Client Alerts

D.C. Circuit Bars FERC Tolling Orders on Rehearing, Upending Agency’s Review Process

By Nicholas Guidi, William DeGrandis & Charles Patrizia

On June 30, 2020, in Allegheny Defense Project v. FERC (Allegheny),

the D.C. Circuit overruled its prior precedents and invalidated the Federal Energy Regulatory Commission’s (FERC) longstanding practice of issuing tolling orders to extend the statutory period within which to act on requests for rehearing of its orders. The court’s decision has the immediate effect of accelerating the process for filing for appellate review of FERC orders.

While the court’s decision enforces the statutory “deemed denial” of rehearing requests on which FERC does not substantively act within 30 days, the Natural Gas Act (NGA)

and the Federal Power Act (FPA)

[3]

require filing for judicial review within 60 days of a FERC “order” on the request for rehearing. Thus, a party may seek review upon a deemed denial, but arguably may also wait for a FERC substantive order on the rehearing request—whether the rehearing request is still pending at FERC once FERC has filed the administrative record at the court will raise additional questions.

Pursuant to the court’s opinion, a party may petition the United States Courts of Appeals for review of a FERC order if FERC does not meaningfully address a rehearing request or establish additional processes within 30 days of that party’s filing a request for rehearing. Because such requests are deemed denied, the decision also calls into question the status of the many pending proceedings in which FERC has issued tolling orders, given the limited period in which parties may seek appellate review.

In any event, the court’s decision will both transform and expedite the process by which FERC orders are reviewed by appellate courts and the agency itself.

I.        Allegheny

Allegheny involved FERC’s granting of a Certificate of Public Convenience and Necessity to a pipeline under the NGA. Landowners and environmental groups sought rehearing of FERC’s decision and moved to stay the certificate pending the outcome of rehearing.

The NGA provides that, “[u]nless the Commission acts upon [an] application for rehearing within thirty days after it is filed, such application may be deemed to be denied.”

Significantly, the NGA prohibits a party from petitioning an appellate court for review of a FERC order “unless such person shall have made application to the Commission for a rehearing thereon.”

[5]

In practice, FERC typically does not substantively act on requests for rehearing within the 30-day period established in the statute. Instead, the FERC Secretary, under delegated authority, issues an order “granting rehearing for further consideration” meant explicitly to extend FERC’s window to review the rehearing request.

Often, FERC will not issue a substantive order granting or denying a rehearing request for months or even years after it issues the tolling order. Given the NGA’s express prohibition of seeking appellate review until rehearing is sought and D.C. Circuit precedent restricting review to final orders,

[7]

parties have had to wait extended periods of time until FERC issues a substantive order on rehearing before they may seek appellate review.

This process played out in Allegheny, as FERC issued a tolling order within 30 days of the request for rehearing. Rather than waiting for a substantive order on rehearing, the aggrieved parties sought review in the D.C. Circuit, drawing a motion to dismiss for lack of ripeness from FERC. In the meantime, the pipeline began construction pursuant to another FERC order. The same parties sought rehearing on this order, and again FERC issued a tolling order. FERC eventually issued an order denying rehearing of the certificate order nine months after the tolling order. Three months later, FERC denied rehearing on the construction order as well. Within the period review was pending, construction of the pipeline was completed and the line began operation with the aggrieved appellants never having had an opportunity to judicially challenge the taking of their land.

Tasked with assessing the legality of FERC’s customary tolling order practice, the court held that, “[a]s a matter of plain statutory text and structure, the Commission lacks that authority.”

The court rejected FERC’s argument that a tolling order constitutes action upon a rehearing request as empty semantics. Rather than addressing the merits of the rehearing request, the court explained, tolling orders merely serve to “kick[ ] the can down the road” and extend indefinitely the time by which the Commission must act.

[9]

The court determined that the “grant” of rehearing contained in tolling orders does not signify meaningful action on the request and effectively “deletes” the 30-day timeframe established in the statute, as well as its “deemed-denied” provision.

[10]

In sum, the court held that, after thirty days has elapsed from the filing of a rehearing request without the Commission substantively addressing the request or establishing additional processes, a tolling order can neither prevent a deemed denial nor alter the jurisdictional consequences of agency inaction. The court made clear that its decision extends only to the jurisdictional implications of FERC’s 30-day review window, and does not mandate that FERC act within 30 days. FERC may grant rehearing and revise its ruling up until it submits the record to the court of appeals, but parties need not wait to seek appellate review if FERC has not sufficiently acted on the rehearing request within 30 days.

On July 6, 2020, FERC sought to stay for 90 days the issuance of the court’s mandate, which was set to take effect on July 7, 2020.

In its motion, FERC argued that a stay is necessary for FERC to consider its internal processes regarding rehearing requests, which are substantially affected by the court’s opinion. FERC further noted that it intends to submit a writ of certiorari with the Supreme Court, a decision that ultimately lies with the United States Solicitor General and the Department of Justice.

II.     Implications

Although the court decided Allegheny based on the NGA’s provisions, its holding almost certainly extends to FERC orders decided under the Federal Power Act (FPA). As the court noted in its opinion, the FPA is a “close relative” of the FPA and is accordingly “interpreted similarly.”

Furthermore, the FPA review provisions are virtually identical to their NGA counterparts, and FERC employs the same tolling practice in FPA-related dockets. FERC Chairman Neil Chatterjee’s and Commissioner Richard Glick’s joint statement in response to the decisions lends credence to this interpretation, as it expressly asks Congress “to consider providing FERC with a reasonable amount of additional time to act on rehearing requests involving orders under both the Natural Gas Act and the Federal Power Act.”

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In the immediate term, Allegheny will impact most FERC cases, including each of those in which a party seeks rehearing. FERC’s inability to toll the review period will serve to expedite the review process, causing FERC to either substantively engage with the rehearing request or grant rehearing for further process within 30 days. If FERC fails to do so, parties may immediately seek appellate review in the appropriate forum. Whereas parties previously had to wait months or years to seek review of FERC actions in the courts of appeals, they can now do so after a month or so, barring a concerted effort by FERC to set matters for additional process.

Absent such initiative, the courts of appeals will now receive petitions to review FERC orders much sooner after the issuance of the orders in question. And because filing for appellate review requires FERC to then file an administrative record, once an appeal is taken, unless it is stayed, FERC will likely not have jurisdiction to act on the rehearing. As to seeking a stay, FERC and the appellant could agree on a motion to hold the appeal in abeyance, pending further FERC action with regard to briefing/hearing or similar actions. If the court grants such a motion, the appeal would be held in abeyance pending the further proceedings at FERC.

Looking backward, the court’s decision could also affect those pending cases in which FERC has already issued a tolling order. Pursuant to the court’s ruling, these previously issued orders now signify that the 30-day statutory review period has elapsed and the requests may be deemed denied. Because both the FPA and NGA give parties 60 days from the date FERC issues an order on rehearing to seek review in the courts of appeals, parties whose rehearing requests have merited only a tolling order may have arguably forfeited their right to seek review if the tolling order was issued more than 60 days ago. Anticipating this outcome, some parties have filed protective petitions with the court of appeals in the event the D.C. Circuit invalidated the tolling order process. It remains to be seen whether such foresight was necessary, or whether courts will show lenience to parties who have relied on FERC’s tolling order practice in withholding their petitions for review, at least where FERC has not issued a substantive determination on rehearing.

Either way, the court’s holding in Allegheny ensures that the process following a FERC order under the FPA or NGA will fundamentally change. Barring a legislative fix or a creative reimagining of the rehearing process by FERC, the courts of appeals will receive a flood of petitions in the short term and significantly expedited petitions for review going forward. Parties aggrieved by a FERC order whose requests for rehearing have received only a tolling order are best served by filing a petition for review in the applicable court of appeals as soon as possible. Otherwise, they risk forever forfeiting their right to review of FERC’s decision.

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    Allegheny Def. Project, et al. v. Fed. Energy Regulatory Comm’n, No. 17-1098, 2020 WL 3525547 (D.C. Cir. 2020) (June 30 Opinion).

    15 U.S.C. § 717r(b).

   16 U.S.C. § 825l(b).

   15 U.S.C. § 717r(a).

    15 U.S.C. § 717r(b).

   18 C.F.R. § 375.302 (The secretary of the Commission may “[t]oll the time for action on requests for rehearing,” but has no further authority to “act on requests for rehearing.”).

   Clifton Power Corp. v. FERC, 294 F.3d 108, 111 (D.C. Cir. 2002) (holding that, until a rehearing application is resolved, FERC’s decision is not final for purposes of obtaining judicial review, and any petition for review filed in court is “incurably premature”).

   June 30 Opinion at 19.

   Id. at 24.

  Id. at 27.

  Fed. R. App. P. 41(b) (“The court’s mandate must issue. . .seven days after entry of an order denying a timely petition for panel rehearing, petition for rehearing en banc, or motion for stay of mandate, whichever is later. The court may shorten or extend the time by order.”).

  June 30 Opinion at 28 (quoting City of Clarksville v. FERC, 888 F.3d 477, 484 (D.C. Cir. 2018)).

  Chairman Neil Chatterjee and Commissioner Richard Glick, Joint Statement on Allegheny Defense Project v. FERC (July 2, 2020), available at

https://ferc.gov/news-events/news/ferc-chairman-neil-chatterjee-and-commissioner-richard-glick-issue-joint-statement

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