General Counsel Report

APGA's General Counsel, John Gregg of McCarter & English, prepares this weekly report to highlight the industry news for public natural gas professionals.

June 21, 2018

Administration Nominates Permanent Head of EERE
Daniel Simmons has headed the Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) on a temporary basis since last year, and now President Trump has nominated him to be Assistant Secretary. He has been the principal deputy assistant secretary in that office, where APGA has met with him on occasion since 2017. A lawyer, from 2008 to 2017, Simmons worked for the Institute for Energy Research (IER) and the American Energy Alliance (AEA), its lobbying arm, which receive funding from oil interests like Koch Industries and coal companies like Peabody Energy. During that time, AEA pushed Congress to completely defund EERE. IER had a major role in the Trump administration's energy policies with its President Tom Pyle leading Trump's DOE transition team.

McIntyre Happy to See Natural Gas Exports Rise
In a recent Energy Bar Association speech, FERC Chairman Kevin McIntyre was bullish on LNG exports, saying proposed exports are “big enough to move the needle on balance of trade.” Moreover, he thinks all domestic gas production is not intended in the US: “We have such abundance of natural gas production now. It's really true that we don't need it all here. But we'd sure be interested in selling it to all our friends. And why not? Why shouldn't U.S. produced natural gas make it to global markets?”

Divided FERC Upholds Approval of Mountain Valley Pipeline
On rehearing, by a 3-2 vote, FERC denied rehearing of the Commission’s 2017 decision to certificate the giant Mountain Valley Pipeline (MVP) and Equitrans Expansion Projects, which are designed to provide 2,000,000 Dth per day of firm transportation service to markets in the Northeast, Mid-Atlantic, and Southeast regions. Commissioner LaFleur maintained her original dissent that these projects and the Atlantic Coast Pipeline Project are too much, “balancing the aggregate environmental impacts resulting from the authorization of both these projects, against the economic need of the projects, I could not find either proposal, on balance, in the public interest.” New to FERC, Commissioner Glick dissented on the basis that FERC failed to meet its obligations under the National Environmental Policy Act, and he also disagreed that precedent agreements among affiliates of the same corporation are sufficient to demonstrate that the Projects are needed. Both again disagreed with the majority’s consideration of downstream GHG emissions and the failure to use the Social Cost of Carbon to evaluate the impacts of those emissions.

NG Fuel Cell Maker Trying IPO to Raise Funds
Bloom Energy produces natural gas solid oxide fuel cells at two plants, including one at Newark, Delaware—so called “Bloom Boxes” marketed to corporate headquarters for Goodge, Walmart and several others. It does not expect to be profitable in the foreseeable future according to disclosures in documents announcing intention to sell shares on the NYSE in an initial public offering. It has lost $2.3 billion since its founding in 2001. In 2012, Bloom promised Delaware officials it would have 900 employees by 2017 at its Newark plant, where it now employs 277. 2011 state legislation created an electric utility surcharge to fund benefits to Bloom, reaching over $166 million to date, which lawmakers defended as a commitment to alternative energy that kept jobs inside of the state instead of exporting them to wind manufacturers elsewhere. Bloom failed to hit targets and has had to return $1.5 million of economic development funds to the state so far.

California Adds Pipeline Safety Rules
The California Department of Conservation has added safety regulations for operators of active gas pipelines in “sensitive areas,” with homes and other occupied structures, to require maps and “pipeline management plans” submitted to the state’s Division of Oil, Gas and Geothermal Resources, which oversees the drilling, operation, maintenance, and plugging and abandonment of oil, natural gas, and geothermal wells in California. The regulations also require annual inspections for leaks or defects on those gas pipelines and “mechanical integrity testing” every two years. The new regulations apply to active gas pipelines that are at least a decade old in areas defined by the Public Resources Code as “sensitive,” near homes, schools and other “occupied structures.” The new regulations also allow a local government or other state agencies the ability to petition the State Oil and Gas supervisor to designate specific pipelines as being within a sensitive area.

Multi-State Plan for Zero Emission Cars Leaves Out CNG
Nine states are preparing a plan which outlines 80 steps that auto makers, dealers, utilities, government officials and charging and fueling companies should take to boost adoption of so-called zero-emission vehicles (ZEV)—only electric and not CNG. The Multi-State ZEV Task Force also want further adoption of hydrogen fuel cell vehicles, though that technology has received less emphasis from auto makers than electric cars. Electric vehicles have accounted for just around 1% of industry sales in recent years. A key metric behind the states’ plan is an emissions-cutting goal amounting to sales of roughly 12 million zero-emission vehicles by 2030 across the nine states, a dramatic increase of more than 26-fold from current levels. There were only about 461,000 such vehicles on the road in the nine states at the end of 2017. The coalition includes California Oregon, Maryland, New York, New Jersey, Connecticut, Vermont, Massachusetts and Rhode Island.

View past reports here.