In a much-anticipated decision, FERC last week proposed revisedcomplaint procedures that encourage parties to voluntarily usearbitration or other informal measures to resolve their commercialdisputes up-front in an attempt to expedite the process at theCommission. The proposed complaint process would apply uniformly toall FERC-regulated energy sectors – natural gas pipelines, electricutilities, oil pipelines and hydroelectric concerns.

The complaint proposal, which was outlined in a notice ofproposed rulemaking (NOPR), represents an “amalgam” of proposalsfrom the Interstate Natural Gas Association of America, thePipeline Customer Coalition, the Electric Industry DisputeResolution Working Group and the FERC First! staff, said ChairmanJames Hoecker [RM98-13]. “I think that in the future we’ll beprepared to deal with complaints in a more expeditious kind ofway.”

The proposed rulemaking calls for parties to try to resolvetheir commercial differences among themselves before filing aformal complaint at FERC. This would be done either throughalternative dispute resolution (ADR), the FERC Enforcement Hotlineor some other informal measures, it proposed [RM98-13]. With theaid of these, FERC hopes to be “less of a day-to-day omnipresenceand more of a referee calling balls and strikes,” Hoecker said.”We…don’t want to encourage over-reliance on complaints. We arenot inviting parties to invite us into every commercial dispute.That’s not what this [NOPR] is about.”

Major gas producers were concerned about the complaintproposal’s emphasis on arbitration techniques, noted Philip Budzik,director of federal regulatory affairs for the Natural Gas SupplyAssociation (NGSA). “The reason being that many times disputesbetween pipelines and their customers have to do withinterpretation of either tariff language or regulations. Quitefrankly, only the Commission can do that. An outside arbitratordoes not necessarily know the law and precedent. So I think a lotof disputes are not really even appropriate for arbitration.”

They also contend that the Commission’s strong emphasis on theuse of arbitration or other resolution measures prior to filing acomplaint would delay the process even further, and consequentlywould mean lost money for producers and other pipeline customerssince the Natural Gas Act doesn’t provide for retroactive refunds.

But the American Gas Association (AGA), a member of the PipelineCustomer Coalition, had a more upbeat reaction to the NOPR. “Itsounds like they are willing to impose shorter time lines on boththe industry and perhaps themselves to resolve [complaint]disputes. This is integral to moving forward with lighterregulation,” said Jane Lewis, AGA senior counsel and director. “Weare very interested in the Commission moving forward with aprocedural rule in their complaint process as expeditiously aspossible.” Although the gas industry had sought a gas-specificcomplaint process, she indicated that AGA might be able to accept auniform policy that would address complaints under variousjurisdictional statutes.

The use of ADR and other informal/preliminary resolutionmeasures, combined with other steps, such as set time frames forFERC to act on complaints, will go a long way in expediting thecomplaint process, the Commission believes. Specifically, theinformal, pre-complaint measures would enable FERC to weed out theless serious complaints, allowing it to “focus its attention onthose complaints concerning the most difficult and contentiousissues,” according to the proposed rulemaking.

“There’s a lot to like” in FERC’s proposal. said CommissionerWilliam Massey. It has “a uniform, Commission-wide approach; moreteeth in the way we handle these cases; less foot-dragging byeither 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 agood-faith effort to tighten up the complaint processsubstantially,” he noted.

Under the NOPR, if arbitration or other forms of resolution havefailed and a complaint has been filed, the Commission proposes thatthe complaining party first clearly identify the problem, outlinethe type of action and/or relief being sought and why, quantify thefinancial burden, include all documents that support the facts inthe complaint, state whether the FERC Hotline or ADR procedureswere used, and provide a copy of the complaint to affected parties.”I believe this improved sharing of information will significantlybenefit the ability of the Commission and the parties to resolvecomplaints,” 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 thepleadings alone. In this instance, FERC said it would strive toresolve the dispute within 60 to 90 days. The second option is anexpedited case before an adminstrative law judge (ALJ), with a60-day deadline for an initial decision. Last, FERC could orderthat a complaint be resolved through ADR techniques, such asmediation, arbitration, mini trial, or a proceeding before asettlement judge. Since ADR is voluntary, the affected partieswould determine when the complaint would be settled.

FERC also has asked industry to comment on several otheralternative procedures, such as the use of letter orders to resolvea limited category of cases, the assignment of an ALJ to addressinterim relief issues, and special procedures for small customerswho allege harm. Comments are due within 60 days of the NOPR beingpublished in the Federal Register.

Susan Parker

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