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CFTC Finalizes Exception for Swaps with Utility Special Entities

The Commodity Futures Trading Commission (CFTC) last week released a final rule excluding certain electricity and natural gas swaps with governmental agencies and municipalities from the lower de minimis threshold for swaps with special entities.  The rule makes permanent currently existing no-action relief previously issued by CFTC Staff.  The final rule is the result of a petition filed by advocates for public energy companies claiming that subjecting swap transactions with governmental entities to a lower de minimis threshold would reduce the number of available counterparties, raise market liquidity concerns and make it more difficult for public energy companies to mitigate risk.  To address these concerns the CFTC will allow certain swaps with special entities to be counted as regular swaps for purposes of swap dealer registration. Under the Commodity Exchange Act and the CFTC’s regulations, an entity is exempt from registration as a swap dealer if the...

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FERC Commissioner Moeller Convenes Public Meeting Focusing on Resolving Natural Gas Supply Challenges for Electric Generators

Commissioner Philip Moeller of the Federal Energy Regulatory Commission (FERC) held a public meeting on September 18, 2014 to discuss ideas to facilitate and improve the way in which natural gas is traded and to explore the concept of establishing a centralized natural gas trading platform.  Although not an official FERC conference, the ideas at issue were an extension of FERC’s recent focus on gas-electric coordination.  During the well-attended meeting, Commissioner Moeller presided over a large roundtable discussion of stakeholders, including electric generation owners, natural gas producers, pipelines and marketers, who engaged in a spirited discussion of whether natural gas supplies are meeting the needs of electric generators and improvement in supply practices.  The central focus of the meeting was the creation of a natural gas information and trading platform containing bids and offers for the purchase and sale of commodity and capacity for receipt...

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Environmental Impact Analysis Required for Natural Gas Facilities Clarified in Court Decision Denying Residents’ Challenge to Compressor Siting Approval

A New York town’s challenge to the Federal Energy Regulatory Commission’s (FERC) siting authorization for a natural gas pipeline compressor station was rejected by the U.S. Court of Appeals for the D.C. Circuit in Minisink Residents for Environmental Protection and Safety v. FERC.  The court’s August 15 decision denying the petition for review of residents of the Town of Minisink, when read in conjunction with its decision earlier this year in Delaware Riverkeeper Network v. FERC, delineates the scope of environmental impact analysis that the court will require of FERC  under the National Environmental Policy Act (NEPA). Residents of the Town protested the compressor station’s location and urged FERC and Millennium to pursue an alternative site referred to as the Wagoner Alternative.  The Wagoner Alternative would have resulted in the compressor station being located in a less populous area but would have required the replacement of a seven mile pipeline...

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Get LinkedIn to Updates on Mexico’s Energy Reforms

The energy reforms in Mexico have generated significant interest from energy investors around the world. McDermott has created a new LinkedIn Group, McDermott Discussion Group: Mexico’s Energy Reforms, to discuss legislative developments and their impacts on the changing energy private investment climate. Members of our team are well studied in these reforms and we will be posting updates on legislative developments and market updates. We encourage group member discussion and comments as well. Group participants stand to gain insight from our lawyers who are studying the reforms, from their peers who are also considering opportunities in Mexico, and from Mexican government officials who are tasked with executing the reforms.  The impact of the reforms will be felt across the board, covering the oil, gas and power sectors. Click here to join our group. If you have any questions or technical issues, please contact Taylor Shekarabi.

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D.C. Circuit Rules that FERC May Not Segment Its Evaluation of the Environmental Impact of Related Natural Gas Pipeline Construction Projects, Regardless of Whether They Are Separately Proposed

The D.C. Circuit Court of Appeals recently issued an opinion holding that the Federal Energy Regulatory Commission (FERC) violated the National Environmental Policy Act (NEPA) when it segmented its evaluation of the environmental impact of four separately proposed but connected projects to upgrade the “300 Line” on the Eastern Leg of Tennessee Gas Pipeline Company’s natural gas pipeline system.  Going forward, the court’s ruling will likely compel proponents of interrelated or complimentary pipeline projects to seek their certification on a consolidated basis and will require FERC to evaluate their cumulative impact. Tennessee Gas’s challenged Northeast Project was the third of four proposed upgrade projects to expand capacity on the existing Eastern Leg of the 300 Line.  The Northeast Project added only 40 miles of pipeline, while the four proposed projects combined to add approximately 200 miles of looped pipeline.  FERC approved Tennessee Gas’s first...

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The President’s Methane Reduction Strategy – Here’s What Energy Companies Need to Know

President Obama recently released a Strategy to Reduce Methane Emissions (Strategy) that sets forth a multi-pronged plan for reducing methane emissions both domestically and globally.  Domestically, the plan is to focus on four sources of methane—the oil and gas sector, coal mines, agriculture and landfills—and to pursue a mix of regulatory actions with respect to those sources.  Energy companies now have the opportunity to help influence exactly what those actions will be. For the oil and gas sector, the Strategy indicates that the federal government will focus primarily on encouraging voluntary efforts to reduce methane emissions—such as bolstering the existing Natural Gas STAR Program and promoting new technologies.  But the Strategy also identifies two areas of potential mandatory requirements.  First, later this year, the Bureau of Land Management (BLM) will issue a draft rule on minimizing venting and flaring on public lands.  Regulated parties will...

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Massachusetts Permit for New Natural Gas Plant Incorporates Global Climate Conditions Including Sunset Date

The Massachusetts Energy Facilities Siting Board (Siting Board) approved a certificate for a 630-megawatt natural gas-fired power plant in Salem last month.  The certificate is unique in that it incorporates the terms of a settlement agreement that imposes greenhouse gas emissions caps and requires the plant to sunset operations no later than 2050. The facility is scheduled to begin operations in 2016 and will replace a 63-year-old oil- and coal-fired plant.  The emissions caps, which would gradually decrease beginning in 2026, could be satisfied by emissions reductions from reduced operations or carbon-capture systems; credits or allowances from the Regional Greenhouse Gas Initiative (RGGI); Renewable Energy Certificates; or investment in Massachusetts Renewable Portfolio Standard-eligible local renewable generation, energy efficiency or demand-response measures. The certificate is the result of a settlement reached between the developer and an environmental...

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Greenhouse Gas Limits for New Power Plants – Comments due to EPA by March 10, 2014

Yesterday, the United States Environmental Protection Agency’s (EPA) proposal to set greenhouse gas emissions limits for new coal-fired and natural gas-fired power plants was published in the Federal Register.  This proposal was originally posted on EPA’s website on September 20, 2013; however, the formal publication triggers the start of a 60-day public comment period.  The publication also suggests that EPA is still on track to meet President Obama’s June 2014 deadline for publishing an initial proposal to regulate emissions from existing power plants. The proposed rule would limit new coal plants to 1,100 pounds of CO2 emissions per megawatt-hour (lbs/MWh) of electricity produced, with compliance measured on a rolling average basis during each 12-operating month period.  The proposal would also require new small natural gas plants to meet a 1,100 lbs/MWh emission limit, while requiring larger, more efficient natural gas plants to meet a limit of 1,000...

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Energy Regulators FERC, CFTC Finally Reach Proactive Understanding on Jurisdiction and Information Sharing

Primary regulators of energy transactions, the Federal Energy Regulatory and Commodity Futures Trading Commissions (FERC, CFTC or jointly Participating Agencies) began the new year by entering on January 2 two overdue Memoranda of Understanding (MOU), one on overlapping jurisdictions, the other on sharing of information generated in connection with market surveillance and investigations into suspected market manipulation, fraud or abuse.  Both MOUs became effective immediately. FERC, with jurisdiction over physical natural gas and power transactions, and the CFTC, with jurisdiction over financially settled products such as energy futures and swaps, had battled in recent years over the reach of each other’s jurisdiction, culminating in a March 2013 decision of the U.S. Court of Appeals for the D.C. Circuit finding that FERC improperly invaded CFTC’s jurisdiction when, under authority of the Energy Policy Act of 2005, it sought to fine Amaranth Advisors trader...

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Mexican Energy Reforms Bring E&P Opportunities and Much More

Last week the Mexican Congress approved legislation including Constitutional amendments that were approved by the required number of Mexican states on December 16 that will bring changes to the nation's energy laws that exploration and production companies have hoped for ever since Mexico nationalized the oil and natural gas industry in 1938.  But the legislature did not just stop there – the legislative changes have also opened the door to private investment in the midstream and downstream oil and natural gas sectors and increased opportunities for private investment in the electric power sector as well.  There will undoubtedly be myriad devils in the details of the implementing legislation, not least of which will be developing forms of contract that will be needed in a very short time frame under the law. Since nationalization, Petróleos Mexicanos (Pemex) has enjoyed a monopoly over all oil and natural gas exploitation in Mexico, although it has for...

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