Regulatory Updates

FERC Seeks Comment on Potential Reforms to Improve Regional Transmission Planning, Cost Allocation, and Generator Interconnection Processes

On July 15, 2021, the Federal Energy Regulatory Commission (“Commission”) issued an Advance Notice of Proposed Rulemaking (“ANOPR”) seeking public comment on the potential need for reforms or revisions to existing regional transmission planning, cost allocation, and generator interconnection processes.  Pointing to the transforming electricity sector, including growth of new resources seeking to interconnect to the transmission system and renewables located distant from load centers, the Commission seeks comments on whether and which reforms to the Commission’s regulations are necessary to ensure that transmission rates remain just and reasonable and not unduly discriminatory or preferential and that reliability is maintained.  The Commission made clear it has not predetermined any specific proposal but seeks comments on potential reforms and welcomed commenters to offer additional or alternative proposals.

Within the category of regional transmission planning and cost allocation, the Commission seeks comment on whether transmission providers in each transmission planning region should amend their regional processes to plan for the transmission needs of anticipated future generation to meet a changing resource mix, including generation that is not yet in the interconnection queue.  Questions raised in the ANOPR pertaining to regional transmission planning include:  whether changes are needed with respect to future scenario modeling, if transmission providers should be required to model geographic zones with high potential for renewable generation development to facilitate interconnection of such resources; whether and how to expand or improve any incentives to incent regional facilities that demonstrably may offer a more efficient or cost-effective solution to an identified need than local alternatives; whether reforms to the interregional transmission coordination processes are warranted, including potentially requiring interregional transmission planning; and whether reforms are needed to improve the coordination between regional transmission planning and generator interconnection processes.

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Court of Appeals Finds Statutory One-Year Period for Issuance of Water Quality Certification Can Be Tolled by State Agency’s Request for Information

The U.S. Court of Appeals for the Fourth Circuit has reversed the Federal Energy Regulatory Commission’s (FERC) issuance of a hydroelectric license on the basis that the North Carolina Department of Environmental Quality (NCDEQ) had not waived its statutory authority for issuing a water quality certification for the project, notwithstanding that the initial request for certification was submitted more than two years previously and the Clean Water Act provides that a state must act on a certification request within one year.  North Carolina Department of Environmental Quality v. FERC (4th Cir. July 2, 2021).  This decision is the latest in an inconsistent judicial history regarding whether a state agency can effectively extend the one-year period for action by repeatedly requesting more information from the applicant or processing re-submitted identical applications. 

In this case, the license applicant originally filed a request for certification pursuant to Section 401 of the Clean Water Act in March 2017.  Section 401 provides that a state waives its certification authority if it “fails or refuses to act on an application within a reasonable period of time (which shall not exceed one year).”  33 U.S.C. § 1341.   From 2017 to 2019, the applicant and NCDEQ exchanged numerous communications regarding the status of the request and the need to submit additional information.  To prevent the one-year waiver period from taking effect, the applicant withdrew and re-submitted its request twice with the acquiescence of and guidance from NCDEQ.  In issuing the license on September 20, 2019, FERC determined that NCDEQ had waived its certification authority by not acting on the initial request within one year, and declined to include conditions imposed by the state agency.  FERC held that to allow state agencies to delay action by asking for more information “could encourage the states to ask applicants to provide additional data in order to give themselves more time to process certification requests, in contravention of Congress’ intent.”  In so ruling, FERC relied on Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (DC Cir. 2019) for the proposition that an agreement between an applicant and a state agency to repeatedly withdraw and re-submit an application over several years amounts to a waiver of the state’s certification authority.

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DHS/TSA Issue Second Security Directive Requiring Cybersecurity Actions for Critical Pipelines

On July 20, 2021, the Department of Homeland Security’s (DHS) Transportation Security Administration (TSA) issued an expected second Security Directive that requires owners and operators of TSA-designated critical pipelines, including natural gas pipelines, to implement additional critical protections against cyber intrusions.  The first Security Directive was issued on May 28, 2021, and it was focused on TSA pipeline cybersecurity incident reporting requirements.  This second Security Directive will require the following:

• Implement specific mitigation measures to protect against ransomware attacks and other known threats to information technology (IT) and operational technology (OT) systems;
• Develop and implement a cybersecurity contingency and recovery plan; and
• Conduct a cybersecurity architecture design review.

Notably, the specific content of this second Security Directive will not be publicly available.  It is being designated by DHS as “sensitive security information” and will only be available to the TSA-designated critical pipelines.

We are not aware of any additional next steps on pipeline cybersecurity mandates at this time; however, further regulatory and/or legislative action cannot be ruled out.

The DHS press release on the second TSA Security Directive is available here.

For more information, or to obtain assistance in understanding how TSA’s Security Directive impacts your organization, please contact Kristen Connolly McCullough, Barry Lawson, or Ellen Hill.

July 21, 2021

CPUC Unanimously Approves Two Proposals to Open Proceedings on Major Procurement Requirement and Distributed Energy Resource Planning

During its June 24, 2021 Voting Meeting, the California Public Utilities Commission (CPUC) unanimously approved two major decisions.

First, the CPUC issued a decision (Procurement Order) requiring at least 11,500 MW of incremental net qualifying capacity to be collectively procured by all load-serving entities (LSEs) subject to the CPUC’s integrated resource planning (IRP) authority between 2023 and 2026. The Procurement Order is designed to assist California achieve its goal of 100 percent zero-carbon electricity resources by 2045, as well as help the state replace lost capacity from the retirement of the Diablo Canyon Nuclear Power Plant and several once-through-cooling (OTC) thermal power plants. The adopted timeline includes procuring 2,000 MW by August 1, 2023, 6,000 MW in June 1, 2024, 1,500 MW in June 1, 2025, and 2,000 MW in June 1, 2026. Highlights from the Procurement Order include:

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July 1, 2021 Newly Effective Reliability Standards

As of July 1, 2021, the following standard becomes effective:

TPL-007-4 - Transmission System Planned Performance for Geomagnetic Disturbance Events

All Reliability Standards, along with their status, purpose, implementation plans, relevant FERC Orders, and Reliability Standard Audit Worksheets, can be accessed at NERC’s One-Stop Shop.

For more information on the NERC Reliability Standards and their potential applicability and impact, please contact Kristen Connolly McCullough, Lisa Gast, Sean Neal, or Barry Lawson.

FERC Publishes Two Issuances to Help Facilitate Electric Transmission Development Nationwide

On June 17, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) published two issuances in an effort to facilitate electric transmission development nationwide. 

First, recognizing that federal and state regulators each have authority over transmission-related issues, the Commission identified this area as ripe for federal-state coordination and cooperation. Accordingly, pursuant to its authority under Section 209(b) of the Federal Power Act, the Commission established a Joint Federal-State Task Force on Electric Transmission (“Task Force”).  The Commission stated that, to help facilitate fair and efficient transmission planning and financing, the topics the Task Force may consider include: (1) barriers to planning and development of transmission to achieve federal and state policy goals; (2) the Commission’s rules and regulations regarding cost allocation of transmission projects (the Task Force may identify recommendations for reforms); (3) barriers to efficient interconnection of new resources; and (4) ways to ensure cost-effective transmission investment.

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California SB 100 Clean Energy Implementation Effort Commences

On June 2, 2021, the California Energy Commission, in collaboration with the California Public Utilities Commission and the California Independent System Operator (“Joint Agencies”), hosted a workshop to discuss the next steps to meet the requirements of California Senate Bill 100 (“SB 100”).  This workshop built upon the Joint Agencies’ March 2021 report, which found that 145 GW of solar, wind, and storage must be added to the California grid to achieve 100 percent renewable electricity by 2045.  To plan for this unprecedented resource build, the Joint Agencies brought together stakeholders from across the industry to discuss anticipated challenges and proposed solutions.

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Additional Critical Infrastructures Facing Ransomware Cyberattacks – JBS, the World’s Largest Meat Producer, is One of the Most Recently Impacted

While the energy sector has experienced ransomware cyberattacks, most notably the recent Colonial Pipeline incident, the nation-states and other criminal enterprises executing these attacks are flexing their muscles across numerous critical infrastructure sectors.  The latest ransomware attack occurred in the agriculture sector against JBS, the world’s largest meat producer.  Organizations operating in Russia are again suspected of being behind the attack.

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