Jurisdictional Conflict Between FERC and Bankruptcy Courts Spills Over to Natural Gas Agreements
The existing jurisdictional conflict1 between US bankruptcy courts under the Federal Bankruptcy Code and the Federal Energy Regulatory Commission (FERC) regarding required approvals for a debtor in bankruptcy to reject an executory Federal Power Act (FPA)-jurisdictional agreement has also been asserted by FERC with respect to Natural Gas Act (NGA)-jurisdictional agreements in ETC Tiger Pipeline.2 Although acknowledging that the relevant law is “unsettled,”3 FERC asserts that, since the filed rate doctrine and the Mobile-Sierra presumption apply equally to contracts regulated under sections 4 and 5 of the NGA and to contracts regulated under sections 205 and 206 of the FPA, it had “concurrent” jurisdiction4 to the company’s bankruptcy court—the same legal argument5 that the FERC made in the Pacific Gas & Electric and FirstEnergy bankruptcy cases.
With the current COVID-19 pandemic distress in oil and gas markets affecting many businesses therein, this conflict may assume a greater significance in any related bankruptcy proceedings.
1 Discussed in our earlier Perspective “FERC Clarifies Its Concurrent Jurisdiction with Regard to Bankruptcy Filings That Seek to Reject Power Purchase Agreements“ available at: https://www.mayerbrown.com/en/perspectives-events/publications/2019/01/ferc-clarifies-its-concurrent-jurisdiction-with-re and in a related Law360 article “PG&E Highlights Circuit Split On Power Purchase Agreements” available at: https://www.mayerbrown.com/-/media/files/news/2019/01/pge-highlights-circuit-split-on-power-purchase-agr/files/pge-highlights-circuit-split-on-power-purchase-agr/fileattachment/pge-highlights-circuit-split-on-power-purchase-agr.pdf.
2 ETC Tiger Pipeline, LLC, 171 FERC ¶61,248 (June 22, 2020) and available at: https://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=15563143.
3 Id. at 13 and cases cited in fn.57.
5 See NextEra Energy, Inc. v. Pac. Gas & Elec. Co., 166 FERC ¶ 61,049 (2019), 166 FERC ¶ 61,049 at P 28; Exelon Corp. v. Pac. Gas & Elec. Co., 166 FERC ¶ 61,053 at P 25.
