Does FERC's Authority to Delegate Functions to Staff Survive the Loss of an Agency Quorum?

By Harvey Reiter, John McCaffrey and Tammie Ptacek

On May 25th, the Senate Committee on Energy & Natural Resources will hold hearings on President Trump's nominations to fill two commissioner vacancies on the Federal Energy Regulatory Commission (FERC). If confirmed, the nominees – Neil Chatterjee and Robert Powelson — would restore the three member quorum that FERC has lacked since February, when former FERC Chairman Norman Bay resigned and FERC was left with only two commissioners.

Restoration of a quorum would allow FERC to conduct major business that has been held up for several months by the lack of a quorum. But other, more routine actions have been taken by the agency's staff over the last several months under authority delegated to the staff by FERC when it still had a quorum. The legality of some of those actions has been challenged in a case now before the D.C. Circuit Court of Appeals. Allegheny Defense Project v FERC (No. 17-1098) raises the question whether actions taken by the agency's staff after the quorum disappeared are lawful, notwithstanding that FERC had a quorum when it issued its delegation order.

Among the tasks FERC had delegated to its staff was the authority to issue what are termed "tolling orders." Under the two major statutes administered by FERC – the Federal Power Act and Natural Gas Act – parties seeking judicial review of FERC orders must first ask for rehearing within 30 days. FERC, in turn, must "act" on these requests within another 30 days. If FERC does not act, or if it affirmatively denies rehearing, parties challenging its orders may then go to court. "Tolling orders" have been issued by FERC for many years. These orders "grant rehearing," but not on the merits. Rather, they grant rehearing solely "for purposes of further consideration," effectively tolling the rehearing period. FERC's delegation order gives the agency staff the right to issue tolling orders on "stand-alone" rehearing requests (i.e., requests not coupled with other requests for agency action that the staff has not been delegated authority to address).

In February, when it still had a quorum, FERC granted Transcontinental Gas Pipe Line Company a certificate to build and operate a new gas pipeline facility. Allegheny Defense Project filed a timely request for rehearing of FERC's order, but by that time FERC had lost its quorum. When the staff of the then quorum-less FERC issued a tolling order, Allegheny went directly to court, maintaining that the tolling order was invalid and that FERC, therefore, had not acted on its rehearing request within the statutory 30 day period. FERC subsequently filed a motion to dismiss the case, maintaining that Allegheny Defense Project's appeal was premature – the rehearing period had been tolled and there had been no order denying rehearing (the prerequisite for an appeal).

The challenge to FERC's delegation authority posed in Allegheny Defense Project arises, interestingly, not in the party's appeal, but as a defense to FERC's motion to dismiss the appeal. The petitioner has raised three different arguments why its appeal is not premature – all of which go to the legal status of FERC's tolling orders. In deciding whether Allegheny's petition is premature, therefore, it seems likely that the court will have to address at least some aspect of the scope and lawfulness of FERC's delegation authority.

Allegheny's first argument goes to the scope of FERC's delegation order. Even assuming that FERC has the authority to delegate to its staff the power to issue tolling orders, Allegheny maintains that the tolling authority doesn't apply to its case. Allegheny had not only sought rehearing, it had also asked FERC to stay the effective date of its certificate order. FERC's delegation of tolling authority, Allegheny argues, applies only to "stand-alone" rehearing requests, not rehearing requests – like Allegheny's – that are coupled with other requests for relief.

Allegheny's second argument raised the broader question whether FERC's delegation authority survives the loss of a quorum. Citing several circuit court cases involving the National Labor Relations Board, it argues that whatever authority FERC might have to delegate certain agency actions to its staff did not survive the subsequent absence of a quorum. And in FERC's particular case, the problem is compounded by the express statutory requirement that the Commission, not its staff, "act" on rehearing requests within 30 days. Since FERC itself maintains that its staff is only authorized to "toll the time for action" on rehearing requests, and that "authority to act on requests for rehearing is not being delegated," Allegheny argues that the tolling order issued by its staff was a nullity. And, since FERC itself didn't act within 30 days of receiving the rehearing request, its inaction amounted to denial of rehearing allowing Allegheny to appeal.

The last of Allegheny's arguments challenges the authority of the agency itself to issue tolling orders— whether or not it has a quorum. But as FERC has pointed out in its reply, irrespective of the merits of that argument, the D.C. Circuit recognized FERC's authority to issue tolling orders nearly 25 years ago and no panel of that circuit is empowered to overturn circuit precedent. Only the entire court, citing en banc, could overturn circuit precedent. That seems unlikely in the case of a procedural issue that could be disposed of on other grounds.

During FERC's quorum-less period, its staff has issued a number of orders under the authority FERC delegated. These delegated orders are not directly at issue in Allegheny, but depending on the breadth of the D.C. Circuit's ruling on FERC's motion to dismiss Allegheny's appeal, that ruling might have ramifications beyond those to the parties to that case.

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