November 2017 – Global Power Law & Policy

Please Join Us: Connecting the Dots: U.S. and International Issues and Regulatory Developments on Connected Cars/Autonomous Vehicles

Nov 20 2017

An Access Partnership and K&L Gates Symposium

We invite you to join us in the K&L Gates Washington, D.C. office on Wednesday, December 6 for an in-person (only) breakfast symposium focused on the rapidly changing global regulatory landscape surrounding connected cars/autonomous vehicles.

Our experienced panelists are government and industry officials who will discuss upcoming national and international industry and regulatory developments regarding the autonomous vehicles industry, focusing on cybersecurity and privacy issues, and infrastructure-related concerns.

We are pleased to announce the following speakers and panelists. Please note that panels remain in formation.

Welcome
9:00 a.m.
Ryan Johnson, Senior Manager, International Public Policy, Access Partnership

Keynote Speaker: Nat Beuse, Associate Administrator for Vehicle Safety Research, National Highway Traffic Safety Administration (NHTSA).
9:05 a.m.
Nat is responsible for NHTSA’s vehicle safety research activities, which are focused on achieving the agency’s mission of reducing fatalities and injuries caused by motor vehicle crashes.

Keynote Speaker: Andrea Glorioso, Counsellor for the Digital Economy, Delegation of the European Union to the United States.
9:30 a.m.
Andrea acts as the liaison between the European Union and United States on policy, regulation, and research activities related to the Internet and information and communication technologies. He worked for eight years at the European Commission in Brussels on cybersecurity, personal data protection, cloud computing, and Internet governance. He was part of the teams that produced a number of key strategies of the European Commission, including the Action Plan on the Internet of Things and the Cloud Computing Strategy.

Panel Discussion: Infrastructure*
10:00 a.m.
Moderator: Stephen A. Martinko, Government Affairs Counselor, K&L Gates

David S. Kim, Vice President, Government Affairs, Hyundai Motor Company

Greg Rogers, Policy Analyst & Assistant Editor, Eno Transportation Weekly (ETW), Eno Center for Transportation

Jim Tymon, Chief Operating Officer/Director of Policy and Management, American Association of State Highway and Transportation Officials (AASHTO)

Panel Discussion: Cybersecurity & Privacy*
11:00 a.m.
Moderator, Bruce J. Heiman, Partner, K&L Gates

Robert E. Muhs, Vice President, Government Affairs, Corporate Compliance & Business Ethics, Avis Budget Group

Kiyoshi Nakazawa, Representative, Information Technology Promotion Agency (IPA) New York Director, Information Technology Department, Japan External Trade Organization (JETRO) New York Special Advisor to the Ministry of Economy, Trade and Industry (METI), Government of Japan

Al Sisto, Executive Chairman, Device Authority

*Panel in formation.
For more information, please visit our event page.

To RSVP, please click here.

Senate’s Version of the “Tax Cuts and Jobs Act” Is Good News for Energy Renewables – UPDATE

Nov 18 2017

By: Elizabeth C. Crouse and Rachel D. Trickett

Late on November 16, 2017, Senate Finance Committee (“SFC”) Chair Orrin Hatch released amendments to the Senate Republicans’ tax reform proposal. Similar to the original version and the first amendment (released late on November 14, 2017), the amended proposal does not include provisions concerning the PTC or the ITC. In addition, the Enhanced Oil Recovery Credit, the Credit for Producing Oil and Gas from Marginal Wells, and the New Markets Tax Credit would all remain intact. Also similar to the prior version, the SFC proposal does not address expired energy credits for qualified fuel cell and small wind energy property, qualified microturbine property, or production from advanced nuclear power facilities. Recently, however, Senator Chuck Grassley announced publicly that Senate Republicans would address certain of those expired energy credits in a separate “extenders bill” apart from the “Tax Cuts and Jobs Act” at the end of the year.

K&L Gates Blockchain Energizer – Volume 17

Nov 17 2017

By Molly Suda, Buck B. Endemann, and Ben Tejblum

There is a lot of buzz around blockchain technology and its potential to revolutionize a wide range of industries from finance and health care to real estate and supply chain management. Reports estimate that over $1.4 billion was invested in blockchain startups in 2016 alone, and many institutions and companies are forming partnerships to explore how blockchain ledgers and smart contracts can be deployed to manage and share data, create transactional efficiencies, and reduce costs.

While virtual currencies and blockchain technology in the financial services industry have been the subject of significant debate and discussion, blockchain applications that could transform the energy industry have received comparatively less attention. Every other week, K&L Gates Blockchain Energizer will highlight emerging issues or stories relating to the use of blockchain technology in the energy space. To subscribe to the Blockchain Energizer newsletter, please click here.

IN THIS ISSUE

Energy Web Foundation Launches Public Test of Its Energy Blockchain Network
Pilot Project Launches to Use Energy Storage and Blockchain to Balance the Grid
At COP 23, the Climate Ledger Initiative Focuses on How Blockchain Can Support Paris Agreement
Blockchain Platform for Commodities Trading Under Development

To view more information on theses topics in Volume 17 of the Blockchain Energizer, click here.

Today’s House vote in Favor of H.R. 1, the Tax Cuts and Jobs Act

Nov 17 2017

By: Elizabeth C. Crouse

Earlier today, the U.S. House of Representatives voted in favor of H.R. 1, the Tax Cuts and Jobs Act. As expected, the limitations on the Production Tax Credit and Incentive Tax Credit that we discussed in our post on November 3 remain in the House bill: the House Republicans would dramatically curtail the PTC, leave the ITC in respect of solar energy installations largely intact, and renew the ITC in respect of several “orphan” renewable energy technologies. However, as discussed in our post on November 15, the Senate Republicans would not change the existing PTC or ITC provisions in the Senate tax reform package. (According to recent news reports, the Senate Republicans intend to renew the ITC in respect of the “orphan” technologies in an extenders bill later this year.) The Senate has not yet voted on its separate tax reform proposal and, at this point, it is not clear whether a conference committee bill will include any provisions regarding the PTC or ITC.

Senate’s Version of the “Tax Cuts and Jobs Act” Is Good News for Energy Renewables

Nov 15 2017

By: Charles H. Purcell, Mary Burke Baker, Elizabeth C. Crouse, Rachel D. Trickett

On November 2, 2017, we alerted taxpayers that the House Ways and Means Committee had unveiled its much anticipated tax reform bill titled the “Tax Cuts and Jobs Act” (the “House Plan”). The House Plan includes substantial modifications to existing renewable energy tax credits including the production tax credit (“PTC”) and the investment tax credit (“ITC”), and also eliminates other tax incentives entirely, effective beginning after 2017, including the Section 199 Domestic Production Activities Deduction (the “DPAD”), the New Markets Tax Credit (the “NMTC”), the Historic Rehabilitation Tax Credit (the “HRTC”), the Enhanced Oil Recovery Credit, and the Credit for Producing Oil and Gas from Marginal Wells.

On the evening of November 9, 2017, Senate Republicans released the Senate’s proposal (the “Senate Plan”). The Senate Plan differs from the House’s proposed legislation in several key ways. Significantly, the Senate Plan does not modify the PTC or the ITC, which is consistent with public statements made by several Senate Republicans since the House Plan was released. Similarly, the Enhanced Oil Recovery Credit, Credit for Producing Oil and Gas from Marginal Wells, and NMTC would all be left intact and the HRTC would remain available, albeit in reduced form. However, unlike the House Plan, the Senate’s proposed legislation did not address expired energy credits for qualified fuel cell and small wind energy property, qualified microturbine property, or production from advanced nuclear power facilities.

Similar to the House’s proposed legislation, the Senate Plan would repeal the DPAD effective for tax years beginning after 2017. As we discussed in our previous alert, repealing the DPAD would affect a variety of domestic manufacturers of a number of items, including solar panels, construction equipment, and software, as well as oil and gas producers.

The Senate Plan is moving very quickly and is expected to proceed on a schedule roughly one week behind that of the House Plan.

GOP’s “Tax Cuts and Jobs Act” Trims Renewable Energy and Other Tax Credits

Nov 03 2017

By Mary Burke Baker, Elizabeth C. Crouse, Rachel D. Trickett, Charles H. Purcell

On November 2, 2017, the House Ways and Means Committee unveiled its much anticipated tax reform bill titled the “Tax Cuts and Jobs Act” (the “House Plan”). The House Plan is a significant step by Republican lawmakers to fulfill a campaign promise to reform the United States tax code. Significantly, for solar, wind, and other renewable energy companies that have been scrambling to predict how proposed tax reform might affect their industries, the House Plan includes substantial modifications to existing renewable energy tax credits including the production tax credit (“PTC”) and the investment tax credit (“ITC”). Many other energy-related tax incentives were also cut, including the Code Section 199 Domestic Production Activities Deduction and credits for Enhanced Oil Recovery and Producing Oil and Gas from Marginal Wells. Two other credits that are often used in conjunction with the ITC on small solar developments, the New Markets and Historic Rehabilitation Tax Credits, were also cut.

THE PTC

The House Plan would permanently reduce the maximum PTC rate from 2.4 to 1.5 cents per kilowatt-hour–with no inflation adjustments going forward–for all projects that did not begin construction prior to the date the House Plan is enacted. It is possible that this reduction may be retroactive for projects that commence construction on or after November 2, 2017, the day on which the House Plan was released. Under current law, the PTC is scheduled to sunset in 2020; this schedule would remain unchanged in the House Plan.

Effective for all tax years–including years beginning prior to, on or after enactment of the House Plan–the House Plan would require a “continuous program of construction” from the date a facility begins construction to the date it is placed in service. The “continuous program of construction” requirement exists under current law and has been interpreted by the Department of the Treasury (the “Department”) to permit several “safe harbor” time periods. At present, it is unclear whether the House Plan, if enacted, would effectively eliminate those safe harbors or whether the Department may issue them unchanged or substantially unchanged.

THE ITC

The House Plan would align the expiration dates and phase-out schedules for different qualified energy properties and extend the ITC to certain other technologies. Solar energy, fiber-optic solar energy, qualified fuel cell, and qualified small wind energy property would be eligible for a 30% ITC if construction begins before 2020 and would be phased out for construction that begins before 2022 using the same schedule currently applicable to solar energy property. Qualified microturbine, combined heat and power systems, and thermal energy property would be eligible for a 10% ITC if construction begins before 2022. The permanent 10% ITC available for solar energy and geothermal property would be eliminated for all facilities if construction of such facility begins after 2027.

Similar to the PTC, the House Plan would also require a “continuous program of construction” until a facility is placed in service to meet the “beginning of construction” requirement to qualify for the ITC. Existing Department guidance regarding the continuous program of construction is currently applicable only to wind facilities intended to qualify for the PTC. As with regard to the PTC, it is not clear whether the Department will apply the same standard to projects intended to qualify for the ITC if the House Plan is enacted.

The good news for the renewable power industry is that the PTC and ITC survive under the House Plan, albeit with changes that may have a significant impact on the industry. Other tax incentives did not fare as well. For example:

Section 199 Domestic Production Activities Deduction

The Code Section 199 domestic production activities deduction or “DPAD” would be repealed effective for tax years beginning after 2017. This affects a variety of domestic manufacturers of a number of items, including solar panels, construction equipment, and software, as well as oil and gas producers.

Enhanced Oil Recovery Credit

The enhanced oil recovery credit would be repealed effective for tax years after 2017.

Credit for Producing Oil and Gas from Marginal Wells

The credit for producing oil and gas from marginal wells would be repealed effective for tax years after 2017.

New Market and Historic Rehabilitation Tax Credits

Two other credits that are often seen in conjunction with small solar installations were also cut. The New Market Tax Credit for development in designated low-income areas of the country would be eliminated effective for tax years after 2017, but credits that would have already been allocated may be used over the course of up to seven years as contemplated under current law. Similarly, the Historic Rehabilitation Tax Credit for expenses incurred to rehabilitate old and/or historic buildings would be repealed. Under a transition rule, the credit would continue to apply to expenditures incurred through the end of a 24-month period of qualified expenditures that would have to begin within 180 days after January 1, 2018.

CONCLUSION

The House Plan is far from final, but it is moving very quickly. The House Ways and Means Committee Chair, Kevin Brady, has indicated that the House Republicans plan to pass the House Plan by Thanksgiving. Taxpayers impacted by these proposed changes must engage immediately in order to have any impact on the final legislation. For any questions on these issues, please contact one of the following members of our Tax and Federal Tax Policy Teams.

K&L Gates Blockchain Energizer – Volume 16

Nov 02 2017

By Molly Suda, Buck B. Endemann, and Ben Tejblum

IN THIS ISSUE

Energy Finance Blockchain Platform Launches in California
Blockchain Platform Aimed at Rewarding Energy Conservation Launches in the United Kingdom
European Commission Plans Significant Additional Investment in Blockchain and Other Innovative Technologies

To view more information on theses topics in Volume 16 of the Blockchain Energizer, click here.

ITC Commissioners Recommend Tariffs and Quotas on Imports of Solar Cells and Modules; President May Announce Final Remedy Decision before End of 2017

Nov 02 2017

By: Stacy J. Ettinger, Elias B. Hinckley, and James R. Wrathall

As we previously reported, on September 22, 2017, the U.S. International Trade Commission (“ITC”) found that increased imports of crystalline silicon photovoltaic (“CSPV”) cells and modules have seriously injured (economically harmed) U.S. solar manufacturers. The four ITC Commissioners have now announced their separate recommendations for how to alleviate or “remedy” that economic injury. Remedies, such as tariffs or quotas, normally can be imposed for a maximum of four years.

The President will have the final say on whether to impose a remedy, and if so, the form, amount, and duration of the remedy. There is speculation in Washington that the President’s remedy decision could be announced in December.

The stakes are high. Industry experts believe that tariffs at the levels originally requested by Suniva could massively impede the economic health and growth of U.S. downstream users and consuming industries, more than doubling the costs of some solar projects and putting tens of thousands of jobs at risk. Industry experts believe that imposition of tariffs at the levels recommended by the Commissioners could potentially have less of a draconian impact. Public comments on remedy issues for the President’s consideration may be submitted before November 20, 2017.

As described below, the Commissioners’ recommendations range from 10-35 percent tariffs on cell and module imports to defined quotas on imports of CSPV products. As a result of the ITC’s earlier injury findings, imports from free trade agreement (“FTA”) countries Mexico and Korea would be subject to imposition of remedies while imports from other FTA countries, including Canada, would not.

Chair Rhonda Schmidtlein recommends an in-quota tariff rate of 10 percent and an in-quota volume level of 0.5 gigawatts for imports of cells. Imports of cells that that exceed the in-quota 0.5 gigawatt volume level would be subject to a 30 percent tariff. Commissioner Schmidtlein also recommends a 35 percent tariffs on CSPV modules, to be reduced in each subsequent year.

Vice Chair David Johanson and Commissioner Irving Williamson recommend a 30 percent tariff on CSPV cell imports in excess of 1 gigawatt. In each subsequent year, the tariff rate would decrease and the in-quota amount would increase. For imports of CSPV modules, Commissioners Johanson and Williamson recommend a 30 percent tariff, to be reduced in each subsequent year.

Commissioner Meredith Broadbent recommends a quantitative restriction (quota) on imports of CSPV products into the United States, including cells and modules. The first year import quota would be set at 8.9 gigawatts, to be increased by 1.4 gigawatts in each subsequent year.

Commissioner Broadbent also recommends the President administer these quantitative restrictions through the sale of import licenses at public auction at a minimum price of one cent per watt. The revenue generated by the sale of import licenses would be used to assist domestic CSPV product manufacturers, including for purchase of production equipment, hiring of production workers, and R&D.

The ITC will send its final report to the President, including the Commissioners’ remedy recommendations, by November 13, 2017. The President has up to 60 days – and complete discretion – to determine the form, amount, and duration of the remedy.

The Commissioners’ remedy recommendations, if adopted by the President, would likely result in less impact on final module pricing than Suniva had originally requested. For example, the initial pricing impact of a 30 percent tariff would likely be in the range of 10 to 15 cents per watt on CSPV modules. This amount would likely decline as the price of modules drops and the tariff rate is reduced over time. Additionally, some CSPV manufacturing might shift to free trade agreement countries not included in the injury finding, which could further pull prices lower over time.

Public comments on remedy issues for the President’s consideration are due to the Office of the United States Trade Representative (“USTR”) on November 20, 2017. Rebuttal comments are due November 29, 2017. USTR will hold a public hearing on December 6, 2017.

For more information on the solar proceeding, including information on filing comments on remedy issues, contact Stacy Ettinger, Elias Hinckley, or Jim Wrathall of K&L Gates.

Archive:November 2017