Tuesday, October 21, 2014

FERC Determines Compliance With Capacity Release Order to Show Cause

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In March of this year, the Commission initiated a show cause proceeding requiring all pipelines to either: (1) revise their tariffs in accordance with the Commission’s regulations under 18 C.F.R. 284.8(d), which requires pipelines to provide for the posting of capacity release offers; or (2) demonstrate that they are in full compliance with those regulations.

In response to its show cause order, the Commission received 157 compliance filings. On October 16, 2014, in its Order on Filings In Compliance With Order to Show Cause, 149 FERC ¶ 61,031,the Commission accepted the compliance filings with certain conditions. Of these responses, 64 pipelines properly revised their respective tariffs to provide for the posting of capacity release offers in accordance with section 284.8(d). An additional 23 pipelines successfully demonstrated that their tariffs were already in compliance with the regulations. However, the Commission found that the remaining 69 filings were not acceptable and required further compliance. The two major issues with these filings involved setting of minimum periods for posting and the reasonableness of posting fees.

Length of Posting:
The Commission found that potential replacement shippers should be permitted to have their offers posted for however long they desire, subject to the pipeline’s right to establish a posting cap. These caps, though, may not be less than 30 days. A 30-day cap, according to the Commission, addresses the interests of the potential replacement shippers, who desire longer posting periods in order to seek the best offers of released capacity, while imposing a minimal burden on the pipeline.

Out of the 157 compliance filings, 31 pipelines submitted compliance filings that were silent on how long a potential replacement shipper could post offers. An additional 32 pipelines included provisions limiting the length of a posting, but those filings imposed caps of less than 30 days. The Commission accepted these compliance filings, but required the pipelines to submit a revised filing extending the minimum length of the caps.

Fee for Posting:
In their compliance filings, three pipelines proposed a $50 fee for posting offers, while three other pipelines had existing tariff provisions that already imposed a $50 posting fee. Another pipeline had a provision that allowed for a fee, but did not set the amount of the fee. The Commission struck down these fees as inconsistent with Order No. 636, requiring the removal of existing fee provisions within 30 days of the order.

In Order No. 636-A, the Commission held that a pipeline should recover the fixed costs for its electronic bulletin board in its transportation rates as part of its cost of service and may not recover an administrative fee from its operation of a capacity release program. The pipeline could, however, charge a fee to frequent users of the electronic bulletin board, such as marketers, but these charges must be limited to the recovery of variable costs.

Further compliance filings consistent with the Commission’s October 16 Order are due within 30 days (November 17). If you have questions or would like more information on the issues discussed in this article, please feel free to contact us.

Wednesday, October 8, 2014

Pricing Electric System Reliability in MISO

Daniel E. Cooper

  There have recently been two significant Orders from the Federal Energy Regulatory Commission ("FERC") concerning System Support Resources ("SSRs") for the Midcontinent Independent System Operator ("MISO").  SSRs are electric generating units scheduled for retirement, but where MISO requests for reliability purposes that the resources remain in service under a special agreement.  The first of the two Orders made major changes to the determination of payments to the SSR owner.  The second Order requires a major change in how costs of some SSRs are allocated to loads. 
  The Order changing SSR payment determination was in response to a Section 205 complaint filed by AmerenEnergy Generating Resources ("Ameren") in FERC Docket No. EL13-76.  Prior to that Order, MISO's tariff limited SSR payments to actual “going forward” variable and operating SSR out-of-pocket costs, with payment for capital additions required for SSR operation also included.  Ameren argued MISO's interpretation of SSR payment provisions was too narrow, and that an SSR owner should be entitled to the full SSR cost of service, including return on investment, depreciation and taxes.  Despite significant opposition to Ameren's position, on July 22, 2014 FERC issued an Order (148 FERC ¶ 61,057) agreeing with Ameren.  FERC directed MISO to modify its tariff to allow an SSR owner to make a Section 205 filing of a proposed SSR payment when MISO and the SSR owner failed to agree on the SSR payment.
  The FERC Order concerning SSR cost allocation came in response to an April, 2004 complaint by the Public Service Commission of Wisconsin (PSCW) filed under Docket No. EL14-34.  MISO previously filed a service schedule under Docket No. ER14-1243 allocating the cost of the Presque Isle SSR (located in Michigan's Upper Peninsula) on a pro rata basis to all Load Serving Entities ("LSEs") connected to the American Transmission Company (ATC).  That pro rata cost allocation was consistent with historical precedent and the allocation method FERC approved in a previous Presque Isle SSR filing. However, in an Order issued July 29, 2014 (148 FERC ¶ 61,071), FERC agreed with the PSCW that pro rata cost allocation over LSEs on the ATC system was inconsistent with cost causation principles.  FERC directed MISO to allocate the Presque Isle SSR costs only to LSEs shown to benefit from the SSR based on a MISO "load-shed study".  Also in departure from standard practice, FERC ordered to make refunds retroactive to the date the PSCW filed its complaint, consistent with the new allocation.
  The impact of the two orders is potentially significant.  The SSR pricing Order will provide a strong incentive for generator owners to enter into SSR agreements where offered, rather than retiring the generators.  This Order can be viewed as FERC again affirming that system reliability outweighs cost considerations.  The impact of the Presque Isle SSR cost allocation Order is harder to gauge. The Presque Isle SSR allocation raises issues of how far to go in "targeting" customers with costs, and how to address discriminatory aspects of Presque Isle SSR costs being narrowly allocated while similar "must run" costs in Wisconsin are being allocated across the entire ATC system.  These and related questions have been raised on rehearing.  So stay tuned for further developments. 

Thursday, October 2, 2014

ILSA Exemption for Condominiums


On September 26, 2014, the President signed a bill into law that exempts condominium developers from the burdensome registration and reporting requirements of the Interstate Land Sales Full Disclosure Act (“ILSA”). This new law becomes effective in March 2015.

Congress passed ILSA in 1968 as a response to fraud and abuses in the sale of land, which generally arose when parcels of vacant land were marketed to out-of-state buyers as promising development opportunities. It wasn’t until after the land was purchased that the buyer would visit the newly purchased property, only to discover that the promising investment was nothing more than worthless Florida swamp land with no access to roads or utilities.

Accordingly, Congress enacted ILSA to protect buyers from these unscrupulous sales techniques by requiring developers to comply with an extensive registration and reporting scheme when selling subdivision lots. ILSA also gave buyers the right to revoke purchase contracts within two years of execution if the developers failed to comply with those requirements.

When ILSA was enacted, its application to condominiums was not contemplated, but over time federal courts interpreted ILSA as applying to condominium units. Condominium developers struggled to comply with ILSA’s extensive requirements. This came to a head when the market crashed in 2008 and ILSA’s two-year revocation period became a popular front for condominium buyers to rescind their now above-market contracts merely by showing a developer’s failure to comply—even in a trivial manner—with ILSA.

This new exemption is an important victory for condominium developers, who can now sell condominium units without the time and expense of complying with ILSA and without the risk of buyers exploiting ILSA’s rescission loophole. However, developers should be aware that registration and reporting requirements for the sale of condominiums may still exist under state law.

B3 Strategies Expands with Addition of Erin Mahrt and Emily Rice


PHOENIX, Ariz. (October 2, 2014) – B3 Strategies is pleased to announce that Erin Mahrt, Government Relations Associate, and Emily Rice, Government Relations Assistant, have joined the public policy firm.

“I am very fortunate to have found two talented young people who are passionate about being involved in Arizona public policy,” said Russell Smoldon, CEO of B3 Strategies. “The knowledge and experience Erin and Emily bring are essential to supporting and growing the services B3 offers to clients. I’m very happy to have them on board.”

Mahrt earned a Bachelor of Arts in Psychology from Arizona State University. She recently earned her juris doctor from the Sandra Day O’Connor College of Law at Arizona State University. While in law school, Mahrt was involved in a number of organizations, including serving as a member of the Student Bar Association and as an associate editor on the Law Journal for Social Justice. She is passionate about public health and the law-making process, and hopes to further those interests while working for B3.

“I’m very excited to be a part of B3 and to have the opportunity to learn from and work with Russell Smoldon,” said Mahrt. “I look forward to assisting our clients with their public policy needs. In addition, I feel very fortunate to be associated with a law firm as prestigious as Jennings, Strouss & Salmon.”

Rice earned her Bachelor of Arts in English and History from Gonzaga University in Spokane, Washington. Prior to joining B3 Strategies, she worked as a Communications Manager for GameTruck Licensing, LLC in Tempe, AZ where she handled the company’s social media and internal communications, as well as assisting in the discovery process of new potential franchises.

“I am thrilled to be part of B3 Strategies,” said Rice. “Working with a team that is dedicated to helping clients achieve their goals and solve the problems they face is an amazing opportunity. I’m looking forward to contributing every way I can.”

About B3 Strategies
“Building Public Policy Brick-By-Brick”
Positioned as “The Public Policy Architects,” B3 Strategies, an affiliate of Jennings, Strouss & Salmon law firm, provides clients with the knowledge and tools needed to present, support and implement public policy to address issues affecting their businesses. B3 Strategies leverages relationships with an extensive network of government officials, legislators and the business community to develop and implement public policy strategies at the local state, and federal levels for a wide-range of industries, including those focused on energy, water, taxation, environmental, health care and economic development issues.

For additional information please visit www.B3strategies.com, and follow us on LinkedIn, Facebook and Twitter.

About Jennings, Strouss & Salmon
Jennings Strouss & Salmon is one of the Southwest's leading law firms, providing business, litigation and regulatory legal counsel for over 70 years through its offices in Phoenix and Peoria, and Yuma, Arizona; and Washington, D.C. For additional information please visit www.jsslaw.com and follow us on LinkedIn, Facebook and Twitter.

~JSS~

Monday, September 29, 2014

Mann and Chambers Appointed Vice-Chairs of ABA Fidelity and Surety Law Committee


PHOENIX, Ariz. (September 29, 2014) – Jennings, Strouss & Salmon, PLC, a leading Phoenix-based law firm, is pleased to announce Jay M. Mann and Andy J. Chambers have been appointed Vice-Chairs of the American Bar Association (ABA) Tort Trial and Insurance Practice Section (TIPS) Fidelity and Surety Law Committee.

The Vice-Chairs serve a one-year term, which commenced in August. The leadership appointment is in recognition of their commitment to TIPS and their reputation among the 25,000 TIPS members.

“I am proud to have served as Vice-Chair of the ABA Fidelity and Surety Law Committee for 15 years,” stated Mann. “This is a hard working group that volunteers much time and effort to promote the fidelity and surety industries, and I look forward to its continued success.”

 “I am honored to have been selected for the Vice-Chair position,” said Chambers. “I look forward to contributing to the valuable role the ABA/TIPS Fidelity and Surety Law Committee serves in the industry.”

Mann is Chair of the firm's Construction, Fidelity and Surety department. He is a frequent lecturer and author in the areas of construction, surety, and fidelity law. Mann is also active in numerous professional and civic organizations, including the State Bar of Arizona, the Maricopa Bar Association, and numerous other organizations focused on construction, surety, and fidelity law. He earned a J.D., with honors, from Loyola University of Chicago and a B.A. from the University of Illinois.

Chambers is a member of the firm’s Construction, Fidelity and Surety department. He focuses his practice on fidelity law, commercial litigation, surety, and construction law. He possesses extensive commercial litigation experience, guiding clients through all phases of claim investigation, litigation, trial, arbitration, mediation, and appeals. In addition, Chambers also represents companies and insurers in the emerging arena of cyber security and data breaches. He earned a J.D., cum laude, from the Washington College of Law at American University and a B.A. from the University of California, Santa Barbara.

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~

Contact:  Dawn O. Anderson  |  danderson@jsslaw.com|  602.495.2806

Friday, September 19, 2014

Alternatives to Courthouse Litigation: Resolving Commercial Disputes Without Filing a Lawsuit


Gerald W. “Buzz” Alston, Chair, Alternative Dispute Resolution Department
Gerald W. “Buzz” Alston, Chair, Alternative Dispute Resolution Department

Jennings, Strouss & Salmon attorney, Gerald W. “Buzz” Alston, authored “Alternatives to Courthouse Litigation: Resolving Commercial Disputes Without Filing a Lawsuit,” published in District Energy Magazine’s “From a Legal Perspective” section.

Alston discusses why filing a lawsuit should be viewed as the final option to pursue a resolution in a commercial dispute. Exploring alternative dispute resolution options such as mediation and arbitration can often reduce expenses and time to a resolution, and can potentially preserve business relationships. While alternative dispute resolution cannot resolve every dispute, it should be considered before entering into the judicial system.
Read the complete article.

Tuesday, September 9, 2014

30 Jennings Strouss Attorneys Named to 2015 Best Lawyers® in America List


PHOENIX, Ariz. (September 9, 2014) – Jennings, Strouss & Salmon, PLC, a leading Phoenix-based law firm, is pleased to announce that 30 lawyers have been named to the 2015 Edition of Best Lawyers.
Lawyers on the 2015 Best Lawyers in America list are divided by geographic region and practice areas. They are reviewed by their peers on the basis of professional expertise, and undergo an authentication process to verify that they are in current practice and good standing.
Jennings, Strouss & Salmon, PLC congratulates the following attorneys named to the 2015 Best Lawyers in America list:
Gerald W. Alston – Arbitration; Commercial Litigation; International Arbitration – Commercial; International Trade and Finance Law; Litigation – Construction; Mediation

Timothy W. Barton - Litigation - Real Estate
David Brnilovich – Real Estate Law
John R. Christian – Tax Law; Trusts and Estates
Richard K. Delo – Legal Malpractice Law – Defendants; Medical Malpractice Law – Defendants; Personal Injury Litigation – Defendants
John J. Egbert – Commercial Litigation; Employment Law – Management; Labor Law – Management
Lee E. Esch – Real Estate Law
Michael J. Farrell – Commercial Litigation; Litigation – Securities
Jay A. Fradkin – Health Care Law; Medical Malpractice Law – Defendants; Personal Injury Litigation – Defendants
Jeffrey D. Gardner – Commercial Litigation
Joel L. Greene – Energy Law
Paul G. Johnson – Commercial Litigation
Gary G. Keltner – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Litigation – Bankruptcy; Real Estate Law
Richard L. Lassen – Trusts and Estates
Richard Lieberman – Business Organizations (including LLCs and Partnerships); Corporate Governance Law; Corporate Law; Leveraged Buyouts and Private Equity Law; Mergers and Acquisitions Law; Private Funds / Hedge Funds Law; Securities / Capital Markets Law
Jay M. Mann – Construction Law; Litigation – Construction
Bruce B. May – Real Estate Law
John C. Norling – Real Estate Law
Robert Novak – Banking and Finance Law; Real Estate Law
Michael R. Palumbo – Commercial Litigation
Russell Rea – Eminent Domain and Condemnation Law
J. Scott Rhodes – Administrative / Regulatory Law; Ethics and Professional Responsibility Law; Legal Malpractice Law – Defendants
Alan I. Robbins – Energy Law
Jack N. Rudel – Corporate Law
John G. Sestak, Jr. – Administrative / Regulatory Law; Commercial Litigation; Corporate Law; Litigation - Banking and Finance; Litigation – Construction; Litigation - Labor and Employment; Litigation - Real Estate
Richard Silverman – Energy Law
Wayne A. Smith – Real Estate Law
George C. Spilsbury – Corporate Law; Public Finance Law
Bradley J. Stevens – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Litigation - Bankruptcy
Kenneth C. Sundlof, Jr. – Energy Law
About Jennings, Strouss & Salmon, PLC
Jennings, Strouss & Salmon, PLC, has been providing legal counsel for over 70 years through its offices in PhoenixPeoria, 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 LinkedInFacebook 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~
Contact:  Dawn O. Anderson  |  danderson@jsslaw.com |  602.495.2806

Monday, August 25, 2014

Richard H. Silverman Named an Officer of University of Arizona Foundation Board of Trustees



PHOENIX, Ariz. (August 25, 2014) – Jennings, Strouss & Salmon, PLC, a leading Phoenix-based law firm, is pleased to announce that Richard H. Silverman has been named Vice Chair of the University of Arizona (UA) Foundation’s Board of Trustees.
Silverman’s one-year term began on July 1, 2014. The other members of the Board include Chair Thomas W. Keating, Secretary Ted H. Hinderaker, Treasurer Robert F. Charles, Jr., and Past Chair Sarah B. Smallhouse.
“I am honored to serve,” said Silverman. “Especially because of the university’s growing and expanding impact on Maricopa County and the state with projects like the UA Cancer Center and Tech Launch Arizona.”  
Silverman served on the UA Foundation Board of Trustees for more than 10 years, and supports the university’s Steele Children’s Research Center and the UA Cancer Center. He earned his undergraduate degree in 1962 and his juris doctorate in 1965 from the UA. Silverman serves on the UA College of Medicine-Phoenix Leadership Board, and the UA TRIF-Water, Environmental and Energy Solutions initiative External Advisory Board. In 1966, he began work at the Salt River Project and later became the company’s chief operating executive and general manager before joining Jennings Strouss in 2011.
About Jennings, Strouss & Salmon, PLC
Jennings, Strouss & Salmon, PLC,  has been providing legal counsel for over 70 years through its offices in PhoenixPeoria, 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; litigation; real estate; surety and fidelity; tax; and trust and estates. For additional information please visit www.jsslaw.com and follow us on LinkedInFacebook 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~
Contact:  Dawn O. Anderson  |  danderson@jsslaw.com|  602.495.2806

Tuesday, August 19, 2014

Arizona Registrar of Contractors Transition in Complaint Handling Process


By John G. Sestak, Jr.

The Arizona Registrar of Contractors (ROC) has historically followed a unique enforcement process, which has been described as “complainant driven.” Under that process, the complaining party made the sole decision “in whether to file a complaint, whether to have the ROC issue a citation, whether a hearing would occur, and whether repairs or settlement agreements complied with the terms of the contract.” As the ROC described, in a Director’s Message dated September 5, 2013, “in this ‘complainant driven’ process, the complainant made the critical decisions as the parties attempted to resolve their dispute.”

Since the fall of 2013, the ROC has transitioned from a “complainant driven” process to a regulatory process. Now, the ROC will effectively have complete control over the entire process once a complaint is filed. A citation will not be issued simply because the complainant requests it. Rather, the ROC will decide whether the evidence produced by the complainant and gathered by the ROC investigator supports the issuance of a citation. The Director’s Message states that, based upon a comparison with other states, this change will result in fewer citations being issued against contractors.

If the ROC decides to issue a citation, an arbitration process can be implemented. The arbitration process will typically be used for small-dollar disputes involving poor construction on residential properties where a contractor is not the subject of numerous prior complaints. For these cases, the contractor will be able to avoid the citation and formal disciplinary process by resolving the complaint through arbitration.

If a complaint is not resolved, the ROC may decide to prosecute the claim, regardless of whether the complaining party has made a settlement with the contractor or otherwise decides to abandon the complaint. Even if the complainant settles with the contractor, the ROC may elect to prosecute the claim and proceed to a hearing. The ROC may also subpoena the complainant’s testimony, even though the complainant has settled with the contractor. This is why the complainant ceases to become a “party” to the action or process once the complaint is filed.

The ROC will impose progressive discipline on contractors’ licenses based upon the severity and recurrence of violations. The ROC states that, in the future, discipline will consist of letters of concern, suspension limited to a finite number of days, suspension until compliance with an order of the ROC, and possible revocation of a license. The ROC suggests that this change will result in fairer and speedier resolution of investigations and that a contractor will not permanently lose its license for a first-time minor violation.

While the ROC states that these changes will enhance consumer protection, reduce “gaming of the system by bad contractors…,” be fairer to good contractors, and streamline the process, it remains to be seen what will evolve. The Director, in a Director’s Message of May 30, 2014, reported that the new process has resulted in a decrease of the issuance of citations against contractors from 36% of all complaints to approximately 13% of all complaints.

Thursday, August 14, 2014

Chapter 11 Bankruptcy (Infographic)



To learn more about bankruptcy law, contact Jennings Strouss. Jennings Strouss was ranked #1 in Phoenix, Arizona in the field of Bankruptcy and Creditor-Debtor Rights Law by The Best Lawyers in America®, 2010 & 2011.