On October 3, 3018, President Donald Trump announced his intent to nominate Bernard L. McNamee to fill the vacant seat on FERC, for the term expiring June 30, 2020, resulting from Commissioner Robert Powelson’s resignation. If nominated, confirmed, and sworn in, Mr. McNamee would restore the Republican majority among FERC Commissioners.

On September 20, 2018, FERC partially accepted tariff amendments proposed by the California Independent System Operator Corporation (“CAISO”) aimed at improving the efficiency of its congestion revenue rights (“CRR”) market rules.  Specifically, CAISO proposed to decrease the percentage of transmission system capacity available in the annual CRR allocation and auction processes from 75 percent to 65 percent (“Capacity Release Reduction Proposal”).  FERC accepted the Capacity Release Reduction Proposal, finding it just and reasonable.  CAISO also proposed to eliminate full funding of CRRs and instead scale CRR payouts, on a constraint-by-constraint basis, up to the extent that CAISO collects sufficient revenue through the day-ahead market congestion charges and charges to counterflow CRRs (“Scaling Proposal”).  FERC, however, rejected the Scaling Proposal as not just and reasonable.

On September 21, 2018, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) ruled that FERC’s order to deny ANR Storage Company’s (“ANR”) request to charge market-based rates was arbitrary and capricious.  The D.C. Circuit found that FERC provided no basis for treating ANR differently from another competitor, DTE Energy Company (“DTE”) in a prior decision, and that FERC’s explanation for why intrastate facilities could not restrain ANR’s exercise of market power was internally inconsistent.  As such, the D.C. Circuit remanded the proceeding back to FERC.

On September 24, 2018, the U.S. District Court for the Eastern District of Virginia (“District Court”) concluded that FERC’s assessment of a civil penalty against Powhatan Energy Fund, LLC and certain of its traders and affiliates (“Powhatan”) for market manipulation allegations was not barred by the statute of limitations because FERC’s claim accrued when Powhatan failed to pay the civil penalty rather than when the alleged violations actually occurred.  However, the District Court noted that it was particularly difficult to apply the statute of limitations to enforcement actions brought under the Federal Power Act’s (“FPA”) de novo review procedures and thus stayed the issue to allow Powhatan to file an interlocutory appeal.

On September 27, 2018, the U.S. Court of Appeals for the Second Circuit (“Second Circuit”) dismissed challenges to the New York zero emission credit (“ZEC”) program, ruling that: (1) the ZEC program is not field preempted by the Federal Power Act (“FPA”) because the ZEC program is not expressly tied to wholesale market participation or prices; (2) the ZEC program is not conflict preempted because it does not intrude on federal goals; and (3) the ZEC challengers did not have standing to raise a dormant Commerce Clause claim because they did not own out-of-state nuclear generators that they alleged were discriminated against by the ZEC program.

On September 20, 2018, FERC denied the Utah Board of Water Resources (“Utah Board”) and the Washington County Water Conservancy District’s petition for a declaratory order, asking FERC to find that its licensing jurisdiction under the Federal Power Act (“FPA”) extends to all of the Lake Powell Pipeline Project facilities identified in the Board’s license application for the project, including 89 miles of water delivery pipeline.

On August 31, 2018, FERC and the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), an agency under the U.S. Department of Transportation (“DOT”), signed a Memorandum of Understanding (“MOU”) to coordinate the siting and safety review of FERC-jurisdictional Liquified Natural Gas (“LNG”) facilities.

On September 13, 2018, the U.S. Court of Appeals for the Seventh Circuit (“Seventh Circuit”) dismissed challenges to the Illinois “zero emission credit” (“ZEC”) program, a state law which compensates nuclear plants and other generators that do not produce carbon emissions (“ZEC Program”).  In doing so, the Seventh Circuit ruled, among other things, that: (1) the ZEC Program is not preempted by the Federal Power Act (“FPA”) because eligibility to receive ZECs does not depend on the generator’s participation in a wholesale auction, and (2) the ZEC Program does not violate the dormant Commerce Clause because it does not discriminate against interstate commerce.

On September 20, 2018, FERC denied rehearing and partially granted clarification of its order regarding Multi-Value Project (“MVP”) rate pancaking charges between PJM Interconnection, L.L.C. (“PJM”) and the Midwest Independent Transmission System Operator, Inc. (“MISO”).  In the underlying order, FERC determined that because MISO’s transmission projects benefited the existing MISO-PJM system, the limitation on rate pancaking imposed by FERC in 2003 and 2010 was no longer reasonable. 

On September 20, 2018, FERC dismissed Nevada Hydro Company, Inc.’s (“Nevada Hydro”) request that (1) the Lake Elsinore Advanced Pumped Storage (“LEAPS”) facility is a transmission facility and (2) LEAPS is entitled to cost-based rate recovery under the California Independent System Operator Corporation’s (“CAISO”) Transmission Access Charge.  FERC found that Nevada Hydro’s request is premature because LEAPS has not been studied in the CAISO Transmission Planning Process (“TPP”) to determine whether it addresses a transmission need identified through that process, and, if such a need were met, how the facility would be operated.