FERC Reaffirms Controversial Energy Capacity Decisions: Insights and Analysis

The Federal Energy Regulatory Commission (“FERC” or “Commission”) issued on April 16, 2020 two orders[1] largely denying requests for rehearing of its prior decisions that, among other things, subjected to minimum offer price thresholds energy resources participating in PJM Interconnection, L.L.C.’s (“PJM”) capacity market which receive so-called “State Subsidies”.[2]  FERC  reaffirmed that a resource within broadly-defined categories (e.g., renewable resources) receiving State Subsidies must offer capacity in PJM’s forward capacity market at or above an administratively-established price floor (i.e., the minimum offer price rule, or “MOPR”), regardless of such a resource’s actual incremental costs.  Potential and likely ramifications of the Commission’s actions, arguments opponents of the April 16 Orders are likely to raise and potential paths forward for industry market participants are set forth below.  Additionally, the most promising arguments that could be used to invalidate the April 16 Orders, some of which are discussed below, have not been raised before or addressed by FERC. Continue Reading

US EPA’s COVID-19 Interim Guidance on Site Field Work Decisions

On April 10, 2020, the U.S. Environmental Protection Agency (EPA) issued Interim Guidance regarding EPA decision-making with respect to the potential impacts of the current novel coronavirus (COVID-19) pandemic on field work at certain cleanup sites.  The Interim Guidance, which “supplements” a March 19 EPA guidance, applies to all contaminated sites where EPA is the lead agency or has direct oversight or responsibility, affecting various regulatory programs that were excluded from EPA’s March 26 COVID-19 Enforcement Discretion Memo, including hazardous waste cleanups under CERCLA and RCRA, among others.  This is an interim guidance, and EPA has made it clear that it will “update this guidance as the current situation evolves.” Continue Reading

Code Section 1031 Like Kind Exchange Deadlines Extended

On April 9, 2020, the IRS issued Notice 2020-23 (the “Notice”) which expands the filing and payment deadline relief announced by the Internal Revenue Service (“IRS”) in March.  The March announcement gave taxpayers until July 15, 2020 to file their federal income tax returns and to pay federal income taxes, each of which were originally due on April 15, 2020.  The Notice extends additional key tax deadlines for individuals and businesses including certain deadlines applicable to taxpayers engaging in time-sensitive deferred like-kind exchanges. Continue Reading

Walking the Path of Utilities’ Ownership of Wind and Solar

Members of the Sheppard Mullin Energy, Infrastructure and Project Finance Team wrote an article published in the March 16, 2020 edition of Tax Notes Federal regarding the practical impacts on tax equity financing for renewable energy projects of a private letter ruling (“PLR”) published by the IRS in late 2019.  The PLR addressed normalization and loss disallowance rules applicable to public utilities.  These rules have posed significant challenges to public utilities that want to own renewable energy generation facilities, make efficient use of the tax benefits they provide (via the tax equity market) and recover their costs from ratepayers. Continue Reading

FERC Orders, Notices, and Other Guidance Regarding the Novel Coronavirus

Last week the Federal Energy Regulatory Commission (“FERC”) continued to issue orders, notices, and guidance related to the current novel coronavirus pandemic, the health and safety of FERC and energy industry employees, and the continued reliability of the U.S. energy sector.  A summary of FERC’s relevant actions are provided below, including information regarding FERC’s operating status, extensions for filing deadlines and efforts to ease regulatory burdens during this crisis. Continue Reading

State-Level Rent Relief Due to COVID-19 Impacts: California Governor Newsom’s Executive Order Explained

As state and local governments act to address the economic fallout of the COVID-19 pandemic, relief for renters impacted by the coronavirus has come from both state and local policymakers.  In previous posts, we covered San Francisco’s and San Diego’s efforts to temporarily ban evicting residential and commercial tenants impacted by COVID-19.  In this post, we explain Governor Gavin Newsom’s Executive Order, issued on March 27, creating a statewide moratorium on evicting renters impacted by COVID-19.  Here are key takeaways from the statewide Executive Order. Continue Reading

California Judicial Council Adopts Rule Tolling Statute of Limitations

On April 6, 2020, the State Judicial Council adopted emergency amendments to the California Rules of Court in response to the COVID-19 pandemic.  One important change that affects many real estate transactions and development projects tolls the statute of limitations for all civil causes of action from April 6, 2020, until 90 days after the Governor declares that the state of emergency related to the COVID-19 pandemic is lifted.  Among other things, this extends the date for initiating litigation challenging a CEQA document or a development approval, such as a tentative map or conditional use permit.  This also affects the date of “final approval” under many real estate purchase agreements and creates additional uncertainty for project proponents.

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San Diego Responds to COVID-19 with Local Programs to Protect the Health of both Citizens and Businesses

In a continued effort to take aggressive steps to protect the health and welfare of its citizens from COVID-19, the City of San Diego (“City”) enacted a temporary moratorium on evictions to provide relief to residential and commercial tenants facing financial hardship related to the pandemic (the “Ordinance”) and established a Small Business Relief Fund (“SBRF”) to provide grants and forgivable or low-to zero-interest-rate loans to eligible small businesses for working capital.

Here is what you need to know about the Ordinance and the SBRF Program.

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New Shelter-in-Place Orders Dramatically Restrict Bay Area Construction, Including Residential Projects

As the number of COVID-19 cases continues to rise, state and local officials in California are taking increasingly aggressive action to stop the virus’ spread through Shelter-in-Place (“SIP”) orders.  In addition to Governor Newsom’s statewide SIP order, six Bay Area counties  – San Francisco, Santa Clara, San Mateo, Marin, Contra Costa, and Alameda – have issued more restrictive local SIP orders.  New versions of these local orders, published on March 31st and substantially identical, clarify uncertainties in prior orders and dramatically narrow the scope of allowable construction projects.  These new orders are in effect from April 1st  through May 3rd, but are subject to further extension. Continue Reading

San Francisco Temporarily Bans Evicting Residential and Commercial Tenants Impacted by COVID-19 Epidemic

As of the beginning of April, more than one million Californians have applied for unemployment assistance.  While state and local officials are seeking to address this aspect of the economic fallout of the COVID-19 pandemic in a number of ways, renter protections are among the most visible measures to emerge.  In San Francisco, Mayor London Breed issued a series of Declarations temporarily banning commercial and residential evictions if the tenant cannot pay rent due to COVID-19 impacts.  Here are important takeaways from the Declarations. Continue Reading

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