Global Power Law & Policy

Legal and Policy Developments Affecting the Global Power Industry.

 

1
U.S. ENERGY STORAGE ASSOCIATION RECOGNIZES K&L GATES WITH BRAD ROBERTS OUTSTANDING INDUSTRY ACHIEVEMENT AWARD
2
UPDATED July 6, 2020: The Nation Goes the Way Montana Goes? Nationwide Permit 12 Vacatur and Injunction
3
Senate ENR Committee Holds Hearing on FERC Commissioner Nominees
4
Senate ENR Hearing Slated for FERC Nominees
5
Join Us at Solar Power International
6
Join Us: PV Magazine Webinar – Is your company capturing the 2020 safe harbor?
7
U.S. Army Corps Proposes Two New Nationwide Permits for Utility Lines and Revises Additional Nationwide Permits Impacting Utility-Scale Wind and Solar Infrastructure
8
To Kill a Mockingbird: Federal Court invalidates Department of Interior’s MBTA Opinion Letter
9
Trump nominates Clements, Christie to FERC
10
FERC Updates PURPA Rules and Dismisses Petition to Declare Jurisdiction over Net-Metering Sales
11
K&L Gates Advises Unico Solar Investors on Commercial and Industrial Solar Projects Joint-Venture Partnership

U.S. ENERGY STORAGE ASSOCIATION RECOGNIZES K&L GATES WITH BRAD ROBERTS OUTSTANDING INDUSTRY ACHIEVEMENT AWARD

The U.S. Energy Storage Association (ESA), the national trade association for the American energy storage industry, will recognize K&L Gates with the Brad Roberts Outstanding Industry Achievement Award at the 2020 ESA Annual Awards taking place during the association’s virtual conference next week.

The award recognizes K&L Gates for “its tremendous contributions that have advanced the industry forward including nurturing early storage developers, hosting an annual conference, and developing the widely circulated Energy Storage Handbook.” The ESA determines this award by surveying its members and past award recipients each year to identify a member organization that has made significant contributions in the storage industry.  

Read more about the award in the ESA press release

UPDATED July 6, 2020: The Nation Goes the Way Montana Goes? Nationwide Permit 12 Vacatur and Injunction

By: Ankur K. Tohan, Buck B. Endemann, and Tad J. Macfarlan

On April 15, 2020, the Montana federal district court issued an Order in Northern Plains Resource Council v. U.S. Army Corps of Engineers, No. 4:19-cv-00044-BMM (D. Mont.) (NPRC v. Corps) that may have far reaching implications for energy development projects across the United States.

In a case involving the Keystone XL Pipeline Project, the Montana court vacated the U.S. Army Corps of Engineers’ (Corps) Nationwide Permit (NWP) 12. The Court concluded that because the Corps failed to consult under the Endangered Species Act (ESA) Section 7 when it reissued NWP 12 in 2017, the permit is not valid and the Corps may not authorize work under the terms and conditions of NWP 12.

Background, Key findings, and Order

The Corp’s 2017 Reissuance of NWP 12. When the Corps reissued NWP 12 (along with all other NWPs) in 2017, it determined that ESA consultation with the U.S. Fish and Wildlife Service and National Marine Fisheries Service (the “Services”) was not required because the reissuance of NWPs has “no effect” on ESA-listed species or critical habitat.

Court’s Key Findings. The court held that the Corps’ “no effect determination and resulting decision to forego programmatic consultation proves arbitrary and capricious in violation of the Corps’ obligations under the ESA.” The court concluded that the Corps cannot circumvent ESA Section 7(a)(2) consultation requirements by relying on project-level review (e.g., by non-federal entities) under NWP General Condition 18’s preconstruction notification (PCN) requirement. The court reasoned that (1) General Condition 18’s PCN requirement fails to ensure that the Corps fulfills its obligations under ESA Section 7(a)(2) because it delegates the Corps’ initial effect determination to non-federal permittees.

Court’s Order. Based on the court’s findings, the Order (1) vacated NWP 12; (2) remanded NWP 12 to the Corps to initiate consultation now; and (3) enjoined the Corps from authorizing work under NWP 12 until consultation is completed.

Potential Implications if a Motion for Reconsideration or Stay is not Granted

Immediate Impact on Projects with NWP 12 Authorization. The Order creates immediate uncertainty for project proponents needing NWP 12 authorization. If the Order is not stayed or appealed, the Corps could reopen programmatic consultation with the Services, which could take several months or longer to complete and, once completed, may be subject to further litigation. In addition, the Order could be leveraged by other plaintiffs targeting the Corps’ other NWPs that rely on General Condition 18. Given the uncertainty, developers will need to consider their current permitting options, which may include other NWPs, individual 404 permits (which trigger NEPA, NHPA, and ESA), or project redesign to avoid impacts to regulated waters.

Current Status

On April 27, 2020, the Corps filed motions for expedited briefing and consideration for a partial stay of the Order pending an appeal. The Corps’ motion asks the Court to stay “those portions of its April 15, 2020, Order that vacate NWP 12 and broadly enjoin the Corps from authorizing any dredge or fill activities under the permit”; or at “the very least, the Court should stay its vacatur and injunction as they relate to anything other than the Keystone XL pipeline.”

**UPDATE**:    On April 28, 2020, U.S. District Court Judge Brian Morris denied the Corps’ motion for a temporary administrative stay of the court’s vacatur, injunction, and remand orders.  Judge Morris ordered Plaintiffs and the Corps to complete briefing on an expedited basis by May 8, however, on the Corps’ broader request for a stay pending appeal, which should give permit-seekers and holders additional insight into the immediate future of NWP 12.

**UPDATE May 7, 2020**: On May 7, 2020, Plaintiffs filed their opposition to the Corps’ Motion for Partial Stay Pending Appeal. Significantly, Plaintiffs agree with the Corps to ask the Court to revise the remedy that the was ordered on April 15, 2020.  Specifically, Plaintiffs propose that the Court modify these remedies as follows.

(1) narrowing the vacatur of NWP 12 to a partial vacatur that applies to the construction of new oil and gas pipelines, thereby keeping NWP 12 in place during remand insofar as it authorizes non-pipeline construction activities as well as routine maintenance, inspection, and repair activities on existing NWP 12 projects; and

(2) narrowing the injunction to enjoin the Corps from authorizing any dredge or fill activities for Keystone XL under NWP 12. This relief would afford appropriate protection for endangered and threatened species and their critical habitats while minimizing any potential disruption claimed by Defendants.

**UPDATE May 12, 2020**: On May 11, 2020, the Montana District Court issued its ruling on the Corps’ motion to stay the court’s original Order issued on April 15, 2020. 

The Court denied the motion to stay Order pending an appeal to the 9th Circuit.  However, the Court adopted Plaintiffs’ proposal that the Court revise the scope of remedy in the original Order to apply only to new and gas construction projects. The Court narrowed the scope vacatur and injunction as follows:

  1. NWP 12 is vacated as it relates to the construction of new oil and gas pipelines pending completion of the consultation process and compliance with all environmental statutes and regulations. NWP 12 remains in place during remand insofar as it authorizes non-pipeline construction activities and routine maintenance, inspection, and repair activities on existing NWP 12 projects.
  2. The Corps is enjoined from authoring any dredge or fill activities for the construction of new oil and gas pipelines under NWP 12 pending completion of the consultation process and compliance with all environmental statutes and regulations. The Corps remains able to authorize dredge or fill activities for nonpipeline construction activities and routine maintenance, inspection, and repair activities on existing NWP 12 projects.

**UPDATE June 17, 2020**: On June 15, 2020, the US Solicitor General, on behalf of the US Army Corps of Engineers, filed an application for a stay with the US Supreme Court.

The application seeks a stay of the April 15, 2020, order issued by the United States District Court for the District of Montana (as amended May 11), pending an appeal of that order to the Ninth Circuit Court of Appeals and, if necessary, pending a future appeal to the US Supreme Court.

The Solicitor states that the district court “had no warrant to set aside NWP 12 with respect to Keystone XL, let alone for the construction of all new oil and gas pipelines anywhere in the country.”

The Solicitor points to the fact that when plaintiffs brought the original lawsuit to challenge the Corps’ alleged use of NWP 12, they limited their claims and relief to the use of NWP 12 to authorize construction of the Keystone XL pipeline. According to the filing, plaintiffs expressly disclaimed any request for vacatur of NWP 12, or an injunction, extending beyond Keystone XL itself; and made no “meaningful effort to establish Article III standing to challenge the potential application of NWP 12 to crossings by any other specific proposed pipelines.” Despite these facts, the Solicitor argues, the district court first vacated NWP 12 on a nationwide basis, and then in an amended order narrowed the scope of vacatur to all new oil and gas projects.

The Solicitor argues that a stay is appropriate because the district court order went well beyond what the plaintiffs original sought, is inconsistent with Article III and traditional principles of notice and equity, and was wrongly decided on ESA grounds. The Solicitor argues that the “Corps reasonably determined that merely re-issuing NWP 12 would have no effect on listed species or critical habitat — and therefore did not trigger any consultation requirement under the ESA — because the regulatory scheme and conditions in NWP 12 ensure that any necessary consultation occurs on an activity-specific basis.”

The US Supreme Court is evaluating the application.

**UPDATE July 6, 2020**: On July 6, 2020, the U.S. Supreme Court ruled that the Montana District Court Order (as amended on May 11) is stayed, except with regard to the Keystone XL pipeline. Until the Ninth Circuit issues a ruling on the appeal — and any subsequent appeal to the U.S. Supreme Court — of the District Court Order by the U.S. Army Corps of Engineers, the order remains in effect for Keystone XL but does not apply to other entities or parties.

Senate ENR Committee Holds Hearing on FERC Commissioner Nominees

Authors: Kimberly FrankSandra SafroDavid Wochner, and Patrick Metz

On September 16, 2020, the Senate Energy and Natural Resources (ENR) Committee held a hearing to consider the nominations of Mark Christie and Allison Clements to the Federal Energy Regulatory Commission (FERC).  Chairman Murkowski and Ranking Member Manchin focused their preliminary comments on the importance of ensuring that FERC has a full complement of five Commissioners and expressed interest in acting quickly to move through the confirmation process.  However, there was no indication of the specific timing of the Senate ENR and floor votes that would be required to confirm the nominees.  Several Senators praised both Christie and Clements, and no Senator expressed opposition to the nominees, though Clements received a few pointed questions from Senators Gardner and Lee about her time at the Natural Resources Defense Council.

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Senate ENR Hearing Slated for FERC Nominees

Authors: Kimberly Frank, Sandra Safro, David Wochner, and Patrick Metz

On September 9, 2020, the Senate Energy and Natural Resources (ENR) Committee announced that it would hold a hearing this Wednesday, September 16, 2020, to consider the nominations by President Trump of Allison Clements and Mark C. Christie to serve as FERC Commissioners.

The Senate ENR Committee hearing is an important first step toward the confirmation of Clements and Christie.  After holding its hearing, the Committee will hold a vote on whether to forward the nominees to the full Senate.  At that point, the Senate would need to consider their nominations and vote to confirm their appointments.  Each would then would need to be sworn in as Commissioners. 

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Join Us at Solar Power International

Please join K&L Gates Energy, Infrastructure and Resources Practice Area Leader, David Benson, at Solar Power International as he moderates the panel, “The Evolution of Finance in a Changing Offtake Market,” on Friday, September 25, 2020, at 3:05pm EDT.

This panel will discuss new revenue models, such as merchant projects, hedging strategies, and VPPAs, are changing how renewable energy projects are being financed. Topics will include how panelists view projects with these evolving offtake approaches and how they view risk in these markets, taking the audience through transaction structures and what it takes to execute renewable energy deals.

For more information on Solar Power International, please click here.

Join Us: PV Magazine Webinar – Is your company capturing the 2020 safe harbor?

Join K&L Gates partner, Elias Hinckley, as he participates on a webinar with PV Magazine, “Is Your Company Capturing the 2020 Safe Harbor?”

­This webinar will discuss the current 26% solar investment tax credit that will be reduced by to 22% on January 1, 2021 and steps to take to ensure your project captures the full credit.

The webinar will take place on Wednesday, 23 September, 2020, at 11:00 AM EDT.

For more information and to register, please click here.

U.S. Army Corps Proposes Two New Nationwide Permits for Utility Lines and Revises Additional Nationwide Permits Impacting Utility-Scale Wind and Solar Infrastructure

Authors: Ankur K. Tohan, Robert M. Smith, and Natalie J. Reid

The U.S. Army Corps of Engineers (USACE) has proposed revisions to its Nationwide Permits (NWPs) that will significantly change to how utility lines will be treated under the NWP program. Currently, only one NWP exists to address the construction of all utility lines: NWP 12. The USACE proposes to add two new utility line permits: NWP C: Electric Utility Line and Telecommunications Activities and NWP D: Utility Line Activities for Water and Other Substances. The USACE further intends to limit existing NWP 12 to only oil and natural gas activities. Finally, the USACE has proposed to further reduce the regulatory obstacles faced by wind and solar project developers by modifying additional NWPs.

The key changes relevant to wind and solar developments are the creation of NWP C, the elimination of many Pre-Construction Notification requirements, and the removal of the 300 linear foot limit for losses to stream bed in NWP 51. To read the full alert CLICK HERE.

To Kill a Mockingbird: Federal Court invalidates Department of Interior’s MBTA Opinion Letter

Authors: Ankur K. Tohan and Gabrielle E. Thompson

In her opening statement to an August 11 opinion, United States District Court Judge Valerie Caproni writes:

“It is not only a sin to kill a mockingbird, it is also a crime.”

Judge Caproni’s literary reference is the launching point for addressing the matter at hand: the validity of the Department of Interior’s December 22, 2017, Memorandum M-37050, which concludes that the Migratory Bird Treaty Act (MBTA) prohibition on the “taking” or “killing” of migratory birds applies only to deliberate acts intended to take a migratory bird. The M-Opinion announced the Trump administration’s view of the take prohibition in the MBTA, and states that the Trump administration will not seek criminal penalties against individuals and industries —such as oil and gas, as well as renewable energy— for incidentally taking migratory birds. The M-Opinion significantly limited the scope of the take prohibition in the MBTA, reducing the potential liability for development of infrastructure and renewable energy projects.

Judge Caproni writes that Interior’s opinion violates the letter of the law for the past century and contradicts Interior’s long held position that even incidental take or kill of a migratory bird violated the MBTA “irrespective of whether the activities targeted birds or were intended to take or kill birds.” Now, Judge Caproni stated,

“[I]f the Department of the Interior has its way, many mockingbirds and other migratory birds that delight people and support ecosystems throughout the country will be killed without legal consequence.”

Judge Caproni devotes the remainder of her ruling explaining why the M-Opinion violates the Administrative Procedures Act as contrary to law. Judge Caproni rejected Interior’s narrow reading of the statute as lacking support in the plain language of the MBTA. As Judge Caproni explained,

“There is nothing in the text of the MBTA that suggests that in order to fall within its prohibition, activity must be directed specifically at birds. Nor does the statute prohibit only intentionally killing migratory birds. And it certainly does not say that only ‘some’ kills are prohibited.”

While Judge Caproni acknowledged that in drafting the MBTA Congress may have been “principally concerned” about over-hunting, Congress chose not to narrowly draw the prohibition in the statute to intentional take or kill of birds.

The August 11 order vacates the M-Opinion.

Trump nominates Clements, Christie to FERC

By Sandra E. Safro, David L. Wochner, Kimberly B. Frank, and Patrick T. Metz

Late yesterday, the White House announced that President Trump intended to nominate Mark C. Christie and Allison Clements to be FERC Commissioners. Christie would assume the seat currently occupied by Commissioner Bernard McNamee, whose term expired June 30, 2020, but who is continuing as commissioner until the earlier of when his replacement is confirmed and sworn in or the end of the current congressional session, as permitted by law. Clements would fill a seat left vacant in August 2019 with the departure of former Commissioner Cheryl LaFleur. If the Senate confirms Christie and Clements, FERC would have five Commissioners for the first time since LaFleur left the Commission in August 2019.

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FERC Updates PURPA Rules and Dismisses Petition to Declare Jurisdiction over Net-Metering Sales

By Kimberly Frank, Buck Endemann, Abraham Johns

On July 16, 2020, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued two noteworthy electric power orders: the first is a final rule (“Order No. 872”) that updates regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”);[1] the second dismisses the New England Ratepayer Association’s (“NERA”) petition for a declaratory order on FERC’s jurisdiction over net energy metering sales.[2] 

Final Rule on PURPA Update

In September 2019, FERC issued of a Notice of Proposed Rulemaking (“NOPR”) to significantly change how it implements PURPA, a law that applies to small power producers.[3]  In Order No. 872, FERC largely adopted the NOPR’s proposed revisions to the Commission’s regulations implementing PURPA sections 201 and 210.  Notable changes to the PURPA regulations include: (1)  providing additional flexibility to set “avoided cost” rates for qualifying facilities (“QFs”) sales; (2) modifying the “one-mile rule” to allow for consideration that affiliated QFs more than one mile but less than ten miles apart may be at the same site ; (3) revising procedures to  challenge  initial QF certification and re-certification; (4) revising the threshold from 20 megawatts (“MW”) to 5 MW at which a utility may petition to terminate its obligation to purchase from certain QFs; and (5) requiring states to develop criteria that must be met for a QF to be entitled to a contract or legally enforceable obligation (“LEO”).   

Changes included in Order No. 872 will be effective 120 days from publication in the Federal Register.  When effective, Order No. 872 will not affect existing contracts, LEOs, or existing certifications for facilities, but will be prospective, applying to new contracts or LEOs, and certifications or recertifications for facilities filed after the order’s effective date.

Dismissal of NERA Petition for Declaratory Order

On April 14, 2020, NERA filed a petition for declaratory order, seeking FERC’s declaration that FERC holds exclusive jurisdiction over wholesale energy sales from behind-the-meter generation[4] and requiring that the rates for such sales be priced pursuant to the Federal Power Act (“FPA”) or PURPA, when applicable.  Specifically, NERA asked FERC to declare jurisdiction over energy sales of rooftop solar and other distributed energy resources on the customer side whenever the output exceeds the customer’s demand, or the energy is meant to bypass customer load.  NERA characterized “full net metering,” as “a practice through which an electricity consumer produces electric energy from a generation source (most often solar panels) that is located on the same side of the retail meter as the customer’s load.”[5]  Historically, the Commission sees such transactions as retail in nature and regulated by the states.  NERA argued, however, that the energy exceeding customer demand or bypassing customer load is sold to a utility for resale to customers, making them wholesale sales, and therefore, subject to FERC’s jurisdiction.[6] 

The Commission began its analysis with a reminder: “Declaratory orders to terminate a controversy or remove uncertainty are discretionary.”[7]  The Commission then used its discretion not to address the issues presented, as they did not “warrant a generic statement” from FERC.[8]  The Commission found that NERA never identified “a specific controversy or harm” to be addressed.[9]  Further, the Commission found that to the extent NERA is concerned that certain New England state regulatory authorities are not pricing QF sales in accordance with PURPA, the petition did not meet PURPA’s requirements for enforcement. 


[1] Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978, 172 FERC ¶ 61,041 (2020).

[2] New England Ratepayers Ass’n, 172 FERC ¶ 61,042 (2020) (“NERA Order”).

[3] Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978, 168 FERC ¶ 61,184 (2019) (“NOPR”).

[4] Behind-the-meter generation refers to energy generated from the customer side of the retail meter.

[5] NERA Order at P 3.

[6] NERA Order at P 4.

[7] NERA Order at P 35.

[8] NERA Order at P 35.

[9] NERA Order at P 36-37.

K&L Gates Advises Unico Solar Investors on Commercial and Industrial Solar Projects Joint-Venture Partnership

Seattle – Global law firm K&L Gates LLP has advised solar energy systems developer Unico Solar Investors on a long-term joint-venture partnership with Excelsior Energy Capital, a leading independent North American renewable energy investor, to build, own, and operate a 250 MW pipeline of commercial and industrial solar projects across North America.

A wholly-owned subsidiary of Unico Investment Group, Unico Solar will develop and manage the portfolio, which will consist of ground-mount, rooftop, and carport solar projects across multiple U.S. states including Arizona, California, Colorado, Hawaii, Massachusetts, Nevada, New Jersey, New York, Oregon, and Washington, among others. The projects will provide clean electricity to a variety of customers, including commercial businesses, property owners, municipalities, educational institutions, utilities, and others, with construction expected to begin later this year.

The K&L Gates team that advised on the partnership was led by Seattle partner David Benson and included Seattle partner Elizabeth Crouse, Houston partner Edmundo de la Fuente, and Portland partner William Holmes, as well as Seattle associates Adam Heyd and Brad Lewis, Orange County associate Lana Le Hir, Houston associate Olivia Mora, and Boston associate Mike O’Neill.

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