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
Wednesday, March 5, 2014 12:28 pm by Darren Spalding, Alastair Young and Nick Kendrick
On 24 February 2014, Sir Ian Wood delivered his Final Report (the “Report”) on the future of the UK Continental Shelf (“UKCS”). The Report sets out a number of conclusions and recommended actions relating largely to more stringent regulation, a focus on regional development and better industry co-operation. If the recommendations are implemented, they will fundamentally change the North Sea oil and gas industry.
The Report’s overriding message is that for production from the UKCS to be prolonged, a change to both the regulatory and commercial landscapes will be required. The Report proposes a new regulator (the “Regulator”) which would sit within the government department currently responsible for the oil and gas industry in the UK, the Department of Energy and Climate Change (or “DECC”). The Regulator will be tasked with developing strong relationships with both UKCS operators and the Treasury, and will enjoy a significant degree of independence and operational freedom. The Report envisages that the Regulator would be staffed with experienced personnel from industry as well as attracting top new graduates. To achieve this, the Regulator would – the Report suggests – be funded by UKCS operators and should offer agreed levels of service in return for such funding. On the commercial side, the Report supports much greater co-operation between operating companies, led by the introduction of regional development, increased third party access to infrastructure, wider sharing of data and streamlining of legal and commercial negotiations between parties. Any failure to co-operate in furthering these principles could subject the relevant party to sanctions from the Regulator, including the loss of a licence. (more…)
Category: Natural Gas/LNG, Regional Energy Law, Shale Development, Upstream Energy
Monday, March 3, 2014 10:45 am by David Perlman and Jessica Miller
This week the Federal Energy Regulatory Commission (FERC) put to rest any doubt that transmission rights pursuant to a pre-Order No. 888 transmission service agreement are subject to the FERC’s open access regime when the agreement is modified or becomes obsolete. In the same order, FERC found that a so-called “resale tariff” is only permissible where a jurisdictional transmission provider seeks to resell transmission rights on a non-jurisdictional transmission provider’s facilities—where the resale could not be facilitated under a FERC-approved Open Access Transmission Tariff (OATT).
FERC’s February 27, 2014 order rejected a December 30, 2013 filing by SoCal Edison Company (SCE). SCE’s filing attempted to modify transmission rights it has held since 1966 under a transmission services agreement with Arizona Public Service Company (APS). The 1966 agreement arose in connection with SCE and APS’s joint ownership interests in two generating units at Four Corners in New Mexico. Pursuant to the agreement, APS constructed and operated a 500 kV transmission line from Four Corners to the Arizona-Nevada border, and SCE paid APS cost-based transmission service charges for rights to all of that line’s transmission capacity, for purposes of transmitting SCE’s portion of the units’ output to California. In 2013, SCE transferred to APS its ownership interests in the Four Corners units, so SCE no longer needed the transmission capacity it had held for more than four decades for purposes of transmitting its Four Corners capacity. (more…)
Category: Electric, FERC, Power, Regional Energy Law, Transmission
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
Friday, February 7, 2014 12:34 pm by Sandra Snyder, Richard Alonso and Tim Wilkins
On Tuesday, February 4, 2014, EPA issued a pre-publication copy of a proposed rule that if adopted would transfer greenhouse gas (GHG) permitting in Texas from EPA Region 6 to the Texas Commission on Environmental Quality (TCEQ). The proposed rule has yet to be published in the Federal Register. When it is published, the public will have 30 days to comment on the proposed rule. EPA must review and respond to those comments before it can adopt a final rule that would transfer authority to TCEQ. (more…)
Category: Air Quality/Climate Change, Enforcement, Environmental, Natural Gas/LNG, Power, Regional Energy Law
Friday, December 13, 2013 1:16 pm by Manuel Vera and Andrew Farris
As we previously reported, on August 12, 2013, Mexican President Enrique Peña Nieto submitted a highly anticipated constitutional reform proposal to the Mexican Congress for purposes of restructuring the Mexican energy sector, including oil, gas, petrochemical, and power, by allowing greater private participation in the Mexican energy market (the “Bill”).
Following this proposal by President Peña Nieto, the Mexican Senate approved the Bill on December 11, 2011 and the Mexican House of Representatives approved the Bill on December 12, 2011, with additional revisions that extend private participation in the Mexican energy market beyond that contemplated in the original Bill. The Bill must also be ratified by a majority of Mexico’s 31 state legislatures, where ratification is expected to happen soon. (more…)
Category: Natural Gas/LNG, Power, Regional Energy Law, Upstream Energy