On February 27, 2009, FERC approved a settlement agreement with Energy Transfer Partners LP (“ETP”) under which it will pay no civil penalty and neither admit nor deny any wrongdoing to any third party by Oasis Pipeline, LP (“Oasis”), an affiliate. The decision follows a ruling by FERC Administrative Law Judge Bruce Birchman that FERC was unable to prove Oasis had unduly discriminated against non-affiliated shippers (see November 21, 2008 edition of the WER).

President Obama on Tuesday issued a memorandum directing the Departments of Commerce and the Interior to reconsider regulations they had issued in December of last year to limit the impact of the listing of the polar bear as a threatened species. Although the Interior Department found that the number of polar bears have been increasing in the last several decades, the Department last year listed the polar bear as a threatened species based on actual and modeled future loss of Arctic sea ice.

On Tuesday, Maryland Governor Martin O’Malley (D) introduced legislation to partially re-regulate the electricity market in that state. Separately, state legislators also have filed two bills (SB 795 and SB 844) that would go even further, and fully re-regulate Maryland’s electricity market.

On February 20, 2009, FERC accepted the California Independent System Operator Corporation’s (“CAISO”) Exceptional Dispatch provisions in its Market Redesign and Technology Upgrade Tariff (“MRTU Tariff”). While FERC believes that CAISO will rely on the Exceptional Dispatch mechanism much less frequently in the future as it gains experience with MRTU, the mechanism will maintain grid reliability in circumstances where resources issued exceptional dispatch instructions could exercise local market power.

The White House on Thursday released a budget including revenues based on an assumption that a cap-and-trade program limiting greenhouse gas (“GHG”) emissions will be in place by 2012. According to the budget document, the assumed cap-and-trade program has emission targets requiring GHG emission reductions of 14 percent below 2005 levels by 2020 and 83 percent below 2005 levels by 2050.

On Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit reversed EPA’s 2006 revision to the National Ambient Air Quality Standard (“NAAQS”) for fine particulate matter on the ground that the standard may not be sufficiently stringent. Commonly referred to as PM-2.5 (particulate matter that is less than or equal to 2.5 microns in diameter), PM-2.5 results from the emission of nitrogen oxides and sulfur dioxide, which are chemically transformed in the atmosphere into microscopic nitrate and sulfate particles.

On February 20, 2009, the American Public Power Association (“APPA”) issued a report entitled APPA’s Competitive Market Plan: A Roadmap for Reforming Wholesale Electricity Markets (“Market Plan”). The Market Plan proposes reforms for RTO markets that it says would provide better competition and consumer protection within Regional Transmission Organizations (“RTOs”) while maintaining reliability.

On February 19, 2009, the Commission ruled that PJM’s three-pivotal-supplier test, used to identify sellers that can exercise market power, was not unjust and unreasonable and rejected complaints to have the test terminated. However, the Commission did require PJM to reform the test’s mitigation measures applied to suppliers who fail the test.