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On June 16, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied a consolidated Petition for Review of several of Kern River Gas Transmission Company’s (“Kern River”) FERC-approved transportation rates.  In doing so, the D.C. Circuit held that FERC acted reasonably in setting the rates, responded meaningfully to rate objections, and articulated a rational explanation of its decisions.

On June 18, 2015, the Commission issued two separate Notice of Proposed Rulemakings (“NOPRs”) in which it proposed to approve several mandatory Reliability Standards submitted by the North American Electric Reliability Corporation (“NERC”).  The proposed Reliability Standards broadly address the areas of Transmission Operations (“TOP”), Interconnection Reliability Operations and Coordination (“IRO”), Emergency Preparedness (“EOP”), and Undervoltage Load Shedding (“UVLS”).  If approved, the proposed Reliability Standards would replace several currently-effective NERC Reliability Standards.

At its June 18, 2015 monthly Commission meeting, FERC issued a final rule adopting revisions to Rule 508 of its Rules of Practice and Procedure which eliminate the requirement that participants in FERC trial-type evidentiary hearings provide paper copies of all exhibits introduced as evidence.  According to FERC, the final rule facilitates a shift toward electronic hearing procedures, while still retaining the option to provide exhibits in paper form.

On June 9, 2015, the Commission denied Duke Energy Corporation’s (“Duke”) complaint against PJM Interconnection, L.L.C. (“PJM”) in which Duke alleged that PJM failed to reimburse Duke for fuel PJM directed Duke to purchase so that certain gas-fired generating units would be available to run during the January 2014 polar vortex.  Although it dismissed Duke’s complaint, the Commission also initiated an investigation to examine whether certain provisions of PJM’s Open Access Transmission Tariff (“OATT”) are unjust, unreasonable, unduly discriminatory, or preferential because they: (i) do not allow market participants to submit day-ahead offers that vary by hour; and (ii) do not allow market participants to update their offers in real time, including during emergency situations.

On June 9, 2015, FERC conditionally approved significant reforms to PJM Interconnection LLC’s (“PJM”) capacity market framework.  In doing so, FERC stated that PJM had demonstrated that the reforms were needed in order to ensure the long-term reliability of the electric supply within the PJM region.  Meanwhile, Chairman Norman Bay dissented, stating that PJM’s proposal was seriously flawed, and may “result in billions in additional costs for consumers without achieving its intended aim.”

On June 2, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied nineteen consolidated petitions for review of the Environmental Protection Agency’s (“EPA”) compliance determinations with EPA’s 2008 ground-level ozone standards, known as the National Ambient Air Quality Standards (“NAAQS”).  By denying review, the D.C. Circuit affirmed EPA’s authority to make such compliance determinations under the Clean Air Act, and upheld EPA’s interpretation of the Clean Air Act and EPA’s corresponding obligations as applied to the NAAQS.

On May 29, 2015, FERC assessed civil penalties against Powhatan Energy Fund LLC (“Powhatan”), Dr. Houlian Chen, and two funds owned by Dr. Chen, HEEP Fund, LLC (“HEEP”) and CU Fund, Inc. (“CU Fund”) (collectively, “Parties”) for market manipulation in PJM Interconnection L.L.C.’s (“PJM”) energy markets.  In doing so, FERC held that the Parties engaged in fraudulent Up-To Congestion (“UTC”) transactions to garner excessive amounts of transmission credits.  The civil penalties include a $16.8 million penalty against Powhatan, a $10.8 million penalty against CU Fund, a $1.92 million penalty against HEEP, and a $1 million penalty against Dr. Chen.  FERC also ordered disgorgements against Powhatan for $3,465,108, CU Fund for $1,080,576, and HEEP for $173,100.

On May 26, 2015, FERC approved a stipulation and consent agreement (“Settlement”) between FERC’s Office of Enforcement (“Enforcement”) and the North American Electric Reliability Corporation (“NERC”), and the Western Electricity Coordinating Council (“WECC”) and Peak Reliability—WECC’s NERC-certified Reliability Coordinator.  Among other items, the Settlement provides for a $16 million civil penalty against WECC, and resolves FERC and NERC’s investigation of WECC for Reliability Standard violations that contributed to the September 8, 2011 Southwest Blackout.

On May 15, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) denied a petition for review of FERC’s order determining that the La Grange Hydroelectric Project (“Project”) fell within the mandatory licensing provisions of the Federal Power Act (“FPA”).  In doing so, the D.C. Circuit rejected arguments made by the owners of the Project – the Turlock Irrigation District and the Modesto Irrigation District (collectively, the “Districts”) – that FERC’s decision was arbitrary and capricious for asserting jurisdiction over a historical hydro facility that owners contend does not qualify for FPA’s mandatory licensing triggers.

On May 20, 2015, the U.S. District Court of the Eastern District of California (“District Court”) upheld FERC’s decision that it had jurisdiction over Barclays Bank PLC and four traders (collectively, “Barclays”) for allegedly manipulating electricity markets in the West.  In doing so, the District Court held that FERC maintained jurisdiction, and not the Commodity and Futures Trading Commission (“CFTC”).  The District Court also ruled that FERC’s jurisdiction under Federal Power Act (“FPA”) sections 201 and 222 – FERC’s authority to regulate transmission and sale of wholesale electric energy in interstate commerce and FERC’s anti-manipulation rule, respectively – was appropriate.