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FERC v. Powhatan Energy Fund, LLC: A Reminder from the Fourth Circuit that Statutes of Limitations Must be Read Carefully

In the context of a civil enforcement action brought by the Federal Energy Regulatory Commission, the Fourth Circuit parsed the language of a statute of limitations to affirm the Eastern District of Virginia. This allows the governmental action to move forward and rejects a concerted industry effort backed by amicus support. The underlying case concerns alleged manipulation in wholesale energy markets, but the Fourth Circuit’s opinion was limited to resolving when FERC’s cause of action accrued. 

The relevant statute of limitations is a general one for civil enforcement actions, barring them “unless commenced within five years from the date when the claim first accrued.” 28 U.S.C. § 2462. Appellants’ position was that the statute of limitations ran from the date the allegedly manipulative trading occurred. The practical effect of this position would have been that only the last four days of disputed trading would be subject to potential civil penalties. Appellants cited other statutes where limitations periods have been interpreted to run from the time the conduct occurred and heavily relied on a Supreme Court interpretation of the Investment Advisers Act under which the statute of limitations under 28 U.S.C. § 2462 runs from the date of the disputed conduct. See Gabelli v. SEC, 568 U.S. 442, 448. 

The Fourth Circuit cited Gabelli for the proposition “that statutes of limitation do not run until a plaintiff has a complete and present cause of action,” FERC v. Powhatan Energy Fund, LLC, 2020 U.S. App. LEXIS 4161, *14 (4th Cir. February 11, 2020), and it was on this basis that the Fourth Circuit distinguished the cases. Here, FERC could not proceed until it had issued a penalty assessment order and allowed 60 days to pass for the recipient of the order to respond, 16 U.S.C. § 823b(d)(1), while the SEC faced no such statutory prerequisites in Gabelli. This difference was enough for the Fourth Circuit to hold that FERC’s action was timely. 

The practice lesson here is that statutes of limitations are not one-size-fits-all. Even Gabelli and Powhatan Energy Fund were interpreting the same statute of limitations and reached different outcomes. Some statutes of limitations apply a discovery rule where the limitations period begins to run when a plaintiff could have reasonably discovered that all the elements for the cause of action were present. Some specify that the statute of limitations begins to run at the time the conduct occurred. And yet others are multi-tiered based on different potential circumstances. So always take a close look at the applicable statute of limitations, and if there is ambiguity (to say nothing of potential tolling) be prepared to argue based on the text, the underlying justifications of statutes of limitations, and the relative equities involved. 

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