United States: Jurisdictional Conflict Between FERC And Bankruptcy Courts Spills Over To Natural Gas Agreements

The existing jurisdictional conflict¹ between US bankruptcy courts under the Federal Bankruptcy Code and the Federal Energy Regulatory Commission (FERC) regarding required approvals for a debtor in bankruptcy to reject an executory Federal Power Act (FPA)-jurisdictional agreement has also been asserted by FERC with respect to Natural Gas Act (NGA)-jurisdictional agreements in ETC Tiger Pipeline.² Although acknowledging that the relevant law is "unsettled,"³ FERC asserts that, since the filed rate doctrine and the Mobile-Sierra presumption apply equally to contracts regulated under sections 4 and 5 of the NGA and to contracts regulated under sections 205 and 206 of the FPA, it had "concurrent" jurisdiction⁴ to the company's bankruptcy court-the same legal argument⁵ that the FERC made in the Pacific Gas & Electric and FirstEnergy bankruptcy cases.

With the current COVID-19 pandemic distress in oil and gas markets affecting many businesses therein, this conflict may assume a greater significance in any related bankruptcy proceedings.

Footnotes

1 Discussed in our earlier Perspective "FERC Clarifies Its Concurrent Jurisdiction with Regard to Bankruptcy Filings That Seek to Reject Power Purchase Agreements" available at: https://www.mayerbrown.com/en/perspectives-events/publications/2019/01/ferc-clarifies-its-concurrent-jurisdiction-with-re and in a related Law360 article "PG&E Highlights Circuit Split On Power Purchase Agreements" available at: https://www.mayerbrown.com/-/media/files/news/2019/01/pge-highlights-circuit-split-on-power-purchase-agr/files/pge-highlights-circuit-split-on-power-purchase-agr/fileattachment/pge-highlights-circuit-split-on-power-purchase-agr.pdf.

2 ETC Tiger Pipeline, LLC, 171 FERC ¶61,248 (June 22, 2020) and available at: https://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=15563143.

3 Id. at 13 and cases cited in fn.57.

4 Id. at 14 and 15.

5 See NextEra Energy, Inc. v. Pac. Gas & Elec. Co., 166 FERC ¶ 61,049 (2019), 166 FERC ¶ 61,049 at P 28; Exelon Corp. v. Pac. Gas & Elec. Co., 166 FERC ¶ 61,053 at P 25.

Originally published 6 July 2020.

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