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FERC Proposes Uniform Complaint Process

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 way."

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 jurisdictional statutes.

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.

Susan Parker

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