Regulatory

  • March 03, 2022

Contentious Senate Committee Hearing Highlights the Politically-Charged Nature of FERC’s Recent Pipeline Policy Statements

FERC, Natural Gas Pipelines, Regulatory
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The Senate Energy & Natural Resources Committee held a hearing today to question Federal Energy Regulatory Commission (FERC) Chairman Richard Glick and Commissioners Allison Clements, Mark Christie, James Danly, and Willie Phillips about FERC’s two recent policy statements regarding natural gas certificates.  Those two policy statements, each of which were issued by 3-2 vote with Commissioners Christie and Danly dissenting with separate statements, were issued on February 18, 2022 and are the subject of a separate Pierce Atwood blog post. Members of the Pierce Atwood Energy team watched the livestream video of the Senate hearing, and, in this post, provide some high-level insights based on the Senators’ questions and Commissioners’ responses today.

To no one’s surprise, the hearing was a politically-charged event. With one notable exception, the participating Senators’ response to FERC’s actions was split along party lines, with Democrats generally supporting the policy statements and Republicans criticizing the policy statements with openly expressed dismay and frustration.  The FERC Commissioners’

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  • February 21, 2022

FERC Issues Two Controversial Policy Statements on Natural Gas Infrastructure

FERC, Natural Gas Pipelines, Regulatory
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On February 18, 2022, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued two controversial policy statements that will significantly impact the permitting and construction of new natural gas pipeline facilities.  The policy statements were each approved by a 3-2 majority with Commissioners Danly and Christie issuing separate dissents.

The Updated Policy Statement on Certification of New Interstate Natural Gas Facilities (“Updated Policy Statement”) revises FERC’s 1999 Certificate Policy Statement to give environmental analysis and policy, including environmental justice, a greater role in determining whether FERC should approve new natural gas transportation facilities as consistent with the “public convenience and necessity” under Section 7 of the Natural Gas Act (“NGA”).  A companion Interim Policy Statement on the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews (“GHG Policy Statement”) seeks to explain how FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under the National Environmental Policy Act (“NEPA”) and the NGA.

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  • November 23, 2021

Technical Conference Sparks Debate Over FERC’s Legal Authority to Consider Greenhouse Gas Emissions in Pipeline Certification Review

FERC, Natural Gas Pipelines, Regulatory
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On November 19, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) convened a staff-led technical conference to discuss methods natural gas companies may use to mitigate the effects of direct and indirect greenhouse gas (“GHG”) emissions resulting from pipeline construction and expansion projects that are subject to Natural Gas Act (“NGA”) sections 3 and 7 authorizations by FERC (the “Conference”). The Conference included three panel discussions:  1) The Level of Mitigation for a Proposed Project’s Reasonably Foreseeable Greenhouse Gas Emissions; 2) Types of Mitigation; and 3) Compliance and Cost Recovery of Mitigation.

One of the threshold questions posed by the Commissioners, and a recurring theme throughout the conference, was whether FERC has the legal authority to consider GHG emissions as part of its certification process. Chairman Richard Glick asserted that FERC has authority to mitigate GHG emissions and that doing so will provide greater certainty for the industry, and expressed concern regarding FERC’s handling of the issue to date, given the flurry of recent decisions

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  • September 27, 2021

FERC Staff Recommends Natural Gas Infrastructure Winterization Measures in Light of 2021 Extreme Winter Weather Events

FERC, Natural Gas Pipelines, Regulatory
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The Federal Energy Regulatory Commission (“FERC”), in coordination with the North American Electric Reliability Corporation (“NERC”), presented its preliminary findings and recommendations at FERC’s Open Meeting on September 23 regarding its inquiry into the February 2021 Cold Weather Event in the Electric Reliability Council of Texas (“ERCOT”), Southwest Power Pool, Inc. (“SPP”), and Midcontinent Independent System Operator, Inc. (“MISO”).

The February 2021 Cold Weather Event occurred from February 8 through 20, 2021, during which large numbers of generating units experienced outages, derates, or failures to start, resulting in energy and transmission emergencies. The power outages affected millions of customers throughout the ERCOT, MISO, and SPP regions. On February 16, 2021, FERC and NERC announced a joint inquiry to examine the root causes of the event.

The preliminary findings indicate that a majority of the unplanned generating unit outages, derates, and failures to start were due to natural gas fuel supply issues. The major causes of the decline in natural gas

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  • May 17, 2021

Government Races to Secure Critical Infrastructure in Wake of Colonial Pipeline Ransomware Attack

FERC, Natural Gas Pipelines
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One of the nation’s largest pipelines, Colonial Pipeline, which carries 45 percent of the East Coast’s fuel supplies, was forced to shut down on May 7 after it was targeted by a ransomware attack. Ransomware is a type of malware where criminal groups encrypt data, effectively “holding it hostage,” until the victim pays a ransom.

Colonial Pipeline resumed operations on May 15. However, the cyberattack has sparked public panic and outcry as parts of the country experience fuel shortages and fuel prices rise to their highest levels in nearly seven years. The incident has also renewed efforts government-wide to strengthen security of U.S. pipelines and the power grid. On May 11, the U.S. House Committee on Energy and Commerce reintroduced bipartisan legislation aimed at bolstering the Department of Energy’s (“DOE”) ability to respond to cybersecurity threats to U.S. energy infrastructure. Among the several measures introduced were:

(1) The Pipeline and LNG Facility Cybersecurity Preparedness Act, which would require DOE to implement

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  • April 09, 2021

State Climate Legislation Takes Aim at Natural Gas Industry

Clean Energy, Natural Gas Pipelines, Renewable Energy
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This is the second post in an ongoing series focused on how state and federal measures addressing climate and carbon reduction are affecting the natural gas industry. You can find the first post in this series here.

Nevada

In the latest effort to phase out or reduce the use of natural gas, a bill was introduced to the Nevada Legislature on March 23, 2021 (A.B. 380) that would set emissions reduction targets for buildings over the next 30 years to achieve a 95% decrease in emissions from buildings by 2050. The latest bill builds on Nevada’s 2019 climate strategy, which established a goal of economy-wide net-zero emissions by 2050.[1]

The bill would direct the Nevada Public Utilities Commission (“Nevada PUC”) to open an investigatory docket to examine how gas utilities can assist the state in achieving its 2050 emissions goal and how gas utilities can maintain safety standards

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  • March 19, 2021

The Natural Gas Industry in a Climate-Focused Future: Regulators Take Action to Adapt

FERC, Natural Gas Pipelines, Regulatory, Renewable Energy

Introduction

Climate change policies at the state and federal levels will have significant impacts on natural gas companies and their customers.  On the one hand, there is pressure on companies to maintain safe and reliable service – on the other, the push for net-zero carbon emissions by 2050.  These competing objectives will have notable effects on how companies conduct their long-term planning to maintain system reliability while avoiding potential stranded costs and safeguarding ratepayers.  This post and subsequent updates will focus on how federal and some state regulators are addressing the issues.

Federal

The Biden Administration’s clean energy plan, which calls for a 100% clean energy economy by 2035 and net-zero emissions economy-wide by no later than 2050, has sparked an increased focus on achieving these goals. To reach net-zero by 2050, the Biden Administration plans to invest $1.7 trillion in federal funds in clean energy research and modernization, deploy zero emission vehicles across the government, and enforce

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  • November 19, 2020

FERC Accepts PJM Compliance Filings Overhauling Reserve Market and E&AS Offset Calculation

FERC, Regulatory

On November 12, 2020, the Federal Energy Regulatory Commission (“Commission”) approved changes regarding PJM Interconnection, L.L.C.’s (“PJM”) reserve market, including how the Regional Transmission Organization (“RTO”) calculates its energy and ancillary services offset (“E&AS Offset”). The order approves a PJM compliance filing establishing categorical exclusions for nuclear, wind and solar resources, which historically have not provided capacity reserves due to their inflexible characteristics.  The order also greenlighted a related exemption process PJM will use to determine reserve eligibility for resources that are automatically deselected, recognizing that in some circumstances nuclear, wind, and solar may be able to provide reserves.

As background, on August 5, 2020, PJM submitted a compliance filing containing revisions to its tariff to incorporate a forward-looking E&AS Offset beginning with the Base Residual Auction (“BRA”) for the delivery year commencing June 1, 2022.  The Commission accepted the compliance filing and established an effective date of May 1, 2022.

PJM’s compliance filing described which resources may provide synchronized reserves, non-synchronized

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  • November 09, 2020

Energy Infrastructure in Biden’s Administration: What You Need to Know

Development Incentives, Regulatory, Renewable Energy, Tax Credits

President elect Joe Biden has set forth two comprehensive plans targeting clean energy and climate change (collectively “The Biden Energy Plan”).[1]  The Biden Energy Plan seeks to aggressively pursue a net-zero (carbon neutral) power sector by 2035 and a net-zero U.S. economy by 2050. Additionally, themes from Biden’s Build Back Better plan for job growth and economic recovery are interwoven throughout the Biden Energy Plan.

The Biden Energy Plan is comprised of the following major initiatives:

Biden Energy Plan Commitments for Day 1 of the Biden Administration

On Day 1 of Biden’s administration, Biden plans to put the Biden Energy Plan into action by requiring methane pollution limits for new and existing oil and gas operations, developing new fuel economy standards, aiming for 100% of sales for light- and medium-duty vehicles to be zero emissions, and protecting federal lands and waters from new oil and gas leasing.

Clean Energy Mobilization at the Federal Level

To

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  • October 23, 2020

FERC Proposes Policy Statement on Oil Pipeline Affiliate Contracts

FERC, Regulatory

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

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