Energy Legal Blog

The Federal Energy Regulatory Commission (“FERC”) recently determined in a case of first impression that states have limited authority to implement feed-in tariff programs, which generally seek to encourage “green” energy. For energy service companies and energy sellers seeking to take advantage of these programs, the order potentially dampens the prospects for feed-in tariffs to take off in the US, and, at a minimum presents additional FERC compliance considerations, discussed below.

Feed-in tariffs generally consist of three elements: (1) a state-fixed incentive rate designed to attract new sources; (2) a mandated offer to purchase power for a prescribed duration through long-term contract; and (3) a guaranteed access to the grid. (more…)

On February 16, 2010, President Obama announced that DOE had offered $8.3 billion in conditional commitments for loan guarantees for two new nuclear reactors to be built at the Vogtle Electric Generating Plant in Burke, Georgia. This announcement came on the heels of the release of Obama’s FY 2011 budget which proposed tripling the current loan guarantee authority for nuclear projects. These two actions signal a renewed willingness on the part of the Administration to support nuclear power as an essential ingredient in the nation’s future energy supply. (more…)

PR News announced that Bracewell & Giuliani’s Energy Legal Blog will be recognized as the best “Legal PR Blog” at its annual Corporate Social Responsibility & Legal Awards Luncheon on February 24, 2010 at the National Press Club in Washington, D.C. This award recognizes an outstanding and influential law-related weblog or online journal written by a representative of the organization with the goal of espousing the brand or a certain message and written with flair and personality.

“Managing a crisis and working with legal counsel are two areas of communication that will always be a part of a PR professional’s responsibilities,” notes Diane Schwartz, vice president of PR News. “The Legal PR Awards shines a light both on how law firms are communicating to their stakeholders and to how the PR industry is in the driver’s seat when a crisis hits.”

More information on the award program and this year’s winners is available at http://www.prnewsonline.com/awards/csr2009_event-finalists.html.

The American Reinvestment and Recovery Act (ARRA) appropriated $6 billion to the U.S. Department of Energy’s (DOE) Title XVII Loan Guarantee Program to support loan guarantees of up to $60 billion for renewable energy and electric power transmission projects.  The DOE Loan Guarantee Program was established under the Energy Policy Act of 2005 and was designed to support eligible projects that use new and innovative technology to avoid, reduce or sequester air pollutants, including anthropogenic emissions of greenhouse gases . (more…)

Congress did not in the Energy Policy Act (EPAct) of 2005 confer on FERC federal “backstop” authority to overrule timely state decisions denying applications to site and construct proposed interstate transmission lines, a divided (2-1) panel of a U.S. appeals court ruled February 18 in the much-anticipated case of Piedmont Environmental Council v. FERC. The issue of FERC’s authority to override state denials will likely be further appealed.

The majority decision by Judge Blane Michael of the Richmond-based U.S. Court of Appeals for the Fourth Circuit overturned a 2006 FERC rulemaking interpreting new section 216 that Congress in EPAct 2005 added to the Federal Power Act. That section created two new federal powers. First it empowered the Secretary of Energy to designate as a national interested electric transmission (NIET) corridor any area where the transmission grid is determined to be capacity constrained or congested. Second, for the first time in the history of federal regulation of the power industry, it conferred on FERC “backstop” federal authority to permit within a designated NIET corridor the siting and construction of new or modified interstate electric transmission lines, but only in circumstances detailed in the new section 216. One such circumstance arises when FERC finds that a state commission or other state permitting authority “has withheld approval for more than 1 year after the filing of an application seeking approval” for a proposed transmission line. Contrary to a majority of FERC commissioners, the court majority concluded that “withheld for more than one year” does not comprise scenarios where a state denies a construction and siting application consistent with state law within one year from the filing of the application. Agreeing with FERC Commissioner Suedeen Kelly, who dissented from the agency’s 2006 rulemaking, interpreting the statutory phrase “withheld for more than one year” to encompass a timely denial is a “nonsensical” and therefore impermissible reading. (more…)

Jurisdictional jockeying between FERC and the Department of Interior threatens development of Outer Continental Shelf  (OCS) ocean power projects. The issue calls out for agency cooperation and possibly an interagency agreement similar to that between FERC and the U.S. Forest Service for licensing and permitting hydroelectric projects on Forest Service lands. Absent such cooperation, the matter will have to be resolved by the courts.

The dispute flared most recently when Pacific Gas & Electric Co. asked FERC to issue preliminary permits for two sites located partially in state waters and partially on the OCS. PG&E contemplates placing between 8 and 200 wave energy conversion devices in water with depths of 60 to 600 feet and delivering the energy from the two projects via underwater cables connected to the PG&E transmission grid. The two projects would each generate about 40 MW. FERC considers them hydroelectric projects because they generate electricity through ocean waves.

While Interior does not contest FERC’s jurisdiction over such projects in state waters, it contends that FERC has no authority over the OCS sites. Interior argues that “navigable waters” (the touchstone for FERC jurisdiction) does not include waters beyond the 3 mile boundary of the U.S. territorial waters. Interior’s position derives from the definition of navigable waters in a number of statutes, including the Clean Water Act and the Rivers and Harbors Act of 1899. Rejecting this argument, FERC says the Federal Power Act (FPA) definition of navigable waters is broader and extends to “bodies of water over which Congress has jurisdiction” under the commerce clause, including OCS waters. FERC also asserts authority under the FPA to issue licenses for projects located on “lands and other interests in lands owned” by the U.S., again including the OCS.

By empowering Interior to lease the OCS for non-oil and gas energy sources, the Energy Policy Act of 2005 (EPAct 2005), according to Interior, made Interior the lead agency for OCS wave energy projects. Not so, says FERC, asserting EPAct 2005 limited Interior’s authority to OCS activities not otherwise authorized by “other applicable law” and that hydro licensing is otherwise authorized by the FPA. No end to the debate is in sight.