Andrew Soto American Gas Association vs. Federal Energy Regulatory Commission

On January 22, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion holding that the Federal Energy Regulatory Commission (FERC) failed to respond to the reasonable concerns of a dissenting commissioner when it revised the financial reporting forms interstate pipelines are required to file.  American Gas Association v. FERC, No. 08-1266 (D.C. Cir. decided Jan. 22, 2010). The court held that while FERC is not required to agree with arguments raised by a dissenting commissioner, it must, at a minimum, acknowledge and consider them, which FERC failed to do.  The court remanded the case back to FERC, noting that while FERC could again conclude that the burdens of additional reporting outweigh the benefits, it must do so in a reasoned decision that acknowledges the concerns raised by the dissenting commissioner.

As several have suggested, the significance of this ruling is far greater than the individual FERC proceeding involved and even greater than the case AGA had thought it was bringing to the court.  On its own, the court focused on FERC’s failure to address the arguments raised in dissent by then-commissioner, now-chairman Jon Wellinghoff.  This case will stand as precedent for all Federal agencies that, as a matter of administrative law, agencies must address the arguments raised by their dissenting commissioners.  Failure to do so will make their orders vulnerable to a court challenge.

A recent article in Inside FERC (“Court stance on FERC dissents seen as unworkable”) suggests that the ruling could adversely impact the decision-making process at FERC.  The article noted that, unlike courts, dissents in FERC cases are normally not circulated in advance.  Former FERC Chairman Joseph Kelliher was quoted as discussing the difficulty of requiring commissioners to supply a dissent in advance and the potential damage to comity among the commissioners of “gamesmanship” associated with the timing of supplying the dissent.

I take a contrary view.  I believe that the ruling will actually strengthen the decision-making process at FERC.  In the article, both Kelliher and former FERC general counsel William Sherman acknowledged that even though dissents are not normally circulated in advance, the views of a dissenting commissioner are generally known before the order is voted on.  Therefore, the ruling will simply require the majority to pay a little more attention to them.  During the deliberative process, the chairmen and staff will need to know when a commissioner will dissent and what the fundamental concerns are.  That can only help the process.  When I worked for former FERC Chairman Pat Wood, it was part of my job to know when a commissioner would dissent and what the dissent would say.  Pat told me he wanted to know because “I may agree with them.”

The concerns that have been raised regarding the potential for delay or gamesmanship can be easily addressed.  First, problems can be fixed on rehearing.  A large part of FERC’s vulnerability in the orders that led to the court’s decision stemmed from the fact that FERC waited until the rehearing order to even address AGA’s arguments, and it was the rehearing order to which Wellinghoff dissented.  FERC can reduce the impact of this ruling if it adequately addresses the arguments that are raised the first time around.  The dissent will have been revealed initially, which FERC can address on rehearing.

Second, even if the press of business prevents full consideration of all of the arguments initially and a dissent surfaces in a rehearing order, voluntary remand is available.  In any court case, FERC has an opportunity to seek a remand of the orders for which judicial review is sought in order to further consider them and even provide additional support and reasoning for its decisions.  The FERC solicitor can review the orders that have been taken up and, if there is a dissent, make a determination if the arguments were adequately addressed.  If additional reasoning is needed, FERC can seek a voluntary remand.

In the end, the court’s opinion should stand for the proposition that an agency must adequately justify its decisions, even when the challenge comes from one of its own commissioners.  The outcome of the court’s opinion should be better, more well-reasoned agency decisions.

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