Although NEPA does not mandate any particular substantive outcomes, it requires an agency to consider the direct and reasonably foreseeable indirect effects of a proposed action.4

The Draft Guidance states that “[a] projection of a proposed action’s direct and reasonably foreseeable indirect GHG emissions may be used as a proxy for assessing potential climate effects.”5 While direct effects are caused by an action and occur at the same time or place, indirect effects are caused by the action and are later in time or farther removed in distance but are still reasonably foreseeable. Thus, the proposed guidance suggests that quantification of emissions is sufficient to meet an agency’s obligation to assess effects of emissions.

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In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts

Mark R. Haskell, Frederick M. Lowther, and Lamiya N. Rahman

With the May 1 order, the Commission reaffirms its view that it has concurrent jurisdiction over debtors’ efforts to reject their FERC-jurisdictional contracts in bankruptcy. Further developments in judicial proceedings in the Sixth and Ninth Circuits are expected.

On May 1, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) denied Pacific Gas and Electric Company’s (“PG&E”) requests for rehearing of two Commission orders asserting concurrent jurisdiction with bankruptcy courts over the disposition of wholesale power contracts PG&E seeks to reject through bankruptcy.1

In its Rehearing Order, the Commission acknowledged a circuit split regarding the relative authorities of the Commission under the Federal Power Act (“FPA”) and the bankruptcy courts under the Bankruptcy Code as they relate to the review and disposition of FERC-jurisdictional contracts in bankruptcy proceedings. However, the Commission affirmed its prior holdings that that “the way to give effect to both the FPA and the Bankruptcy Code is for a party to a Commission-jurisdictional wholesale power contract to obtain approval from both the Commission and the bankruptcy court to modify the filed rate and reject the contract, respectively.”2 Continue reading “In PG&E Bankruptcy, FERC Reasserts Concurrent Jurisdiction over the Disposition of Wholesale Power Contracts”

FERC Reaffirms Its Final Rule on Rate Changes Relating to Federal Income Tax Rates for Natural Gas Pipelines

Mark R. Haskell, Brett A. Snyder, George D. Billinson, and Lamiya N. Rahman

The Commission’s recent order upholds the Form No. 501-G filing requirement, which was designed to determine whether pipelines are over-recovering on their cost of service in light of recent federal income tax rate and policy changes. Thus far, the Commission has initiated investigations into the rates of six pipelines pursuant to its authority under section 5 of the Natural Gas Act. These proceedings are ongoing.

On April 18, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued an order (“Order No. 849-A”)1 denying requests for rehearing of its final rule on federal income tax rates for jurisdictional natural gas pipelines (“Order No. 849”).2 Order No. 849 adopted procedures for determining whether pipelines may be collecting unjust and unreasonable rates in light of income tax reductions established by the Tax Cuts and Jobs Act and the Commission’s revised tax allowance policy following the United Airlines, Inc. v. FERC decision.3 These procedures included a requirement that certain interstate natural gas pipelines file a FERC Form No. 501-G to estimate cost of service reductions and changes in returns on equity (“ROE”) resulting from the income tax changes. Continue reading “FERC Reaffirms Its Final Rule on Rate Changes Relating to Federal Income Tax Rates for Natural Gas Pipelines”

FERC Issues Notice of Inquiry Regarding Electric Transmission Incentives Policy

Mark R. Haskell, George D. Billinson, and Lamiya N. Rahman

According to FERC Chairman Chatterjee, the electric transmission incentives NOI and a concurrently released NOI on the Commission’s ROE policy “will be critical to ensuring that the energy revolution we’re currently undergoing results in more reliable services and lower prices for customers.” The electric transmission incentives NOI “asks very important questions about whether the Commission should be focused on incentivizing projects with risks and challenges or thinking more broadly about the reliability and economic benefits that transmission projects can provide.” Comments are due 90 days, and reply comments are due 120 days, after publication in the Federal Register.

On March 21, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued a Notice of Inquiry Regarding the Commission’s Electric Transmission Incentives Policy (the “NOI”) in Docket No. PL19-3-000.1 The NOI seeks comments on the scope and implementation of the Commission’s transmission incentives policy, citing numerous developments in transmission planning and development in the 13 years since FERC first promulgated its electric transmission incentives regulations and the seven years since FERC issued its last policy statement on the topic.

Section 219 of the Federal Power Act (“FPA”) requires the Commission to establish rules providing incentive-based rate treatment for electric transmission in interstate commerce by public utilities, for the purpose of benefitting consumers by ensuring reliability and reducing the cost of delivered power by reducing transmission congestion.2 Continue reading “FERC Issues Notice of Inquiry Regarding Electric Transmission Incentives Policy”

FERC to Review Its Policies Regarding the Determination of the Return on Equity in Jurisdictional Rates

Mark R. Haskell, Brett A. Snyder, and George D. Billinson

FERC is conducting a comprehensive review of its method for determining the appropriate return on equity in jurisdictional rates across the energy industry. Comments are due no later than 90 days, and reply comments no later than 120 days, after the publication of the NOI in the Federal Register.

On March 21, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued a Notice of Inquiry (“NOI”) as to whether it should modify its policies (and, if so, how) for calculating the return on equity (“ROE”) for jurisdictional rates.1 Although ostensibly directed at policies applicable to public utilities, the NOI also seeks comment as to whether those policies should also be applied to interstate natural gas pipelines and oil pipelines. Continue reading “FERC to Review Its Policies Regarding the Determination of the Return on Equity in Jurisdictional Rates”

FERC Revises Interlocking Officer and Director Regulations

Mark R. Haskell, George D. Billinson, and Lamiya N. Rahman

Section 305 of the Federal Power Act (“FPA”)1 generally requires prior approval from the Federal Energy Regulatory Commission (“FERC” or “the Commission”) before an individual may serve as an officer or director of: (1) more than one public utility; (2) a public utility and certain entities authorized by law to underwrite or participate in the marketing of public utility securities; or (3) a public utility and a company that supplies electrical equipment to that public utility.

Parts 45 and 46 of the Commission’s regulations implement the provisions of Section 305.2 On February 21, 2019, the Commission announced revisions to those regulations,3 which largely track those outlined in the Notice of Proposed Rulemaking (“NOPR”) issued last July.4 Continue reading “FERC Revises Interlocking Officer and Director Regulations”

FERC Adopts Regulations Implementing $10 Million Threshold for Review of Public Utility Mergers and Consolidations

Mark R. Haskell, George D. Billinson, and Lamiya N. Rahman

On February 21, 2019, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a final rule implementing statutory amendments to section 203(a)(1)(B) of the Federal Power Act (“FPA”) (“Order No. 855”).1 Order No. 855 revises Part 33 of FERC’s regulations to establish a $10 million threshold for mergers and consolidations requiring FERC review and approval. The Commission is also implementing a notification requirement for merger and consolidation transactions that do not require Commission approval under the newly-amended regulations but that involve the acquisition of facilities valued over one million dollars. The amended regulations take effect on March 28, 2019. Continue reading “FERC Adopts Regulations Implementing $10 Million Threshold for Review of Public Utility Mergers and Consolidations”

FERC Commissioners Approve the Venture Global Calcasieu Pass LNG Export Project but Signal Divisions in Approaches to Evaluating GHG Emissions

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On February 21, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued an order authorizing Venture Global Calcasieu Pass, LLC (“Calcasieu Pass”) to site, construct, and operate a new liquefied natural gas (“LNG”) terminal and associated facilities (the “Export Terminal”) pursuant to section 3 of the Natural Gas Act (“NGA”).1 The Certificate Order also authorized TransCameron Pipeline, LLC (“TransCameron”) to construct and operate a new interstate pipeline under NGA section 7. Although the Certificate Order drew favorable conclusions in its environmental review of the projects, a concurrence by Commissioner LaFleur and a dissent by Commissioner Glick signaled growing dissatisfaction among half of the current Commission with respect to FERC’s practice of evaluating a project’s greenhouse gas (“GHG”) emissions.

The Certificate Order

The Export Terminal, to be located along the Calcasieu Ship Channel in Cameron Parish, Louisiana, will have a nameplate capacity of 10 million metric tons per annum (“MTPA”) and a peak capacity of 12 MTPA under optimal operating conditions. Natural gas will be delivered to the Export Terminal by TransCameron’s proposed 23.4-mile, 42-inch diameter interstate pipeline, which will extend from the Grand Chenier Station in Cameron Parish, Louisiana to the Export Terminal and will be able to provide up to 2,125,000 dekatherms per day (“Dth/d”) of natural gas transportation service. Continue reading “FERC Commissioners Approve the Venture Global Calcasieu Pass LNG Export Project but Signal Divisions in Approaches to Evaluating GHG Emissions”

FERC Clarifies and Revises Certain Aspects of Its Final Rule Reforming Large Generator Interconnection Procedures and Agreements

Mark R. Haskell, George D. Billinson, and Lamiya N. Rahman

On February 21, 2019, the Federal Energy Regulatory Commission issued an order (“Order No. 845-A”) granting in part and denying in part requests for rehearing and clarification of its final rule reforming the large generator interconnection procedures (“Order No. 845”).[1] Order No. 845 aimed to “improve certainty for interconnection customers, promote more informed interconnections decisions, and enhance the interconnection process”[2] by implementing various revisions to the Commission’s pro forma Large Generator Interconnection Procedures (“LGIP”) and pro forma Large Generator Interconnection Agreements (“LGIA”), including:

Pipeline Update: Here Today, Gone Tomorrow? FERC’s Natural Gas Pipeline Greenhouse Gas Analysis Policy

Stephen C. Zumbrun

The Republican majority of the Federal Energy Regulatory Commission (“FERC” or “Commission”) has drawn a clear distinction with how and when the Commission will analyze upstream and downstream greenhouse gas (“GHG”) emissions when reviewing natural gas pipeline projects. But with the recent announced resignation by Republican Commissioner Robert Powelson, a pending Notice of Inquiry issued by the Commission, a separate advanced Notice of Proposed Rulemaking issued by the Council on Environmental Quality (“CEQ”), and a recent petition to the D.C. Circuit Court, this current established protocol may not last and by this time next year we may see a whole new approach to pipeline GHG analysis coming out of FERC. Continue reading “Pipeline Update: Here Today, Gone Tomorrow? FERC’s Natural Gas Pipeline Greenhouse Gas Analysis Policy”