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Commission Watch

FERC Versus Bankruptcy Jurisdiction:
Fortnightly Magazine - November 2004

or collateral or other security requirements that the troubled company may or may not be able to post or provide in light of its resources, needs, debt covenants, or other constraints. A troubled company may find that it is not well-served by being perceived as an unreliable party due to its potential ability to invoke Section 365 in circumstances other than those entertained by FERC.


1. K. Irvin and R. Loeffler, "The Tyranny of FERC: The Commission's Power Grab Over Bankruptcy Courts Condemns Merchants to a Corporate Netherworld," , May 2004, p. 21; K. Irvin & R. Loeffler, "Restructure or Bust? Why FERC Must Yield to Bankruptcy Law," , Oct. 1, 2003, p. 17.

2. 11 U.S.C. § 101, et seq. (the Code). District courts have original jurisdiction over bankruptcy cases. 28 U.S.C. § 1334. They usually refer the cases to the bankruptcy court, although they may, and sometimes must, withdraw the reference in whole or in part. 28 U.S.C. § 157.

3. 16 U.S.C. § 791, et seq. (the FPA).

4. 11 U.S.C. § 365(a).

5 Bankrupt Enron Power Marketing Inc. is seeking to enforce large judgments (over $300 million in the aggregate) for liquidated damages under wholesale electricity supply contracts entered in its favor by a bankruptcy court against Nevada Power Co. and Sierra Pacific Power Co. The defendants have appealed to the district court (appeals from bankruptcy courts first go to the district court, 28 U.S.C. § 158) and are pursuing relief in a separate proceeding before FERC. The dispute has drawn much public comment, including filings by Nevada's two United States senators with FERC.

6. 378 F.3d 511 (5th Cir. 2004) ("Mirant"). The circumstances of , and the rulings of the bankruptcy court and, upon withdrawal of the reference, the district court, are amply set forth in the appellate opinion and the more recent article cited, supra, in endnote 1.

7. , 378 F.3d at 542-526. As of the preparation of this article, the time for parties to seek rehearing in the Fifth Circuit or an appeal to the Supreme Court has not elapsed (no such petition yet has been filed), and the district court has not yet adopted a standard nor sent the matter back to the bankruptcy court, although the parties are skirmishing in the district court over certain related issues.

8. , 107 U.S. 445 (1883) (banking regulatory statute's insolvency provision requiring ratable distribution superseded general statute giving United States priority as creditor of insolvent persons).

9. , 465 U.S. 513 (1984) (in effect, construing exceptions to the NLRA and adopting a hybrid standard).

10. , 502 U.S. 32 (1991) (finding no conflict between relevant provisions of the statutes and rejecting argument that more general provisions of the Code were in conflict with banking regulation statutes).

11. , et al., 537 U.S. 293 (2003) (finding no conflict).

12. , 417 U.S. 535, 551 (1974).

13. , 523 U.S. 517, 530, 534 (1998). Because statutes are not always clear, court decisions on whether there is a conflict between two statutes also may reflect analysis of