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.