79–010 

Calendar No. 469 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–278 

FAIR RATEPAYER ACCOUNTABILITY, TRANSPARENCY, 

AND EFFICIENCY STANDARDS ACT 

JUNE 18, 2018.—Ordered to be printed 

Ms. MURKOWSKI, from the Committee on Energy and 

Natural Resources, submitted the following 

R E P O R T 

[To accompany S. 186] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (S. 186) to amend the Federal Power Act to provide 

that any inaction by the Federal Energy Regulatory Commission 

that allows a rate change to go into effect shall be treated as an 

order by the Commission for purposes of rehearing and court review, having considered the same, reports favorably thereon with 

an amendment, and recommends that the bill, as amended, do 

pass. 

The amendment is as follows: 

Strike all after the end of Section 1, the Short Title, and insert 

the following: 

SEC. 2. AMENDMENT TO THE FEDERAL POWER ACT. 

Section 205 of the Federal Power Act (16 U.S.C. 824d) is amended by adding at 

the end the following: 

(g) INACTION OF COMMISSIONERS.— 

(1) IN GENERAL.—If the Commission permits the expiration of the 60-day period established under the first sentence of subsection (d) because the members 

of the Commission are divided two against two as to the lawfulness of the 

change, as a result of vacancy, incapacity, or recusal on the Commission— 

(A) the failure to act by the Commission shall be considered to be an 

order issued by the Commission accepting the change for purposes of section 313(a); and 

(B) there shall be added to the record of the proceeding of the Commission— 

(i) the proposed order; 

(ii) notice of the division of the Commissioners with respect to the 

proposed order; and 


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(iii) the written statement of each member of the Commission explaining the views of the Commissioner with respect to the proposed 

order. 

(2) APPEAL.—If any party to a proceeding of the Commission described in 

paragraph (1) seeks a rehearing under section 313(a) and the Commission fails 

to act on the merits of the rehearing request by the date that is 30 days after 

the date of the rehearing request because the members of the Commission are 

divided two against two, as a result of vacancy, incapacity, or recusal on the 

Commission, any party that sought the rehearing may appeal under section 

313(b). 

PURPOSE

The purpose of S. 186 is to amend the Federal Power Act (FPA) 

to provide that any inaction by the Federal Energy Regulatory 

Commission (FERC or Commission) that allows a rate change to go 

into effect shall be treated as an order by the Commission for purposes of rehearing and court review. 

BACKGROUND AND NEED

Section 205 of the FPA requires rates charged by electric utilities 

to be just and reasonable and declares rates that are not just and 

reasonable to be unlawful. To enable the Commission to determine 

if rates are just and reasonable, section 205 requires any public 

utility wishing to change its rates to notify the Commission and the 

public 60 days before the utility changes its rates. (16 U.S.C. 824d.) 

The 60-day notice period gives the Commission time to consider the 

lawfulness of the rate change and for the public to contest the 

change. The Commission normally issues an order during the 60- 

day period, either (1) allowing the change to go into effect, (2) denying the change in its entirety, (3) denying the change until the electric utility submits other changes to its rates, or (4) suspending the 

change for up to 5 additional months to allow the Commission time 

to hold a hearing to consider the lawfulness of the change. If FERC 

fails to act within 60 days, then the changes will go into effect by 

operation of law without a Commission order. 

Section 313 of the FPA gives any person that is aggrieved by a 

Commission order approving or denying a rate change the opportunity to request a rehearing from the Commission. The Commission must act on the rehearing request within 30 days or the request is deemed denied. To the extent such rehearing request is denied, the aggrieved party can then ask the U.S. Courts of Appeals 

to review the Commission’s rate change order. But the FPA does 

not grant the courts jurisdiction to review rate changes if the party 

has not requested rehearing or if the Commission has not issued 

an order, in cases where the rate change went into effect by operation of law without a Commission order. 

In only a very few instances has a rate change under section 205 

gone into effect because the Commission failed to act within 60 

days. In fact, on only six occasions since 1977 when FERC was established has this occurred. On the most recent occasion, only four 

Commissioners were available to act on a rate submittal within the 

required time period. According to their public statements, the 

Commissioners were divided two against two as to the action they 

wanted to take on the rate filing. Because of that split, the Commission did not issue an order, the rates took effect, and the utility 

(in this case, ISO New England, the Regional Transmission OrganiVerDate Sep 11 2014 01:08 Jun 24, 2018 Jkt 079010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR278.XXX SR278

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zation for New England, or ISO–NE) was therefore allowed to 

charge the rates that it had submitted (See, Notice of Filing Taking 

Effect by Operation of Law, FERC Docket ER14–1409 (September 

16, 2014)). 

Public Citizen, Inc. and the State of Connecticut objected to ISO– 

NE’s rate change and sought rehearing on the Commission’s public 

notice, issued by the Commission’s Secretary, that the change had 

taken effect by operation of law. Upon receipt of those rehearing 

requests, the Commission’s Deputy Secretary issued a further public notice in the proceeding, acknowledging the requests for rehearing, and stating that the Secretary’s earlier notice was not an order 

issued by the Commission, ‘‘[r]ehearing therefore does not lie,’’ and 

concluding that the submittals asking for rehearing ‘‘are therefore 

dismissed’’ (Notice of Dismissal of Pleadings, FERC Docket ER14– 

1409 (October 24, 2014)). Public Citizen and Connecticut then 

sought review in the Court of Appeals, which held that it lacked 

jurisdiction since the Commission had not issued an order it could 

review. Public Citizen, Inc. v. FERC, 839 F.3d 1165 (D.C. Cir. 

2016). In dismissing the case, the court acknowledged that the FPA 

comports, ‘‘with the ‘‘almost universally accepted common-law rule’ 

that only a ‘‘majority of a collective body is empowered to act for 

the body.’ ’’ 839 F.3d 1169, citing, Fed. Trade Comm’n v. Flotill 

Prods., Inc., 389 U.S. 179, 183 (1967). The court said that ‘‘whether 

analyzed under the statutorily-prescribed requirements for Commission action or under general institutional principles, we reach 

the same conclusion: FERC did not engage in collective, institutional action when it deadlocked.’’ 839 F.3d 1170. Announcing its 

holding, the court said, ‘‘Any unfairness associated with this outcome inheres in the very text of the FPA. Accordingly, it lies with 

Congress, not this Court, to provide the remedy.’’ Id. at 1174. 

As the court observed, legislation could remedy this situation. 

The bill provides that where the Commission fails to act because 

it is divided two against two as to the lawfulness of that rate 

change, the absence of an order by the Commission shall itself be 

considered an order for purposes of rehearing and subsequent judicial review. It also seeks to ensure that in the rare, unusual, and 

disfavored situation where the Commissioners cannot come to a 

majority vote that there will be an adequate administrative record 

for the court to review. Finally, the bill requires each of the Commissioners to articulate formally and publish his or her views 

about the rate filing at issue. Having the benefit of these statements may discourage ties by highlighting more precisely the reasoning that leads each Commissioner to his or her views and, consequently, to enable the fashioning of an order that could attract 

a majority vote. 

LEGISLATIVE HISTORY

S. 186 was introduced on January 23, 2017, by Senators Markey, 

Warren, Whitehouse, and Reed. The Senate Subcommittee on Energy held a hearing on S. 186 on October 3, 2017. 

The Committee on Energy and Natural Resources met in open 

business session on March 8, 2018, and ordered S. 186 favorably 

reported, as amended. 


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COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in 

open business session on March 8, 2018, by a majority voice vote 

of a quorum present, recommends that the Senate pass S. 186, if 

amended as described herein. 

COMMITTEE AMENDMENT

During its consideration of S. 186, the Committee adopted an 

amendment to require the Commission to compile an adequate administrative record of the proceeding for a court to review and to 

adjust the scope of S. 186 to cover situations where a rate change 

takes effect at the end of the 60-day notice period by operation of 

law because the Commission is evenly divided two against two as 

to the lawfulness of the change, as a result of vacancy, incapacity, 

or recusal on the Commission rather than any inaction that allows 

a rate change to take effect. The amendment is further described 

in the section-by-section analysis. 

SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

Section 1 contains the short title. 

Section 2. Amendment to the Federal Power Act 

Section 2 amends section 205 of the FPA (the Act of June 10, 

1920, Chapter 285, as amended)) by adding at the end a new subsection (g), entitled Inaction of Commissioners. 

The new subsection 205(g)(1) provides that if the Commission 

permits the expiration of the 60-day period for action because the 

members of the Commission are divided two against two as to the 

lawfulness of the change, then the failure to act by the Commission 

shall be considered to be an order issued by the Commission accepting the change for purposes of section 313(a) of the Federal 

Power Act. Further, that then there shall be added to the record 

of the proceeding of the Commission: (i) the proposed order; (ii) notice of the division of the Commissioners with respect to the proposed order; and (iii) the written statement of each member of the 

Commission explaining the views of the Commissioner with respect 

to the proposed order. 

The new subsection (g)(2) provides for appeal under certain conditions. Specifically, if any party to a proceeding of the Commission 

described above seeks a rehearing under section 313(a) of the FPA 

and the Commission fails to act on the merits of the rehearing request by the date that is 30 days after the date of the rehearing 

request, any party that sought the rehearing may appeal under 

section 313(b) of the FPA. 

COST AND BUDGETARY CONSIDERATIONS

The following estimate of the costs of this measure has been provided by the Congressional Budget Office: 

Under the Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) is responsible for ensuring that rates, 

terms, and conditions set by public utilities related to interstate 

transmission and sales of electricity are just and reasonable. SecVerDate Sep 11 2014 01:08 Jun 24, 2018 Jkt 079010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\SR278.XXX SR278

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tion 205 of that act requires public utilities to notify FERC of any 

changes to such rates, terms and conditions. Under current law, 

FERC has 60 days to review proposed changes and issue an order 

determining whether such changes can take effect. Affected parties 

can seek a rehearing of FERC’s decision and a subsequent review 

by an appellate court. If, however, FERC fails to issue an order 

within 60 days, any proposed changes take effect automatically. In 

the absence of an official decision by FERC, affected parties cannot 

request a rehearing. 

S. 186 would amend section 205 of the FPA to specify circumstances under which a failure by FERC to issue an order related to a proposed change in rates or other terms would be considered an order to allow such changes. Thus, under the bill, affected 

parties could seek rehearing and appellate review. 

By expanding the number of cases in which proposed rate 

changes could result in rehearings, S. 186 could increase FERC’s 

workload. However, using information from FERC about the small 

number of cases that would be affected by the proposed change, 

CBO estimates that any increased administrative costs to the agency would be insignificant in any given year. Furthermore, because 

FERC recovers 100 percent of its costs through user fees, any 

change in its costs (which are controlled through annual appropriation acts) would be offset by an equal change in fees, resulting in 

no net change in federal spending. 

Enacting S. 186 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting S. 186 would not increase net direct 

spending or on-budget deficits in any of the four consecutive 10- 

year periods beginning in 2028. 

S. 186 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate is Megan Carroll. The estimate was approved by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

S. 186. The bill is not a regulatory measure in the sense of imposing Government-established standards or significant economic responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

Little, if any, additional paperwork would result from the enactment of S. 186, as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

S. 186, as ordered reported, does not contain any congressionally 

directed spending items, limited tax benefits, or limited tariff benefits as defined in rule XLIV of the Standing Rules of the Senate. 


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EXECUTIVE COMMUNICATIONS

The testimony provided by the Federal Energy and Regulatory 

Commission at the October 3, 2017, hearing on S. 186 follows: 

TESTIMONY OF JAMES DANLY, GENERAL COUNSEL, FEDERAL

ENERGY REGULATORY COMMISSION, BEFORE THE UNITED

STATES SENATE COMMITTEE ON ENERGY AND NATURAL

RESOURCES SUBCOMMITTEE ON ENERGY

S. 186 (THE ‘‘FAIR RATEPAYER ACCOUNTABILITY, TRANSPARENCY, AND EFFICIENCY STANDARDS ACT’’ OR ‘‘FAIR

RATES ACT’’)

As discussed above, when a public utility seeks to 

change its rates or other provisions of its tariff, FPA Section 205 requires the utility to file the proposed change 

with the Commission sixty days in advance of when the 

change is to take effect. The Commission then provides the 

public the opportunity to intervene in the proceeding and 

to comment on the proposed change. Prior to expiration of 

the statutory, sixty-day notice period, the Commission will 

take action on the proposed rate or tariff provision, typically by issuing a Commission order. Under Section 313 of 

the FPA, any party aggrieved by a Commission order may 

seek rehearing of that order. Once the Commission acts on 

the request for rehearing (or fails to act within 30 days), 

review is available in the United States Courts of Appeals. 

A request for rehearing, though, is a prerequisite for appellate review. Under Section 313, parties may not seek 

review from the Court of Appeals if they did not seek rehearing. 

In exceedingly rare cases, a public utility’s filing under 

Section 205 has taken effect by operation of law without 

a Commission order. I am familiar with only six occasions 

where this outcome has occurred under either the FPA or 

under the comparable provisions of the Natural Gas Act. 

One such occurrence was in September 2014, when capacity auction results filed by ISO New England (ISO–NE) became effective by operation of law. At the time, the Commission had only four sitting Commissioners. Public statements issued by the Commissioners after ISO–NE’s filing 

took effect revealed a 2–2 split on the question of whether 

to accept the auction results, which was why the Commission never issued an order regarding the filing. 

When filings have taken effect under Section 205 without a Commission order, parties have occasionally sought 

rehearing. The Commission has dismissed those rehearing 

requests on the grounds that rehearing was not available 

because the Commission did not issue an order. The Commission followed that approach with respect to rehearing 

requests filed in the ISO–NE case, and, when challenged 

on appeal, the Commission’s approach was affirmed by the 

United States Court of Appeals for the District of Columbia Circuit. The Court agreed with the Commission that, 

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evant precedent, where there is no Commission order in a 

Section 205 proceeding, rehearing and appellate review are 

precluded. 

S. 186 could partially change that outcome. Under the 

bill, absence of Commission action resulting in a filing taking effect by operation of law would constitute an order accepting the filing for purposes of rehearing and appeal 

under Section 313 of the FPA. As a result, the proposed 

legislation would permit any party aggrieved by the filing 

to seek rehearing. If the Commission acts on that request 

for rehearing, the aggrieved party could seek review in the 

Court of Appeals. 

The proposed legislation offers the possibility for aggrieved parties to pursue further administrative and judicial process when a disputed rate goes into effect even 

though half of the seated Commission would not have accepted the rate in an order. Oddly, under the current statutory framework, a party who manages to persuade only 

one of four Commissioners, and loses on a 3–1 vote, may 

request rehearing at the Commission and seek redress at 

a Court of Appeals. However, a party that is perhaps more 

persuasive and manages to convince two of four Commissioners, resulting in a 2–2 split—and thus no Commission 

order—is currently barred from seeking rehearing and appellate review. 

This bill potentially represents a step toward correcting 

this exceedingly rare, but not unimportant, problem. However, it is only a partial measure, and there are several 

issues that I would like to bring to the Subcommittee’s attention as it considers this legislation. 

First, the mere fact that aggrieved parties are foreclosed 

from requesting rehearing and subsequent appellate review does not mean that they are without means of redress under the current formulation of the FPA. Should a 

public utility’s filing take effect by operation of law, and 

the aggrieved party believes those rates to be unjust and 

unreasonable or unduly discriminatory, they may avail 

themselves of the procedures afforded under section 206. 

They can file a complaint in a separate action and, if they 

meet their burden, they will be able to have the rates altered. While this option increases the cost to litigants and 

shifts the burden to the party filing the complaint, any 

amendment to the FPA should be adopted knowing that 

this alternative route to redress already exists. 

Second, the bill may not afford the relief anticipated by 

the Subcommittee. Should the Commission’s inaction be 

the result, as in the ISO–NE case, of a 2–2 split, a similar 

result could obtain for a later order on rehearing. In that 

case, there would be another 2–2 split and no order on rehearing would issue. In such a case, it would be exceedingly unlikely that a Court of Appeals would entertain a 

petition for review. Moreover, even if a Court of Appeals 

accepted the petition, the Court would almost certainly remand the case back to the Commission for further adjudication. When sitting in review of agency action, Courts 


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of Appeals review the evidentiary record compiled below 

and the reasoning the agency employed—as reflected in its 

orders—to support its decision based on that record. In the 

case of a serial 2–2 split, no orders would issue and such 

a review would be impossible. Remand would appear to be 

the Court’s only option. 

Finally, the proposed language might be overbroad. As 

drafted, the bill’s effects are not restricted to the occasion, 

like that presented in the ISO–NE case, of a deadlocked 

Commission, but instead apply to ‘‘[a]ny absence of action’’ 

by the Commission that allow rates to go into effect by operation of law. If the Subcommittee’s primary objective is 

to provide remedy following inaction by a deadlocked Commission, it might consider narrowing the circumstances 

under which the bill’s provisions would apply in order to 

limit unintended consequences. 

In summary, while the Subcommittee may ultimately 

decide that this change to 205 is necessary, it is my view 

that it only partially advances the interests of an exceedingly narrow category of aggrieved parties in very rare occasions of Commission inaction. Given that the right to 

seek rehearing under such circumstances does not, as a 

practical matter, guarantee a rehearing order or appellate 

review, and given the fact that parties can always challenge rates under section 206, I would counsel discretion 

in your deliberations on whether to alter the central provision of the Federal Power Act. Unlike S. 1860, which seeks 

to ameliorate a serious problem that affects the whole of 

the regulated community and represents an administrative 

burden on the Commission, this bill, while perhaps defensible, is not required to ensure the success of the Commission’s role regulating the wholesale power markets, nor to 

guarantee the rights of aggrieved parties. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the original 

bill, as reported, are shown as follows (existing law proposed to be 

omitted is enclosed in black brackets, new matter is printed in 

italic, existing law in which no change is proposed is shown in 

roman): 

FEDERAL POWER ACT 

The Act of June 10, 1920, Chapter 285, as Amended 

* * * * * * * 

PART II—REGULATION OF ELECTRIC UTILITY 

COMPANIES ENGAGED IN INTERSTATE COMMERCE 

* * * * * * * 

Rate and Charges; Schedules; Suspension of New Rates 

SEC. 205. (a) All rates and charges made, demanded, or received 

by any public utility for or in connection with the transmission or 


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sale of electric energy subject to the jurisdiction of the Commission, 

and all rules and regulations affecting or pertaining to such rates 

or charges shall be just and reasonable, and any such rate or 

charge that is not just and reasonable is hereby declared to be unlawful. 

* * * * * * * 

(d) Unless the Commission otherwise orders, no change shall be 

made by any public utility in any rates, charges, classification, or 

service, or in any rule, regulation, or contract relating thereto, except after sixty days’ notice to the Commission and to the public. 

Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules stating plainly the 

change or changes to be made in the schedule or schedules then in 

force and the time when the change or changes will go into effect. 

The Commission, for good cause shown, may allow changes to take 

effect without requiring the sixty days’ notice herein provided for 

by an order specifying the changes so to be made and the time 

when they shall take effect and the manner in which they shall be 

filed and published. 

* * * * * * * 

(g) INACTION OF COMMISSIONERS.— 

(1) IN GENERAL.—If the Commission permits the expiration of 

the 60-day period established under the first sentence of subsection (d) because the members of the Commission are divided 

two against two as to the lawfulness of the change, as a result 

of vacancy, incapacity, or recusal on the Commission— 

(A) the failure to act by the Commission shall be considered to be an order issued by the Commission accepting the 

change for purposes of section 313(a); and 

(B) there shall be added to the record of the proceeding 

of the Commission— 

(i) the proposed order; 

(ii) notice of the division of the Commissioners with 

respect to the proposed order; and 

(iii) the written statement of each member of the 

Commission explaining the views of the Commissioner 

with respect to the proposed order. 

(2) APPEAL.—If any party to a proceeding of the Commission 

described in paragraph (1) seeks a rehearing under section 

313(a) and the Commission fails to act on the merits of the rehearing request by the date that is 30 days after the date of the 

rehearing request because the members of the Commission are 

divided two against two, as a result of vacancy, incapacity, or 

recusal on the Commission, any party that sought the rehearing 

may appeal under section 313(b). 

* * * * * * * 

Æ 


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