Energy, Utilties & Renewables

House of Reps, TSA Tackle Cybersecurity in the Energy Industry

This week, the House of Representatives approved three measures aimed at improving cybersecurity in the energy industry:

  • Energy Emergency Leadership Act. This Bill requires the Secretary of Energy to assign energy emergency and cybersecurity responsibilities to an Assistant Secretary, including responsibilities regarding infrastructure and cybersecurity.

 

 

  • Cyber Sense Act of 2021. This Bill encourages coordination between the Department of Energy and electric utilities. It also requires the Department of Energy to test products and technologies intended for use in the bulk power system.

These measures, which will now move to the Senate, are in response to the slew of recent cybersecurity attacks against critical U.S.

Government Races to Secure Critical Infrastructure in Wake of Colonial Pipeline Ransomware Attack

One of the nation’s largest pipelines, Colonial Pipeline, which carries 45 percent of the East Coast’s fuel supplies, was forced to shut down on May 7 after it was targeted by a ransomware attack. Ransomware is a type of malware where criminal groups encrypt data, effectively “holding it hostage,” until the victim pays a ransom.

Colonial Pipeline resumed operations on May 15. However, the cyberattack has sparked public panic and outcry as parts of the country experience fuel shortages and fuel prices rise to their highest levels in nearly seven years. The incident has also renewed efforts government-wide to strengthen security of U.S. pipelines and the power grid. On May 11, the U.S. House Committee on Energy and Commerce reintroduced bipartisan legislation aimed at bolstering the Department of Energy’s (“DOE”) ability to respond to cybersecurity threats to U.S. energy infrastructure. Among the several measures introduced were:

(1) The Pipeline and LNG Facility Cybersecurity Preparedness Act, which would require DOE to implement

FERC Declares Concurrent Jurisdiction with Bankruptcy Courts Over Rejections of Natural Gas Transportation Agreements

On June 22, 2020, the Federal Energy Regulatory Commission (“FERC”) issued an order in response to a Petition for Declaratory Order (“Petition”) filed by ETC Tiger Pipeline, LLC (“ETC Tiger”), finding that FERC has concurrent jurisdiction with United States Bankruptcy Courts to review and dispose of natural gas transportation agreements sought to be rejected through bankruptcy.[1]

The Petition, filed on May 19, 2020, requested that FERC find that it has concurrent jurisdiction with Bankruptcy Courts under sections 4 and 5 of the Natural Gas Act (“NGA”) with respect to natural gas transportation agreements between ETC Tiger and Chesapeake Energy Marketing, L.L.C. (“Chesapeake”) and that FERC approval of any abrogation or modification of the agreements is statutorily required.  Specifically, ETC Tiger requested three Commission declarations:

  1. The natural gas transportation agreements between ETC Tiger and Chesapeake are FERC-jurisdictional agreements reflecting filed rates approved by FERC pursuant to its exclusive jurisdiction under the NGA;
  2. If Chesapeake seeks rejection of the agreements

PHMSA Issues Gas Pipeline Regulatory Reform Notice of Proposed Rulemaking

On June 9, 2020, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued a Notice of Proposed Rulemaking (“NOPR”) to revise the Federal Pipeline Safety Regulations (“Regulations”) to reduce regulatory burdens associated with construction, operation, and maintenance of gas pipeline systems. The NOPR is in response to a series of executive orders (E.O. 13771, 13777, and 13783) calling on agencies to reduce or eliminate regulatory burdens. According to PHMSA, the value of the annualized cost savings associated with the proposed amendments is approximately $129 million (at a discount rate of 7 percent). The key reforms, which ease certain monitoring requirements, streamline reporting obligations, and reduce the burden on distribution pipelines associated with the Distribution Integrity Management Program (“DIMP”), are summarized below.

DIMP Requirements

PHMSA has proposed two revisions to DIMP requirements to ease the regulatory burden on gas distribution operators. The NOPR would provide operators of farm taps originating from regulated source pipelines the flexibility to choose between inspecting pressure regulators pursuant

New FERC Data Collection Requirements for Market-Based Rate Sellers

Data Collection for Analytics and Surveillance and Market-Based Rate Purposes,
Order No. 860, 168 FERC ¶ 61,039 (2019).

On July 18, 2019, the Federal Energy Regulatory Commission (“Commission”) issued a final rule which will have impacts on new market-based rate applications, as well as companies which currently have such authorization.  Under this rule, companies which currently hold market-based rates, as well as new applicants, will need to submit data into a relational database regarding their affiliates, and will need to keep such data updated.  This will add a new compliance obligation to companies, and will require closer monitoring of active and passive investors in a project.

Following up on the 2016 series of Notices of Proposed Rulemaking,[1] the Commission issued a final rule, adopting its proposal to collect market-based rate information in a relational database, but declining to require entities, including those holding market-based rates (“Sellers”) and those who transact in virtual energy and