A recent ruling from the D.C. Circuit Court of Appeals that prevents federal regulators from delaying decisions on whether to build out gas infrastructure indefinitely leaves many unanswered questions for the power sector, attorneys say.

Last week, the court ruled 10-1 that the Federal Energy Regulatory Commission does not have the authority to postpone decisions on requests for rehearing indefinitely. The Allegheny Defense Project v. FERC en banc hearing concerned the commission's practice of delaying landowners' requests for rehearing on pipeline development, while developers could move forward with construction under the Natural Gas Act.

But the D.C. Circuit's response was much broader than anticipated, according to industry lawyers, and as a result could lead to a dramatic shift in legal processes before FERC.

"Personally, I wasn't surprised by the ruling. But I thought that it would be more likely that the court would rule narrowly, like only in the context of infrastructure disputes ... where long delays can allow eminent domain proceedings to proceed even before FERC substantively acted upon our rehearing requests," former FERC Commissioner Suedeen Kelly, who is now a partner at law firm Jenner and Block, told Utility Dive. 

Instead, the court came down "very broadly," she said. "So it's pretty clear that the ability of FERC to indefinitely delay the appeal of these orders under not only the Natural Gas Act, but also, I believe, under the Federal Power Act [(FPA)], is over."

Under the current process, an individual has 30 days to file a request for rehearing after FERC issues an order, and FERC then has 30 days to respond to that request. But FERC commonly responds to such requests through delaying or tolling the order, sometimes indefinitely. Tolling the requests prevents the parties that sought a FERC rehearing from pursuing litigation. Once FERC does either affirm or deny the request, an opponent of the order has another 60 days to ask an appellate court to review the order.

Though FERC Commissioner Richard Glick initially praised the rule as a "resounding victory" for landowners, he and Chair Neil Chatterjee later issued a joint statement asking Congress to grant FERC "a reasonable amount of additional time to act on rehearing requests involving orders under both the Natural Gas Act and the Federal Power Act." The commission also on Monday filed a stay with the Court of Appeals, requesting an additional 90 days for the mandate issued by the court to take place.

The move likely reflects a concern over rehearing requests that are currently pending, Steve Weiler, partner at Dorsey and Whitney law firm told Utility Dive.

"They didn't say this, but it's implied — how do we address all those within a 30 day period when we haven't been able to do so previously?" said Weiler, who principally represents electric utilities in regional wholesale markets.

Another question will be how the commission adjusts its processes to respond to this order longer term, and whether Congress will respond to the commission's request for more leeway, attorneys say.

Impact to the Federal Power Act

Power sector attorneys agreed that the ruling, despite directly addressing the NGA, also applies to the FPA because of how closely the language matches in each law.

"No question at all" that the ruling will apply to the FPA as well, Jeff Dennis, managing director and general counsel at Advanced Energy Economy told Utility Dive. "The pertinent language in the statutes is exactly the same."

"Although the Court's decision in Allegheny was focused simply on the Natural Gas Act, its implications travel over to the power act as well," said Weiler. 

FERC's practice of delaying requests for rehearing for long periods of time has long been a source of contention among advocates, attorneys and other stakeholders in the energy industry, particularly as FERC cases have become more numerous. And how the commission responds to this order will be a huge deal for those who interact with the commission, attorneys say.

"The Commission considers many, many more cases now than it did when the Federal Power Act or the Natural Gas Act were written," said Dennis. "Those statutes didn't contemplate complex market design cases like [the Minimum Offer Price Rule], like any number of RTO/ISO-related cases, all of those things. So the commission has to be very creative in figuring out how to address those complexities while complying with the court's order."

Though the existing process frustrated many stakeholders, "the most severe impacts from that previous long-standing approach were on landowners," said Dennis. "The factual circumstances of the Allegheny Defense Project case were kind of the most extreme examples of how that policy could create real, lasting, irreparable harm on parties who are seeking rehearing and ultimately plan to seek judicial review."

For the power sector, the ruling could also have positive effects, he said. "Anytime the commission is making a major decision that it's not likely to grant rehearing on and that will have implications in the market, it's always better to be able to get judicial review quicker."

Under a more expedited process, stakeholders could avoid the issues raised with the PJM Interconnection Minimum Offer Price Rule (MOPR), for example. In that case, stakeholders worried the PJM auction would commence before parties were able to litigate, leaving states in the region particularly unsure how to act.

"There could be some benefit" to avoiding the "uncertainty that creates for clean energy and frankly, everyone in the market alike," said Dennis.

And without the ability to issue a tolling order, FERC could instead grant a rehearing subject to further briefing, as the court suggested, said Weiler.

"Instead of issuing a tolling order that doesn't really address the merits, FERC could do a little bit more. Maybe say, 'All right, we need some more time. So we're going to ask the parties to hone the arguments a little more for us,'" also giving FERC more time to think through its own actions, he said.

But there will also be challenges based on the sheer quantity of filings in front of FERC, said Kelly and other attorneys and former FERC commissioners.

How much can Congress do?

FERC could take the ruling to the Supreme Court or wait for Congress to act, as Chatterjee and Glick requested, said Weiler. But under a presumptive Congressional intervention, federal legislators could not act retroactively, said Kelly, leaving current requests for rehearing in limbo.

If FERC fails to respond to a request for rehearing within 30 days and does not issue a tolling order on the request, it's deemed denied by law. Under that circumstance, it's unclear what the party in opposition would do, Kelly said. Further, it's unclear what Congress would do if presented with the issue.

"It depends on how far Congress wants to go in retroactively trying to make things work smoothly," said Kelly.

"The first question is, 'Does Congress even want to go there?' And then the second question is, if Congress decides that it wants to go there, 'Legally, what could it do?' Because Congress and legislatures cannot change things retroactively."

What Congress would likely be amenable to, she said, is giving FERC more time to act on these orders, which she and former FERC Chair Jon Wellinghoff believe is necessary.

"The commission shouldn't have unlimited time to just let these rehearing requests sit," Wellinghoff told Utility Dive. "There should be some reasonable parameters set around what the restrictions are from a timing and procedural perspective on the one hand. But on the other hand, FERC should have some level of discretion, if additional time and investigation is necessary to fully consider the matter."

Often, FERC simply doesn't have the resources to act on these orders quickly, said Kelly. After her first year on the commission, she calculated they issued five and a half decisions on average per day. 

But other times the commission hoped that by giving parties more time to "cool down" some issues could be resolved. "And in some cases they were just really, really difficult cases," she said.

If Congress isn't able to act this session, Wellinghoff said he'd be concerned over whether the commission ends up having to deny more requests for rehearing as a result of the ruling "and ultimately [has] less ability to fully and fairly consider them."

But likely the shortest end of the stick will go to industry, said Weiler.

"The simple truth is that FERC has issued tolling orders for 50 years and the courts have approved their use until last week," he said. "So this is a change. Change is a lawyer's best friend, but not necessarily a business man's best friend. … This just means that there's possibly more delay and extra time."