In two previous client alerts (link and link), Steptoe has discussed the DC Circuit’s 2016 decision in Public Citizen, Inc. v. FERC and Congress’ legislative response to it. Public Citizen held that when a rate takes effect because of FERC inaction, there is no final agency action the court can review. Under the “Fair RATES Act,” which passed the House of Representatives in January of this year, Section 205 of the Federal Power Act would be amended so that FERC and courts may review altered rates, regardless of whether they are the result of FERC action or inaction. On October 3, 2017, the Senate Committee on Energy and Natural Resources heard testimony on the bill. Testimony was presented by FERC’s general counsel, whose comments indicate an agency that is less than enthusiastic about the proposal.
FERC’s comments raised three main issues. First, FERC noted that the bill would have little practical impact because cases in which rates take effect by operation of law are exceedingly rare, and aggrieved parties can still avail themselves of the complaint procedures afforded under section 206 of the FPA if they consider a rate improper.
Second, FERC noted that the bill may not afford the relief anticipated. If FERC inaction was the result of a split vote – as in Public Citizen – the bill would afford parties the right to rehearing, but not necessarily any meaningful appellate review. This is because on rehearing FERC might still have a split vote: if it did, FERC would issue no rehearing order, and thus there would be no FERC orders for the Court of Appeals to evaluate. In appellate review of agency decisions, courts look to the evidentiary record compiled below and the reasoning the agency employed – as reflected in its orders – to support its decisions based on that record. Without such orders, the appeals court could likely do nothing more than remand the case for further agency action, potentially creating a never-ending circle of split votes.
Finally, FERC noted that the proposed language might be overbroad. As drafted, the bill’s effects are not restricted to instances in which FERC is deadlocked, but instead apply to any absence of action by FERC that allow rates to go into effect by operation of law. FERC recommends narrowing the language to avoid any unintended or unforeseen negative consequences from the broader language.
FERC’s comments indicate that it does not feel the bill to be necessary or of any practical benefit. As of yet, the bill has not been voted on by the Committee. Steptoe will continue to monitor the progress of the bill.