On June 30, the DC Circuit struck down the Federal Energy Regulatory Commission’s (FERC) use of tolling orders to buy additional time in responding to requests for rehearing—a longstanding agency practice that had the effect of materially delaying litigants’ rights to seek judicial review of FERC’s orders.  The opinion was issued in a case that implicated the Natural Gas Act;  however, it is unlikely FERC will be able to avoid having the court’s rationale also impact the agency’s orders issued under the Federal Power Act.

From a procedural perspective, before a party may appeal a decision by  FERC it must first seek rehearing of the subject decision.  A party must request rehearing within 30 days of an order, and “[u]pon such application the Commission shall have power to grant or deny rehearing or to abrogate or modify its order without further hearing.  Unless the Commission acts upon the application for rehearing within thirty days after it is filed, such application may be deemed to have been denied.”  It is that obligation—FERC’s obligation to “act” within 30 days—that was before the court for consideration.

For decades, FERC has used delegated orders issued by its Secretary within the thirty-day time period to toll the time for further action on requests for rehearing. Those tolling orders took no substantive action with regard to a request for rehearing—nor could they, given the Secretary’s limited authority—and as a result they operated merely to delay FERC action on a request for rehearing for an undefined period of time.  And to say FERC does this routinely would be an understatement.  For instance, according to the DC Circuit, every request for rehearing with respect to a pipeline certificate issued since 2017 has been met with a tolling order.  And in that specific context, landowners were left in a legal purgatory where they could not seek an appeal while a pipeline moved forward with eminent domain proceedings.  But no more.

Yesterday’s decision finds that the Natural Gas Act does not allow FERC to issue tolling orders for the sole purpose of preventing rehearing from being deemed denied by its inaction and the statutory rights to judicial review attaching.  Rather, FERC must at least substantively engage with a request for rehearing application within the thirty-day period, or the request is deemed denied and aggrieved parties may seek judicial review.  The opinion represents a significant blow to a decades-old practice at FERC, and ensures that parties will have timely access to judicial review.

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Photo of Jason Johns Jason Johns

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations…

Jason Johns advises independent power producers, utilities, investors, and large users of gas and power resources with matters arising in power markets and state and federal energy regulatory arenas. Jason appears regularly in proceedings before the Federal Energy Regulatory Commission and in negotiations at the ISO/RTO level, where he represents independent power developers and utilities. His experience includes negotiating major facility contracts, such as interconnection, transmission, and power purchase agreements; prosecuting disputes at FERC; and counseling and defending clients on issues related to regulatory compliance.

Jason also works closely with large commercial and industrial users of electricity and gas, such as aerospace companies, pulp and paper mills, steel mills, and tech company data centers. In that role, Jason helps clients negotiate power and gas supply contracts, interstate pipeline capacity asset management agreements, and pipeline bypass agreements. Jason has also assisted these clients with demand management agreements, the installation of on-site resources (such as battery storage, fuel cells, and solar PV), and with retail and wholesale power purchase agreements for renewable energy and other resources. Jason also serves as a board member of The Climate Trust, a national leader in carbon offset projects and innovative climate change solutions.

Jason and his wife are parents to two growing boys, and they live just outside of Portland, Oregon.

Click here for Jason John’s full bio.

Photo of Richard Bonnifield Richard Bonnifield

Rich Bonnifield focuses his practice on energy law, including electricity, nuclear and natural gas matters.  He has a deep understanding of the unique challenges faced by electric and gas utilities that operate in a heavily regulated industry.  Rich provides strategic legal and regulatory…

Rich Bonnifield focuses his practice on energy law, including electricity, nuclear and natural gas matters.  He has a deep understanding of the unique challenges faced by electric and gas utilities that operate in a heavily regulated industry.  Rich provides strategic legal and regulatory advice on rates, corporate structure, transactions, tariffs and reliability matters.  He assists electric and gas utility clients with the development and implementation of regulatory, ethics and reliability compliance programs, procedures and training.Click here for Richard Bonnifield’s full bio.