(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 will become effective upon publication in the Federal Register.
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
The Federal Energy Regulatory Commission (FERC or the “Commission”) announced in December that it is opening a new inquiry and seeking comments regarding its current policies with respect to the recovery of income tax costs in the interstate transportation rates of natural gas and oil pipelines and electric utilities.1 The inquiry follows a decision from the U.S. Court of Appeals for the D.C. Circuit, United Airlines, Inc. v. Federal Energy Regulatory Commission, 827 F.3d 122 (D.C. Cir. 2016), which held that FERC’s current approach may allow double recovery of taxes by pipelines owned by master limited partnerships (MLPs) and may not ensure parity in after-tax returns between those pipelines and pipelines owned by corporations. As FERC explains, the court’s holding in United Airlines could have a “potentially significant and widespread effect” on the rates and after-tax returns of a wide variety of entities subject to the Commission’s jurisdiction.
On December 15, 2016, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its regulations to require that each Regional Transmission Organization or Independent System Operator (RTO/ISO) adopt market rules governing the pricing of “fast-start resources.” The NOPR is FERC’s latest effort to address issues regarding price formation in the energy and ancillary services markets operated by RTOs/ISOs.
A significant development occurred in the United Kingdom’s oil and gas industry on 1 October 2016. The Oil & Gas Authority (OGA), the industry regulator, was converted from an executive agency of the government to a company with the Secretary of State for Business Energy and Industrial Strategy as its sole shareholder.
On December 9, 2016, a group of investors in renewable energy projects (“Petitioners”)1 asked the Federal Energy Regulatory Commission (FERC) to find that certain non-managing (i.e., passive) “tax equity” interests in public utilities are “non-voting securities” for purposes of Section 203 of the Federal Power Act (FPA) and therefore that dispositions or acquisitions of such interests do not require prior authorization from FERC. Petitioners’ request, if granted, has potentially significant implications for the energy project finance community. Favorable FERC action it would relieve parties to passive investment transactions and FERC staff of significant burdens in preparing and processing precautionary Section 203 applications for such transactions, and would streamline the process for closing such investments. It also would reduce the number of related “change-in-status” filings under Section 205, further reducing administrative burdens on regulated entities, their upstream owners and FERC staff.
As we noted in October, two of the country’s six Federal Energy Regulatory Commission (FERC)-regulated grid operators have initiated stakeholder processes to explore the integration of wholesale electricity markets with regional public policy goals aimed at decarbonization. As part of their respective stakeholder forums, ISO New England (ISO-NE) and New York Independent System Operator (NYISO) continue to discuss a carbon price as a potential new market design.