United States: Facing A Potentially Lengthy Non Quorum Period, FERC Delegates Further Authority To Its Staff

On February 3, 2017, the Federal Energy Regulatory Commission (FERC or the "Commission") issued an order (the "Delegation Order") delegating "further authority" to its staff—beyond the existing delegations of authority already set forth in its regulations1—to take action on matters that would normally require action by the Commission itself. The additional delegations are intended to address the impending, and potentially lengthy, lack of a three-commissioner quorum resulting from the resignation of Commissioner Norman Bay on January 26, 2017, effective February 3, 2017.2 Bay's resignation leaves FERC with only two commissioners, one short of the quorum needed for Commission action under the statutes it administers. The relatively limited additional delegations will primarily maintain the "status quo" and ensure that rates and terms and conditions of service subject to FERC jurisdiction that are challenged cannot take final effect without Commission review.

Recognizing its "continuing responsibility to carry out its regulatory obligations" under the statutes it administers—including the Federal Power Act (FPA), Natural Gas Act (NGA) and Interstate Commerce Act—FERC delegated certain "further authority" to FERC staff as specified in the Delegation Order effective February 4, 2017. The additional delegated authority will remain effective only "until such time as the Commission again has a quorum and takes action to lift the delegation" not to "extend beyond 14 days following the date a quorum is reestablished." The delegations to "staff" under the Delegation Order mean "to the relevant office director," but "such authority may be further delegated to his or her designee" consistent with FERC's regulations.

Among the important reasons for FERC's action is that, during the period when it has fewer than three commissioners and lacks a quorum, FERC-jurisdictional entities will continue to make rate and other filings under the FPA and NGA, which, "in the absence of Commission action . . . would take effect [by operation of law] without suspension, refund protection, or the ability for protesting parties to [request rehearing or] appeal." In the Delegation Order, FERC stated that its "general practice has been not to allow such filings to go into effect by operation of law" and that one purpose of the additional delegations in the order is to "ensure that staff has authority to prevent such filings from going into effect by operation of law" during the non quorum period.

With regard to such filings, the Delegation Order provides that, if the date by which the Commission is required to act on a filing with a statutory action deadline falls during the period that the Commission lacks a quorum, FERC staff is delegated further authority (1) to accept and suspend such filings and to make them effective, subject to refund and further order of the Commission; or (2) to accept and suspend such filings and to make them effective, subject to refund, and to set them for hearing and settlement judge procedures.

The Delegation Order further provides that such action is without prejudice to any further FERC action when FERC regains a quorum. For initial rates and rate decreases under Section 205 "for which suspension and refund protection are unavailable," FERC also delegated authority to staff, pursuant to Section 206 of the FPA, "to institute a proceeding to protect the interests of customers."

Importantly, FERC states that "[d]ecisions made pursuant to delegated authority may be challenged on rehearing," but "authority to act on requests for rehearing is not being delegated."3 

FERC also delegated authority to its staff to:

  • "extend the time for action on matters where such extension of time is permitted by statute," such as extending the 180-day period for consideration of filings under Section 203 of the FPA
  • "take appropriate action on uncontested filings . . . seeking waivers of the terms and conditions of tariffs, rate schedules and service agreements, including waivers related to, e.g., capacity release and capacity market rules"
  • "accept settlements not contested by any party or participant, including Commission Trial Staff."

In addition, citing the Anti-Deficiency Act,4 FERC also noted that, during the period when there is no quorum, other "limited Commission operations can continue," even absent delegation of further authority to staff, including activities that, if not performed, would "imminently threaten the safety of human life or the protection of property," such as "inspecting and responding to incidents at liquefied natural gas facilities or jurisdictional hydropower projects."

These additional delegations to FERC staff are limited in scope, and are in addition to existing delegations of authority to staff to act on routine and non controversial matters, including uncontested rate filings. While the additional delegations will ensure that contested rates and tariff provisions cannot take full effect without a Commission vote, they do not give FERC staff authority to reach final decisions on such matters. As a result, they will do little to resolve what is likely to be a period of profound uncertainty caused by the inability of the Commission to reach decisions on contested and often controversial matters, such as Regional Transmission Organization/Independent System Operator market design, approval of the construction of new natural gas pipelines, and other issues critical to energy markets and infrastructure development. In addition, FERC-regulated entities may be hampered in their ability to move forward with mergers or other corporate transactions, or to obtain favorable financing for infrastructure projects, as long as FERC is unable to issue decisions on contested filings.

As of this writing, it appears that this unprecedented period of uncertainty could linger for some time, since the Trump administration has not yet nominated individuals to fill FERC's three open seats. Once the administration makes and transmits its nominations to the Senate, further delay could result from the need to find room for confirmation hearings on a legislative calendar already crowded with nominations to numerous other government posts. Moreover, once seated, the new FERC commissioners will face an immediate backlog of contested matters waiting for resolution, and it could take the agency many months to get back up to speed.

Footnotes

1 See 18 C.F.R. §§ 375.301-.315 (2016).

2 FERC subsequently issued several corrections to its Delegation Order.

3 Because authority to issue "tolling orders" extending the time for FERC to act on requests for rehearing "already rests with the Secretary, . . . timely requests for rehearing will be addressed when the Commission again has a quorum."

4 See 31 U.S.C. §§ 1341, 1342 (2012).

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