• September 01, 2020

Update: First Circuit Revises Prior Decision to Vacate Air Permit in Light of Material Developments

Natural Gas Pipelines, Permitting, Regulatory
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As discussed previously in Pierce Atwood’s Energy Infrastructure Blog, on June 3, 2020, the U.S. Court of Appeals for the First Circuit vacated an air permit issued by the Massachusetts Department of Environmental Protection (DEP) for the construction of a new compressor station proposed by Algonquin Gas Transmission (Algonquin) as part of its Atlantic Bridge natural gas pipeline project and remanded the matter to the agency for further analysis.  Town of Weymouth v. Massachusetts Department of Environmental Protection, et al., No. 19-1794 (Jun. 3, 2020) (June 3 Opinion). Algonquin petitioned for panel rehearing as to the remedy only. On August 31, 2020, the Court granted Algonquin’s petition and revised its June 3 Opinion to remand without vacatur. Town of Weymouth v. Massachusetts Department of Environmental Protection, et al., No. 19-1794 (Aug. 31, 2020).

When deciding whether to vacate the agency’s decision or remand without vacating, the Court considered the “severity

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  • August 20, 2020

Green Power and the 2020 California Blackouts

Clean Energy, Energy Storage, Renewable Energy, Solar Power, Wind Power
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This week, California experienced its first blackouts in nearly 20 years. On August 19, the California Independent System Operator (“CAISO”) issued another state-wide flex alert, calling on the public to reduce energy use to prevent rotating power outages. As the state’s heat wave enters its seventh day, the temperature in California today will again reach dangerous levels and will continue to strain the system. While the exact cause of the recent blackouts is under investigation, Assemblyman Jim Patterson pointed to the unreliability of renewable power and the state’s reduced dependence on natural gas.

CAISO called the events this week a “perfect storm,” caused by the heat wave and corresponding spike in demand, simultaneous loss of some sources of power, and inability to import out-of-state electricity. When the sun sets, electricity generated by solar facilities drops, removing thousands of megawatts of solar power from the system while demand, fueled by the record-breaking heat, remains high.

Despite allegations that renewables are unreliable, there is no indication

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  • July 09, 2020

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

FERC, Natural Gas Pipelines, Regulatory
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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

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  • July 08, 2020

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

Renewable Energy, Solar Power, Tax
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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

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  • July 02, 2020

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

FERC, Natural Gas Pipelines, Regulatory
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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

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  • July 01, 2020

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

FERC, Natural Gas Pipelines, Regulatory
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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
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  • June 11, 2020

PHMSA Issues Gas Pipeline Regulatory Reform Notice of Proposed Rulemaking

Natural Gas Pipelines
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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

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  • June 10, 2020

First Circuit Vacates Air Permit Due to Inadequate BACT Analysis

Natural Gas Pipelines
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On June 3, 2020, the U.S. Court of Appeals for the First Circuit vacated an air permit issued by the Massachusetts Department of Environmental Protection (DEP) for the construction of a new compressor station proposed by Algonquin Gas Transmission as part of its Atlantic Bridge natural gas pipeline project and remanded the matter to the agency for further analysis.  Town of Weymouth v. Massachusetts Department of Environmental Protection, et al., No. 19-1794 (Jun. 3, 2020).  In reviewing the agency’s decision, the First Circuit concluded that the DEP’s Best Available Control Technology (BACT) analysis was inadequate because the Agency failed to undertake its own independent analysis of the cost-effectiveness of the various options of controlling air emissions and instead relied on the Federal Energy Regulatory Commission’s (FERC) analysis.  The court also decided several other environmental arguments raised by the Town of Weymouth and other petitioners in favor of the DEP, including environmental justice and noise concerns, among other issues, which are addressed in a

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  • August 19, 2019

Changes to Horizontal Market Power Analysis in FERC Market-Based Rate Applications

FERC
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Refinements to Horizontal Market Power Analysis for Sellers in Certain Regional Transmission Organization and Independent System Operator Markets,
Order No. 861, 168 FERC ¶ 61,040 (2019).

Effective date: September 24, 2019.

On July 18, 2019, FERC issued an order modifying the requirements for entities which hold market-based rate authority, as well as new applicants. This order will reduce the filing burden on entities seeking market-based rates in the Eastern ISOs, PJM, NYISO, ISO New England and MISO. It leaves filing requirements unchanged for entities in bilateral markets, CAISO and SPP.

Order No. 861 finds that sellers transacting in markets operated by regional transmission organization (“RTO”) and independent system operators (“ISO”) do not need to submit indicative screens regarding their horizontal market power to obtain or maintain market-based rates to sell energy, ancillary services and capacity. The Commission found that the ISO/RTOs’ market monitoring regimes are sufficiently mature to allow for appropriate monitoring and mitigation. Further,

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  • August 13, 2019

New FERC Data Collection Requirements for Market-Based Rate Sellers

FERC, Regulatory
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Data Collection for Analytics and Surveillance and Market-Based Rate Purposes,
Order No. 860, 168 FERC ¶ 61,039 (2019).

On July 18, 2019, the Federal Energy Regulatory Commission (“Commission”) issued a final rule which will have impacts on new market-based rate applications, as well as companies which currently have such authorization.  Under this rule, companies which currently hold market-based rates, as well as new applicants, will need to submit data into a relational database regarding their affiliates, and will need to keep such data updated.  This will add a new compliance obligation to companies, and will require closer monitoring of active and passive investors in a project.

Following up on the 2016 series of Notices of Proposed Rulemaking,[1] the Commission issued a final rule, adopting its proposal to collect market-based rate information in a relational database, but declining to require entities, including those holding market-based rates (“Sellers”) and those who transact in virtual energy and

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