Friday, March 7, 2014 4:11 pm by Stan Chelney and Michael Hefter
On March 5, 2014, the United States Supreme Court upheld a $185 million arbitration award obtained by the United Kingdom’s BG Group PLC against the Republic of Argentina, pursuant to a bilateral investment treaty. The Court reversed the finding of the Court of Appeals for the District Court of Columbia that the arbitration panel lacked jurisdiction over the dispute, finding that the arbitrators, and not a court, properly determined whether the treaty’s conditions to arbitration had been satisfied.
In BG Group PLC v. Republic of Argentina, 572 U.S. __ (2014), the Supreme Court interpreted the dispute resolution provision contained in an investment treaty between the United Kingdom and Argentina (the “Treaty”), requiring each nation to afford the others’ investors “fair and equitable treatment” and forbidding the “expropriation of investments” by either nation. The Treaty permits investors to submit disputes to a local court in the country where the investment is made, and permits arbitration “where, after a period of eighteen months has elapsed from the moment when the dispute was submitted to [that] tribunal . . ., the said tribunal has not given its final decision.” (more…)
Category: Courts, European Energy Law, Litigation, Natural Gas/LNG, Regional Energy Law
Thursday, March 6, 2014 10:01 am by Bryan Loocke, Stuart Zisman and Stephen Crain
On Tuesday, March 4, 2014, a Dallas jury found that Enterprise Products Partners, L.P. (“Enterprise”) had entered into a partnership with Energy Transfer Partners, L.P. (“ETP”) to jointly develop a crude oil pipeline from Cushing, Oklahoma to the Texas Gulf Coast despite the lack of executed partnership agreements and the inclusion of express non-binding provisions in their preliminary agreements. In awarding damages of $319MM to ETP, the jury concluded that a partnership had in fact been created and that Enterprise breached its partnership duties to ETP when it subsequently entered into a new joint venture with Enbridge (US) Inc. (“Enbridge”) to own and operate a neighboring crude pipeline.
According to the court filings, ETP and Enterprise entered into a confidentiality agreement, “non-binding” term sheet, and reimbursement agreement, each of which contained customary non-binding disclaimers. Subsequent to entering into such preliminary documents, Enterprise and ETP publicly announced that they had “agreed to form a 50/50 joint venture” to construct the crude pipeline. In addition, the parties began marketing capacity under a FERC open season using the project name “Double E Crude Pipeline, LLC.” During the summer of 2011, the parties exchanged drafts of the definitive agreements for the joint venture (including a draft LLC Agreement for Double E) but those agreements were never finalized or executed. Before the end of the open season period, Enterprise allegedly began separate discussions with Enbridge about jointly developing another similar crude pipeline. (more…)
Category: Courts, Crude and Products, Midstream
Thursday, February 27, 2014 3:40 pm by Ty Johnson
In an unusual move, on February 21, 2014 the Court of Appeals for the Third Circuit (“Third Circuit”) asked the U.S. Attorney General for his opinion as to whether the Federal Power Act (“FPA”) preempts New Jersey’s Long Term Capacity Pilot Program (“LCAPP”), a finding made by the United States District Court for the District of New Jersey (“District Court”) in PPL EnergyPlus, LLC v. Hanna, which is now pending on appeal before the Third Circuit.
In recent years, states including New Jersey and Maryland, through different mechanisms, have instituted requirements that the state utilities serving retail customers must purchase power from “new generation” to be located within each respective state’s borders. In New Jersey, such generation would be guaranteed a long-term contractual payment so long as the generation cleared the PJM capacity market. Bidding as low as possible would best guarantee the units would clear. Because generators are not paid what they bid, but the payments are based on the clearing price of the most expensive unit to clear, having units bid at levels that do not reflect their cost recovery needs was perceived by the generation community as an effort to reduce payments made for capacity. (more…)
Category: Courts, Electric, FERC, Power, Regional Energy Law
7:00 am by David Perlman and Jennifer Lias
On December 2, 2013, FERC filed a Petition for an order affirming its assessment of a civil penalty in the District of Massachusetts against Lincoln Paper and Tissue, LLC (“Defendant”), alleging that the Defendant engaged in a manipulative scheme as a retail customer in the electricity market in order to receive additional profits in a “demand response” program run by ISO New England, Inc (“ISO-NE”). As in FERC v. Barclays, the court’s resolution of this case may significantly affect the scope of FERC’s anti-manipulation enforcement authority going forward.
On February 14, 2014, the Defendant filed a Motion to Dismiss the case arguing that FERC lacks jurisdiction over its participation in the “demand response” program. The “demand response” program initiated by ISO-NE was a FERC authorized program with the purpose of reducing energy prices by reducing overall consumption of (i.e. demand for) electricity. Therefore, to participate in the “demand response” program, the Defendant had to reduce its retail consumption—i.e. to forego retail purchases of electric energy. (more…)
Category: Courts, Electric, FERC, Organized Markets, Power
Wednesday, February 26, 2014 2:14 pm by David Perlman, Jennifer Lias and Robert E. Pease
On July 16, 2013, the Federal Energy Regulatory Commission (“FERC”) issued an order finding Barclays Bank PLC (“Barclays”), Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith (together with Barclays, “Defendants”) in violation of FERC’s anti-manipulation regulations and assessed significant penalties. The Defendants chose to have the validity of the order tried de novo in federal district court, and on December 16, 2013, filed a Motion to Dismiss the FERC action. On February 14, 2014, FERC filed an Opposition to the Motion to Dismiss previously filed by the Defendants.
This case represents the first time a FERC electric market manipulation claim is being adjudicated in a federal district court. The court’s ruling could have significant implications for FERC’s jurisdiction in a manipulation action that involves financial transactions and its authority with regard to wholesale power markets. (more…)
Category: Courts, Electric, FERC, Organized Markets, Power, Uncategorized
Thursday, January 9, 2014 10:38 am by Bryan Loocke and Yaw Temeng
On December 19, 2013, the Pennsylvania Supreme Court (the “Court”) largely affirmed a 2012 ruling by the state’s Commonwealth Court, which struck down several provisions of a law known as Act 13 (the “Act”). The Act created guidelines for natural gas drilling in the state, and included a provision restricting the power of local governments to pass zoning ordinances prohibiting natural gas fracking. However, the state Supreme Court sided with the lower court ruling and found several aspects of the law unconstitutional.
The Court was divided in its constitutional grounds for invalidating the Act. In the majority opinion, three justices concluded the Act was in violation of Section 27 of the state constitution, the Environmental Rights Amendment (“Section 27”). Those justices found the Act did not adequately balance the promotion of hydrocarbon production against the duty to protect the environment as required by Section 27. Essentially, the Court imposed a balancing test requiring a government action to reasonably account for the environmental impact on an affected locale for it to be deemed constitutional under Section 27. The decision ultimately remanded parts of the case to the lower court to determine whether the remainder of the law was severable from the invalidated provisions. (more…)
Category: Courts, Environmental, Natural Gas/LNG, Shale Development, Upstream Energy