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D.C. Circuit Upends FERC Tolling Order Practice

On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit), sitting en banc, overturned fifty years of circuit precedent in finding that the Federal Energy Regulatory Commission’s (FERC or Commission) practice of issuing “tolling orders” for the purpose of preventing requests for rehearing from being denied by operation of law, which delay judicial review indefinitely, is not authorized by the Natural Gas Act. Allegheny Defense Project v. FERC, Case No. 17-1098.  Given that the rehearing provisions in the Natural Gas Act are substantively identical to those in the Federal Power Act (FPA), this decision likely will affect FERC’s actions on rehearing of electric matters as well.  Under both statutes, if FERC does not act within thirty days of a request for rehearing, the request is deemed denied and the party can proceed with an appeal to the courts.  As it is unlikely that FERC will be able to issue thorough, reasoned rehearing orders in all cases within thirty days, FERC will need to develop a new way to handle rehearing requests that does not involve tolling orders.

The Court did suggest some ways in which FERC could give itself more time. The Court notes that FERC retains the authority to modify, in whole or in part, its decisions until FERC files the record of its proceeding with the Court, typically forty days after an appeal is filed.  The Court further notes that FERC can request an extension of time from the Court to file the record; if granted, this would provide FERC additional time to act on the rehearing request.  The Court also suggested that FERC may be able to grant rehearing for the express purpose of revisiting and substantively reconsidering a prior decision, and would need additional time for supplemental briefing or further hearing processes for that purpose. 

FERC already has signaled that, at least in the short term, it intends to apply the Allegheny Defense Project holding to FPA decisions and to take advantage of the time until it files the record with the Court.

Examining the “plain statutory text,” the D.C. Circuit held that tolling orders are not one of the types of actions that the Natural Gas Act authorizes FERC to take to prevent a rehearing request from being deemed denied and thereby delay the requestor’s opportunity for judicial review. The Court found that FERC’s “virtually automatic” tolling order practice impermissibly rewrote the statute to remove FERC’s thirty-day clock to act on rehearing, stating, “through the use of tolling orders, the Commission has eliminated entirely the jurisdictional consequences of its inaction, preventing rehearing applications from being deemed denied even after they have been pending for prolonged periods of time.” In response to FERC’s argument that a tolling order is an action on the application for rehearing within the context of 15 U.S.C. § 717r(a), the Court explained, in great detail, that a tolling order does not substantively engage with the rehearing application and by its terms simply grants the Commission additional time for consideration. 

The Court noted that its decision does not mean that FERC must issue comprehensive orders on rehearing within thirty days of a request. While it stated that it was not deciding the issue, the Court implied that FERC may issue an order granting rehearing “for the express purpose” of reconsidering its decision and require additional time for further processes, such as supplemental briefing or a hearing. In his concurrence, Judge Griffith provided FERC some guidance on how to gain time to address a request for rehearing:  set a briefing schedule and direct interested parties to respond to the rehearing request. FERC would then have unlimited time to rule on the expanded record. 

Further, the majority of the Court advised that, “in practice, . . . the Commission will typically still have at least seventy days total, with the possibility of more time, to act on a rehearing application” because the statute states that the Commission may “modify or set aside” its order “[u]ntil the record in a proceeding shall have been filed in a court of appeals.” The key difference, the Court recognized, is that this approach “ensures that the Commission’s additional time for action comes with judicial superintendence and the opportunity for the applicant to seek temporary injunctive relief if needed under the ordinary standards for a stay.”