Bankruptcy Court Rules that Federal Energy Regulatory Commission Does Not Have Concurrent Jurisdiction Over Rejection of Power Purchase Agreements

PG&E Corp. v. Fed. Energy Reg. Comm’n (In re PG&E Corp.), No. AP 19-03003, 2019 WL 2491247 (Bankr. N.D. Cal. June 7, 2019).

The debtors filed an adversary proceeding seeking a judgment enjoining the Federal Energy Regulatory Commission from impacting the debtors’ ability to reject power purchase agreements and related relief.

Shortly after the debtors announced their intent to file for bankruptcy protection, power purchase agreement counterparties filed administrative proceedings with the Federal Energy Regulatory Commission seeking a ruling that FERC must approve rejection of a PPA.  On Janaury 25 and 28, 2019, FERC ruled that it has concurrent jurisdiction with the bankruptcy court to consider rejection of PPAs.  On January 29, 2019, the debtors filed their voluntary bankruptcy petitions.  On the petition date, the debtor aslo filed an adversray proceeding for decalaratory and injunctive relief barring FERC from impacting the debtors’ ability to reject PPAs.  In its detailed analysis, the bankruptcy court stated unequivocally that there is no concurrent jurisdiction between FERC and the bankruptcy court with respect to rejection of executory contracts.  Pursuant to 28 U.S.C. §§ 157(b)(2) and 1334(a), the bankruptcy court has the exclusive authority and jurisdiction over the rejection of executory contracts under section 365 of the Bankruptcy Code, including PPAs.