Category: Governmental Affairs

1
CLE Presentation: COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies
2
FERC Sets Technical Conference to Assess COVID-19 Impacts on Energy Industry
3
Join Us! Energy Storage Association Webinar: Energy Storage, Trade and China
4
Treasury to Extend Deadlines for Accessing Wind, Solar Tax Credits
5
Trump Administration To Consider Whether Imports Pose a Threat to the U.S. Energy Infrastructure
6
UPDATED May 12, 2020: The Nation Goes the Way Montana Goes? Nationwide Permit 12 Vacatur and Injunction
7
Split FERC Floats Overhaul of Utility Power Purchase Regs
8
OZ Flash: Newly Issued Proposed Regulations and the President’s Remarks are a Boon to the OZ Incentive
9
2018 Election Guide: A Guide to Changes in Congress – Available Now
10
UPDATED: Comprehensive Energy Policy Legislation A Side-by-Side Comparison of H.R. 8 & S. 2012

CLE Presentation: COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies

Join us on Wednesday, June 10, 2020, for a CLE presentation on “COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies.”

Companies are seeing unprecedented legal and business impacts due to the COVID-19 pandemic.  These impacts are bringing about changes in strategy and how many companies approach their day-to-day business operations to adapt to this new business environment. This one-hour session will involve a presentation by the following K&L Gates attorneys sharing their perspectives on what to consider during the “next new normal.”

Moderator: 

Panelists:

This presentation will include the evolving legal and business impacts of COVID-19 in connection with:

  • Contract Issues
  • Insurance Issues
  • Potential Work Issues
  • Litigation Trends

This webinar will contain a chat feature in which you can submit questions so that we may tailor this presentation to address your concerns.

To register, please click here.

FERC Sets Technical Conference to Assess COVID-19 Impacts on Energy Industry

By: William Keyser, Sandra Safro, Patrick Metz and Abraham Johns

On May 20, 2020, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) announced that it will hold a technical conference to discuss the impact on the energy industry of emergency conditions arising from the COVID-19 pandemic.  The conference will take place July 8-9, 2020 from 9 a.m. to 5 p.m. 

Preregistration for the conference is available at: http://www.ferc.gov/whats-new/registration/07-07-20-form.asp.  FERC will issue a supplemental notice that includes the conference agenda in a proceeding opened in Docket No. AD20-17-000.

The Commission plans to use the conference to assess the ongoing impacts that the COVID-19 pandemic is having on parts of the U.S. energy industry.  While the Commission already enacted short-term regulatory relief actions for regulated entities, the conference will explore long-term options for safeguarding the nation’s energy markets, electric transmission system, natural gas and oil transportation, and future operation of energy infrastructure. 

In addition, FERC intends for the event to serve as a public forum for the Commission and stakeholders to address the recovery of the industry from the COVID-19 pandemic.  The event will afford the public an opportunity to receive high-level information about how COVID-19 may change the energy industry moving forward. 

Among the topics the Commission plans to cover in panels and discussions are: (1) ongoing and future operational and planning challenges due to COVID-19; (2) operations, planning, and infrastructure development impacts anticipated due to the effect of COVID-19 on electric demand; (3) operations, planning, and infrastructure development impacts anticipated due to the effect of COVID-19 on natural gas and oil demand; and (4) anticipated issues related to access to capital, such as credit, liquidity, and return on equity.

Further information about the event will be posted on the Calendar of Events webpage for the event.  K&L Gates will continue to monitor for updates from the Commission about the conference.

Join Us! Energy Storage Association Webinar: Energy Storage, Trade and China

Please join K&L Gates’ Elizabeth Crouse on the Energy Storage Association’s upcoming webinar, Energy Storage, Trade and China, on Thursday, May 21 from 12:00 PM – 1:00 CDT.

This webinar will explore the key trade and national security policies that currently impact the ESS market in the U.S. and assess their potential impacts on future deployments, including:

• How might regulatory developments under the Executive Order impact storage?
• What might the future hold for tariffs?
• How do these processes play out in an election year?

For more information and to register, please click here.

Treasury to Extend Deadlines for Accessing Wind, Solar Tax Credits

Author: Elizabeth Crouse

This afternoon, the Office of Legislative Affairs at the Department of Treasury, issued a letter to Charles Grassley, the Chairman of the Senate Committee on Finance, indicating that Treasury intends to issue administrative relief to the solar and wind industries regarding certain investment tax credit (“ITC”) and production tax credit (“PTC”) deadlines. Although the letter does not provide any details as to the nature of this relief, Chairman Grassley’s April 23, 2020 letter to Treasury requested that the four-year safe harbor for the continuous construction and continuous efforts test for the PTC and ITC be extended to a five-year safe harbor period.

Chairman Grassley did not request administrative relief concerning the impact of COVID-19 related measures taken by manufacturers and shipping companies on a customer’s “reasonable expectation” that materials purchased in 2019 would be delivered within 3.5 months after payment. This latter provision is important for purposes for establishing beginning of construction of solar projects in 2019.

Trump Administration To Consider Whether Imports Pose a Threat to the U.S. Energy Infrastructure

Authors: Stacy J. Ettinger, Steven F. Hill, David L. Benson, William M. Keyser

On May 4, 2020, Commerce Secretary Wilbur Ross announced an investigation into whether imports of certain power distribution transformers and parts threaten to impair U.S. national security. A few days earlier, on May 1, 2020, President Trump issued an Executive Order declaring a national emergency over potential foreign threats to the security of the U.S. bulk power system.  Both actions, which are in response to perceived foreign threats to the U.S. electrical power grid, will likely result in the imposition of significant restrictions on the importation of covered equipment.  As discussed below, each action will proceed along separate paths.

Commerce Section 232 National Security Investigation

On May 4, 2020, Commerce Secretary Wilbur Ross announced that the agency intends to initiate an investigation under Section 232 of the Trade Expansion Act of 1962[1] into whether imports of certain power distribution transformers and parts threaten to impair U.S. national security. Secretary Ross indicated the investigation will focus on “laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators.” 

Once initiated, the investigation must be completed within 270 days. Commerce will then provide its report and recommendations to the President, at which point the President has 90 days to determine the nature and duration of action to “adjust” imports.

The law gives the President complete discretion (“in the judgment of the President”) to choose the nature or duration of any action to adjust imports “so that such imports will not threaten to impair the national security.” Previous Section 232 actions included imposition of import tariffs, fees, and quotas, as well as complete embargo of subject imports. For example, in March 2018 President Trump imposed tariffs on steel and aluminum imports as a result of similar Section 232 investigations launched in April 2017. The President also has the option of negotiating agreements with trading partners to limit subject imports, the option embraced by President Trump in the context of the Section 232 investigation launched in May 2018 with respect to imports of automobiles.

Executive Order to Secure U.S. Bulk-Power System from Foreign Adversary Threats

On May 1, 2020, President Trump issued an Executive Order[2] declaring a national emergency over potential foreign threats to the U.S. bulk-power system from foreign adversaries that may seek to commit malicious acts against the United States and its population including malicious cyber activities.  The Order empowers the U.S. government to block imports of certain equipment that could endanger the security of U.S. power plants.

As a practical matter, the new Order does not ban anything, but rather instructs the Department of Energy to issue regulations within 150 days.  These regulations are expected to set forth procedures whereby specifically identified bulk power equipment may be prohibited from importation, acquisition, transfer, or installation.  (This process will likely be similar to that laid out in Commerce Department regulations implementing a 2019 Executive Order declaring a national emergency with respect to the information and communications technology and services supply chain concerns.[3]  Please see our prior alert for an explanation of those Commerce regulations.[4])

The May 1st Order provides authorization to target any acquisition, importation, transfer, or installation (transaction) of to-be-identified bulk-power system electric equipment designed, developed, manufactured, or supplied by persons owned/controlled by/subject to the jurisdiction or direction of a foreign adversary, where the transaction—

  • poses an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of the bulk-power system in the United States;
  • poses an undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the economy of the United States; or
  • otherwise poses an unacceptable risk to the national security of the United States or the security and safety of United States persons.

The Order provides a somewhat generic definition of the term “foreign adversary” as “any foreign government or foreign non-government person engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the United States or its allies or the security and safety of United States persons.”  The Commerce regulations (referenced above) include this same definition which gives the agency discretion to identify foreign adversaries as needed.

Implications

Trump Administration actions in response to perceived foreign threats to the U.S. electrical power grid could include sweeping import restrictions with a significant impact on both the renewable and conventional power industries. Until the Department of Energy issues regulations to implement the Executive Order, the order will not directly impact any power plant project or transaction.   


[1] 19 U.S.C. 1862 (2018); https://www.govinfo.gov/content/pkg/USCODE-2018-title19/html/USCODE-2018-title19-chap7-subchapII-partIV-sec1862.htm.

[2] https://www.federalregister.gov/documents/2020/05/04/2020-09695/securing-the-united-states-bulk-power-system.

[3] https://www.federalregister.gov/documents/2019/05/17/2019-10538/securing-the-information-and-communications-technology-and-services-supply-chain.

[4] http://www.klgates.com/commerce-proposes-process-to-evaluate-transactions-involving-information-and-communications-technology-and-services-for-national-security-concerns-12-03-2019/

UPDATED May 12, 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.

Split FERC Floats Overhaul of Utility Power Purchase Regs

A divided Federal Energy Regulatory Commission proposed major changes Thursday in how it implements the Public Utility Regulatory Policies Act, with one commissioner saying the change would “administratively gut the statute” that requires utilities to buy power from small-scale renewable energy producers.

The notice of proposed rulemaking fulfills a priority of FERC Chairman Neil Chatterjee to update the agency’s long-standing policies under PURPA, which is four decades old and has been criticized by many — especially in the utility industry — as being outdated.

Partner Will Keyser commented that PURPA reform has been long in the making. Read his quote and the full article here.

Originally reported by law360.com

OZ Flash: Newly Issued Proposed Regulations and the President’s Remarks are a Boon to the OZ Incentive

By Mary Burke Baker, Adam J. Tejeda, Olivia S. Byrne, Elizabeth C. Crouse, Edward Dartley, and Cary J. Meer

Yesterday, the Treasury Department rolled out proposed Opportunity Zone (“OZ”) regulations (the “Proposed Regulations”) and President Trump noted the progress made by his Opportunity and Revitalization Council to eliminate barriers to OZ investments. The administration is clearly all in on maximizing the number of businesses and projects that will qualify for OZ benefits.

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2018 Election Guide: A Guide to Changes in Congress – Available Now

The tumultuous 2018 midterm election, characterized by many as the most consequential in a generation, ended as predicted: the Democrats took control of the House while the Republicans increased their hold in the Senate.

Indeed, it was a tale of two Houses. As of 10:00 a.m. ET on November 7, the Democrats have picked up 28 seats in the House of Representatives, with the prospects of gaining about seven more as the remaining close races are decided, mostly in the west. In the Senate, Democratic Senators in Missouri, Indiana, and North Dakota were defeated while a Republican lost in Nevada, resulting in a net gain of two Senate seats thus far for Republicans with three races too close to call.

To help you assess yesterday’s election, K&L Gates has prepared a comprehensive guide that summarizes the results and their impact on the 116th Congress, which will convene in January. The Election Guide lists all new members elected to Congress, updates the congressional delegations for each state, and provides a starting point for analyzing the coming changes to the House and Senate committees.

Please click here to download the most up-to-date version of the 148-page Election Guide, which will be updated on an ongoing basis as more of the close races are called and committees are finalized.

For additional information regarding the effects of the recent elections, please contact Tim Peckinpaugh or any member of the Public Policy and Law practice.

To view the complete guide online, click here.

UPDATED: Comprehensive Energy Policy Legislation A Side-by-Side Comparison of H.R. 8 & S. 2012

By Tim Peckinpaugh and Kathleen Nicholas

Linked below is our updated side-by-side comparison of the House and Senate energy bills, which are moving to conference to reconcile differences in the hope of producing a final bill.  The principal difference from our earlier side-by-side comparison is the inclusion of several natural resource and energy R&D provisions added to the House bill late last month in order to prepare the bill for conference and permit the appointment of House conferees.This is the first comprehensive energy bill to advance this far in the legislative process in nine years.

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