Power & Pipes

Following weeks of anticipation, US Senator Joe Manchin (D-WV) released the text of the Energy Independence and Security Act of 2022, his permitting reform legislation, on September 21, 2022. As part of an agreement to win Senator Manchin’s support of the Inflation Reduction Act, Democratic leadership committed to bringing energy infrastructure permitting reform to a vote this year, namely by including it in a continuing resolution (CR) to extend government funding before the end of the fiscal year on September 30.

The Cybersecurity and Infrastructure Security Agency (CISA) issued a request for information (RFI) on the new cyber incident reporting requirements for critical infrastructure owners as required by the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA).

The California Air Resources Board (CARB) voted on August 25, 2022, to approve the Advanced Clean Cars II rule that prohibits the sale of new gasoline-fueled cars by 2035. The rule sets forth a plan whereby automakers must deliver an increasing amount of zero-emission light-duty vehicles each year, essentially phasing out the manufacturing of gasoline-fueled cars. The requirements begin in 2026, when 35% of cars manufactured for sale must be zero-emission or plug-in hybrid vehicles. The required amount rises to 68% of cars manufactured for sale by 2030, then to 100% by 2035.

FERC recently issued a notice of proposed rulemaking (NOPR) to expand the existing duty of candor rule by adding a requirement in 18 CFR Part 1 that any entity communicating with FERC or other specified organizations related to a matter that is subject to FERC’s jurisdiction must submit accurate and factual information and must not submit false or misleading information or omit material information. However, exercising due diligence to prevent the submission of false or inaccurate information would be an affirmative defense to violations of the requirement.

US Senators Maria Cantwell (D-WA) and Catherine Cortez Masto (D-NV) introduced legislation on July 28, 2022, to provide FERC with the authority to temporarily or permanently ban any person from trading or transacting in certain energy markets if that person is found to have manipulated the natural gas or electricity market or willfully or knowingly provided false information regarding those markets. Known as the Energy Consumer Protection Act of 2022, the legislation will be introduced in the House of Representatives by Representative Jan Schakowsky (D-IL).

On June 9, the Department of Transportation (DOT), through the Federal Highway Administration (FHWA), proposed mandatory standards concerning the development and operation of publicly available electric vehicle (EV) charging infrastructure in US markets. DOT’s proposal is the first-ever effort of the US government to impose mandatory standards on EV charging infrastructure in an effort to create uniformity and consumer transparency in the EV charging sector. DOT’s proposal is subject to comment and consideration, and a final rule is expected later this year.

With the push to transition to a low-carbon economy, carbon offsets have become an option that many have turned to in order to decarbonize and achieve their climate goals. The demand for carbon offsets is quickly increasing, and the industry has recognized the need for quality standards applicable to a carbon offset, the ability to monitor, report, and verify carbon offsets, and mechanisms that ensure market integrity. Next month, the Commodity Futures Trading Commission (CFTC) will be hosting a meeting to discuss issues related to the supply and demand for high quality carbon offsets and to gather information to assess its potential role in regulating products involving carbon offsets.

FERC recently held a Staff-led technical conference to discuss whether, and if so, how, the Commission should require additional financial assurance mechanisms in the licenses and other authorizations it issues for hydroelectric projects, to ensure that licensees have the capability to carry out license requirements and, particularly, to maintain their projects in safe condition. The feedback received during the conference, as well as the comments to be filed, will likely shape the ultimate FERC rule on financial assurance requirements currently under consideration.

Authored by litigators from our energy team, the Not Just Boilerplate series on Power & Pipes provides real-world examples of the impact that certain contract clauses can have on energy companies. Whether in repeat form agreements, employment agreements, or heavily negotiated one-off deals or mergers, there can sometimes be a tendency to just “grab” clauses from prior agreements, with the thinking that “it has always worked before . . .”

Cost allocation for regional transmission projects has long been one of the more challenging aspects of regional transmission development because it determines who should ultimately bear the costs of the regional transmission projects and in what proportion. Litigation over these issues is not uncommon.