Court Rulings

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On July 23, 2013, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) affirmed the Environmental Protection Agency’s (“EPA”) primary National Ambient Air Quality Standards (“NAAQS”) for ozone that were adopted during the Bush Administration in 2008.  In addition, the D.C. Circuit reversed, but left in place pending remand, EPA’s secondary ozone standards.

On June 7, 2013, the United States Court of Appeals for the Seventh Circuit (“Seventh Circuit”) upheld the majority of a FERC order that approved the Midcontinent Independent System Operator, Inc.’s (“MISO”) cost allocation methodology for multi-value projects (“MVPs”) (see October 24, 2011 edition of the WER).  The Seventh Circuit affirmed the majority of FERC’s approval of MISO’s MVP cost allocation, dismissed one issue, and remanded another back to FERC for further analysis.

On May 20, 2013, the U.S. Supreme Court ruled that a “windfall tax” imposed on a subsidiary of PPL Corporation (“PPL”) by the United Kingdom (“U.K.”) is creditable for U.S. tax purposes.  The Supreme Court held that the predominant character of the tax was tantamount to an excessive profit tax, and therefore, is classified as an income tax and creditable for U.S. purposes.  The Supreme Court’s ruling overturned the U.S. Court of Appeals for the Third Circuit’s (“Third Circuit”) prior decision on the matter.

On March 15, 2013, the United States Court of Appeals for the District of Columbia (“D.C. Circuit”) determined that FERC did not have the authority to fine energy trader Brian Hunter – previously a natural gas trader for Amaranth Advisors LLC (“Amaranth”) – $30 million for manipulating natural gas futures markets.  Instead, the D.C. Circuit determined that the Commodity Futures Trading Commission (“CFTC”) has “exclusive jurisdiction over all transactions involving commodity futures contracts” and that nothing in the Energy Policy Act of 2005 (“EPAct 2005”) clearly and manifestly repeals CFTC’s exclusive jurisdiction.

On January 22, 2013, the United States Court of Appeals for the Fifth Circuit (“5th Circuit”) held that natural gas clearinghouse Dynegy Marketing and Trade (“Dynegy”) had no contractual duty to refinery plants Ergon Refining and Ergon-West Virginia (“Ergon WV”) to attempt to secure replacement gas, when Dynegy’s upstream supplies were curtailed during Hurricanes Katrina and Rita.  The 5th Circuit case focused on the meaning of two different force majeure clauses in two different agreements that Dynegy had with Ergon Refining and Ergon WV.

On January 24, 2013, the United States Court of Appeals for the D.C. Circuit refused to rehear a decision of a three-judge panel of the court that overturned EPA’s Cross-State Air Pollution Rule (“CSAPR”).  CSAPR addressed the interstate transport of pollutants emitted by electric generating units (“EGUs”) located in the eastern two-thirds of the country.  The panel decision in the EME Homer City v. EPA case, issued on August 21, 2012, found that EPA had misinterpreted underlying statutory requirements.

On December 18, 2012, the U.S. Court of Appeals for the District of Columbia Circuit (“DC Circuit”) again addressed the question of whether, and to what degree, FERC has the authority to regulate charges to electric generators for the use of station power.  Denying a petition for review by a group of generators from California led by Calpine Corporation (“Calpine”), the DC Circuit held that FERC properly recognized that its lack of jurisdiction over retail sales prevented it from regulating the netting periods used by utilities to assess station power charges.

On Demember 14, 2012, The United States Court of Appeals for the D.C. Circuit dismissed an extraordinary appeal of proposed EPA New Source Performance Standards (“NSPS”) for greenhouse gas emissions from new coal-fueled electric generating units.  The appeal of the proposed standards was taken by a group of companies seeking to develop new coal-fueled generation and by the Utility Air Regulatory Group.