Power & Pipes

A LawFlash prepared by our energy team discusses the executive orders issued by President Joe Biden on January 27 to confront the “existential threat” of climate change.

It’s been a difficult several days for the oil industry. First, the Biden administration revoked the border-crossing permit for the Keystone XL pipeline on January 20. Another executive order, among other things, directed the secretary of the US Department of the Interior to pause oil and natural gas leases on public lands and offshore waters pending a review of leasing practices. And on January 26, the US Court of Appeals for the DC Circuit affirmed a district court’s decision to vacate an easement vital to the Dakota Access Pipeline (DAPL or the pipeline) that had been granted by the Army Corps of Engineers (Corps). But the court, however, reversed the lower court’s order that required the pipeline to cease operations. Accordingly, the pipeline may continue to operate while the Corps decides what to do about Dakota Access’s trespass. Separately, however, local Native American tribes have sought an injunction before the district court, the briefing for which ended earlier this month.

Our colleagues in the environmental practice explain the DC Circuit’s recent decision vacating the Environmental Protection Agency’s Affordable Clean Energy (ACE) rule and discuss the implications for the Clean Power Plan.

A LawFlash from our energy team explains the hurdles that new natural gas infrastructure projects will face and FERC’s likely analysis when considering whether to approve a proposed project.

In an expected move, President Joe Biden has designated Commissioner Richard Glick as the new FERC Chairman. Chairman Glick takes over from Commissioner James Danly, whose term as Chairman lasted less than three months.

FERC has issued a notice of inquiry inviting comments on potential changes to its regulations requiring financial assurance measures in licenses and other authorizations for hydroelectric projects. As of December 2020, FERC has identified at least 88 of the approximately 1,600 hydroelectric projects under FERC license that are nonoperational, primarily due to the licensees’ lack of financial resources. FERC expressed concern that inadequate financing may result in threats to public safety and environmental resources. Therefore, in order to fulfill its responsibilities to the public, FERC is considering whether to take additional measures to ensure licensees have the financial resources to operate and maintain their projects for the life of the project, including under unforeseen circumstances.

Our colleagues in the tax practice have published a LawFlash detailing the Consolidated Appropriations Act, 2021, which includes the Taxpayer Certainty and Disaster Tax Relief Act of 2020. The act contains tax provisions to provide direct relief to individuals, but also includes tax benefits for various industries, including the “green” energy and technology industries.

The US Congress adopted extensive federal energy policies in the Energy Act of 2020 (Energy Act), which President Donald Trump signed into law on December 27 as part of the Consolidated Appropriations Act, 2021. The Consolidated Appropriations Act also includes tax provisions important to the energy sector.

At its December open meeting, FERC proposed to establish rules for incentive-based rate treatments for voluntary cybersecurity investments by a public utility. If approved, the regulations would provide incentives for utilities to invest in cybersecurity improvements above and beyond existing mandatory requirements, provided the investments are related to the jurisdictional transmission or sale of electric energy. Traditionally FERC has worked to enhance the cybersecurity of the bulk-power system by directing the development and expansion of mandatory NERC Critical Infrastructure Protection (CIP) reliability standards. The proposed rules here would be quietly revolutionary by offering the “carrot” of financial incentives for cybersecurity enhancements, rather than relying exclusively on the “stick” of monetary sanctions that result from violations of mandatory requirements.

FERC has issued a final rule, Order No. 874, expanding the eligibility criteria for Qualifying Facilities (QFs) as defined under the Public Utility Regulatory Policies Act of 1978 (PURPA) to enable certain fuel cell–based electric generation to receive QF status. The final rule amends the definition of useful thermal energy output of a topping-cycle cogenerator in its regulations implementing PURPA by adding a new paragraph to specifically include thermal energy that is used by a fuel cell system with an integrated steam hydrocarbon reformation process for production of fuel for electricity generation. This new paragraph, along with the rest of Order No. 874, removes ambiguity as to whether such fuel cell technology may be included in the eligibility criteria for a cogeneration facility to be a QF.