Natural Gas Regulation
Overview of our Federal Natural Gas Regulatory Practice
A hallmark of our federal natural gas regulatory practice is the diversity of both our client base and the matters on which we have expertise. Most of our natural gas regulatory experts began their careers representing shippers on FERC-regulated interstate natural gas pipelines. As the industry has matured and regulated natural gas companies have diversified into non-utility trading and marketing areas, as well as acquiring interests in midstream, interstate pipeline and storage assets, we have diversified our practice and currently represent an interstate natural gas pipeline, several federal and state regulated natural gas storage companies, various gas LDCs, gas-fired electric generators, and natural gas marketing and trading companies. We have participated in the development and implementation of all aspects of federal natural gas regulatory policy over the past 20+ years, including Order Nos. 436, 636, 637, 2004, and 670; FERC’s policy statements pertaining to pipeline certificates and negotiated rates; various infrastructure development initiatives; and many precedent-setting individual cases. Among them:
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Approval of Innovative Storage Rate Design. We successfully prosecuted the first departure from traditional, “Equitable” cost-based natural gas storage ratemaking for Saltville Gas Storage Company LLC, a high deliverability salt cavern storage facility.
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Development of Novel Asset Optimization Arrangement. We drafted and negotiated a unique “co-piloting” arrangement between our client NJR Energy Services and Niagara Mohawk Power Corp., pursuant to which NJRES provides gas portfolio management services to this large New York gas and electric LDC on terms that are sensitive to both state regulatory objectives and federal regulatory mandates.
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Project Counsel on Iroquois Eastchester Extension Project. We served as FERC regulatory counsel for Iroquois Gas Transmission System, L.P. in its prosecution, construction and operation of a major system expansion under Long Island Sound and the East River to a new terminus in the Bronx, NY (the first interstate pipeline construction in New York City in 40 years).
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Development of Fuel Management Settlement. We served as counsel to a group of East Coast LDCs in litigation against Dominion Transmission, Inc. pertaining to that pipeline’s management of system gas, fuel retention, storage accounting, and related issues, and led the customers in crafting a settlement that resolved historical issues, incentivized the pipeline to manage fuel use efficiently and provided certainty and cost containment for the shippers. This settlement arrangement lasted through its initial term and was renewed by the pipeline and customers for an additional five year period.
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Corporate Accountability, Compliance, and Enforcement Actions. In the wake of the Western Markets/Enron scandals, we have had substantial experience representing clients in FERC audit as well as enforcement proceedings. We have undertaken legal and regulatory compliance audits for several large utilities in different regions of the country, as well as for a large energy trading company; we developed compliance programs for Order No. 2004 affiliate standards of conduct and market behavior rules (including price reporting protocols), and we develop and implement various compliance training programs for our energy clients.
In sum, Troutman Sanders can provide energy clients with superior counsel and advice from a line-up of FERC attorneys who have dedicated their careers to serving energy clients in the public and private sectors and who possess unmatched knowledge of domestic energy regulatory laws, including state utility and deregulation plans.
FERC Litigation
The Firm represents a variety of natural gas clients in administrative litigation matters before FERC, and regularly counsels clients with respect to FERC policy initiatives and regulatory compliance. The following are examples of natural gas litigation proceedings and issues on which the Firm’s attorneys have been engaged:
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Participated in natural gas pipeline rate and tariff litigation on behalf of a wide variety of shippers on the following pipeline systems: Algonquin, Columbia Gas, Dominion Transmission, El Paso, Equitrans, Florida Gas, Gas Transmission Northwest, Kern River, Kinder Morgan, Northern Natural, Northwest, Texas Eastern, Texas Gas, Tennessee, Transco, and Transwestern.
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Represent Iroquois Gas Transmission System, L.P. in its tariff change proceeding to update its gas quality and interchangeability standards.
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Represented Saltville Gas Storage Company in its successful defense of a complaint proceeding challenging its jurisdictional status and alleging NGA violations.
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Represented Saltville in prosecution of cost-based rates pursuant to limited jurisdiction certificate authority and, following its transition from Hinshaw to full FERC-jurisdictional status, prosecuted the certificate application including approval of a novel initial storage rate design.
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Represented a group of New York/New Jersey gas LDCs in litigation against Dominion Transmission, Inc. involving system gas procurement, management and accounting issues.
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Represented Sempra Energy Trading in Transwestern Pipeline negotiated rates investigative proceeding and fast-track evidentiary hearing.
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Represented NUI Corp./Elizabethtown Gas in Texas Eastern ROFR show cause proceedings and other pipeline complaint proceedings.
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Represented NUI Corp./Florida Gas in complaint action against Florida Gas alleging ROFR violations.
FERC Certificate Applications and other Natural Gas Regulatory Permitting
The Firm regularly assists natural gas clients in the preparation and prosecution of various regulatory approvals. This work involves, among other things, strategic planning and assessment of proposed projects in partnership with the client’s internal and retained technical experts, coordination of application preparation and interface with FERC and other governmental agencies involved in the permitting/approval process, pleading and discovery practice, and handling of various community, landowner, and political issues affecting the project. Some examples of recent application prosecution work are the following:
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Successfully transitioned Saltville Gas Storage from state to federal jurisdiction, including prosecution of NGA Section 7(c) applications and management of construction and service-related transition issues.
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Represent Iroquois as Transmission, Inc. in all recent NGA Section 7(c) certificate proceedings, including the expansion project that involved the first gas pipeline construction into New York City in many years, and several additional recent expansion projects, including the Northeast-07 (Millennium) pipeline consortium project, and Iroquois’ currently pending 08/09 Expansion Project.
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Represented the Jackson Prairie Storage Project in FERC certificate proceeding to authorize gas storage recycling project to manage migration issues.
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Successfully obtained NGA Section 7(f) service area determinations for Louisville Gas & Electric Company, NUI Utilities, Inc.
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Represent various state-regulated natural gas storage companies in connection with limited FERC jurisdiction matters, including NGPA Section 311 compliance, prosecution of “Hinshaw” blanket certificates, preparation of operating statements, and rate petition proceedings.
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Advice, counseling, and prosecution of licenses and other authorizations necessary to engage in various cross-border activities, including Department of Energy/Office of Fossil Energy blanket and individual natural gas import/export licenses, NGA Section 3 FERC authorizations and Presidential Permits to construct and operate border facilities, and U.S. Customs Service proceedings.
Natural Gas Commodity Transactions
We draft, negotiate and counsel clients with respect to a broad range of physical transaction forms, including the GISB/NAESB form agreements as well as customized agreements to meet particular needs for firmness, reliability, or other transaction-specific characteristics. We also counsel clients with respect to compliance responsibilities including FERC’s wholesale trading code of conduct, requirements for reporting of pricing information to index developers, and other regulatory requirements affecting gas commodity wholesale traders.
Natural Gas Transportation/Storage and Other Regulated Services
We assist clients with the negotiation and drafting of precedent agreements for new firm services; interconnection agreements; operational balancing agreements; firm transportation, storage, park and loan; negotiated rate agreements; and other services provided by regulated pipelines and storage companies. We counsel clients with respect to regulated transfers of FERC-jurisdictional capacity through the capacity release program, and other commercial transactions raising regulatory issues (such as the “shipper must have title” rule). We represent shippers in various capacities involving regulated gas service providers, including participation in rate, tariff and other litigation as well as prosecution of and other advocacy in pipeline certificate proceedings at FERC. We represent pipelines and their shippers in disputes pertaining to billing and payment, penalty imposition, credit support, new services, insolvency/bankruptcy and a wide range of other matters; such activities have included informal negotiations, communications with FERC enforcement staff, alternative dispute resolution mechanisms, the filing of formal complaints at FERC, and civil litigation.
Structured Transactions such as Asset Management and Optimization
We have experience representing both the holders of gas portfolio assets and energy marketing and trading companies seeking to manage, optimize and transfer those assets, and have counseled clients as well as drafted and negotiated various forms of asset management, asset optimization, asset sale and other forms of structured transactions involving gas commodity and service relationships. Given the regulatory complexities involved in proper structuring of such arrangements, our regulatory and energy trading experts work closely together on such multi-faceted transaction arrangements.
Import/Export Issues
A number of the Firm’s natural gas clients are engaged in cross-border transactions that require prosecution and administration of import authorizations from the Department of Energy/Office of Fossil Energy. We have prosecuted and counseled clients regarding both transaction-specific and blanket authorizations. We are also representing several clients in matters pertaining to Department of Homeland Security/US Customs Service investigations of alleged reporting failures pertaining to natural gas imports as well as various compliance activities.
Federal Maritime Practice
Maritime regulation is a critical component of any U.S. LNG development project. While FERC is the lead agency responsible for the authorization and siting of onshore LNG facilities, the United States Coast Guard plays a pivotal role as well, including assisting with the environmental review process, as well as conducting the safety and security assessments for maritime facilities and vessels. The Troutman Sanders maritime team has in-depth knowledge of this area, and regularly advises clients on the regulatory and political outlook for LNG shipping and similar energy transportation. In addition, the Troutman Sanders maritime team has extensive experience in other key maritime areas, including commercial contacts of carriage and charter parties, port and terminal agreements, maritime environmental compliance, and federally-regulated maritime workers compensation.
Energy Legislation and Government Affairs
Troutman Sanders attorneys support our energy clients in shaping federal and state laws and policies, as well as energy laws and policies in countries around the world. Many of the Firm's energy lawyers formerly served as Capitol Hill legal counsel or as senior officials in the White House, Department of Energy, FERC, and/or Environmental Protection Agency. We help our clients keep an eye on emerging developments and trends, and provide the analysis, drafting, and advocacy that turn laws and policy-making in the proper direction. Developing countries often look to the U.S. and Europe for precedent, and we frequently help our overseas clients work with local governments to shape energy legislation and policy.
The Firm’s federal and state energy practitioners are on the cutting edge of energy policy. Our attorneys drafted various legislative provisions for inclusion in the Energy Policy Act of 2005, and are currently providing strategic counsel and advice regarding many of the provisions in this legislation. We also represented a major importer of LNG in connection with legislative and regulatory actions following the September 11, 2001 tragedy to restrict LNG transportation and impose new security regulations on U.S. LNG facilities.
State Regulatory Practice
In conjunction with our natural gas federal regulatory practice, we also maintain an extensive state regulatory practice affecting energy clients. Troutman Sanders has represented utilities before state public service commissions since the 1920s in every type of proceeding covering the entire range of utility regulation, including rates, financing, plant construction, competitor complaints, marketing practices, power purchases, integrated resource planning, conservation programs, and rulemakings.
The Firm is proud of its long record of successful litigation of public utility issues before state commissions and in state courts. While this aspect of our practice has traditionally focused on electric utility representations, we currently serve as project transactional counsel for a gas LDC currently undertaking a substantial state-regulated transportation infrastructure expansion project in Virginia. We also have extensive experience assisting clients in addressing consumer matters, operational issues, state certification prosecution, and rate-related matters.