Thought Leadership

Baker Botts Washington Recap - Episode 11

Client Updates

In the latest installment of our video series on important regulatory and legislative updates, Partner Kyle Clark recaps the speeches given on October 27 and 28 by officials from DOJ, SEC and CFTC which highlighted each agency's enforcement priorities.

Partner Tom Holmberg discusses commissioner Richard Glick's response to New Mexico Senator Martin Heinrich regarding the interstate transportation and storage of hydrogen. The letter demonstrates the chairman’s thinking on jurisdictional issues around hydrogen and FERC’s potential future role in the regulation of hydrogen transportation and storage.

 

 

In speeches on October 27 and 28, officials from DOJ, SEC and CFTC highlighted each agency’s enforcement priorities.

DOJ officials focused on three areas.

  • First, DOJ re-affirmed its focus on prosecuting individuals in white collar cases.  DOJ’s latest announcements included restoring a requirement that any company seeking cooperation credit to reduce its own punishment must disclose all non-privileged information about all individuals involved in misconduct – regardless of position or seniority. 
  • Second, DOJ reiterated its focus on foreign bribery and anti-corruption efforts.  Officials noted the Department’s continued efforts to track down proceeds of foreign bribery that end up in the United States, then use federal seizure and forfeiture statutes to confiscate those assets.
  • Third, and finally, DOJ spoke of its plans to combat cyber fraud, including by ensuring companies truthfully describe their products and services and ensuring that government contractors timely report cyber breaches.

SEC’s new enforcement director, Gurbir Grewal, spoke about the SEC’s focus on the role of gatekeepers.  Director Grewal identified auditors, audit firms, underwriters and attorneys among the group of gatekeepers the enforcement division plans to scrutinize when misconduct is identified.

He also shared SEC’s intention to focus on the cryptocurrency sector, including registrations and representations made about coin offerings and coin exchanges, and the growing product sector of crypto-based lending and award programs.

CFTC (Commodity Futures Trading Commission)

The acting director of enforcement of the CFTC, Vincent McGonagle, spoke of the agency’s plans to examine digital assets and blockchain-based products offered on a margin or finance basis, with an eye toward whether those products should be offered on an exchange. 

This activity will impact emerging foreign exchange products, including those being tied to cryptocurrency, which some multi-national companies are exploring as an alternative to traditional forex trading and hedging. 

On September 28, Senator Martin Heinrich of New Mexico sent a letter to FERC commissioner Richard Glick, requesting comm’r Glick’s views on certain issues regarding the interstate transportation and storage of hydrogen. 

On October 26, Commissioner Glick sent a response to the Senator.  While he answered all of Senator Heinrich’s questions, several of his responses bear repeating, because they demonstrate the chairman’s thinking on jurisdictional issues around hydrogen and FERC’s potential future role in the regulation of hydrogen transportation and storage.

First, Chairman Glick confirmed that the Natural Gas Act grants the Commission authority to the transportation of natural gas in interstate commerce. This includes pipelines that blend some amount of hydrogen into the natural gas stream.  FERC’s authority also extends to the tariff provisions setting forth the terms of service on the pipeline and the quality specifications of the natural gas stream to be transported.

Although Chairman Glick confirmed FERC’s jurisdiction over pipeline transportation of hydrogen when blended into the natural gas stream, he also noted that, in practice, such blending is relatively rare.

Finally, the Chairman confirmed that FERC’s experience with linear transportation infrastructure such as natural gas pipelines may provide analogous expertise for regulating new hydrogen pipelines

The day after Commissioner Glick responded to Senator Heinrich’s questions, Senator Heinrich issued a press release announcing the introduction of a bipartisan package of legislation intended to promote the development of clean hydrogen.  One of the proposed bill, the Hydrogen Infrastructure Finance and Innovation Act includes a provision requiring several regulatory agencies – including FERC – to assess the jurisdiction over the siting, construction, safety, and regulation of hydrogen transportation and to report their findings to Congress. 

We will continue to the activities of lawmakers and regulators as they consider the regulatory framework of hydrogen transportation in the U.S.

 

 

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