April 21, 2023
A recent U.S. Supreme Court decision allowing federal courts to hear constitutional challenges to enforcement proceedings at two federal agencies paves the way for similar challenges to in-house enforcement proceedings at the Federal Energy Regulatory Commission (FERC), McGuireWoods Washington partner Todd Mullins told Law360 in an April 18 story.
“From a procedural standpoint, it’s a serious needle move,” said Mullins, a former investigations Branch Chief at FERC’s enforcement office who leads McGuireWoods’ energy enforcement practice. “I would expect some subjects of FERC enforcement to now use this case as a basis for what FERC has been pretty successful in avoiding up to now: court cases, in the midst of agency proceedings, that actually rule on whether requirements for subjects of enforcement to go through certain FERC processes are or are not provided for by statute, or are or are not constitutional.”
Mullins said the Supreme Court’s decision could affect both natural gas and electricity market cases. Notably, even though the Federal Power Act already gives enforcement targets the option to go directly to court once hit with allegations from FERC’s enforcement division, and virtually every company facing electricity market manipulation penalties has chosen that route, subjects are still required by FERC first to go through lengthy and fairly one-sided proceedings at the agency.
Enforcement targets can now “argue they should not have to go through protracted agency proceedings if they elect de novo review [by federal courts] as they have a right to do under the FPA statute,” Mullins said.