Washington—BP is taking the US Federal Energy Regulatory Commission to appeals court over the agency's December ruling holding its ground in a long-running enforcement case involving findings of natural gas market manipulation dating back to 2008.
FERC in 2016 ordered BP to pay more than $20 million in civil penalties and disgorgement for manipulating the price of natural gas in the Houston region in order to profit from market conditions in the wake of Hurricane Ike. The commission in December confirmed its stance, rejecting BP efforts to convince FERC to dismiss the case in light of subsequent court rulings about the statute of limitations.In an emailed statement Feb. 8, BP said it did "not believe there is credible evidence to support FERC's findings or that any alleged activity falls within FERC's jurisdiction, and we will appeal this decision to the 5th Circuit."
It added, "Respecting the world in which we operate is one of our values and that includes compliance with laws and regulations."
Effort to reopen nixedBP in February 2018 sought to have FERC reopen and dismiss the case as time-barred, citing a Sept. 29. 2017, federal district court decision and a June 5, 2017, Supreme Court decision that the company said amounted to a "significant change in the law" pertaining to the statute of limitations.
After a long lull in the BP case, FERC Dec. 17, 2020, under then Chairman James Danly, voted 3-0 to find that BP "waived any statute of limitations defense by failing to raise it earlier in this proceeding."
Among other points of contention, FERC found its enforcement staff met the burden of persuasion on a claim of manipulation under the Natural Gas Act and its anti-manipulation rule. FERC said BP "had not rebutted or defeated" the regulator's claims "with contrary evidence of at least equal weight."
Jurisdictional reachThe commission, in its Dec. 17 order, also weighed in on a question of FERC's jurisdictional reach that has contributed to interest in the case, because of the potential for precedent in other energy market manipulation cases.
FERC said it was unpersuaded by BP's assertions on rehearing that the commission lacked jurisdiction because the manipulative scheme at issue involved non-jurisdictional transactions in intrastate activity. FERC affirmed its view that "BP's manipulative scheme included the use of non-jurisdictional fixed price sales to directly affect the Houston Ship Channel Gas Daily index price." FERC found the index price was used to price at least 46 jurisdictional sales for resale during the investigative period, and noted the commission's approach was to address situations in which there is a "nexus between the fraudulent conduct of an entity and a jurisdictional transaction."
According to notices in the FERC docket, BP has already paid civil penalties of about $24.4 million in principal plus interest, under protest and reserving its rights pending outcome of judicial review. It similarly paid $250,295 in disgorgement with interest, under protest and with reservation of rights.
Latest petitionIn the new petition for review, docketed in the 5th US Circuit Court of Appeals Feb. 5, BP challenges FERC's 2014 order establishing hearing in the case, its July 2016 order affirming the administrative law judge's initial decision, and its Dec. 17, 2020, order addressing arguments raised on rehearing.
The company asked the court to review, vacate or reverse or modify in whole or in part, or set aside in whole or in part the orders. A prior BP petition in the case had been in abeyance pending FERC's action on BP's effort to dismiss the case (BP America, et. al, v. FERC, C21-60083).
