Navigating Unchartered Waters: FERC Provides Additional Guidance Through the Delegation of Additional Authority to FERC Staff for the Non-Quorum Period
In recent weeks, there has been much speculation over what actions the Federal Energy Regulatory Commission (“FERC” or the “Commission”) would take to ensure continuity of operations following the departure of Commissioner Norman Bay. Under the Department of Energy Organization Act, the Commission is required to have a quorum of three commissioners “for the transaction of business.” Because Commissioner Bay’s departure leaves only two FERC commissioners, many have questioned whether FERC would effectively cease to function until such time as the Trump administration is able to fill commission vacancies. Earlier this week, in a podcast posted on FERC’s website, Acting Chairman Cheryl LaFleur indicated that FERC was working on expanding FERC staff’s delegated authority during the period in which FERC does not have a quorum, consistent with the approach taken by other federal agencies during similar periods.
Earlier today, FERC formally issued an order expanding the authority of FERC staff to act on filings submitted to the Commission without formal FERC action during the non-quorum period. FERC’s order expanded FERC staff’s authority in several important respects.
First, the order grants FERC staff expanded authority to take action on filings made pursuant to Sections 205 of the Federal Power Act (“FPA”), Section 4 of the Natural Gas Act (“NGA”), and Section 6(3) of the Interstate Commerce Act (“ICA”). As a general matter, these statutory provisions require FERC to take action within a prescribed period of time following a filing made under these sections. While FERC staff already has been delegated authority to act on filings submitted pursuant to these sections to the extent that they are uncontested, today’s order expands FERC staff’s authority to extend to any filing—whether contested or uncontested—that FERC would otherwise be required to act on during the non-quorum period. In particular, FERC staff would be permitted to either: (1) accept and suspend such filings, subject to refund and further Commission order; or (2) accept and suspend such filings, subject to refund, and set the filing for hearing and settlement judge procedures before a FERC Administrative Law Judge. In the case of initial rates or rate decreases filed pursuant to Section 205 of the FPA, which are not subject to FERC’s suspension authority, FERC staff would have the authority to commence an investigation pursuant to Section 206 of the FPA into whether the proposed rates are just and reasonable.
Second, the order grants FERC staff authority to take action on uncontested filings made pursuant to Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA seeking waivers of the terms and conditions of tariffs, rate schedules and service agreements, including waivers related to FERC’s capacity release and capacity market rules. FERC’s reference to rules governing the release of capacity on natural gas pipelines is noteworthy, as companies often will seek waiver of FERC’s capacity release requirements in order to facilitate the assignment and release of capacity as part of a merger or acquisition of assets. Today’s order provides certainty to companies considering such transactions that the lack of quorum will not prevent FERC from granting requests for waiver of the capacity release rules.
Third, the order authorizes FERC staff to grant requests for an extension of time, unless granting such a request would be prohibited by statute.
Fourth, the order grants FERC staff the authority to accept uncontested settlements filed with FERC.
In addition to granting FERC staff expanded delegated authority, today’s order makes clear that FERC staff will continue to act on matters falling within the scope of its preexisting delegation authority during the non-quorum period, including the ability of the Secretary’s office to toll the time for action on requests for rehearing.
These additional delegations will help to alleviate some of the backlog that would otherwise accrue during a period of non-quorum and provide some additional certainty and clarity for filers as to what can be expected. As a practical matter, however, the lack of quorum still could create significant delays and uncertainty, particularly if a large number of filings are accepted and suspended subject to further Commission action, or, are accepted and suspended subject to refund and set for settlement proceedings and hearing. In effect, FERC’s delegation of authority to staff to suspend filings subject to a further FERC order or the outcome of settlement and hearing procedures allows FERC staff to prevent filings from going into effect by operation of law, while deferring a substantive decision on the merits until such time that FERC has a quorum. Unless a new commissioner is promptly nominated and confirmed, the result could be a delay of many months between when a filing is submitted to FERC and when FERC addresses the merits of the filing.