Good Morning Everyone,
JECE is excited to announce that our Spring Symposium has been rescheduled for Friday, March 21. Check back soon for details about speakers and schedules.
Good Morning Everyone,
JECE is excited to announce that our Spring Symposium has been rescheduled for Friday, March 21. Check back soon for details about speakers and schedules.
Due to Winter Storm Pax, our Symposium for Friday, February 14 has been CANCELLED.
JECE will be considering whether or not rescheduling the event for later this semester is feasible and will continue to post updates with any developments.
The Journal of Energy, Environment, and the Climate is pleased to invite you to our Spring 2014 Symposium, hosted from 9 a.m. until 3 p.m. this Friday, February 14 at the Washington and Lee School of Law Moot Court Room.
Join us as we hear from environmental law experts from around the country as well as a number of W&L Law professors as they discuss Environmental Justice at both the national and international levels.
We are excited to remind everyone that this Friday, November 1, the W&L Journal on Energy, Climate, and the Environment will be hosting our fall symposium: Uranium Mining in Virginia. Schedules will be provided at the W&L School of Law Moot Court Room, but for a preview of what fantastic speakers will be joining us, click here: Fall Panel Schedule
by Randall W. Miller
Washington & Lee Journal of Energy, Climate, and the Environment
Amid the government shutdown, the Federal Energy Regulatory Commission (FERC) remained active. On October 9, 2013, FERC asked a federal district court in Sacramento, California to enforce its order against Barclays Bank PLC (Barclays). In the order, issued on July 16, 2013, FERC imposed a total of $487.9 million in penalties and disgorgement from Barclays after an investigation in FERC’s crackdown on market manipulation. FERC’s Office of Enforcement found that, from November 2006 to December 2008, Barclays violated FERC’s anti-manipulation rule by “trad[ing] fixed price products . . . for the fraudulent purpose of moving the [daily index] price at a particular point so that Barclays’ financial swap positions at that same trading point would benefit.” Barclays denied any wrongdoing and refused to pay the penalties within 60 days. As a result, FERC filed an action in the Eastern District of California, pursuant to the Federal Power Act (FPA) Section 31, to gain a court order enforcing its penalties against Barclays.
FERC has conducted at least 13 public probes of energy-market gaming since 2011, and in 2013 alone, FERC has sought more than $900 million in penalties and settlements from banks, such as Deutsche Bank and JP Morgan. The penalties assessed against Barclays reach a record high for FERC. FERC also imposed the following fines against individual traders for their part in the alleged manipulation: Scott Connelly garnered a $15 million fine, Karen Levine received a $1 million fine, and Ryan Smith was assessed a fine of $1 million. In regards to disgorgement, FERC has directed Barclays and its traders to give up $34.9 million in profits in order to distribute the money to help low-income homeowners pay energy bills in the affected markets, which include Arizona, California, Oregon, and Washington.
Even though the sheer size and scope of FERC’s order is intriguing, the procedural posture of the action is also very interesting. Because Barclays chose to have penalties assessed against it, but then refused to pay the penalties within 60 days following the assessment, the case will proceed to district court. Barclays had the opportunity to contest the penalties before FERC’s administrative law judges, but Barclays decided to forego that option. The district court will review the action de novo and will likely consider the evidence supporting FERC’s penalties and Barclays defenses to determine whether or not FERC’s penalties against Barclays are legitimate. The district court has the authority to approve, increase, or reduce the penalties.
Based on the facts set forth in FERC’s Order Assessing Civil Penalties, Barclays could argue that FERC lacks subject matter jurisdiction over a section of the manipulation claim because a portion of the claim involved the swaps market on the Intercontinental Exchange, which is regulated by the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC). If the court finds this argument persuasive, then it is very likely that Barclays will pay an amount below $487.9 million, assuming that the court affirms the other grounds for FERC’s penalties.
In its March 2013 opinion in Hunter v. F.E.R.C., the Court of Appeals for the District of Columbia (D.C. Circuit) drew a line in the ongoing turf battle between the CFTC and FERC. Specifically, the D.C. Circuit concluded that the CFTC had exclusive jurisdiction over natural gas futures contracts, even though FERC claimed that it should have jurisdiction under the Natural Gas Act (NGA) Section 4A because the alleged manipulative conduct “affected” a substantial amount of natural gas transactions. The D.C. Circuit prevented FERC from assuming jurisdiction over natural gas futures, even though alleged manipulation in the futures market may influence the physical markets.
In U.S. v. Reliant Energy Services, Inc., the Court considered FERC’s overlapping jurisdiction with the CFTC in the wholesale electricity market. Although the District Court for the Northern District of California concluded that FERC has “exclusive authority” in the electricity context under the FPA, the court found that the CFTC has concurrent jurisdiction under the Commodity Exchange Act (CEA). The District Court supported its reasoning by quoting the United States Supreme Court’s conclusion in U.S. v. Borden Co., which determined that “it is a cardinal principle of construction that . . . when there are two acts upon the same subject, the rule is to give effect to both.” As a result, the court concluded that the CFTC could share jurisdiction with FERC in the electricity market.
Although the reasoning in Reliant Energy seemed to be relevant to the issue in Hunter, the D.C. Circuit distinguished Reliant Energy because it “involve[d] the interaction between the CEA’s criminal provisions and FERC’s exclusive authority over electricity markets” as opposed to FERC’s authority under the NGA and the CFTC’s exclusive authority over futures markets. While the cases involved factual distinctions, the Hunter opinion revealed the D.C. Circuit’s hesitancy to give FERC concurrent jurisdiction with the CFTC in the futures markets. The precedent created in Hunter and Reliant Energy reflects courts’ reluctance to interpret the FPA and NGA broadly.
Even so, FERC may point to Reliant Energy as an example of how it can share jurisdiction with the CFTC and why it has subject matter jurisdiction over the manipulation claim in the swaps market. In contrast, Barclays may be able to counter that argument by demonstrating that the FPA has neither given FERC sole authority over the electricity markets nor concurrent regulatory authority in the relevant swaps market. Because FERC has selected a district court in California and this claim involves the electricity market, the Barclays court may draw more attention to the reasoning in Reliant Energy than the reasoning in Hunter, which mentioned Reliant Energy only once.
FERC’s post-Enron and post-EPAct 2005 enforcement strategy is very aggressive. This aggression may be an attempt to avoid another energy crisis and ensure that the Enron loophole has been closed. Conversely, this aggression may simply be evidence of FERC’s desire to test its regulatory limits after Congress increased the Commission’s authority under the Energy Policy Act of 2005 (EPAct 2005) and failed to draw clear boundaries for the Commission in either EPAct 2005 or the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). Instead of clarifying FERC’s jurisdictional scope in the physical and financial markets, Congress created jurisdictional savings clauses and exemption authority, both of which failed to draw the boundaries necessary to avoid duplicative enforcement between the agencies. Even though U.S. Senators have urged the CFTC and FERC to enter into a memorandum of understanding to address these jurisdictional issues, the agencies have not entered into such a memorandum under Dodd-Frank. As a result, the courts must decide the limits of FERC’s regulatory authority.
FERC’s action against Barclays will create precedent for future electricity manipulation litigation in federal court by defining the burden, process, and scope that the parties must meet in district court. If FERC prevails in this action, it may solidify its ability to regulate manipulation in the electricity markets, even if at least one of the affected markets is traditionally regulated by other agencies. Such a victory may also give pause to entities considering the de novo review option in district court. If Barclays prevails, however, future defendants may follow in Barclays’ footsteps and compel FERC to justify its penalties on seemingly more neutral ground in federal court. Either way, this case will be a pivotal point for FERC.
The W&L Law Journal of Energy, Climate, and the Environment presents our 2013 fall symposium, “Uranium Mining in Virginia.”
November 1, 2013
Millhiser Moot Court Room
Sydney Lewis Hall
Washington and Lee University School of Law
+ Robert Bodnar, Ph. D., Prof. of Geochemistry at Virginia Tech
+ Cale Jaffe, Southern Environmental Law Institute
+ Chris Pugsley, Thompson & Pugsley, PLLC
+ Frank Settle, Ph. D., Prof. of Chemistry at Washington and Lee University
+ Kristin Szakos, Vice Mayor of Charlottesville
For more information please contact Casey Coleman at firstname.lastname@example.org
While most of the Commonwealth’s attention has begun to turn more to the steadily gearing up state gubernatorial race, Virginia Senators Mark Warner and Tim Kaine recently made waves on Capital Hill that will continue to ripple across the State for years to come.
As May drew to a close, Senators Warner and Kaine co-sponsored legislation that, if passed, would lift the federal moratorium on offshore gas and oil drilling of the coast of Virginia. Virginia, like many other states and regions across the U.S., has been under a drilling moratorium since the Deepwater Horizon disaster. This moratorium on Atlantic drilling is slated to remain in effect until 2017.
The bill, named the Virginia Outer Continental Shelf Energy Production Act of 2013, proposes an expansion of the nation’s current five-year leasing plan to include the sale of leases for exploration and drilling, however the Senators are adamant that the only support such measures if Virginia receives a large portion of the revenue generated.
Currently, the federal government enjoys all revenue generated from offshore drilling, and Senators Warner and Kaine wish to see a marked change in this policy. Under their plan, Virginia will receive 37.5% of revenue from gas and oil production while an additional 12.5% will go to the federal government to specifically be used with the Commonwealth for conservation, alternative energy development, and public transportation. The remaining 50% will be taken by the federal government with no strings attached.
According to Senator Warner, however, the precise amount of money that Virginia will receive under this plan is not clear as it has not yet been ascertained how much natural gas and oil is actually available for drilling. Furthermore, recognizing the given the controversial nature of offshore drilling – as well as the high possibility of adverse effects to the environment – the senators have affirmed the need for extensive research and analysis prior to any actual drilling. By their estimates, drilling would begin no earlier than 2020.
Numerous environmental groups have already voiced strong opposition to the legislation. Glen Besa, chapter director of the Virginia Sierra Club, worries that offshore drilling will jeopardize both the Commonwealth’s tourism and fishing industries. “As we saw with the Gulf oil disaster, oil spills decimate tourism and fishing industries. In Virginia, that means risking over $2.5 billion and over 100,000 jobs in industries that depend on healthy ocean and Chesapeake Bay waters and clean beaches,” Besa added.
The House of Representatives is set to vote today on H.R. 3 – the Northern Route Approval Act – which would eliminate the need for a presidential permit in implementing the controversial Keystone XL pipeline.
While the bill directly empowers Congress to approve the Keystone XL instead of allowing the decision to rest with President Obama, it is viewed more as a tool to force the Obama administration to act than it is as a measure unto itself. Realistically, H.R. 3 is destined to fail. While it could pass in the Republican-held House of Representatives, it then must both pass the Democratic-held Senate as well as be approved by President Obama, who has explicitly promised to veto any such act.
Irrespective of a final result, the impending vote on H.R. 3 has brought renewed attention to the Keystone XL project. The House Rules Committee has scheduled 90 minutes for debate on the bill, and given the controversial subject matter itself as well as the inclusion of ten new amendments that cover a host of divisive propositions (from requiring a presidential waiver in order to export fuel to requiring a studies and publications of the higher carbon footprints associated with tar sands), a smooth passage is anything but certain.
For more information on H.R. 3, click here.
(Updates will be published as they arise)
This afternoon, the Sixth Circuit invalidated Nationwide Permit 21, a permit used by the U.S. Army Corps of Engineers to authorize the dumping of coal mining waste into Appalachian headwater streams. The ruling is a significant victory for the numerous local, state, and national environmental groups that have been challenging this permit since 2003. The Appalachian Citizen’s Law Center provides an excellent rundown of the history of this case and what the ruling will mean.
Originally posted on Appalachian Citizens' Law Center:
The U.S. Court of Appeals for the Sixth Circuit today invalidated the 2007 version of the nationwide permit used by the U.S. Army Corps of Engineers to authorize the dumping of coal mining waste into hundreds of miles of Appalachian headwater streams.
“The Court agreed with us that the Corps failed in 2007 to demonstrate that filling streams with mining waste has minimal cumulative impacts and that the mining companies can mitigate those environmental impacts to insignificance, ” said Jim Hecker, Environmental Enforcement Director at Public Justice in Washington, DC. ”This permit should never have been issued, because it was based on the Corps’ unsupportable assumption that filling these streams has minimal environmental effects.”
By a vote of 17 to 9, the U.S. House of Representatives Subcommittee on Energy and Power passed the Northern Route Approval Act (H.R. 3) yesterday in an attempt to force the Obama Administration to issue a decision regarding the controversial Keystone XL Pipeline. The bill was passed by a mostly partisan vote, with only three Democrats joining their Republican counterparts in approving the measure.
Crafted by Congressman Lee Terry, a Nebraska Republican, H.R. 3 directly empowers Congress to approve the Keystone XL instead of allowing the decision to rest with President Obama. Realistically, the bill is destined to fail: not only must it be approved by the Republican-held House, it would then have to pass the Democratic-majority in the Senate as well as be signed into law by President Obama. Nonetheless, the bill’s sponsors – as well as Keystone XL supporters outside of Congress – see the bill’s passage as a sign of positive momentum. At the very least, they hope this will spark the Administration to more quickly act and make a final decision. The Chairman of the Subcommittee, Michigan Republican Fred Upton, was quick to reiterate this sentiment, noting that “[t]here is no reason for the administration to continue dragging its feet on this jobs and energy project.” If the President is unwilling to Act, the House is ready to jump in.
Supporters of the pipeline argue that in addition to creating thousands of construction, monitoring, and repair jobs, it will also serve as a critical boost to North American energy independence, bringing in more than 830,000 barrel per day. Opponents, on the other hand, fervently argue that the environmental hazards – from vast increases in greenhouse gas production to potentially devastating spills – far outweigh any benefits.
Particularly worrisome to opponents of H.R. 3, however, is that the measure bypasses executive review and discretion. Democratic Congressman Henry Waxman, a ranking member on the House Committee on Energy and Commerce, strongly emphasized this concern, explaining that it would “lock out the public, eliminate the president’s responsibility to balance competing interests, and block federal agencies from minimizing the destruction of wetlands and endangered species habitats.” Congressman Waxman further argued that in regards to the administrative concerns raised, “[e]ven if you support the pipeline, you should oppose this bill.”
H.R. 3 will be brought to a full committee vote sometime later in May.
To see further information regarding the Northern Route Approval Act as well as the text of the bill itself, please click here.