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On April 20, 2010, a fire on the offshore Deepwater Horizon oil rig caused an explosion killing eleven workers.  Within two days, the oil rig sank causing a pipe to break, and since then oil has been spreading rapidly in the Gulf of Mexico.  Although the media focus has been on efforts to stop the oil spill, the impact of the oil spill is also affecting proposed federal energy legislation and regulatory oversight of the energy industry in general.

On May 20, 2010, FERC rejected SunZia Transmission LLC’s (“SunZia”) request for a declaratory order that it may allocate firm transmission rights, reserve capacity to affiliated generators, and use negotiated rate authority for a proposed transmission project in New Mexico and Arizona.  However, FERC provided a description of how the project could be restructured in order to meet the Commission’s requirements.    

On May 20, 2010, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order initiating a Section 206 Proceeding to investigate the price cap in the Western Electricity Coordinating Council (“WECC”) outside of the California Independent System Operator Corporation (“CAISO”).  FERC’s inquiry is aimed at eliminating market distortions that might result from a difference in bid caps in CAISO markets and the spot market price cap in the rest of the WECC.

On May 20, 2010, FERC revised the contract reporting requirements for both intrastate natural gas pipelines providing service under Section 311 under the Natural Policy Act and Hinshaw pipelines operating under Section 1(c) of the Natural Gas Act (“NGA”), effective April 1, 2011.  The new rule increases the frequency of reporting, covers more transactions, establishes a new form to be used for reporting, and considers all of the filings to be public information. 

On May 20, 2010, the FERC granted in part, and denied in part, Southern LNG Inc.’s (“Southern LNG”) petition for a declaratory order that the Commission would not regulate certain sale and lease activities if Southern LNG decided to reactivate the truck loading facilities at its liquefied natural gas (“LNG”) terminal at Elba Island, Georgia. 

On May 7, 2010, Senator Jeff Bingaman (D-NM) filed an amendment, SA 3892, to the Restoring American Financial Stability Act of 2010 (“S 3217”), which is currently being debated by the U.S. Senate.  Senator Bingaman’s amendment, if adopted, attempts to preserve the Federal Energy Regulatory Commission’s (“FERC”) authority over currently FERC-regulated contracts and electricity and natural gas rates, while acknowledging that the Commodity Futures Trading Commission (“CFTC”) holds exclusive jurisdiction over energy futures and derivatives.