Valerie L. Green

FERC Proposes Policy Statement on Oil Pipeline Affiliate Contracts

On October 15, 2020, the Federal Energy Regulatory Commission (FERC) issued a proposed policy statement containing guidance for oil (and petroleum products) pipeline common carriers proposing rates and terms pursuant to affiliate contracts.  The proposed guidance likely stems from a 2017 order in Magellan Midstream Partners, L.P., wherein FERC denied a petition for declaratory order requesting that a proposal to establish a marketing affiliate to buy, sell, and ship crude oil be found compliant with the Interstate Commerce Act (ICA).  FERC’s guidance seeks to address the key issue identified in the Magellan order—using affiliates to provide a discount or rebate to producers that are not shippers.  The policy statement addresses this concern by requesting additional disclosures in an effort to foster greater transparency.

The policy statement provides oil pipelines with clear guidelines when seeking approval in a petition for declaratory order or tariff filing for contract rates or terms pursuant to an affiliate contract.  The policy statement outlines information carriers

Update: FERC Revises “Tolling” Order Language to Address Recent Court of Appeals Decision; Seeks Legislative Fix

As discussed previously in Pierce Atwood’s Energy Infrastructure Blog, on June 30, 2020, the U.S. Court of Appeals for the DC Circuit ruled that FERC lacks authority to issue tolling orders that postpone rehearing decisions on natural gas project orders solely to give the agency more time to consider rehearing requests and which delay opposing parties’ efforts to file appeals court challenges.  Allegheny Defense Project v. FERC, No. 17-1098 (D.C. Cir. June 30, 2020).  On July 1, 2020, the Federal Energy Regulatory Commission (“FERC”) issued its first order since the Allegheny Defense decision addressing a rehearing request that it did not act on within the 30-day statutory time period under the Natural Gas Act.

Incorporating suggestions from the court’s opinion, in Midcontinent Independent System Operator, Inc., 172 FERC ¶ 61,009 (2020), FERC issued a Notice of Denial of Rehearing by Operation of Law and Providing for Further Consideration.  That notice debuted

NY Appellate Court Enforces 60-Day Deadline for Local Governments to Require PILOT Agreements from Solar Developers

Decision binding on all local state taxing authorities

The Appellate Division of the New York courts has affirmed that a local governmental taxing authority must notify a solar project developer within 60 days from when the developer first notifies the authority of its plans to construct a solar facility that the authority intends to require the developer to enter into a Payment in Lieu of Taxes, or PILOT Agreement, or the taxing authority foregoes its right to require a PILOT Agreement from the project developer. Matter of Laertes Solar, LLC v Assessor of the Town of Harford (2020 NY Slip Op 02302).

Most cities, counties, school districts, and other local government authorities in New York have authority to tax real property.  Local governments often use their taxing power to assess solar energy facilities being developed in their jurisdictions as “improvements” to the property.

As part of New York’s concerted effort to reduce greenhouse gas emissions, the

DC Circuit Rejects FERC’s Tolling Authority in Pipeline Certificate Proceedings

The Federal Energy Regulatory Commission (“FERC”) can no longer delay judicial review of its orders under the Natural Gas Act by issuing a tolling order that takes no action on a rehearing request other than granting itself more time to address the merits.  On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit issued an en banc opinion on rehearing denying motions to dismiss petitions for review filed with the court after FERC issued a “tolling” order extending the statutory 30-day time period for FERC to act on rehearing, but before FERC issued a rehearing order on the merits.  Allegheny Defense Project, et al. v. FERC, No. 17-1098 (D.C. Cir. Jun. 30, 2020).

Such tolling orders in pipeline certificate proceedings under Section 7(c) of the Natural Gas Act enable FERC to authorize pipeline developers to begin construction and seek to condemn construction rights-of-way by eminent domain if necessary before FERC issues a merits

FERC Declares Concurrent Jurisdiction with Bankruptcy Courts Over Rejections of Natural Gas Transportation Agreements

On June 22, 2020, the Federal Energy Regulatory Commission (“FERC”) issued an order in response to a Petition for Declaratory Order (“Petition”) filed by ETC Tiger Pipeline, LLC (“ETC Tiger”), finding that FERC has concurrent jurisdiction with United States Bankruptcy Courts to review and dispose of natural gas transportation agreements sought to be rejected through bankruptcy.[1]

The Petition, filed on May 19, 2020, requested that FERC find that it has concurrent jurisdiction with Bankruptcy Courts under sections 4 and 5 of the Natural Gas Act (“NGA”) with respect to natural gas transportation agreements between ETC Tiger and Chesapeake Energy Marketing, L.L.C. (“Chesapeake”) and that FERC approval of any abrogation or modification of the agreements is statutorily required.  Specifically, ETC Tiger requested three Commission declarations:

  1. The natural gas transportation agreements between ETC Tiger and Chesapeake are FERC-jurisdictional agreements reflecting filed rates approved by FERC pursuant to its exclusive jurisdiction under the NGA;
  2. If Chesapeake seeks rejection of the agreements

PHMSA Issues Gas Pipeline Regulatory Reform Notice of Proposed Rulemaking

On June 9, 2020, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued a Notice of Proposed Rulemaking (“NOPR”) to revise the Federal Pipeline Safety Regulations (“Regulations”) to reduce regulatory burdens associated with construction, operation, and maintenance of gas pipeline systems. The NOPR is in response to a series of executive orders (E.O. 13771, 13777, and 13783) calling on agencies to reduce or eliminate regulatory burdens. According to PHMSA, the value of the annualized cost savings associated with the proposed amendments is approximately $129 million (at a discount rate of 7 percent). The key reforms, which ease certain monitoring requirements, streamline reporting obligations, and reduce the burden on distribution pipelines associated with the Distribution Integrity Management Program (“DIMP”), are summarized below.

DIMP Requirements

PHMSA has proposed two revisions to DIMP requirements to ease the regulatory burden on gas distribution operators. The NOPR would provide operators of farm taps originating from regulated source pipelines the flexibility to choose between inspecting pressure regulators pursuant