Monday, March 16, 2015

FERC Receives Reply Comments on its Proposed Policy on Cost Recovery for Modernization of Natural Gas Facilities


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Last month we informed you that the Federal Energy Regulatory Commission (“FERC”) had received initial comments on its proposed policy to allow interstate pipelines to recover the costs of modernizing their facilities through a cost tracker. On February 26th, FERC received reply comments.

While the initial comments elicited many responses from both supporters and protestors of the proposed policy, the reply comments primarily reflected the views of those who opposed it. These comments focused on three major issues: (1) the uncertain nature of the Environmental Protection Agency (“EPA”) and Pipeline and Hazardous Materials Safety Administration (“PHMSA”) regulations; (2) the need for a rate case under Section 4 of the Natural Gas Act, 15 U.S.C. § 717c; and (3) whether FERC should adopt a broad or narrow definition of the “Eligible Facilities” costs that the pipeline may recover.

EPA and PHMSA Regulations

Both the Indicated Shippers and the Process Gas Consumers Group and the American Forest and Paper Association (“Joint Reply Commenters”) argued that none of the supporting comments offered any evidence as to why the pipelines need an incentive to comply with the EPA and PHMSA regulations. See Reply Comments of the Indicated Shippers; see also Reply Comments of The Process Gas Consumers Group and American Forest and Paper Association. The Indicated Shippers argued that pipelines routinely face compliance costs and EPA and PHMSA compliance costs are no different. The Indicated Shippers then pointed out that no party has disputed that the EPA and PHMSA have not implemented any regulations and that there is considerable uncertainty about the effects of these potential regulations. The Natural Gas Supply Association (“NGSA”) requested that FERC refrain from issuing any order in this proceeding until the EPA and PHMSA actually issue any regulations. See Reply Comments of the Natural Gas Supply Association and Request for Technical Conference.

Section 4 Rate Cases

Reiterating points made in their initial comments, the Indicated Shippers, NGSA, and the Joint Reply Commenters argued that the tracker would contravene the need for traditional Section 4 rate cases. The Indicated Shippers argued that without a rate case, pipeline rates would gradually inflate as pipelines included new costs in the tracker without prior FERC review. The NGSA argued that pipelines have exaggerated the risk of pancaked rates, because pipelines “generally try to avoid filing Section 4 rate cases” anyway.

The Definition of Eligible Facilities

The major disagreement between the pipelines and the shippers has been over the definition of “Eligible Facilities.” FERC proposed to limit costs recovered through the tracker to “one-time capital costs to modify the pipeline’s existing system to comply with safety and environmental regulations such as those being considered by PHMSA and by the EPA, as well as other capital costs shown to be necessary for the safe or efficient operation of the pipeline.”

The Indicated Shippers stated that such a broad definition would eliminate the need for a Section 4 proceeding. Instead of filing a Section 4 rate case, pipelines would just include any voluntarily incurred upgrade costs into the tracker. The NGSA argued that eligible costs should be one-time, mandatory costs incurred to comply with PHMSA and EPA regulations, while the Joint Reply Commenters added that Eligible Facilities should not include the costs of undefined projects. The Joint Reply Commenters recommended that the Commission revisit the definition of Eligible Facilities at a technical conference after the EPA and PHMSA have issued their regulations.

In contrast, Berkshire Hathaway, one of the few reply commenters that supported the proposal, argued that the disagreement over the definition of Eligible Facilities is the exact reason why FERC should adopt a broad definition of Eligible Facilities. See Reply Comments of Berkshire Hathaway Energy Company on Notice of Proposed Policy Statement. Berkshire Hathaway reasoned that a broad definition would permit pipelines and shippers to collaborate on what costs the pipeline should recover.

These reply comments present difficult questions for the Commission. Does it move forward with the proposed policy now, or await EPA and PHMSA’s release of their regulations? When FERC does move forward, will it adopt a broad or narrow definition of Eligible Facilities? If you have questions or would like more information on the issues discussed in this article, please feel free to contact us.

Friday, February 27, 2015

Small Business Real Estate Series – Part I: Commercial Leases




Each year, thousands of new entrepreneurs set out to make their dream of being a business owner a reality. Many will be based in their home until the business is large or profitable enough to support the expense of a commercial space. When that time comes, there are many things to consider for a smooth transition.
This is the first in a series of blogs dedicated to guiding a business out of the home office or garage, and into a leased commercial space. The blogs will not address executive suites or collaborative situations, as they generally do not require the tenant to sign a long-term lease.
If you are an entrepreneur who has determined that your business can no longer operate out of the home, it is time to look for a suitable commercial space. There are many available options for small businesses, including strip malls and shopping centers, industrial parks, warehouses, office buildings, or power centers. Although each of these potential locations is significantly different, the one thing they most likely have in common is that all tenants are required to sign a commercial lease.
It is vital that you do your homework prior to signing a lease. Many issues can be avoided by conducting a little due diligence before choosing a location. Research the available properties on the internet. If your business depends on heavy vehicular or pedestrian traffic, review the online demographics. Many commercial landlords post demographic information on their websites, or are able to provide them if contacted. Make sure the space is located in the demographic your business caters to. For example, a second-hand infant clothing store may not do well in a retirement community. If the potential landlord does not have demographic information, it may be available through the local Chamber of Commerce or Economic Development Agency of the city where the property is located.
After you have reviewed and are satisfied with the demographics of potential spaces, schedule site visits. Conduct multiple visits at various times during the day, especially if your business will rely on evening and weekend traffic. Pay attention to the amount of traffic in the area, particularly around the commercial property you are considering, and in and out of neighboring businesses. If the site is in an industrial park, make note of potential issues, such as whether large trucks, forklifts, or other equipment would impede access to the suite in which you are considering.
During the site visits, assess how the location could benefit your business and, more importantly, impair it. It is easy to see the positives, but it is most important to pay attention to the negatives. Are there businesses in the area that may attract crime or a clientele that could adversely impact your business? Do nearby businesses generate traffic jams, excessive noise or unpleasant odors? Are there businesses that compete with yours? What type of customers do surrounding businesses cater to and will they deter your target clientele? For example, if your business caters to families and children, you may not want to be in the same strip mall as bar.
When you do your site visits, take time to walk around the location to get a sense of the area. Are parking lots and landscaped areas neat, clean and in good condition? Are the public areas well lit at night? Are there multiple entrances and exits for vehicles and pedestrians? Is there adequate parking available? Are there consistently foul odors that emanate from sewers or grease interceptors? If you discover any issues that could hurt your business, cross that location off your list and move on.
During the due diligence process, do not overlook one of the best resources regarding a prospective site - existing tenants. Meet with the other tenants. Chances are they will be as interested in your business as you are in theirs, and they will be more open and forthright than the landlord about particular questions regarding the facility. Inquire whether they have experienced problems with the property, landlord, other tenants, general location, or surrounding areas. Ask if they know why former tenants left and whether they have forwarding contact information. See if they will share how long they have been in the facility, the length of their current lease, and whether they plan to renew. During this process, you will get a feel for the other tenants and how they may impact your business.
There are many issues you need to be sure to address with the landlord. Ask about how the utilities are metered. Are all of the utilities already in place or are you responsible for installation, such as an extension of the gas line or three-phase power? Find out whether the site is served by the city or a private water company, especially if your business uses a substantial amount of water. What is the history of water and sewer expenses? What type of internet service is available? Is there municipal trash service or is it handled by a private company? Are there any specialized refuse providers serving the area to handle biomedical waste or other special substances? Are there currently any major road projects planned for the area? Does the property use a cleaning service? Are there individual restroom facilities or are they shared? Create your own checklist and don’t be afraid to ask questions.
You may want to consider employing the services of a commercial real estate agent who is experienced in representing tenants. Such agents can provide a lot of knowledge about market conditions, available properties, and tenant improvement allowances. Even if you are being represented by a tenant’s agent, you should still do your own research to supplement the information provided by the agent. Once you are satisfied that the property satisfactorily meets the items on your checklist, you will be ready to inquire about the lease.
It is important to note that many landlords use a variation of a standard commercial or industrial lease. As a general rule, commercial leases are written most favorably for the benefit of the landlords. This means that, should something go wrong, the lease will put the burden on the tenant to correct the problem at their own expense. In many cases, the landlord wins and the tenant loses. Do not be misled in believing that you do not have the power to negotiate a lease to include terms that will protect your interests.
Part II of this series will discuss some of the common commercial lease provisions that a small business should pay particular attention to and attempt to negotiate.
David Brnilovich is a member with the law firm of Jennings, Strouss & Salmon, PLC. His practice includes real estate, construction, corporate governance, small business formation, dissolution, purchases and asset sales, estate planning and estate planning litigation. Mr. Brnilovich can be contacted at dbrnilovich@jsslaw.com or 602.262.5898.

Tuesday, February 24, 2015

Department of Labor Announces Final Rule on Definition of Spouse under the FMLA



The Department of Labor (DOL) will publish a Final Rule this week revising the regulatory definition of “spouse” under the Family and Medical Leave Act of 1993 (FMLA).  The changes will allow eligible employees in same-sex marriages to take FMLA leave to care for their spouses or family members, regardless of where the employee resides.  The DOL issues the Final Rule in response to the Supreme Court’s June 2013 decision in U.S. v. Windsor, which held section 3 of The Defense of Marriage Act (DOMA) to be unconstitutional.  Prior to Windsor, the FMLA regulations defined the term “spouse” based on the marriage laws of the state where the employee resides.   Now, the regulations require employers to look to the laws of the state where the employee entered into the marriage.  According to the DOL, the revisions are intended to ensure that spouses in same-sex marriages have the same ability as all spouses to exercise their FMLA rights.

FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons, including certain military family leave provisions.  The effective date for the final rule is March 27, 2015.

Arizona is one of over 30 states that recognize same-sex marriage.  Employers covered under FMLA should review their employment policies to ensure they are in compliance with the new regulations.

The DOL’s announcement and the text of the Final Rule can be found here: http://www.dol.gov/whd/fmla/spouse/index.htm



Kami M. Hoskins is an Arizona native dedicated to creating and implementing effective resolutions to complex legal issues for a variety of clients. She focuses her practice on two primary areas: 1) Bankruptcy, Reorganization and Creditors’ Rights Law; and 2) Labor and Employment. Ms. Hoskins is also the Chair of Jennings, Strouss & Salmon’s Diversity Action Committee, and she helps lead the firm’s diversity and inclusion strategic initiatives.
 

 
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Please note that the materials contained within this client alert have been prepared by Jennings, Strouss & Salmon, P.L.C. for informational purposes only so that readers may learn more about recent developments in the law, as well as the firm, the services it provides, and information on its attorneys. These materials do not constitute, and should not be considered, legal advice, and you are urged to consult with an attorney on your own specific legal matters. Transmission of the information contained in the Jennings, Strouss & Salmon web site is not intended to create, and receipt by the reader does not constitute, an attorney-client relationship with Jennings, Strouss & Salmon or any of its individual attorneys. While we would certainly like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Please do not send us any information about a matter that may involve you until you receive written authorization to do so from one of our attorneys. Unless otherwise indicated in individual attorney biographies, attorneys resident in the firm's various offices are not certified by the Board of Legal Specialization or a similar body of any state. This client alert may contain hyperlinks to websites operated by parties' independent from Jennings, Strouss & Salmon. Such hyperlinks are provided for your reference only. Jennings, Strouss & Salmon does not control such websites, and is not responsible for their content. Jennings, Strouss & Salmon's inclusion of hyperlinks to such websites does not imply any endorsement of the material on such websites or any association with their content. Your access and use of such sites, including information, material, products, and services therein, shall be solely at your own risk. Further, because the privacy policy of this message is applicable only when you are viewing it, once linked to another website, you should read that site's privacy policy before disclosing any personal information. Jennings, Strouss & Salmon retains copyright of original content created in this client alert. If you wish to use information from this client alert, please contact clientservices@jsslaw.com for authorization.

©2015 All Rights Reserved, Jennings, Strouss & Salmon, PLC.

Monday, February 23, 2015

New Client Alert: Navigating the Advertising Minefield


February 23, 2015

Companies developing or marketing services or products need to be aware that the Federal Trade Commission (the “FTC”) and several state agencies have undertaken, and will continue to undertake, enforcement activity against companies making deceptive claims and misrepresenting the evidence used to support those claims

Read the full client alert here.


Tuesday, February 17, 2015

Jennings, Strouss & Salmon Expands Real Estate Law Department with the Addition of Thomas C. Arendt


http://www.jsslaw.com/professional_bios/Thomas_C_ArendtPHOENIX, Ariz. (February 17, 2015) – Jennings, Strouss & Salmon, a leading Phoenix-based law firm, is pleased to announce that Thomas C. Arendt has joined the firm as a Member in the Real Estate department.

“We are truly fortunate to add to the Real Estate group, an attorney with Tom Arendt’s level of expertise and breadth of experience,” stated Bruce May, Chair of the Real Estate department. “He is a welcome addition.”

Arendt is experienced in acquisition and development of real estate, leasing, and real estate workouts and foreclosures. His representation has included various ground-up developments, retail centers, as well as banks and lenders in deed of trust and mezzanine loan projects. Arendt’s representation also includes significant leasing work on unique projects such as ground leases and leases on tribal land.

“I am pleased to be part of a firm that has such a strong history and reputation,” said Arendt. “What truly sets Jennings, Strouss & Salmon apart is the focus it puts on making clients a first priority, which aligns perfectly with my practice.”

Arendt is a Certified Real Estate Specialist with the Arizona State Bar Board of Legal Specialization. He has been listed as a Southwest Super Lawyer for over seven consecutive years and has also been listed in Best Lawyers in America for Real Estate since 2002.

About Jennings, Strouss & Salmon, PLC
Jennings, Strouss & Salmon, PLC, has been providing legal counsel for over 70 years through its offices in Phoenix, Peoria, and Yuma, Arizona; and Washington, D.C. The firm's primary areas of practice include agribusiness; bankruptcy, reorganization and creditors’ rights; construction; corporate and securities; employee benefits and pensions; energy; family law and domestic relations; health care; intellectual property; labor and employment; legal ethics; litigation; professional liability defense; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit www.jsslaw.com and follow us on LinkedIn, Facebook, and Twitter.

The firm’s affiliate, B3 Strategies, assists clients with lobbying and public policy strategy at the local, state, and federal levels. For more information please visit www.b3strategies.com.

~JSS~

Thursday, February 12, 2015

Jennings, Strouss & Salmon Elects Kami M. Hoskins as a New Member

Kami M. Hoskins
PHOENIX, Ariz. (February 12, 2015) – Jennings, Strouss & Salmon, a leading Phoenix-based law firm, is pleased to announce that Kami M. Hoskins has been elected Member (Partner) of the firm, effective January 1, 2015. 

“We are very happy to promote Kami to Member of the firm,” stated J. Scott Rhodes, Managing Attorney at Jennings, Strouss & Salmon. “Her legal skills and professionalism give us great confidence in her future as a member of our firm.”

Hoskins is an Arizona native dedicated to creating and implementing effective resolutions to complex legal issues for a variety of clients. She focuses her practice on bankruptcy, reorganization and creditors’ rights law, and labor and employment law. She is also the Chair of Jennings, Strouss & Salmon’s Diversity Action Committee, where she helps lead the firm’s diversity and inclusion strategic initiatives. 

About Jennings, Strouss & Salmon, PLC

Jennings, Strouss & Salmon, PLC, has been providing legal counsel for over 70 years through its offices in Phoenix, Peoria, and Yuma, Arizona; and Washington, D.C. The firm's primary areas of practice include agribusiness; bankruptcy, reorganization and creditors’ rights; construction; corporate and securities; employee benefits and pensions; energy; family law and domestic relations; health care; intellectual property; labor and employment; legal ethics; litigation; professional liability defense; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit www.jsslaw.com and follow us on LinkedIn, Facebook and Twitter.

The firm’s affiliate, B3 Strategies, assists clients with lobbying and public policy strategy at the local, state, and federal levels. For more information please visit www.b3strategies.com.

~JSS~