Total Gas & Oil Challenges FERC’s Jurisdiction

     MIDLAND, Texas (CN) – French energy giant Total wants the Federal Energy Regulatory Commission’s allegations against it tried by a federal jury before the FERC can levy “hundreds of millions of dollars” in civil penalties in administrative hearings.
     Houston-based subsidiary Total Gas and Power North America and energy traders Aaron Hall and Therese Tran sued the FERC, its four commissioners and administrative law Judge Carmen A. Cintron in Federal Court on Jan. 27.
     The plaintiffs believe FERC is planning to charge them with violating the Natural Gas Act. They say the agency’s enforcement action is unlawful, as it is will be from FERC’s “own officers and employees” who “serve as prosecutors, judge and jury.”
     (Similar lawsuits have been filed recently against the Securities and Exchange Commission and its administrative hearings.)
     “FERC seeks to deprive plaintiffs of vast sums by forcing them through an administrative adjudicatory process that is not authorized by law, violates the separation of powers, and is bereft of the basic constitutional protections that are guaranteed to all private parties when the government seeks to take their property,” Total’s 51-page complaint states.
     “FERC’s in-house adjudication process flips the burden of proof, denies litigants basic procedural rights, and assigns the adjudication of law and facts to ALJs who are themselves FERC officers, whose appointments violate the Constitution, and who work in offices located just a few feet away from those of the Commissioners.”
     Total says hearsay is “routinely admitted” in FERC proceedings and that the accused are deprived of the right to confront testifying witnesses.
     It says FERC’s administrative hearings do not apply federal rules of evidence or civil procedure and unfairly exclude relevant evidence by the accused that would be allowed in federal court.
     It wants the allegations adjudicated first before a federal judge, who will provide the “basic procedural protections” to which the plaintiffs are entitled.
     “The NGA [Natural Gas Act] guarantees plaintiffs’ right to have a federal court – not a FERC officer – adjudicate whether they have violated the NGA,” the complaint states. “From the time of its enactment and continuing to the present, the NGA has granted federal district courts ‘exclusive jurisdiction of violations of’ the NGA or its implementing regulations.”
     When Congress added the civil penalty provisions to the Act in 2005, Congress retained federal courts’ exclusive jurisdiction over violations, the plaintiffs say.
     “Despite Congress’s explicit delineation of these separate roles for FERC and the federal courts, FERC contends that the NGA gives it discretion to eschew federal district courts entirely, deprive accused parties of their statutory right to an Article III tribunal, and instead force them to defend themselves in an unlawful ALJ adjudicative proceeding that lacks many of the most basic constitutionally required procedural protections routinely available in federal court,” the complaint states. “FERC’s in-house proceeding can result in fines of up to $1,000,000 per day per violation, without due process under the law.”
     FERC declined to comment on the lawsuit Monday afternoon.
     The plaintiffs seek declaratory judgment and a jury trial of FERC’s allegations. They are represented by William B. Dawson with Gibson Dunn in Dallas.

%d bloggers like this: