In a Nov. 13 column for Law360, Washington, D.C., partner Todd Mullins and Raleigh associate Christopher McEachran outlined key lessons from an unprecedented recommendation by the Federal Energy Regulatory Commission’s Office of Enforcement (OE) staff to drop an enforcement proceeding against Footprint Power LLC regarding bidding practices at a power station in Salem, Massachusetts.
Following several years of non-public investigation, FERC’s OE issued an order to show cause (OSC) where it alleged that Footprint had not maintained sufficient fuel reserves to run its oil-fueled generation unit at Salem Harbor Station. Footprint responded with several arguments related to the methods used to calculate the amount of available fuel, including one arguably new argument that OE had not considered previously. OE reconsidered its position based on this new presentation of evidence and concluded that Footprint had not violated the applicable rules for all but a few days during the period under review, and recommended dismissing the case.
While Mullins and McEachran cautioned that FERC has not issued a final order and still could assess civil penalties, “we believe it is more likely that the commission will follow OE’s recommendation and drop the case,” they wrote. And, they added, “there may be more in play than just a reconsideration of the facts and the merits.”
“This recommendation may also be an effort by OE to appear fair and reasonable in the face of criticism that the OSC process has become a guaranteed win for OE and the commission,” the authors wrote. “By accepting a compelling fact-based argument here, OE may be seeking to bolster the importance and appearance of fairness of the OSC process, pushing back against calls from some to skip a heretofore seemingly ‘rubber stamp’ OSC process altogether and move straight to litigation of such cases in federal district court.”
Mullins is managing partner of the Washington, D.C., office and leads the firm’s energy enforcement practice group. McEachran co-led the development of McGuireWoods’ FERC Enforcement Reporter, an innovative, web-based legal research tool that organizes information about FERC enforcement cases and policy statements topically.