Energy Legal Blog

On February 2, 2010, the SEC issued the written interpretive release that it approved last week to guide how public companies should evaluate the impacts of climate change in their communications with shareholders. As companies in the energy industry should note, the guidance does not change the existing principles of corporate disclosure, founded on an assessment of materiality and likelihood. That said, the structure and perspective of the guidance suggest that the SEC expects to see greater attention being given to the evaluation and disclosure of risks and opportunities arising from climate change. (more…)

On January 27, by a vote of three to two, the SEC adopted new interpretive guidance on how public companies should evaluate the impacts of climate change in their communications with shareholders.  Such guidance had long been sought by certain pension funds, shareholder advocacy groups and states, who were unsatisfied with the varied nature of corporate disclosure concerning climate change.  While a copy of the guidance has not yet been made available, the Commissioners discussed the guidance at length.

The SEC identified four topics to be evaluated and, as appropriate, discussed in disclosures:

• The impact of existing as well as pending climate-change legislation and regulation.
• The impact of international accords and treaties on climate change or greenhouse gas emissions.
• The actual and potential indirect consequences of climate change regulation or business trends (e.g., reduced demand for carbon-intensive products).
• The actual and potential impacts of the physical effects of climate change. (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.

In U.S. v. Apex Oil, a three-judge panel of the Seventh Circuit ruled 3-0 that EPA’s cleanup injunction against the corporate successor to a chemical company was not discharged in Chapter 11 because the injunction does not create a right to payment and, consequently, is not a ‘debt’ under the Bankruptcy Code.

In essence, Apex had argued that the injunction would require the company to incur costs upward of $150 million and that the purpose of the restructuring would be defeated if these costs had to be incurred. Judge Posner’s opinion turns on the fact that the order required cleanup and was not a substitute for payment; consequently, liability under the order was not a “debt” recognized by the Bankruptcy Code. The court recognized but disavowed a contrary ruling of the Sixth Circuit, thereby setting up a split between the circuits on this important issue.

FERC continues to tweak its rules regarding mergers and acquisitions under section 203 of the Federal Power Act (FPA), issuing new regulations that impose restrictions on affiliate transactions between certain public utilities and their unregulated affiliates. FERC explained that it intends to fill a perceived regulatory gap in its current affiliate sales rules, and stated that this final rule, combined with an order issued the same day allowing for grants of blanket authorization for a public utility to dispose of voting securities, marks the completion of the “initial implementation” of the rules governing transactions conducted under section 203. (more…)

Following up on its grant last fall of extensions of blanket authorization to Goldman Sachs (Goldman) and two other financial houses to acquire securities of electric utilities without prior FERC authorization, FERC has now responded to a Goldman request for clarification regarding this new authority.  FERC clarified that Goldman is not required to report all utility securities held as collateral, but rather only those securities acquired as a result of a foreclosure on that collateral.  The agency reiterated its earlier statement that the conditions imposed on these financial houses are similar to those placed on banks with authorization to acquire securities.  The various reports that Goldman must file concerning its activities under this authorization are each subject to a de minimis threshold of security holdings of one percent, and Goldman must continue to file quarterly reports that separately identify the utility securities held in a proprietary capacity.  These clarifications, in addition to the order granting the extended blanket authorizations, should inform future efforts by financial entities to obtain comparable authorizations.