Monday, November 24, 2014

FERC Proposes Policy on Cost Recovery for Modernization of Natural Gas Facilities

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Following its open meeting on November 20, 2014, the Federal Energy Regulatory Commission (“FERC”) is seeking comments on a proposed new policy statement (PL15-1-000) that will outline the standards interstate natural gas pipelines must satisfy in order to recover the costs of modernizing their facilities and infrastructure. Once approved, this policy would allow pipelines to recover, through a simplified mechanism such as a surcharge or tracker, capital expenditures made to replace old and inefficient compressors and leak-prone pipes and perform other infrastructure improvements and upgrades to enhance reliability, safety, and regulatory compliance. FERC issued this policy proposal in response to recent federal and state regulations concerning pipeline safety, reliability, and environmental concerns.

Applying the guidelines spelled out in its order approving settlement in Columbia Gas Transmission, LLC,142 FERC ¶ 61,062 (2013), FERC proposed five standards that a pipeline would need to satisfy in its proposal for a cost recovery tracker or surcharge:
  1. The pipeline’s base rates to which any surcharges would be added must have been recently found just and reasonable, either through a general Natural Gas Act Section 4 rate proceeding or a collaborative effort between the pipeline and its customers (i.e. a settlement). FERC seeks comments addressing other acceptable approaches to demonstrating that existing base rates are just and reasonable.
  2. The costs eligible for recovery are demonstrated to be one-time capital costs incurred to modify facilities to comply with federal or state safety and environmental regulations, such as those being considered by the Pipeline and Hazardous Materials Safety Administration and by the Environmental Protection Agency, as well as other capital costs shown to be necessary for the safe or efficient operation of the pipeline. The pipeline must demonstrate that the recovered costs are not normal capital maintenance expenditures and are necessary for compliance. As in Columbia Gas, the pipeline would have to specifically identify projects eligible for recovery, the facilities to be upgraded or installed by those projects, and an upper limit on the capital costs related to each project to be included in the surcharge.  FERC seeks comments on whether costs of modifications to compressors for waste heat recovery, and costs associated with pipeline expansions should be covered.
  3. A pipeline must design its proposed surcharge or tracker to protect its captive customers from cost shifts should the pipeline lose shippers or must offer discounts to retain customer business. One way suggested to meet this goal would be for the pipeline to agree to set a floor on the billing determinants that it uses to design the surcharge. FERC seeks comments on similar types of protections that could be imposed.
  4. A pipeline must permit a periodic review of its approved surcharge or tracker to insure that such charge, as well as the base rates, remains just and reasonable. FERC is open to reasonable methods for accomplishing this goal.
  5. A pipeline must work collaboratively with its shippers to seek support for the pipeline’s recovery proposal. However, FERC did state that it may approve filings that are found to be just and reasonable but do not necessarily have 100% shipper support.
In addition to requesting comments on the five proposed standards, FERC seeks input on the following related issues:
  1. Whether pipelines should be allowed to use accelerated amortization methodologies to recover modernization costs; and
  2. Whether FERC should make any changes to the current reservation charge crediting policy to adjust for disruption of primary service resulting from modernization replacements and upgrades.
Initial comments are due 30 days after this proposed policy statement is published in the Federal Register. Reply comments are due 20 days thereafter. If you have questions or would like more information on the issues discussed in this article, please feel free to contact us.

Wednesday, November 19, 2014

Gary Newell Featured in District Energy Magazine

Newell Blog Author CardJennings, Strouss & Salmon energy attorney, Gary J. Newell, is featured in the latest edition of District Energy magazine. Read the full article: Recent PURPA Enforcement Actions: Do they signal a policy shift at FERC?

Watch this video to hear Gary Newell discuss additional information about the Public Utility Regulatory Policies Act of 1978 (PURPA).

Thursday, November 6, 2014

Jennings Strouss Ranked in 2015 “Best Law Firms” List

PHOENIX, Ariz. (November 4, 2014) – Jennings,Strouss & Salmon, PLC, a leading Phoenix-based law firm, has been ranked in the 2015 "Best Law Firms" list by U.S. News & World Report and Best Lawyers®. The firm received a Tier 1 national ranking for Energy Law, along with Phoenix and Washington, DC metropolitan rankings for 33 additional practice areas.
Firms included in the 2015 "Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a ranking signals a unique combination of quality law practice and breadth of legal expertise.
The 2015 Edition of "Best Law Firms” includes rankings in 74 national practice areas and 120 metropolitan-based practice areas.
The U.S. News – Best Lawyers “Best Law Firms” rankings, for the fifth consecutive year, are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms as part of the formal submission process. Clients and peers were asked to evaluate firms based on the following criteria: responsiveness, understanding of a business and its needs, cost-effectiveness, integrity and civility, as well as whether they would refer a matter to the firm and/or consider the firm a worthy competitor.
This year, in addition to the Tier 1 national ranking for Energy Law, Jennings Strouss was included in the metropolitan rankings for the following areas:



Administrative / Regulatory Law
Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
Commercial Litigation
Corporate Law
Energy Law
International Trade and Finance Law
Litigation - Bankruptcy
Litigation - Construction
Litigation - Real Estate
Medical Malpractice Law - Defendants
Personal Injury Litigation - Defendants
Real Estate Law
Trusts & Estates Law

Washington DC

Energy Law



Construction Law
Corporate Governance Law
Employment Law - Management
Health Care Law
International Arbitration - Commercial
Labor Law - Management
Legal Malpractice Law - Defendants
Litigation - Banking & Finance
Mergers & Acquisitions Law
Professional Malpractice Law - Defendants
Securities / Capital Markets Law
Tax Law



Banking and Finance Law
Eminent Domain and Condemnation Law
Ethics and Professional Responsibility Law
Litigation - Labor & Employment
Public Finance Law
About “Best Law Firms”
The U.S. News – Best Lawyers® “Best Law Firms” rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms as part of the formal submission process. To be eligible for a ranking, a law firm must have at least one lawyer listed in 20th Edition of The Best Lawyers in America© list for that particular location and specialty.
About U.S. News & World Report
U.S. News & World Report is a multimedia publisher of news, consumer advice, rankings and analysis. Focusing on Education, Health, Personal Finance, Travel, Cars and News & Opinion, has earned a reputation as the leading provider of consumer advice and analysis that helps its readers make informed life decisions. U.S. News & World Report's signature franchise includes its "Best" series of consumer advice guides and publications that include rankings of colleges, hospitals, mutual funds, cars and more.
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 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


Contact: Dawn O. Anderson || 602.495.2806

Wednesday, November 5, 2014

The Beneficiary Deed – Is It Right for You?

It is common knowledge that the purpose of a Will is to ensure assets are distributed according to a person’s wishes upon his or her death. In addition, many people will go a step further, perhaps upon the advice of their attorney or accountant, and have a trust prepared to help avoid the sometimes lengthy legal process of probate, as well as potentially help minimize or avoid federal estate tax; however, in Arizona, there exists another effective, yet lesser known, estate planning tool called a “beneficiary deed.” 

A beneficiary deed is a deed to real property that specifies who should receive ownership of the real estate upon the death of the current property owner. The designated beneficiary can be either an individual or it can identify multiple beneficiaries. A beneficiary deed can also designate a successor beneficiary. For instance, you may provide that your home goes to your son, but if he predeceases you, the property goes to your brother. In order to be effective, the beneficiary deed must be executed in accordance with the law and recorded in the office of the county recorder of the county in which the property is located prior to the death of the property owner.  Further, the person designated to receive the property need not sign the document, nor are they required to receive notice that they have been designated as a beneficiary.

A property owner may also change or revoke a beneficiary deed, even if it has already been recorded.  If there are co-owners of the property, the beneficiary deed can be revoked by any of the owners who signed the deed initially. A beneficiary deed will not prevent using the property to secure a loan, and will not prevent the owner from selling his or her home.

In addition to the above described flexibility, another advantage of utilizing a beneficiary deed is the fact that the real estate passes to the individual designated without having to go through probate, much like it would if a trust were prepared; however, a beneficiary deed can be generated more quickly and less expensively than preparing a trust. The beneficiary deed also has advantages over gifting property to a family member or friend prior to death, as it permits the owner to maintain control of the property, and avoid gift tax liability.  It also allows the recipient to get the stepped up basis, up to the value of the property, at the time of your death. 

Depending on the individual situation, there are also potential disadvantages to using a beneficiary deed. For instance, if the beneficiary to whom an owner intends to leave the property is a minor, it may be better to have a trust created, allowing the trustee to oversee and maintain the property until the minor reaches an appropriate age. Another potential drawback to using a beneficiary deed in lieu of a trust is that the property remains as part of the estate for purposes of calculating the value for estate taxes.  Although the foregoing may be a non-issue for those whose estate value does not exceed the current exemption amount of $5,340,000, for those whose estate exceeds the current exemption amount, this is something to consider.

The above references are not intended to be an exhaustive list of the pros and cons of beneficiary deeds. Contact an estate planning attorney to discuss your individual circumstances before deciding how best to proceed to determine the best plans to satisfy your individual estate planning needs.

*Garrett Olexa is a member of the law firm of Jennings, Strouss & Salmon, PLC. His practice includes estate planning and estate planning litigation.  Mr. Olexa can be contacted at or 623.878.2222.

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, 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 and follow us on LinkedIn, Facebook and Twitter.


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 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

Contact:  Dawn O. Anderson  ||  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.