Concurrent Jurisdiction is the Answer
Neil H. Butterklee is an Associate General Counsel in the Con Edison Law Department, where he heads up the federal regulatory practice group. Mr. Butterklee’s practice primarily involves litigation and mediation before FERC, the New York State Public Service Commission, and the federal courts of appeal.
Sebrina M. Greene is an Associate Counsel in the Law Department at Con Edison. Ms. Greene’s practice primarily involves litigation in natural gas matters before FERC and the Court of Appeals for the D.C. Circuit.
The Federal Energy Regulatory Commission (FERC) has exclusive jurisdiction over Natural Gas Act (NGA) and Federal Power Act (FPA) tariffs, contracts, and agreements (collectively or individually, wholesale energy contract).
The bankruptcy courts have exclusive jurisdiction over whether a debtor-in-possession may modify, abrogate, or reject its executory contracts in accordance with the provisions of the Bankruptcy Code. Recently, several FERC-regulated energy companies have filed for Chapter 11 bankruptcy protection.
Ambiguity exists over who has jurisdiction to approve the rejection, modification, or abrogation of these executory contracts. Naturally, the bankruptcy courts and FERC have been resistant to relinquishing their jurisdiction, which has led to an inconsistent patchwork of decisions issued by FERC and the courts.
This article puts forth a practical resolution of this issue — and the one currently favored by FERC — which is for the bankruptcy courts and FERC to share jurisdiction over matters related to wholesale energy contracts during Chapter 11 bankruptcy proceedings.