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.

On Wednesday, the United States Court of Appeals for the Fourth Circuit (“Court of Appeals”) reversed a Federal Energy Regulatory Commission (“FERC” or “Commission”) ruling interpreting its authority to approve certain interstate electric transmission projects that had been previously denied by state commissions.

On Thursday, FERC approved new flexible rate mechanisms for two merchant transmission projects. Chinook Power Transmission, LLC (“Chinook”) and Zephyr Power Transmission, LLC (“Zephyr”) plan to build 2,100 miles of transmission to deliver wind power from Montana and Wyoming to customers in Nevada and other Southwestern states.

On February 12, 2009, in an unusual move, FERC rejected a settlement between the Commission’s Office of Enforcement Litigation Staff (“Staff”), the defunct hedge fund Amaranth Advisors LLC (“Amaranth”) and two of Amaranth’s traders, Brian Hunter and Matthew Donohoe. The parties submitted the settlement, which was not made public, to the Commission for approval on November 24, 2008.

On Tuesday, the U.S. Environmental Protection Agency (“EPA”) granted a petition from the Sierra Club and others to reconsider former EPA Administrator Stephen Johnson’s December 18, 2008 memorandum interpreting the federal Clean Air Act as not requiring regulation of carbon dioxide emissions from new coal-fired power plants.