D.C. Circuit Case May Test Continuing Validity of FERC Delegations of Authority to Agency Staff Once Its Quorum Disappeared

By Harvey Reiter, John McCaffrey and Tammie Ptacek

On February 7 and March 7, 2017, we wrote about how the Federal Energy Regulatory Commission (FERC) is operating without a legal quorum of three members and how the lack of a quorum might affect the validity of FERC staff actions taken under a Feb. 3, 2017 FERC delegation order issued hours before it lost its quorum.

Our March 7 insight informed readers of a rehearing application filed by the Wyoming Pipeline Authority (WPA) challenging the legality of any delegation orders issued by FERC staff in the absence of a quorum. The possibility that the WPA would take FERC to court on that issue could have placed a cloud over delegated orders, even on routine uncontested matters. Not long after WPA filed its rehearing, however, the issues raised by that rehearing became moot, while still other issues were presented by a FERC tolling order issued in another proceeding.

On March 22, 2017, Wyoming Gov. Matt Mead forced the WPA to withdraw its rehearing request. Since the 30-day limit for seeking rehearing is statutory and cannot be extended, WPA's withdrawal of its rehearing is with prejudice, that is, it cannot be renewed or raised again. An interesting aside: the Energy360 article discussing the withdrawal quotes the spokesman for Gov. Mead as saying that the rehearing was withdrawn because of the state's "resource limitations" and "budget reductions." But the article then quotes the outside attorney for WPA, who said he was handling the matter for the agency on a pro bono basis.

The day after WPA withdrew its rehearing, the quorum issue resurfaced when the Sierra Club and several other environmental groups opposing the natural gas pipeline project known as the Atlantic Sunrise project filed a petition in the D.C. Circuit for review of a FERC order approving the project. FERC had issued an order approving the project in February, when it still had a quorum. But the Sierra Club and others later sought rehearing and FERC's "tolling order" – an order granting rehearing "for purposes of further consideration" -- was issued by its staff after FERC had lost its quorum.

Ordinarily, a tolling order precludes judicial review, which is permitted only after FERC either denies a rehearing request or fails to act on the request within 30 days. The Sierra Club, however, now argues that only FERC itself can act to deny a rehearing and since FERC lacks a quorum, its staff lacks the authority to issue a tolling order that FERC itself cannot issue. And, the Sierra Club concludes, since 30 days have passed since the Sierra Club filed its rehearing without FERC action, the court has jurisdiction to consider Sierra's appeal.

When deciding whether Sierra Club's petition is premature (because a tolling order was issued), the court will have to address whether the tolling order itself was valid. That is, it will have to decide if FERC can lawfully delegate the authority to issue a tolling order to its staff when there is no quorum. In addressing that question, the court's decision may have broader ramifications for the lawfulness of other delegated orders issued by FERC's staff. Stay tuned.

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