FERC Proposes Uniform Complaint Process
In a much-anticipated decision, FERC last week proposed revised
complaint procedures that encourage parties to voluntarily use
arbitration or other informal measures to resolve their commercial
disputes up-front in an attempt to expedite the process at the
Commission. The proposed complaint process would apply uniformly to
all FERC-regulated energy sectors - natural gas pipelines, electric
utilities, oil pipelines and hydroelectric concerns.
The complaint proposal, which was outlined in a notice of
proposed rulemaking (NOPR), represents an "amalgam" of proposals
from the Interstate Natural Gas Association of America, the
Pipeline Customer Coalition, the Electric Industry Dispute
Resolution Working Group and the FERC First! staff, said Chairman
James Hoecker [RM98-13]. "I think that in the future we'll be
prepared to deal with complaints in a more expeditious kind of
The proposed rulemaking calls for parties to try to resolve
their commercial differences among themselves before filing a
formal complaint at FERC. This would be done either through
alternative dispute resolution (ADR), the FERC Enforcement Hotline
or some other informal measures, it proposed [RM98-13]. With the
aid of these, FERC hopes to be "less of a day-to-day omnipresence
and more of a referee calling balls and strikes," Hoecker said.
"We...don't want to encourage over-reliance on complaints. We are
not inviting parties to invite us into every commercial dispute.
That's not what this [NOPR] is about."
Major gas producers were concerned about the complaint
proposal's emphasis on arbitration techniques, noted Philip Budzik,
director of federal regulatory affairs for the Natural Gas Supply
Association (NGSA). "The reason being that many times disputes
between pipelines and their customers have to do with
interpretation of either tariff language or regulations. Quite
frankly, only the Commission can do that. An outside arbitrator
does not necessarily know the law and precedent. So I think a lot
of disputes are not really even appropriate for arbitration."
They also contend that the Commission's strong emphasis on the
use of arbitration or other resolution measures prior to filing a
complaint would delay the process even further, and consequently
would mean lost money for producers and other pipeline customers
since the Natural Gas Act doesn't provide for retroactive refunds.
But the American Gas Association (AGA), a member of the Pipeline
Customer Coalition, had a more upbeat reaction to the NOPR. "It
sounds like they are willing to impose shorter time lines on both
the industry and perhaps themselves to resolve [complaint]
disputes. This is integral to moving forward with lighter
regulation," said Jane Lewis, AGA senior counsel and director. "We
are very interested in the Commission moving forward with a
procedural rule in their complaint process as expeditiously as
possible." Although the gas industry had sought a gas-specific
complaint process, she indicated that AGA might be able to accept a
uniform policy that would address complaints under various
The use of ADR and other informal/preliminary resolution
measures, combined with other steps, such as set time frames for
FERC to act on complaints, will go a long way in expediting the
complaint process, the Commission believes. Specifically, the
informal, pre-complaint measures would enable FERC to weed out the
less serious complaints, allowing it to "focus its attention on
those complaints concerning the most difficult and contentious
issues," according to the proposed rulemaking.
"There's a lot to like" in FERC's proposal. said Commissioner
William Massey. It has "a uniform, Commission-wide approach; more
teeth in the way we handle these cases; less foot-dragging by
either respondents or perhaps even the Commission; [tighter]
deadlines, in many cases we hope to act within 60 to 90 days;
expedited hearings and technical conferences on complaints; [and]
alternative procedures such as ADR, the Hotline. We made a
good-faith effort to tighten up the complaint process
substantially," he noted.
Under the NOPR, if arbitration or other forms of resolution have
failed and a complaint has been filed, the Commission proposes that
the complaining party first clearly identify the problem, outline
the type of action and/or relief being sought and why, quantify the
financial burden, include all documents that support the facts in
the complaint, state whether the FERC Hotline or ADR procedures
were used, and provide a copy of the complaint to affected parties.
"I believe this improved sharing of information will significantly
benefit the ability of the Commission and the parties to resolve
complaints," said Commissioner Linda Breathitt.
A complaint then would follow one of three procedural tracks.
First, a complaint could be decided by the Commission based on the
pleadings alone. In this instance, FERC said it would strive to
resolve the dispute within 60 to 90 days. The second option is an
expedited case before an adminstrative law judge (ALJ), with a
60-day deadline for an initial decision. Last, FERC could order
that a complaint be resolved through ADR techniques, such as
mediation, arbitration, mini trial, or a proceeding before a
settlement judge. Since ADR is voluntary, the affected parties
would determine when the complaint would be settled.
FERC also has asked industry to comment on several other
alternative procedures, such as the use of letter orders to resolve
a limited category of cases, the assignment of an ALJ to address
interim relief issues, and special procedures for small customers
who allege harm. Comments are due within 60 days of the NOPR being
published in the Federal Register.