On September 19, 2019, one Independent and four Democratic U.S. Senators wrote a letter to FERC asking for an explanation of three actions the Senators believed showed an “apparent erosion” of the “vital role” FERC plays in preventing fraud and manipulation in U.S. energy markets and financial markets: (1) the decline in FERC-initiated civil penalty actions and the abrupt termination of non-public investigations without explanation; (2) the elimination of the Division of Energy Market Oversight (“DEMO”); and (3) the rescission of its policy on issuing Notices of Alleged Violations (“NAVs”) for investigations. Those Senators were Maria Cantwell (D-WA), Dianne Feinstein (D-CA), Ron Wyden (D-OR), Edward Markey (D-MA), and Angus King (I-ME).

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On September 19, 2019, FERC proposed substantial revisions to its Public Utility Regulatory Policies Act of 1978 (“PURPA”) regulations.  If adopted, the package of reforms proposed in the Notice of Proposed Rulemaking (“NOPR”) would: (1) allow states more flexibility to incorporate competitive forces when setting avoided cost rates for Qualifying Facilities (“QFs”), (2) modify the “one-mile rule,” (3) reduce the size threshold for the rebuttable presumption about QFs’ ability to access markets, (4) provide clarity on establishing a legally enforceable obligation (“LEO”), and (5) establish a simplified process to challenge a project’s QF status.  FERC requested comments on a number of proposals, which are due 60 days from publication of the NOPR in the Federal Register.
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Summary of NOPR

On September 19, 2019, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its regulations implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) in light of changes in the energy industry since 1978.[1]
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On September 10, 2019, the United States Court of Appeals for the Third Circuit (“Third Circuit”) vacated a federal district court order permitting PennEast Pipeline Company (“PennEast”) to exercise eminent domain power under the Natural Gas Act (“NGA”) over property interests owned by the State of New Jersey.  The Third Circuit found that while the NGA delegates the federal government’s eminent domain authority to private gas companies, it does not delegate the federal government’s separate and distinct exemption from state sovereign immunity under the Eleventh Amendment.  After acknowledging concerns that its decision would disrupt the interstate gas pipeline industry, the Third Circuit suggested that in the case of state-owned property, a “work-around” might be for a federal official to file the necessary condemnation actions, and then to transfer the property to the natural gas company.
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On September 6, 2019, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) dismissed the City of Oberlin, Ohio’s and the Coalition to Reroute Nexus’s (collectively, “Petitioners”) request to vacate FERC’s authorization for Nexus Gas Transmission, LLC (“Nexus”) to: (1) construct and operate an interstate natural gas pipeline through parts of Ohio and Michigan; and (2) use eminent domain to acquire any necessary rights of way to complete the project (see December 18, 2018 edition of the WER).  The D.C. Circuit agreed with Petitioners, however, that the Commission failed to adequately substantiate its finding that it lawfully credited Nexus’s precedent agreements—under which shippers agree to enter into service agreements once the pipeline is built—with foreign shippers serving foreign customers as evidence of market demand for the interstate pipeline.  As a result, the D.C. Circuit remanded this issue to the Commission, without vacatur, for further explanation of the decision.

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On August 28, 2019, FERC found on voluntary remand from the United States Court of Appeals for the D.C. Circuit (“D.C. Circuit”) that the New York State Department of Environmental Conservation (“New York DEC”) waived its authority under section 401 of the Clean Water Act (“CWA”) to either issue or deny Constitution Pipeline Company, LLC (“Constitution”) a water quality certificate for a proposed 125-mile pipeline project from that would stretch from Pennsylvania to New York (“Project”).  Based on the D.C. Circuit’s decision in Hoopa Valley Tribe v. FERC (“Hoopa Valley”) (see April 24, 2019 edition of the WER), FERC concluded that Constitution’s agreement with the New York DEC to withdraw and resubmit CWA section 401 certification applications did not restart the one-year statutory deadline for the New York DEC to act on Constitution’s application.
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On July 25, 2019, FERC issued an order directing PJM Interconnection, L.L.C. (“PJM”) “not to conduct the 2019 BRA” (Base Residual Auction) in August (“July 2019 Order”).  The 2019 BRA, which will procure capacity for the 2022-2023 Delivery Year, was already delayed from May to August while FERC considered how to apply the PJM Minimum Offer Price Rule (“MOPR”) to resources which receive out-of-market support, including Zero Emissions Credits (“ZECs”) and Renewable Energy Credits (“RECs”).  If the MOPR were applied to units receiving ZECs, RECs, or other out-of-market support, it is expected capacity market prices would be higher in some regions, and market revenues may be lower for some generators receiving ZECs or RECs or their off-takers.
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On July 18, 2019, FERC issued a final rule (“Order No. 860”) revising its data collection and reporting requirements for market-based rate (“MBR”) sellers (“MBR Sellers”).  FERC will require MBR Sellers to provide certain information about corporate relationships and affiliations through a “relational database” that FERC will implement over the next year and a half.  Among other things, FERC adopted reforms to (1) revise the scope of ownership information provided by MBR Sellers in their market-based rate filings; (2) change the information to be included in an asset appendix; (3) require MBR Sellers to submit monthly updates to their relational database; (4) require MBR Sellers to file quarterly notices of change in status, instead of 30 days after the change in status; and (5) remove the existing requirement that MBR Sellers submit corporate organization charts.  Notably, FERC declined to adopt its proposal requiring MBR Sellers to submit “Connected Entity” information.
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On June 26, 2019, the U.S. District Court of Maine (“District Court”) denied a motion for leave to file an interlocutory appeal to the U.S. Court of Appeals for the First Circuit (“First Circuit”) ultimately concerning whether FERC’s enforcement action against Competitive Energy, LLC and its managing member Richard Silkman (collectively, “Respondents”) was time-barred.  The District Court previously denied two motions for summary judgment, relying on the First Circuit’s decision in United States v. Meyer (“Meyer”), which held that a FERC enforcement action accrues when FERC assesses a penalty, and therefore was not barred.  Respondents argued that the District Court should not have followed the First Circuit’s decision in Meyer because two subsequent United States Supreme Court (“Supreme Court”) decisions—Kokesh v. SEC (“Kokesh”) and Gabelli v. SEC (“Gabelli”)—have overruled Meyer.  In denying the motion for interlocutory appeal, the District Court held that whether Meyer continues to be good law does not present a “controlling question of law as to which there is a substantial ground for difference of opinion.” 
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On June 20, 2019, FERC Commissioner Cheryl LaFleur announced on Twitter that she will be leaving FERC at the end of August after serving on the Commission for nine years.  She first announced her intent to leave the Commission in January of this year.  In her recent announcement, Commissioner LaFleur noted that the July open meeting will be her last meeting as a commissioner.  FERC currently has four members—Commissioners Neil Chatterjee and Bernard McNamee, who are Republicans, and Commissioners LaFleur and Richard Glick, who are Democrats.  Assuming no nominee is confirmed by the end of August, Commissioner LaFleur’s departure would leave FERC with a two to one Republican majority, and a minimum number of commissioners for a quorum.
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