This week’s enforcement update covers:
- Powhatan and Chen file motion to dismiss FERC’s amended complaint;
- FERC and Silkman/CES file motions for summary judgement regarding statute of limitations;
- FERC Staff finds no withholding of pipeline capacity in New England markets;
- BP files reply to FERC answer regarding on statute of limitations; and
- FERC and ETRACOM stay discovery pending mediation.
Powhatan and Chen file motion to dismiss FERC’s amended complaint. On February 28, Powhatan Energy Fund, Alan Chen and the other defendants filed a motion to dismiss FERC’s amended complaint in the U.S. District Court for the Eastern District of Virginia. For three reasons, the defendants request that the court partially dismiss FERC’s first amended complaint involving alleged manipulation of the PJM Up-to-Congestion market in 2010. First, according to the defendants, FERC filed this action too late to assert civil penalty claims for all but a handful of the days that make up the so-called “Manipulation Period.” Second, the defendants argue that disgorgement is, by statute, unavailable as a remedy in this civil penalty action. Finally, even assuming disgorgement is available at all, the defendants claim that the statute of limitations also precludes any disgorgement remedy for almost all of the days at issue.
FERC and Silkman/CES file motions for summary judgement regarding statute of limitations. On February 28, Silkman/Competitive Energy Services, LLC (CES) and FERC filed their motions for summary judgment regarding the statute of limitations in the U.S. District Court for the District of Maine. As we previously reported, the parties proposed to file cross-motions for summary judgment on one discrete issue: whether the five-year statute of limitations expired before the case was filed. The parties each filed a separate statement of facts with supporting exhibits. Silkman and CES argue that because FERC filed suit in federal court more than five years after the alleged wrongdoing ended, the five-year statute of limitations prohibits FERC’s action in this case. Conversely, FERC argues that its administrative adjudicatory proceeding and the district court action are each subject to a separate five-year statute of limitations, both of which FERC satisfied. Moreover, according to FERC, if the court were to find that FERC did not satisfy the statute of limitations, FERC is entitled to summary judgment in its favor because: (a) FERC’s claim to enforce the portion of its Penalty Assessment Order seeking disgorgement of payments received by CES is not subject to the five-year statute of limitations under 28 U.S.C. § 2462; and (b) Silkman/CES waived this defense by not raising it during FERC’s adjudication. Responses to the motions for summary judgment are due by March 30.
FERC Staff finds no withholding of pipeline capacity in New England markets. On February 27, FERC issued a news release noting that FERC staff’s inquiry has revealed no evidence of anticompetitive withholding of natural gas pipeline capacity on Algonquin Gas Transmission in New England. As we previously reported, the inquiry arose out of allegations made by the Environmental Defense Fund in an August 2017 white paper, which asserted that local gas distribution companies in New England had engaged in practices to withhold pipeline capacity on the Algonquin system in order to drive up gas and/or power prices in the region. After conducting a review of public and non-public data, FERC staff determined that the study was flawed and led to incorrect conclusions about the alleged withholding. FERC staff found no evidence of capacity withholding. Accordingly, FERC will take no further action on the matter.
BP files reply to FERC answer regarding on statute of limitations. On February 9, BP filed a reply to the FERC Office of Enforcement (OE) answer regarding BP’s motion to lodge and to dismiss, or in the alternative, for reconsideration of FERC’s order affirming the initial decision assessing a civil penalty and disgorgement against BP in FERC Docket No. IN13-15. As we previously reported, BP sought to lodge the district court’s decision in FERC v. Barclays and the Supreme Court’s decision in Kokesh v. SEC regarding the five-year statute of limitations in 28 U.S.C. § 2462. First, BP argues that it has met the standard applicable to its motion to reopen the record. Second, BP refutes OE’s attempts to distinguish the ruling in Barclays. Third, BP argues that the Supreme Court’s holding in Kokesh that the five-year statute of limitations applies to disgorgement governs. Finally, BP argues that it has not waived its statute of limitations argument.
FERC and ETRACOM stay discovery pending mediation. On February 8, FERC and ETRACOM filed a motion to stay discovery in light of pending mediation in the U.S. District Court for the Eastern District of California. According to the motion, the parties have engaged a private mediator and anticipate the mediation will occur on March 8. To avoid incurring the costs of fact and expert discovery while simultaneously engaging in settlement negotiations, the parties request that the court stay party discovery until the conclusion of the mediation process. Following the mediation, the parties will promptly notify the court of its outcome. If the mediation is successful, the parties will make an appropriate filing with the court, taking into account that any proposed settlement can become effective only after approval by FERC. If the mediation is not successful, the parties will notify the court and the requested stay of party discovery would then be lifted. On February 13, Judge Stanley A. Bastian granted the joint motion.