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ETP Seeks Rehearing, Stay of Hearing Order in Manipulation Case

June 2, 2008
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Dallas-based Energy Transfer Partners LP (ETP) and several affiliates, including Oasis Pipeline LP, last Tuesday requested expedited rehearing and a stay of FERC's May order setting for hearing charges that they manipulated the physical natural gas prices at the Houston Ship Channel and Waha trading hub on various dates from December 2003 through December 2005 (see NGI, May 19).

"ETP now seeks rehearing of the hearing order because, as a matter of law, the Commission is not authorized to compel adjudication of ETP's potential civil penalty liability for these charges in a trial-type hearing on the merits before an administrative law judge (ALJ). Rather, ETP is entitled at this juncture to have the Commission's allegations adjudicated de novo in a federal district court," the energy company said.

Based on a show cause order issued in July 2007, the Federal Energy Regulatory Commission (FERC) is seeking to assess penalties on ETP of $97.5 million and require total disgorgement of $69.9 million in unjust profits (see NGI, July 30, 2007). Commission enforcement staff in February asked the agency to increase the penalty amount to $107 million and disgorged profit amount to $74.9 million based on additional information that it uncovered during its investigation (see NGI, Feb. 18).

This marked the second time that ETP has asked for de novo review of the case in district court. In December 2007 FERC rejected ETP's argument that it is entitled to de novo review in district court for any civil penalties assessed under the Natural Gas Act (NGA), and held that the company instead may seek U.S. court of appeals' review of any civil penalty after the Commission makes a final ruling in the show cause proceeding (see NGI, Dec. 24, 2007).

ETP quickly sought judicial review in the U.S. Court of Appeals for the Fifth Circuit, which in March declined to rule on the agency's enforcement action against ETP on the grounds that it lacked jurisdiction to intervene in an ongoing agency matter. The court granted FERC's motion to dismiss ETP's petition for review of the Commission's action.

"While we would urge the Commission to reconsider and reverse course on the position it espoused when it rejected ETP's 2007 rehearing request, we do not expect that the Commission will do so. Accordingly, if the Commission intends to adhere to its position on rehearing, then ETP intends to seek judicial review on an expedited basis in order to determine whether the Commission is authorized to pursue agency adjudication of ETP's potential civil penalty liability under the [Natural Gas Policy Act] and NGA, instead of pursuing its case in federal district court," ETP said in the Tuesday filing.

Moreover, "because the very relief ETP will seek on judicial review is being jeopardized by the forward march of the trial-type hearings the Commission has ordered on the merits, ETP requests that the Commission temporarily stay the [May 15] hearing order so that ETP can pursue expedited judicial rehearing."

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