New Framework Announced for Assessing and Reporting Nature-Related Financial Risks
While reporting of climate-related financial risks has dominated the news following the proposed rulemaking by the U.S. Securities and Exchange Commission, momentum is building toward a standardized reporting framework for sustainability disclosure related to companies’ interface with nature.
In this post, we provide background on the Taskforce on Nature-related Financial Disclosures and its relationship to other recent developments in sustainability disclosure, including additional initiatives emerging to help companies report their nature-related risks and impacts. We conclude with a brief look forward to the second session of the UN Biodiversity Conference and other developments that could influence the future of nature-related reporting. (Continue reading)
Onshore Federal Oil and Gas Leasing Resumes
On April 15, 2022, 16 months after issuing Executive Order 14008, which, among other things, enacted a temporary moratorium on the sale of new oil and gas leases on federal lands and waters, the Biden administration announced that it will resume onshore oil and gas lease sales on federal lands effective April 18, 2022. We summarize the events leading up to the new onshore oil and gas lease sales and the more significant changes to the federal oil and gas leasing program alluded to by the Department of the Interior in the Announcement. (Continue reading)
Federal Energy Regulatory Commission Changes Course on Certification and Project Reviews of New Gas Pipeline Policies
In a recent two-paragraph order, the Federal Energy Regulatory Commission (“FERC”) unanimously changed course on two major, recently issued policy statements applicable to interstate natural gas pipeline projects and, to a lesser extent, authorizations for liquefied natural gas terminals. Importantly, FERC stated that the new gas pipeline policies will not apply to either pending applications or applications filed before FERC finalizes the new gas pipeline policies. (Continue reading)
FERC Reinforces Importance of Qualifying Facility Recertification
On March 24, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued an order in Irradiant Partners, LP, (the “Irradiant Order”) in which it declined to waive qualifying facility (“QF”) recertification requirements under the Public Utility Regulatory Policies Act of 1978. FERC explained that recertification is essential to maintaining the benefits of QF status and acknowledged an absence of regulatory guidance with respect to recertification timing. FERC declined, however, to establish a bright-line test for timeliness, other than to state that recertifying prior to a change is permissible. The Irradiant Order has significant implications for sponsors, owners and investors with portfolios of projects that rely on the exemptions conferred by such QF status. (Continue reading)
Utah Rail Line Project Appeal in the D.C. Circuit Has Environmental Justice Implications for Oil and Gas Projects
A recent challenge to the approval of a rail line in Utah’s Uinta Basin on the basis of a project’s impacts on the Ute Indian Tribe may serve as a litmus test for the effects of the Biden administration’s environmental justice initiatives on oil and gas projects. Although the case is in the early stages and a final order is not likely for a year, the case highlights the importance of giving careful consideration to environmental justice concerns given the threat of citizen suits in the planning stages of oil and gas projects. (Continue reading)
Fifth Circuit Panel Sides with Biden Administration in Ongoing Fight with Certain States Over the Use of “Social Cost of Carbon” in Regulatory Decision-Making
On March 16, 2022, a three judge panel of Fifth Circuit judges unanimously stayed a recent U.S. district court ruling that had temporarily enjoined the Biden administration from basing regulatory decisions on the Social Cost of Carbon estimate generated by the International Working Group, accepting the administration’s arguments that the district court decision was likely to complicate and delay federal environmental rulemaking. This means that federal policy-makers can continue to use the IWG’s SCC estimate (which estimate considers global effects of emissions), while the underlying litigation continues.
We summarize the procedural history of the case, and the context in which the issue arose, as well as implications going forward. (Continue reading)
Directors and Executives Position Themselves to Lead on Climate
In the last two weeks, the conflict in Ukraine has underlined the volatility of a globalized energy economy and shifting energy transition landscape. At the same time, a recently released report from the Intergovernmental Panel on Climate Change spotlights the cascading physical impacts of a changing climate and the adaptation challenges it poses. Together, these developments are the latest signal of the imperative for leaders to be informed on the challenges and opportunities climate change poses to businesses and assets, particularly in the energy and infrastructure sectors. (Continue reading)
Latest Twist in Oil and Gas Lease Moratorium: Court Revokes Federal Oil and Gas Lease Sale, Citing Faulty Climate Review
On January 27, 2022, the U.S. District Court for the District of Columbia vacated the results of the Department of the Interior’s Bureau of Ocean Energy Management’s Lease Sale 257, effectively canceling the sale of certain oil and natural gas leases in the Outer Continental Shelf, Gulf of Mexico. The decision was issued against the larger backdrop of the Biden administration imposing a moratorium on new leases for oil and gas development on federal lands and waters, and subsequent legal challenges from industry and environmental groups. In this post, we summarize this decision, the general context in which the decision was issued and implications going forward. (Continue reading)
FERC Issues Order Revising Downward the Five-Year Oil and Liquids Pipeline Rate Index, Estimated to Save Customers $3.7 Billion Through 2026
On January 20, 2022, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order on rehearing revising downward the index level used in determining interstate oil and liquids pipeline (collectively, “oil pipelines”) rate ceilings (“Order on Rehearing”). As a result of this order, oil pipelines that have adjusted their transportation rates on an indexed basis since July 2021 will be required to decrease those rates, effective March 1, 2022, to the new, lower index ceiling, and indexed rate increases through June 2026 will be smaller than they would have been under the prior order. (Continue reading)
Listen: Energy Q&A with Dan Pickering: Current Market Trends & Predictions for 2022
Kirkland partners Shubi Arora and Rahul Vashi led a discussion with Dan Pickering, Chief Investment Officer of Pickering Energy Partners, on current market trends in the energy sector and predictions for 2022.
- Adapting business models in the post-COVID world
- Evolving investor appetite and focus on ESG
- M&A including market consolidation and exit strategies
- Inflationary pressures and impact of interest rates on deal making
- Trends in sustainability-linked financings
- Prospects and risks of energy transition investments and prospects for future investment
- Energy transition and what the headlines are missing
Listen to the full recording here.
Massive Bipartisan Infrastructure Bill Includes Billions in Funding and Process Improvements for Energy and Infrastructure
On November 5, 2021, the U.S. House of Representatives passed by a vote of 228–206 the $1.2 trillion bipartisan infrastructure bill, the Infrastructure Investment and Jobs Act (“Act”), which contains more than $550 billion in new federal spending. Thirteen Republicans voted for the bill; six Democrats did not. The U.S. Senate had passed the act on August 10, 2021, by a vote of 69–90. The Act will be sent to the President for his signature.
The House then passed, along party lines, a rule that sets debate parameters on the Build Back Better Act, which paves the way for a House vote on the $1.75 trillion tax/spend bill — likely before Thanksgiving. Next, the Congressional Budget Office will prepare its “score” of the bill, which some House members insisted occur before they were wiling to vote on the Build Back Better Act (which is proceeding via the budget reconciliation process).
The Act will provide billions in support for energy and infrastructure across the commodity spaces and a number of important improvements in the federal permitting process. In this post published in August following passage by the Senate, we offer our take on key portions of the Act that have the greatest potential to impact energy and infrastructure market participants and investors. (Continue reading)
Biden Administration and Congress Focus on Methane Emissions
In September, President Biden publicly announced the Global Methane Pledge. The pact, originally agreed by the United States and European Union, aims to reduce global methane emissions at least 30% below 2020 levels by 2030. Since its formal launch at the UN Climate Change Conference (COP 26) days ago, over 100 countries have joined the pledge. Additional countries are expected to join the pledge before COP 26 ends on November 12. In furtherance of this pledge, the Biden administration and Congress have recently taken significant actions intended to reduce methane emissions in the United States, in particular from the oil and gas sector. We summarize several important developments on this front. (Continue reading)
Increasing Focus on Biodiversity-Related Financial Risk Presents New Challenges and Opportunities in Energy and Infrastructure
Climate change has held the spotlight as energy and infrastructure companies, investors and regulators have increased their focus on environmental, social and governance (“ESG”) topics. However, the related topic of biodiversity loss has recently entered the stage and begun to rise on the agenda of policymakers and investors.
Here, we provide background on biodiversity loss and the risks it poses to the energy and infrastructure sector and recent steps taken by policymakers, investors and lenders to push companies to assess and mitigate those risks. We also discuss developments from the UN Biodiversity Conference that appear likely to feed this push and steps that energy and infrastructure companies can take to understand nature- and biodiversity-related risks and opportunities associated with their assets and operations. (Continue reading)
Proposed Build Back Better Legislation Includes Important Changes for Oil and Gas
On October 28, 2021, the House Rules Committee released the text of H.R. 5376, the “Build Back Better Act.” Although final passage in Congress remains uncertain, the proposed legislation includes important changes to federal regulations and policies governing oil and gas development and leasing on federal lands and waters. In this post, we highlight several proposed policies and actions in the context of (1) federal leasing program changes, (2) a focus on methane emissions and (3) fees and bonding changes for operators that would impact the oil and gas sector if enacted as proposed in the House bill. (Continue reading)
Appearing before the Senate Committee on Banking, Housing, and Urban Affairs on September 14, 2021, U.S. Securities and Exchange Commission (“SEC”) Chair Gary Gensler testified to the burgeoning investor demand “for consistent, comparable, and decision-useful disclosures” around climate risk and human capital management, and stated his belief that “the SEC should step in when there’s this level of demand for information relevant to investors’ investment decisions.”
In two recent client Alerts, we discuss SEC activity with respect to climate change and human capital management and board diversity disclosure requirements for public companies. (Continue reading)
Listen: Energy, Climate, ESG & Environmental Matters in Congress and the Biden Administration Webinar
Kirkland recently hosted a live webinar that addressed current energy, climate, ESG and environmental matters in Congress and the Biden administration. The webinar focused on the Senate's bipartisan $1.2 trillion infrastructure bill and the reconciliation process being used to gain passage of a potential $3.5 trillion in spending on climate, energy, and other programs.
Click here to watch the event.
Massive Bipartisan Infrastructure Bill Includes Billions in Funding and Process Improvements for Energy and Infrastructure
On August 10, 2021, the U.S. Senate passed by a vote of 69-30 a sprawling $1.2 trillion bipartisan infrastructure bill, the Infrastructure Investment and Jobs Act (“Act”), which contains over $550 billion in new federal spending. If enacted, the Act would provide billions in support for energy and infrastructure across the commodity spaces and a number of important improvements in the federal permitting process. In this post, we offer our take on key portions of the Act that have the greatest potential to impact energy and infrastructure market participants and investors. (Continue reading)
Biden Administration Affirms Burgeoning Interest in Carbon Capture Investments
On June 30, 2021, the White House Council on Environmental Quality issued a Report to Congress on Carbon Capture, Utilization, and Sequestration (“CCUS”). The overall goal of the report is to outline the administration’s commitment to the responsible development and deployment of CCUS as needed to decarbonize the U.S. economy by mid-century. To that end, the report identifies opportunities to improve existing infrastructure and incentives relating to carbon capture. (Continue reading)
Listen: Raising and Investing Growth Capital in Energy Transition and Tech — Transaction Structures, Fundraising Dynamics and ESG Considerations
Kirkland partners Shubi Arora, Alexandra Farmer, Matthew Nadworny and Jhett Nelson led a conversation on raising and investing growth capital in the energy transition and tech market, including perspectives on transaction structures, fundraising dynamics and ESG considerations.
- Market Overview
- LP Appetite and Fundraising Environment
- Developing ESG Programs for Growth-Focused Sponsors
- Growth Equity Overview
- Unique ESG Due Diligence Considerations
- Growth Equity Investments - Structures, Protections and Exit Considerations
Listen to the full webinar here.
Texas Adopts Legislation to Better Prepare Energy Market for Extreme Weather
In response to Winter Storm Uri, the Texas legislature has adopted a number of bills that could have a significant impact on the energy industry and energy market participants. This post addresses key impacts of SB2 and SB3 — two of the most significant energy-related bills passed by the Texas legislature this session — as well as the status of other legislation awaiting Governor Abbott’s signature. (Continue reading)
Biden Administration Releases Budget and Green Book, Providing Details on Clean Energy Tax Proposals
On May 28, 2021, the Biden administration released its fiscal year 2022 budget proposal, which includes two major legislative plans previously released by the administration, the American Jobs Plan and the American Families Plan. On the same day, the Treasury Department released its highly anticipated “Green Book,” which provides additional detail around the administration’s tax proposals. In this post, we highlight those proposals most relevant to our infrastructure clients. (Continue reading)
Surging Sustainable Finance Market Presents Opportunities for Energy and Infrastructure
The sustainable finance market is experiencing rapid growth, driven by many factors including an increasing number of capital providers seeking to meet their own environmental, social and governance (ESG) goals. There is a sense we are now at an inflection point, with many investors, businesses and financial services providers keenly focusing on climate mitigation. While the COVID-19 pandemic disrupted many industries, it has not slowed down sustainable finance and in fact may have increased focus on social infrastructure and investor social responsibility, driving additional growth in this market.
We discuss a number of challenges and opportunities for energy and infrastructure investors and companies seeking to pursue sustainable finance strategies, (Continue reading)