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On February 3, 2017, the Federal Energy Regulatory Commission (“Commission” or “FERC”) issued an order (“Delegation Order”) (as subsequently amended) delegating authority to Commission staff to issue orders and to perform acts the Commission may find necessary in order to fulfill its statutory and regulatory obligations. The Commission deemed issuance of the Delegation Order, which is effective February 4, 2017, as necessary due to its impending lack of quorum as a result of Commissioner Norman C. Bay’s resignation from FERC effective February 3rd. At that time, FERC will be left with only two Commissioners, one short of the minimum for a quorum necessary to take action.

Under the Delegation Order, FERC provides its staff with authority to take action on rate and other filings made pursuant to the Natural Gas Act, the Federal Power Act, or the Interstate Commerce Act if the Commission is required to take action in the period during which the Commission lacks quorum. Specifically, the Delegation Order delegates to Commission staff the authority to accept and suspend such filings and to make them effective, subject to refund and subject either to (1) further Commission order or (2) hearing and settlement judge procedures. The Delegation Order makes clear that staff’s action pursuant to this delegation is without prejudice to any further action of the Commission once the three-member quorum is restored. The Delegation Order does not delegate authority to staff concerning rate and other filings, such as complaint filings under the Natural Gas Act or Federal Power Act, that are not subject to a statutory deadline.

In addition, Commission staff has the authority to take action on uncontested filings seeking waivers of the terms and conditions of tariffs, rate schedules, and service agreements and on uncontested settlements. Finally, the Delegation Order delegates authority to staff to extend the timeframe by which the Commission must take action, so long as such extension is permitted by law. Notably, through previously delegated authority, the Secretary of the Commission has, among other delegated authority, the authority to toll the time for action on requests for rehearing. FERC’s regulations outlining authorities previously delegated can be found at 18 C.F.R. § 375 Subpart C.

All delegated letter orders made pursuant to the authority under the Delegation Order constitute “final agency action” from which a request for rehearing can be sought from the Commission. Nonetheless, the authority to act on requests for rehearing (other than to toll the statutory deadline for action) is not delegated and, therefore, timely requests for rehearing will be addressed after the Commission reestablishes a quorum.

The authority delegated under the Delegation Order is effective until the required three-member quorum is reconstituted and the Commission takes action to lift the delegation. In no event will this delegated authority extend beyond fourteen days after a quorum is reestablished.

Absent the exercise of delegated authority during the period when the Commission is lacking a quorum, certain filings would have become effective or denied by operation of law due to the Commission’s inaction. Until a quorum is reconstituted, the Commission itself will not be able to take final action on new or existing rate filings, act on new or proposed rules, requests for rehearing (other than the issuance of tolling orders), and contested settlement agreements.

On January 30, 2017, Acting Chairman Cheryl A. LaFleur stated that she is committed to working closely with Commissioner Colette D. Honorable to move the work of the Commission forward during the period of transition when FERC has no quorum. Moreover, Acting Chairman LaFleur confirmed that all of the existing staff delegations that are in place, including such actions as hydropower inspections, liquefied natural gas safety reviews, and audits, will continue during the period when FERC has no quorum.

FERC’s loss of an effective quorum has not gone unnoticed in the nation’s capitol. On January 27, 2017, U.S. Senator Lisa Murkowski issued a statement committing to make it a “top priority” to take the necessary actions to fill the Commission’s vacancies to “re-establish a working quorum on the Commission.” Further, on February 2, 2017, fourteen energy-related trade associations, including the American Public Power Association and the National Rural Electric Cooperative Association, sent a letter to the President “urging the Administration to promptly nominate candidates to fill the Commission’s three existing vacancies as quickly as possible so a quorum can be reconstituted without undue delay.” In addition, a February 2nd Washington Post article highlighted FERC’s lack of quorum and its impact on oil and gas pipeline projects that are currently in line for approval, but will likely face delays as a result of the Commission’s lack of quorum.

FERC’s Delegation Order has already faced opposition since its issuance. On March 6, 2017, the Wyoming Pipeline Authority (“WPA”) requested rehearing of the Delegation Order, challenging its legality. In its filing, WPA argued that the Delegation Order exceeds FERC’s statutory authority and impermissibly grants powers to FERC staff that are greater than those conferred to the Commission itself by Congress. WPA argued that “when the Commission cannot act due to a lack of quorum, it follows that the Staff cannot act in the Commission’s stead under such circumstances, and the attempt of the Delegation Order to cure this deficiency is ultra vires and ineffective.” According to WPA, the Delegation Order is ineffective at remedying the consequences of the Commission’s lack of quorum. Consequently, WPA argued, the only way for the Commission to address the lack of quorum is through the appointment of additional Commissioners. WPA’s request for rehearing can be found here.

Although the Commission’s lack of quorum and its repercussions have been cause for uncertainty, this is not the first time in FERC’s history it has found itself contemplating the loss of quorum. On April 16, 1993, anticipating the impending loss of quorum, the Commission issued a similar order, delegating certain authority to be exercised when the absence of a quorum would otherwise allow various actions to occur without Commission consideration.

For more information, please contact Bob Weinberg, Jeff Genzer, Thomas Rudebusch, Michael Postar, Pete Scanlon, or Lisa Gast.