Since our December update, ISO New England (ISO-NE) and New York Independent System Operator (NYISO) stakeholders have convened additional meetings to assess potential reforms to their respective wholesale electricity markets to better align them with state and regional decarbonization goals. In both NEPOOL’s1 Integrating Markets and Public Policy (IMAPP) initiative and NYISO’s Integrating Public Policy Project (IPPP), carbon pricing remains a central discussion point as they look to advance their stakeholder efforts in 2017.
On February 3, 2017, the Federal Energy Regulatory Commission (FERC or the “Commission”) issued an order (the “Delegation Order”) delegating “further authority” to its staff—beyond the existing delegations of authority already set forth in its regulations1—to take action on matters that would normally require action by the Commission itself. The additional delegations are intended to address the impending, and potentially lengthy, lack of a three-commissioner quorum resulting from the resignation of Commissioner Norman Bay on January 26, 2017, effective February 3, 2017.2 Bay’s resignation leaves FERC with only two commissioners, one short of the quorum needed for Commission action under the statutes it administers. The relatively limited additional delegations will primarily maintain the “status quo” and ensure that rates and terms and conditions of service subject to FERC jurisdiction that are challenged cannot take final effect without Commission review.
Chrysoar, a little known oil company, backed by U.S. private equity (PE) firm EIG Partners, made headlines this week when it purchased $3.8 billion of North Sea assets from Shell. The sale comprises more than half of Shell’s North Sea asset base. It is part of a debt reduction program implemented after its acquisition of BG Group, with Shell targeting divestments totaling $30 billion by 2018. Rather than recycling proceeds into new capital projects (whether in the North Sea or elsewhere), the purchase price will be used to pay down existing loans.
On February 1, 2017, the Federal Energy Regulatory Commission (FERC or the “Commission”) approved a settlement agreement between its Office of Enforcement (Enforcement) and GDF SUEZ Energy Marketing NA, Inc. (GSEMNA) resolving Enforcement’s investigation into whether GSEMNA violated the Commission’s Anti-Manipulation Rule. To resolve the matter, GSEMNA agreed to pay a civil penalty of $41 million, disgorge $40.8 million in unjust profits and undertake compliance reporting. The settlement is significant for two key reasons. First, it reflects the Commission’s continued use of its anti-manipulation authority to prosecute “gaming” of organized wholesale electric markets (i.e., RTOs and ISOs) through bidding strategies that technically comply with market rules, but are inconsistent with the “purpose” of the rules—one of the more controversial theories of market manipulation pursued by FERC in recent years. Second, the $81.8 million settlement is the largest enforcement settlement in almost four years, and it comes at a time when subjects of enforcement actions are increasingly deciding to litigate cases rather than settle with FERC—particularly when major civil penalty and disgorgement amounts are at stake.
On January 23, 2017, the House of Representatives passed H.R. 587, the Fair Ratepayer Accountability, Transparency, and Efficiency Standards Act (“Fair RATES Act”), which would amend Section 205 of the Federal Power Act (FPA) to provide that any inaction by the Federal Energy Regulatory Commission (FERC or the “Commission”) that allows a rate change to go into effect by operation of law shall be treated as an order by FERC for purposes of rehearing and judicial review. The legislation would reverse an October 2016 decision by the U.S. Court of Appeals for the D.C. Circuit that held that rate changes taking effect by operation of law are not subject to judicial review under the FPA.1 Introduced by Rep. Joseph P. Kennedy, III (D-MA) with 15 bipartisan co-sponsors, the Fair RATES Act will now be considered in the Senate, where Sen. Edward J. Markey (D-MA) has introduced a companion measure (S. 186).2
(Houston) – Lawyers and advisors at Akin Gump held a briefing today, titled “The Global Energy Industry: A Look to the Year Ahead in 2017,” addressing some of the big issues likely to affect the global energy industry in the coming year. The event was held as an in-person briefing in the firm’s Houston office and as a webinar for participants around the world.
On January 9, 2017, the Federal Energy Regulatory Commission (FERC) issued a Final Rule—following an Interim Final Rule issued June 29, 2016, as described here—amending its regulations governing the maximum civil monetary penalties assessable for violations of statutes, rules and orders within its jurisdiction. Like the Interim Final Rule, the Final Rule is a result of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “2015 Adjustment Act”), which required each federal agency to issue an interim final rule by July 1, 2016, adjusting for inflation each civil monetary penalty provided by law within the agency’s jurisdiction, and which requires an annual adjustment for inflation by each January 15. Under the 2015 Adjustment Act, increases resulting from the first adjustment were limited to 150 percent of the maximum penalty in effect as of November 2, 2015. The adjustments in the Final Rule represent an additional increase of 1.636 percent for each covered maximum penalty. FERC’s adjusted maximum penalty amounts, which will apply at the time of assessment of a civil penalty regardless of the date on which the violation occurred, are set forth here and are effective January 24, 2017.
Globe Law & Business, in its new book Oil and Gas Sale and Purchase Agreements, has included several chapters written by Akin Gump lawyers. The chapters and their corresponding authors are as follows:
- “Conditions precedent and deferred completions,” by oil and gas partner John LaMaster
- “Oil and gas warranties,” by oil and gas counsel Caroline-Lucy Moran
- “Environmental provisions in upstream acquisitions and divestitures,” by environment and natural resources partner emeritus Paul Gutermann
- “Decommissioning,” by oil and gas counsel Nicholas Antonas and partner Marc Hammerson
- “Anti-corruption provisions,” by international trade counsel Nicole D’Avanzo and partner Tatman Savio
- Oil and gas boilerplate provisions,” by John LaMaster