Category: The Americas

1
BOEM Issues Final Sale Notice for Offshore Wind Lease Areas in Carolina Long Bay
2
FERC Enforcement In 2021: A Year Of Change
3
Commerce Extends Initiation Deadline in Solar Circumvention Inquiries & USTR to Start Targeted China 301 Tariff Exclusion Process
4
White House Chooses Exclusion of Silica-Based Products Produced Using Forced Labor, Impacting Solar PVs
5
D.C. Circuit Affirms That Offshore Wind Lease Does Not Trigger NEPA Review
6
We Have ESG Down to the Letter
7
What a Clean Future Means For Maritime
8
Case Notes: Brazos Electric’s Bankruptcy Filing
9
Washington State Legislature Considers First of Its Kind State-Level Natural Gas Ban
10
Distinguished Speaker Series with FERC Commissioner Neil Chatterjee

BOEM Issues Final Sale Notice for Offshore Wind Lease Areas in Carolina Long Bay

U.S. Energy, Infrastructure, and Resources Alert

By: Stanford D. BairdKenneth J. Gish, JrNathan C. HoweDavid L. WochnerKimberly B. FrankAnkur K. Tohan

The Bureau of Ocean Energy Management will hold its next offshore wind lease auction on 11 May 2022, for two lease areas in the Carolina Long Bay. The lease areas comprise 110,091 acres off the coast of North and South Carolina. The auction date will occur weeks ahead of a 10-year moratorium on offshore energy leases imposed in 2020 by the Trump administration prohibiting auctions of leases for wind, in addition to oil and gas, off the coasts of North and South Carolina beginning on 1 July 2022.

For more information, please contact our Energy, Infrastructure, and Resources lawyers or visit our practice page.

FERC Enforcement In 2021: A Year Of Change

By:  Ruta Skučas, Kimberly Frank, and Maeve Tibbetts

Originally posted on Law360 on January 3, 2022

2021 was a pivotal year for the Federal Energy Regulatory Commission‘s Office of Enforcement. Under the direction of Chairman Richard Glick, the office gained a new director, Janel Burdick, added threats to infrastructure as a new priority, and increased its pace of opening and closing investigations and reaching settlements.

Most significantly, Glick asserted at the presentation of the 2021 enforcement report that “the cop is back on the street,” and that he intends to ensure “vigorous oversight and enforcement” of jurisdictional markets.

Increased Investigations Under Chairman Glick

During the commission’s November 2020 open meeting, when the Office of Enforcement presented its 2020 annual report, then-Commissioner Glick criticized the commission’s enforcement efforts, which he perceived as lacking. In 2020, the commission opened only six new investigations, and reached three settlements totaling $553,376.

Commerce Extends Initiation Deadline in Solar Circumvention Inquiries & USTR to Start Targeted China 301 Tariff Exclusion Process

By: Stacy J. Ettinger

COMMERCE EXTENDS INITIATION DEADLINE IN SOLAR CIRCUMVENTION INQUIRIES – NEW DEADLINE LATE NOV

On September 29, 2021, Commerce determined to delay a decision on initiation in the solar circumvention inquiries. Commerce instead asked the US solar manufacturers – A-SMACC (the so-called American Solar Manufacturers Against Chinese Circumvention) – for additional information. In particular, Commerce requested additional information related to why the A-SMACC companies have requested anonymity in the circumvention proceeding. Commerce also requested information regarding the A-SMACC companies’ ties to business interests in China or Southeast Asian countries.

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White House Chooses Exclusion of Silica-Based Products Produced Using Forced Labor, Impacting Solar PVs

By: Stacy J. Ettinger, Amy L. Groff, William D. Semins, Caitlin C. Blanche, Coleman Wombwell, Elizabeth C. Crouse

Today, the White House announced that Customs and Border Protection (CBP) has issued a withhold release order (the Order) on products manufactured using silica-based products produced by Hoshine Silicon Industry Co., Ltd., and its subsidiaries (“Hoshine”), which are purportedly the world’s largest metallurgical-grade silicon producers. Hoshine has been linked to forced labor in the Xinjiang province of the People’s Republic of China (the PRC). The Order covers silica-based products and materials or goods derived from or produced using those silica-based products. Thus, CBP may use the Order to seize or exclude a variety of products, including solar photovoltaic panels.

D.C. Circuit Affirms That Offshore Wind Lease Does Not Trigger NEPA Review

By: J. Timothy HobbsAnkur K. TohanRobert M. SmithDavid L. WochnerNatalie J. Reid

The Bureau of Ocean Energy Management (BOEM) does not need to conduct full environmental reviews under the National Environmental Policy Act (NEPA) when granting an offshore wind farm lease, the D.C. Circuit Court of Appeals has affirmed. The decision followed a lawsuit by commercial fishing organizations and seaside municipalities who claimed that BOEM violated NEPA and the Outer Continental Shelf Lands Act (OCSLA) when it auctioned an offshore lease to Equinor (formerly Statoil) without performing an environmental review of the anticipated windfarm project. The decision puts to rest the question of whether a mere lease sale may trigger extensive environmental review under NEPA, potentially streamlining the initial lease acquisition process, but also requiring the investment of significant funds before developers have cleared environmental review.

We Have ESG Down to the Letter

Our integrated environmental, social, and corporate governance (ESG) approach is designed to help our clients navigate ever-evolving standards and add value to their companies. We’ve structured our broad scope of ESG services within coordinated and collaborative areas of focus, including corporate governance, investing, energy, and agriculture. These global teams span regions and industries to address an array of issues, from legislative, regulatory, and policy matters, to fund launches and environmentally responsible corporate initiatives.

We can evaluate and advise your business from E to S to G.

For more on our ESG practice, please click here.

What a Clean Future Means For Maritime

By: Brody GarlandCliff L. RothensteinLaurie B. PurpuroDarrell L. ConnerMark Ruge, and Elle M. Stuart

As the Biden Administration finds its stride in the first 100 days, we are starting to see movement on several of its key priorities. Chief among them: pivoting to a clean energy economy. A campaign that promised investments of up to $2 trillion in alternative energy saw progress this week, as House Democrats, led by Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ), Environment and Climate Change Subcommittee Chairman Paul Tonko (D-NY), and Energy Subcommittee Chairman Bobby Rush (D-IL), announced a down payment on those hopes with the introduction of the CLEAN Future Act. In our previous K&L Gates alert from January, our team discussed how the U.S. maritime industry should expect the issues of clean energy investment and climate resiliency to rise to the very top of the White House’s legislative agenda. This week’s rollout of the CLEAN Future Act further confirms the importance of these priorities, and the far-reaching implications of the reforms offered for the transportation and maritime sectors.

Case Notes: Brazos Electric’s Bankruptcy Filing

By: Michael B. Lubic and Sumner C. Fontaine

On 1 March 2021, Brazos Electric Power Cooperative, Inc. (“Brazos”) commenced a chapter 11 bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas. Brazos is a Texas-based non-profit electric cooperative corporation that provides wholesale electricity to its members, which, in turn, provide retail electricity to Texas consumers.  Due to the freezing of essential electric generation and natural gas pipeline equipment during the historic winter storm that blanketed Texas in mid-February 2021 and the resulting spike in wholesale electricity prices, Brazos received approximately $2.1 billion in settlement charge invoices from the Electric Reliability Council of Texas (“ERCOT”).  These invoices, promptly issued during and immediately following the storm, required payment within a matter of days.  In a declaration accompanying the voluntary bankruptcy petition, Mr. Clifton Karnei, Brazos’ Executive Vice President and General Manager, described Brazos’ position following the sudden, dramatic spike in electricity costs as a “liquidity trap that [Brazos] cannot solve with its current balance sheet.” 

Brazos’ first-day pleadings explain that its financial position and need for bankruptcy protection directly result from the effects of February’s winter storm on Texas’ electricity market, specifically on the relationship between Brazos and ERCOT. ERCOT serves a clearinghouse role in one of Texas’ three main energy grids, the Texas Interconnection, which covers 213 of the 254 counties in the state, and is responsible for procuring energy on behalf of its members while also administering the reliable operation of the wholesale electricity market.  To buy and sell wholesale electricity, as Brazos does, ERCOT requires market participants to have sufficient available credit (calculated using a metric based on the participant’s credit limit plus a percentage of tangible net worth, among other factors) to support such participant’s total exposure.  The effects of February’s winter storm on the Texas power grid caused prices to spike to $9,000 per megawatt-hour. The cut-off cap was set on 16 February by ERCOT as demand soared while the state’s electricity supply declined.  For comparison, ERCOT’s monthly prices for wholesale electricity from November 2020 through January 2021 ranged between $21 to $29 per megawatt-hour.  On 16 February, and each of the succeeding three days, ERCOT made collateral calls to Brazos for hundreds of millions of dollars each day, for a total of approximately $1.5 billion in collateral calls.  Brazos filed a notice of force majeure on 25 February, informing ERCOT that it would not satisfy the invoices due to an event outside of Brazos’ reasonable control.  Brazos filed for bankruptcy protection less than one week later.

As of the petition date, Brazos estimates the total principal amount of its funded debt obligations to be approximately $2.04 billion, with $1.81 billion of such debt being secured promissory notes financed through the Federal Financing Bank.  Brazos has fully drawn its $500 million unsecured revolving facility with Bank of America, N.A. and other lenders.  Mr. Karnei states that Brazos’ goals in commencing the chapter 11 case are to preserve its ongoing business operations and propose a reorganization plan to maximize creditors’ recovery.  The first day hearing in front of Judge David Jones is scheduled for 3 March at 2:00 p.m. (EST).

Washington State Legislature Considers First of Its Kind State-Level Natural Gas Ban

By: David Benson, Buck Endemann, Elizabeth Thomas, Sandra Safro, and Benjamin Mayer

Fossil-based natural gas may be headed for a reckoning, at least in Washington State. Not long ago, natural gas was seen by many as the key “bridge fuel” necessary to transition our society away from oil and coal. Natural gas has its upsides; most significantly, it burns more efficiently and emits fewer pollutants than coal.1 Yet burning natural gas still emits greenhouse gases (GHG), including methane, a potent climate pollutant. According to EPA, methane accounts for approximately 10% of the GHG emissions in the United States.2 That is a problem for states like Washington that have called for zero carbon emissions in the power sector by 2045 and have also enacted laws aimed at reducing GHG emissions throughout other sectors.

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Distinguished Speaker Series with FERC Commissioner Neil Chatterjee

Tuesday
26 January 2021
3:00 p.m. – 4:00 p.m. ET

Please join K&L Gates for an open conversation with FERC Commissioner Neil Chatterjee, as we discuss energy market trends, infrastructure development, renewables, and the energy transition.

Commissioner Neil Chatterjee was nominated to the Federal Energy Regulatory Commission by President Donald J. Trump in May 2017 and confirmed by the U.S. Senate in August 2017. He served as Chairman from August 2017 to December 2017. He was again named Chairman on October 24, 2018, and served in that role through November 5, 2020.

Since joining the Commission, Chatterjee has championed strategic initiatives reflecting his firm commitment to ensuring that FERC regulations and actions reflect changes in today’s energy landscape. Additionally, Chatterjee has made energy infrastructure a top priority. 

Prior to his tenure at the Commission, Chatterjee served as an advisor to Senator Mitch McConnell (R-KY), where he played an integral role in the passage of major energy, highway and agriculture legislation. Chatterjee previously worked as a principal in government relations for the National Rural Electric Cooperative Association and as an aide to House Republican Conference Chairwoman Deborah Pryce (R-OH). He began his career in Washington, D.C., as a staff member on the House Committee on Ways and Means.

A native of Lexington, Kentucky, Chatterjee is a graduate of St. Lawrence University and the University of Cincinnati, College of Law. Chatterjee resides with his wife and three children in Virginia.

The program will be moderated by K&L Gates’ Policy & Regulatory Practice Area Leader, David Wochner, and Power Practice Group Coordinator, Elizabeth Crouse.

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