Is a midstream contract treated the same as other executory contracts in bankruptcy, subject to assumption and rejection pursuant to the US Bankruptcy Code? An executory contract is any contract of the debtor where both the debtor and the contract counterparty have ongoing performance obligations on the date of the bankruptcy filing. A midstream contract, if considered by the court to be an executory contract, may be assumed or rejected under 11 USC § 365.
Power & Pipes
FERC, CFTC, and State Energy Law Developments
On February 18, 2021, FERC approved the recertification of Brunner Island, LLC’s status as an exempt wholesale generator (EWG) subject to conditions that limit the economic activity of Brunner unrelated to wholesale power activities.
FERC has issued an order revising its prior order on PJM’s Minimum Offer Price Rule (MOPR) by vacating a footnote that suggested the New Jersey Basic Generation Service default service auction—and by extension other state default service auctions shaped by state resource policy—were not “fuel neutral” or “nondiscriminatory” as required by Commission precedent. As a result of this clarification, resources selected through the New Jersey default service auction will not be presumed to be subject to the MOPR and may be eligible for the MOPR exclusion for independently evaluated, nondiscriminatory, fuel-neutral, competitive state-directed default service auctions.
A LawFlash prepared by our energy lawyers discusses the Federal Energy Regulatory Commission’s Notice of Inquiry regarding the certification of new interstate natural gas transportation facilities and the potential addition of environmental justice as an additional area of examination.
A LawFlash prepared by our energy team discusses likely results of the Texas power outages and blackouts during the recent winter storm, which include federal and state investigations into the outages, federal investigations into commodity and futures price spikes during the storm, force majeure inquiries, and demands for corrective actions to ensure future reliability of the grid system.
On February 17, Texas Governor Greg Abbott took the extraordinary measure of directing the Railroad Commission of Texas (RRC) to restrict out-of-state exports of natural gas produced in Texas through February 21. Noting the unprecedented extreme weather events facing the state, Governor Abbott’s directive seeks to “ensure[] that any natural gas currently in Texas is not sent outside of Texas,” unless it is first offered for sale to in-state power generators. Governor Abbott “mandate[d] that all sourced natural gas be made available for sale to local power generation opportunities before leaving the state of Texas.”
FERC Chairman Richard Glick announced his plans on February 11 to better incorporate environmental justice and equity concerns into FERC’s decisionmaking process.
Midcontinent Independent System Operator (MISO) has issued a report analyzing the effects of renewable energy growth in the MISO region and concluding that the system can reliably accommodate a significant percentage of variable renewable resources.
The US Department of Energy submitted a report to the president last month on “Economic and National Security Impacts under a Hydraulic Fracturing Ban.” This 80-page report analyzed the effects of a hypothetical United States ban on high-volume hydraulic fracturing technology used with any new or existing onshore wells starting in 2021 through 2025.
A natural gas trader pleaded guilty in federal district court last week to conspiring to commit commodities fraud and wire fraud in an insider trading scheme over natural gas futures. His co-conspirator had pleaded guilty last July to conspiracy to commit wire fraud and to violate various provisions of the Commodity Exchange Act and the Commodity Futures Trading Commission’s (CFTC) anti-manipulation rule.