On November 25, 2009, the United States Army Corps of Engineers (“Army Corps”) filed a request for rehearing of FERC’s order requiring the Army Corps to comply with mandatory electric reliability standards. 
The North American Electric Reliability Corporation (“NERC”) issues the standards under section 215 of the Federal Power Act (“FPA”) and related FERC orders, subject to FERC review.  The Texas Regional Entity is one of several regional reliability entities that monitors and enforces compliance with reliability standards for NERC.  On February 20, 2008, the Texas Regional Entity issued a Notice of Confirmed Violation and Proposed Penalty or Sanction against the Army Corps for failing to comply with reliability standards.  On October 15, 2009, FERC issued an order (see October 19, 2009 edition of WER) finding that it has jurisdiction to enforce reliability standards over federal agencies that use, own or operate the bulk power system, including the Army Corps.

 The Army Corps argued that section 215 does apply to government entities and, therefore, they were not required to comply with the standards.  Additionally, the Army Corps claimed that the Commission’s final order failed to properly analyze the applicability of Section 215 of the FPA to the Army Corps’ civil works projects.

 In the request for rehearing, the Army Corps stated FERC’s final order was procedurally defective because the Commission’s Rules of Practice and Procedure do not allow for declaratory judgments in a Notice of Penalty proceeding.  Also, the Army Corps claimed that the Department of Justice Office of Legal Counsel is the proper forum for disputes between federal agencies.  Lastly, the Army Corps argued that neither they nor Congress has waived sovereign immunity, and the Army Corps pointed out that FERC’s final order never addressed this argument.  The Army Corps did raise concerns regarding whether FERC may assess monetary fines since the original Notice of Penalty for the Army Corps was a non-monetary penalty. 

 The request for rehearing is available at www.ferc.gov under docket NP09-26.