Judges tussle over FERC pipeline ‘limbo’

By Niina H. Farah | 04/28/2020 07:45 AM EDT

A federal appeals court yesterday appeared open to modifying a long-standing natural gas pipeline approval process that a judge last year condemned as “Kafkaesque.”

Federal Energy Regulatory Commission headquarters in Washington.

Federal Energy Regulatory Commission headquarters in Washington. Francis Chung/E&E News

A federal appeals court yesterday appeared open to modifying a long-standing natural gas pipeline approval process that a judge last year condemned for putting landowners in "administrative limbo," but the details of the potential changes were far from clear.

During a 3.5-hour remote hearing, the U.S. Court of Appeals for the District of Columbia Circuit’s 11 active judges probed whether the Federal Energy Regulatory Commission should limit or eliminate its use of tolling orders, which allow projects to move forward while preventing environmental groups and affected property owners from raising challenges in court (Energywire, April 27).

The D.C. Circuit could draw a distinction between "honest" tolling orders that allow FERC to spend more time on its review and orders that are simply a means to delay decisionmaking on requests for rehearing of an agency certificate, said Judge Merrick Garland, a Clinton appointee.


Judge Patricia Millett, who last year rebuked FERC’s procedures as "Kafkaesque" in an opinion that ultimately upheld the agency’s approval of the Atlantic Sunrise pipeline, said it would be "untenable" for the court to determine which tolling orders are "honest."

A better standard, the Obama appointee said, would be to determine if FERC’s delay would cause harm to challengers.

"Granting rehearing does not stop you from going to court as long as you are aggrieved," she said.

Some judges on yesterday’s en banc panel asked whether FERC should be required to automatically halt property seizure and pipeline construction — without freezing the project certificate — while the agency considered rehearing requests.

Alternatively, Chief Judge Sri Srinivasan, an Obama appointee, raised the possibility of allowing parties harmed by pipeline construction to file lawsuits even if FERC was not required to halt projects.

"The category of cases we are worried about is not all cases, but irreparable harm cases," said Judge Cornelia Pillard, who was also appointed during the Obama administration.

But Judge Neomi Rao, a Trump pick, pressed for any language in the Natural Gas Act requiring a certificate to be stayed or possibly vacated during rehearing.

"It’s not in the Natural Gas Act that I’m aware of," replied White and Williams LLP partner Siobhan Cole, who represented environmental groups and landowners in the case.

She argued instead that FERC should make a decision about granting or denying a rehearing request within the 30-day window allotted under the statute.

Holding FERC to that timeline would not prevent the agency from extending the time regulators took to consider the merits of a rehearing request, but it would open the door for challengers to go to court, Cole said.

"There are any number of ways the process could go forward fairly," she said. "What it can’t and should not do is to be final for one side and not for the other."

Legal basis for tolling orders

The panel of D.C. Circuit judges also closely questioned FERC about the legal justification for its use of tolling orders and the possible effects of eliminating those tools.

"The practical impact will be a number of rehearing requests would not be addressed with a substantive hearing," said FERC attorney Robert Kennedy. "They would just go to court."

He said that the current system offers sufficient protections against irreparable harm. He added that pipeline developers that want to use eminent domain have to meet a certain standard, and affected landowners are guaranteed compensation.

But, Kennedy added, "what the law deems compensation is probably cold comfort to landowners."

Upon questioning from Millett, Kennedy acknowledged that the Natural Gas Act imposes no limits on how long the agency may use tolling orders.

The FERC attorney maintained that it was Congress’ intent for underlying orders to remain in force during the rehearing process. He denied that the statute set a 30-day clock "per se."

Judge Thomas Griffith pressed Kennedy on how condemnation proceedings can still go forward in district court, even as landowners remained barred from bringing their challenges before judges, as was the case in the Atlantic Sunrise dispute.

"What troubles me is the situation in which you have an eminent domain proceeding going ahead in district court where the district court takes the view that the certificate order is final," said the judge, who was appointed during the George W. Bush administration. "And they can go ahead and make decisions on property rights because it is final."

At the same time, Griffith continued, FERC did not consider the order final for those challenging its approval of the project.

"Can you help me reconcile those two?" he asked. "Because they don’t seem in sync."

Saul Ewing Arnstein & Lehr LLP partner John Stoviak, who represented Atlantic Sunrise developer Transcontinental Gas Pipe Line Co. LLC in the case, warned of the consequences of delaying certificates for pipeline developers.

He suggested that a construction delay of six weeks could lead to a year or more of delays for a project as a whole, due to restrictions on the times of year building can take place.

"There would be real consequences that would go against the Natural Gas Act," Stoviak said.


The D.C. Circuit appears prepared to do "something" about tolling orders, said Carolyn Elefant, a former FERC attorney who now represents landowners in pipeline challenges.

"It’s going to be a divided opinion and a lot of concurring dissent," she said in an interview after yesterday’s hearing. "What that is, I’m not sure."

Elefant said she would like to see FERC issue a stay on its certificates should it take more time to reconsider rehearing. The trickier option, she said, would be allowing challengers to still go to court if FERC maintained discretion to order a stay.

Another option might be for the D.C. Circuit to allow judicial review of a certificate when FERC’s only action on rehearing is to issue a tolling order, ClearView Energy Partners LLC wrote in a note to clients.

"We think the D.C. Circuit is looking for a way to push the Commission to work faster without necessarily limiting it to the 30 days explicitly defined for ‘action’ on rehearing under the NGA," the group wrote.

The Interstate Natural Gas Association of America affirmed its support for the FERC process.

"We continue to believe that the Commission’s issuance of a tolling order meets the statutory requirement of ‘act’ within 30 days and is lawful," a spokesperson for the trade group wrote in an email.

"Our member companies are committed to the fair and respectful treatment of landowners and work diligently to reach mutually agreeable easement agreements for new infrastructure projects."