On May 21, 2020, FERC issued a proposed policy statement setting forth a revised approach to addressing requests for waiver, including: waiver of rates; non-rate terms and conditions; market rules; and procedural deadlines that are set forth in tariffs, rate schedules, service agreements, and contracts on file with FERC (“Proposed Policy Statement”). FERC specifically proposes to:

  1. discontinue granting retroactive waivers of tariff provisions, with a few specified exceptions; and
  2. grant requests for “remedial relief” only when applicants demonstrate that (a) such a request does not violate the filed rate doctrine or rule against retroactive ratemaking, or (b) the requested relief is within FERC’s remedial authority under section 309 of the Federal Power Act (“FPA”) or section 16 of the Natural Gas Act (“NGA”).

In the Proposed Policy Statement, FERC explained that it is proposing these changes to its waiver policies “upon further consideration” of its statutory authority under FPA sections 205 and 206, and the parallel provisions in NGA sections 4 and 5. FERC set an expedited schedule for initial and reply comments on the Proposed Policy Statement, which are currently due on June 4, 2020 and June 11, 2020, respectively.

In reviewing FPA sections 205 and 206, as well as NGA sections 4 and 5, FERC concluded it is authorized to grant waivers of tariff deadlines before the deadline has passed. FERC may not, however, grant retroactive waivers of tariff provisions, except in limited instances where: (i) there was notice that the previously-charged rate was tentative and subject to retroactive adjustment; or (ii) the parties to a contract agreed in advance that the contractual rate could go into effect prior to the filing date. In comparison, FERC noted its remedial authority under FPA section 309 and NGA section 16 allows it to grant remedies not otherwise statutorily authorized, so long as such remedies do not contravene Congressional intent or any express terms of the FPA or NGA.

To implement the Proposed Policy Statement, FERC proposes that:

  • Requests for “waiver” should only apply to: (1) requests for prospective relief where a deviation from the filed tariff has not yet occurred, and (2) petitions for remedial relief when a tariff expressly authorizes regulated entities to seek a remedial waiver for past non-compliance with the filed tariff.
  • “Remedial” relief, in the form of a petition for declaratory order or complaint, should be sought for any actions or omissions that have already occurred prior to the date relief is sought, and should expressly request action pursuant to FPA section 209 309 or NGA section 16 where an alleged tariff violation has occurred.
  • FERC’s existing four-part waiver analysis—in which FERC generally grants waiver where (1) the underlying error was made in good faith; (2) the waiver is of limited scope; (3) the waiver addresses a concrete problem; and (4) the waiver does not have undesirable consequences—will apply to both prospective waiver requests and petitions for remedial relief under both the FPA and NGA.  With respect to requests for remedial relief, however, applicants will still need to demonstrate that the request does not violate the filed rate doctrine or rule against retroactive ratemaking, or, alternatively, is within FERC remedial authority under FPA section 309 or NGA section 16 authority.
  • The policies set forth in a final Policy Statement will apply to all waiver requests that are pending before FERC as of the date of issuance of the Policy Statement; and, pending waiver requests may be refiled, as appropriate.

FERC also noted that, under its proposal, applicants will be required to make a “stronger showing” when seeking remedial relief. For example, FERC proposed that a petition for remedial relief will be “more compelling” when the need for relief results from more than just an “inadvertent error or administrative oversight.”

Finally, with regard to prospective requests to waive FPA’s and NGA’s prior notice requirements, FERC noted that such requests are distinct from remedial relief, and that FERC has discretion to waive prospective requests “for good cause shown.” FERC reiterated that, under its proposal, this policy will remain in effect to the extent that entities seek an effective date no earlier than the day after the date a rate change is filed.

Click here to read the Proposed Policy Statement.