Speaking Energy

On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., which for 40 years required court deference to reasonable agency interpretations of federal statutes in certain circumstances, even when the reviewing court would read the statute differently. The Court ended “Chevron deference” and held that courts “must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” In doing so, the Court upended a longstanding principle of administrative law that is likely to make agency decisions more susceptible to challenge in the courts.

We are pleased to share a recording of Akin’s recently presented “FERC Order No. 2023-A: What’s New and What’s Next?” webinar, along with the program materials.

On 22 February 2024, the UK announced it is withdrawing from the Energy Charter Treaty (ECT) on the basis that it is incompatible with the energy transition, being the 11th state to do so. However, ECT protections for existing renewable and fossil fuel investments will continue for another 20 years, and new investments may be structured to be protected under other investment treaties.

It seems likely the year ahead will see only a modest rebound in mergers & acquisitions (M&A) activity. Among the challenges that remain for 2024, one challenge to further deal activity is the potential shortage of attractive assets coming to market. Another hindrance to the depth of the M&A markets is the ongoing—and widening—valuation gap between the big energy giants and the smaller producers that is now reaching historic levels.

The past year has been broadly characterized as one of limited public market activity and rising interest rates putting a dampener on access to capital. For the oil & gas industry, the volume of debt & equity offerings remained at historically low levels. With bank lenders and some institutional investors also continuing to retreat from the market, it has been a year in which alternative sources of capital have come to the fore.

On December 6, 2023, the House Transportation and Infrastructure Committee approved the Promoting Innovation in Pipeline Efficiency and Safety Act of 2023 (PIPES or the Bill)¹ to reauthorize the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) safety programs for the next four years. The bipartisan legislation was introduced on November 29, 2023, with the goal of striking the correct balance between safe energy resource transportation and ecologically beneficial U.S. manufacturing. The Bill would mandate that guidelines be created to improve operations, recruit more safety experts, and enhance procedures to prevent damage from excavation. The Bill funds PHMSA pipeline safety initiatives with $1.1 billion spread over four years. Among the important clauses of the Bill are the following:

On October 23, 2023, the Federal Energy Regulatory Commission (FERC) issued an order that will permit Trailblazer Pipeline Company LLC (Trailblazer) to convert its approximately 400-mile-long natural gas pipeline system to carbon dioxide (CO₂) transportation. Trailblazer intends to use the pipeline, which originally entered service in the 1980s to bring natural gas from constrained Rocky Mountain supply basins in Wyoming across Colorado and into Nebraska, to transport CO₂from ethanol plants and other emissions sources in Nebraska and Colorado to Wyoming for permanent sequestration in geologic formations (the Trailblazer Conversion Project). FERC has no jurisdiction over the siting, construction, or operation of CO₂pipelines. However, Trailblazer required FERC’s authorization under section 7(b) of the Natural Gas Act (NGA) before it could “abandon” natural gas service on its pipeline facilities. The order also authorized Rockies Express Pipeline LLC (Rockies Express or REX) under NGA section 7(c) to construct additional facilities and lease to Trailblazer existing capacity that will be used to continue service to Trailblazer’s natural gas transportation customers. Trailblazer also intends to contract for capacity on Tallgrass Interstate Gas Transmission, LLC (TIGT) to serve its firm customers. All three pipelines are operated by a subsidiary of Tallgrass Energy Partners.

We are pleased to share a recording of Akin’s recently presented “FERC’s Interconnection Rule: What’s In, What’s Out and Does It Matter?” webinar, along with the presentation materials.