• FERC Relies on Federal “Catchall” Statute of Limitations to Dismiss Case
  • June 2, 2011 | Authors: William "Bill" R. Derasmo; Kevin C. Fitzgerald; Peter S. Glaser; Kevin C. Greene; Lara L. Skidmore
  • Law Firms: Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Portland Office
  • On May 24, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) dismissed a complaint stemming from the California energy crisis by relying on several grounds, including a federal “catchall” statute of limitation - perhaps the first time FERC has relied on this law to dismiss a complaint.

    In May 2009, the Attorney General (“AG”) for the state of California, Edmund G. Brown, filed a complaint accusing several parties of charging unjust and unreasonably rates under short-term bilateral sales to the California Energy Resources Scheduling Division (“CERS”) from January 18, 2001 to June 20, 2001 (the “Complaint”).  The AG sought refunds on behalf of the state ratepayers, alleging that CERS was overcharged almost $1.9 billion.

    In its May 24, 2011 order, the Commission found that the AG failed under the Federal Power Act (“FPA”) to support his allegation, the requested remedy is not available, and many of the theories the AG put forward to advance the Complaint are not valid. The Commission held that the AG failed to explain how FPA section 306 could provide retroactive refunds for the short-term bilateral sales during the specified time frame and FPA section 206 relief concerning the CRES transactions in question is not available since the Complaint was filed eight years after the CRES transactions were completed.  The Commission also refused the AG’s FPA section 309 claims on the ground that they are based on “vague, generalized, and unsupported allegations,” and provide no links between respondents and specific bad acts which affected specific bilateral contracts.  Further, the Commission found the AG has failed to show evidence that would overcome the Mobile-Sierra presumption concerning contract modifications. FERC found that the CRES purchases were made bilaterally and under the Western Systems Power Pool agreement, which includes a Mobile-Sierra clause that the general allegations of the Complaint cannot overcome.

    Notably, the Commission also barred the Complaint based on a federal “catchall” statute of limitations that sets a five-year limit for “an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise.”  Because the time period for the CERS transactions ended on June 20, 2001, and the complaint was not filed until 2009, the Commission found the California AG’s case time-barred. The Commission also found that what the AG sought was “confiscation” as it would affect all sellers to CERS without regard to culpability. It is highly unusual, if not unprecedented, for FERC to rely on this “catchall” statute of limitations to dismiss a complaint.