FERC Tolls Time to Rule on Rehearing of FERC Order No. 1000 — And What Really Goes on Behind the Scenes

by Carolyn Elefant on September 19, 2011

in Appeals, FERC Order 1000

Today marks roughly the 30th day since the first rehearing requests of Order No. 1000 began trickling into FERC.  So not surprisingly, FERC issued a  Tolling Order to afford itself more time to consider the issues raised.  Without the tolling order, FERC decisions, like that issued in Order No. 1000, automatically become final after thirty days by operation of law under Section 313 of the Federal Power Act, 18 U.S.C. sec. 825l and all pending rehearing requests are treated as if denied.  If this were to happen, a party’s only recourse for challenging FERC Order No. 1000 would be to file a petition for review at a federal circuit court.  And FERC would not have an opportunity to take a first crack at addressing any challenges or plugging any chinks in its order; it would be required to defend the rule as is on appeal.  So unless FERC is fairly confident that its order does not need any further explanation or evidence to survive judicial review, it will issue a tolling order to give itself another chance to address the parties’ arguments.

That’s all a tolling order is — an administrative clock-stopper.  For that reason, one of my all time peeves is when a media story (or worse, an over zealous colleague) intimates that a tolling order represents a victory, albeit a small one, because it shows that FERC is thinking about the issues.  The reality is, however, that FERC FERC rarely, if ever reverses itself entirely — which is why portraying a tolling order as a win for those challenging a FERC order is simply inaccurate.

OK, so now that FERC has given itself more time to rule, the trickier question is how long before a rehearing decision issues?  It’s a tough call, but at least I can share a little bit of what goes on behind the scenes, after the jump.

First, the time involved in a rehearing decision is a product of the number of petitions filed and issues raised.  Here,  more than 60 parties filed for rehearing – though many of the petitions raise similar arguments that FERC can address all at once.  Other requests don’t seek rehearing, but  only clarification or reconsideration — which technically, FERC is not obligated to address under the Federal Power Act — although of course, it will do so.  Finally, I saw a couple of rehearing requests which did not contain a list of issues as required by FERC Rule 713 — which means that those issues are deemed waived and FERC is not required to address them either.  In addition, there are also a bunch of issues, usually entity-specific, that FERC may find are more appropriately evaluated when a compliance filing is made.

Once FERC pares down the issues that it must address, I predict that the list won’t be very long.  Most of the arguments coalesce around similar points – FERC’s authority for including the public policy requirements as a factor in transmission planning, legality of the requirement to eliminate rights of first refusal, the restrictions on allocation of costs outside of a region and issues related to interregional cost allocation.  There are a bunch of requests for clarification; some are fairly basic (it’s a long rule, so parts are bound to be confusing), but clarifying a rule typically doesn’t require hard core legal analysis or tough policy considerations so it shouldn’t take as long.  In addition, as far back as 2009, FERC gathered comments on the need for reforms in Order 890, and staff spent a year reviewing the comments filed on the NOPR.  In short, there’s not much that’s new at this stage of the game.  Given the relatively few issues and lack of new arguments, it’s possible for FERC to issue a decision on rehearing in as little as three to four months.

But that’s not all that goes into the analysis.  After all, in this instance a delay favors FERC.  Recall, FERC’s order takes effect immediately and does not stay the October 11, 2012 deadline by which transmission owners must incorporate a planning process into the provisions of their open access transmission tariffs.   As a result, the longer FERC waits to issue a decision on rehearing, the more entrenched Order No. 1000 will become in practice  because companies must begin compliance even before FERC’s rehearing decision issues.   Once companies start moving ahead with compliance, they may realize that the obligations imposed by FERC Order No. 1000 are not as costly or difficult to implement as they once feared — and as a result, they may drop their opposition.

Delay does not necessarily hurt the companies that must implement Order No. 1000 either.  Although complying with a rule while rehearing is pending creates uncertainty, at the same time, companies that have sought rehearing can leverage it to extract favorable concessions on planning and cost allocation from other stakeholders.  For example, a utility might agree to drop its rehearing request — or to refrain from seeking judicial review of the resulting order if stakeholders voluntarily agree to a cost allocation process by which stakeholders would shoulder a larger percentage of costs for reliability related transmission projects.

As I posted here, the arguments raised on rehearing that are most likely to carry the day in a federal appellate court relate to legal issues (e.g., FERC exceeded its authority under the Federal Power Act)  rather than policy arguments (e.g.,  FERC should have required allocation of costs outside of a region even if the other region does not volunteer to accept those costs).   Even so, that doesn’t mean that policy choices aren’t relevant.  In fact, a decision seemingly as trivial as FERC’s timing in issuing a decision on rehearing — whether sooner or later — has a significant impact on whether a federal court hears arguments on Order No. 1000, and which issues remain live until that point.

Leave a Comment

Previous post:

Next post: