Category: Energy Infrastructure/Pipelines

Climate Change Environmental Groups Challenge President’s Executive Orders to Expand Energy Development

Margaret Anne Hill, Frank L. Tamulonis III, Stephen C. Zumbrun, and Melissa A. Scacchitti ●

We previously reported that President Trump issued a series of executive actions to fulfill his pledge to advance the United States’ domestic energy economy. These executive actions, such as President Trump’s Executive Orders Unleashing American Energy, Declaring a National Energy Emergency, and Reinvigorating…[the] Coal Industry…., now face legal challenges from environmental groups, led by Our Children’s Trust, a nonprofit law firm that exclusively represents youth plaintiffs against state and federal governments.[1] Presently, Our Children’s Trust seeks to enjoin these orders from taking effect because of their potential impact on climate change in the youths’ future. This post will provide a brief overview of the litigation and its pending timeline.

Continue reading “Climate Change Environmental Groups Challenge President’s Executive Orders to Expand Energy Development”

Supreme Court Scales Back the NEPA Roadblock to Infrastructure Projects

Margaret Anne Hill and Stephen C. Zumbrun ●

Overview

On May 29, 2025, the U.S. Supreme Court issued a significant decision clarifying the scope of environmental review required under the National Environmental Policy Act (“NEPA”) for major infrastructure projects. The Court recognized and reined in what infrastructure practitioners have long understood: NEPA strayed far beyond its “procedural” and “informational” roots to become an obstruction to infrastructure projects across the country.

As brief background, a project developer filed an application with the Surface Transportation Board (“STB”) for a proposed 88-mile railroad line in Utah. The STB, pursuant to its NEPA requirements, issued a 3,600-page environmental impact statement (“EIS”) analyzing the environmental effects of the project and ultimately approved the railroad line. Groups challenged the STB’s approval, and the D.C. Circuit vacated the STB’s decision, ordering the STB to analyze the potential “upstream” impacts of the proposed railroad, which included possible increased oil and gas drilling activities in Utah, and potential “downstream” impacts of the railroad, such as increased oil refining in Texas.

The Supreme Court reversed the D.C. Circuit Court’s prior decision, finding that the D.C. Circuit: (1) did not afford substantial deference to the STB required in NEPA cases, and (2) incorrectly ordered the STB to review the environmental effects of projects separate in time and place from the actual 88-mile railroad under consideration.

Continue reading “Supreme Court Scales Back the NEPA Roadblock to Infrastructure Projects”

DOE Releases Draft Roadmap to Address Interconnection Challenges for Clean Energy Projects

Brett A. Snyder and Lamiya N. Rahman  ●

On October 25, 2023, the Department of Energy (“DOE”) released a draft roadmap addressing challenges to the interconnection of clean energy projects to the transmission grid. The roadmap, developed by the Interconnection Innovation e-Xchange (“i2X”),[1] identifies short-term (1–2 year), medium-term (2–5 year), and long-term (5+ year) solutions aimed at addressing barriers to connecting solar, wind, and battery projects to the grid and maintaining grid reliability.[2]

As the roadmap notes, interconnection requests have dramatically increased in the past decade, with 2,500 to 3,000 new requests a year, reflecting 400 to 600 GW/year of proposed capacity.[3] At the same time, constraints on transmission capacity and issues in the interconnection process have caused large backlogs, delays, and interconnection costs, resulting in a “more difficult and costly energy transition for ratepayers, utilities, and their regulators.”[4]

DOE has also issued a request for information (“RFI”) to seek feedback from interconnection stakeholders regarding the draft roadmap. Responses to the RFI are due on November 22, 2023.

Continue reading “DOE Releases Draft Roadmap to Address Interconnection Challenges for Clean Energy Projects”

In Order No. 2023, FERC Takes Step in Reforming Transmission Grid Policies by Enacting Generator Interconnection Reforms

Mark R. Haskell, Brett A. Snyder, Lamiya N. Rahman, and Jane Thomas

On July 28, 2023, the Federal Energy Regulatory Commission (“FERC”) unanimously approved Order No. 2023, a Final Rule designed to streamline the process by which generation resources can connect to the interstate transmission grid.

At a high level, the Final Rule substantially revises the current pro forma large generator interconnection procedures (“LGIP”) and agreement (“LGIA”) with the following updates: 

      • Replacing the current first-come, first-served process with a first-ready, first-served interconnection cluster study process.
      • Increasing the speed of interconnection queue processing by, among other things, imposing strict study deadlines and penalties on transmission providers.
      • Incorporating technological advancements into the interconnection process.

Order No. 2023 also makes changes to the small generator interconnection procedures (“SGIP”) and agreement (“SGIA”).

To read the full client alert, please visit our website. 

DOE Kicks Off Supplemental Environmental Review of the Alaska LNG

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On July 2, 2021, the Department of Energy’s Office of Fossil Energy (“DOE/FE”) issued a Notice of Intent (“Notice”) to Prepare a Supplemental Environmental Impact Statement (“SEIS”) for the Alaska LNG Project (“Project”). DOE/FE will evaluate potential environmental impacts of upstream natural gas production on the North Slope of Alaska, and will conduct a life cycle analysis to calculate greenhouse gas (“GHG”) emissions for liquefied natural gas (“LNG”) exported from the Project.

The $38.7 billion Project includes a proposed gas treatment plant on the North Slope of Alaska, 800-mile pipeline, and a liquefaction facility with a planned liquefaction capacity of 20 million metric tons per year. The Federal Energy Regulatory Commission (“FERC”) has issued an order approving the construction and operation of the Project. On August 20, 2020, DOE/FE authorized Alaska LNG Project LLC’s (“Alaska LNG”) request to export LNG to any country with which the United States has not entered into a free trade agreement (“FTA”) requiring national treatment for trade in natural gas (“Non-FTA countries”) in a volume equal to the Project’s planned liquefaction capacity (equivalent to roughly 929 Bcf per year or 2.55 Bcf per day).

To read the full client alert, please visit our website. 

D.C. Circuit Upholds Cutting of Transmission Incentives by FERC

George D. Billinson

On February 19, 2021, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) upheld a decision by the Federal Energy Regulatory Commission (“FERC” or the “Commission”) cutting transmission incentives previously granted to three electric transmission companies.

The Energy Policy Act of 2005[1] amended the Federal Power Act to require FERC to promulgate a rule creating incentive-based rate treatment for electric transmission.[2] The rule was intended to “promote reliable and economically efficient transmission and generation of electricity by promoting capital investment in the enlargement, improvement, maintenance, and operation of all [transmission] facilities, . . . provide a return on equity that attracts new investment in transmission facilities, . . . [and] encourage deployment of transmission technologies and other measures to increase the capacity and efficiency of existing transmission facilities and improve the operation of the facilities . . . .”[3] FERC promulgated such a rule, which is codified in the Commission’s regulations.[4] One incentive available to a stand-alone transmission company (a “Transco”)[5] is “[a] return on equity [“ROE”] that both encourages Transco formation and is sufficient to attract investment.”[6]

Because FERC has traditionally viewed independence as a hallmark of a Transco, it considers the ownership and business structure of the Transco to ensure that the Transco operates independently of other market participants when deciding whether to grant such incentives. FERC has declined to establish a particular methodology for reflecting the degree of a Transco’s independence or specific incentive levels.[7] However, the Commission has made clear that it “will consider the level of independence of a Transco as part of our analysis when we determine the proper ROE for the Transco, and evaluate the specific attributes of a particular proposal, including the level of independence, to determine appropriate incentives.”[8] Continue reading “D.C. Circuit Upholds Cutting of Transmission Incentives by FERC”

Exports, Eminent Domain, and the “Public Convenience and Necessity”: FERC Weighs In

Mark R. Haskell, Brett A. Snyder, and Jane Thomas


On September 3, 2020, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an Order on Remand from the U.S. Court of Appeals for the District of Columbia Circuit, providing a more robust explanation regarding how the NEXUS Gas Transmission, LLC (“NEXUS”) pipeline project, which relied in part on precedent agreements that would export natural gas to Canada, merits authorization under section 7(c) of the Natural Gas Act (“NGA”), thus giving NEXUS eminent domain authority.

Background

On August 25, 2017, the Commission had issued a certificate of public convenience and necessity under section 7(c) to NEXUS. The Certificate Order approved the Project, which allowed for the use of eminent domain to build an approximately 250-mile-long pipeline in Ohio and Michigan. NEXUS had executed eight precedent agreements, accounting for 59 percent of the capacity of the Project, and the Commission found that these agreements demonstrated a need for the Project. Two of the eight precedent agreements were with Canadian companies.

Protesters argued that NEXUS should not be permitted to use eminent domain because some of the project’s capacity would be used to export gas and exports are subject to NGA section 3 authorization, rather than section 7, which does not allow for eminent domain. The Commission affirmed its underlying decision on rehearing and stated that Commission policy did not require FERC to look beyond precedent or service agreements to make judgments about the needs of individual shippers.

Protesters appealed to the D.C. Circuit. In September 2019, the D.C. Circuit, in City of Oberlin v. FERC, 937 F.3d 599, remanded the case to FERC and directed the Commission to supply an explanation for why it allowed the crediting of export precedent agreements with foreign shippers when analyzing market need for a domestic pipeline project. The D.C. Circuit also asked FERC for more robust explanation for why eminent domain was needed or appropriate.

Please click here for the full client alert.

Breaking with Precedent, D.C. Circuit Holds FERC Lacks Authority to Issue Tolling Orders under the Natural Gas Act

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) struck down the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) practice of issuing tolling orders that extend the time FERC may take to consider applications for rehearing of its orders under the Natural Gas Act (“NGA”). In a recent decision on en banc rehearing in Allegheny Defense Project v. FERC,1 the D.C. Circuit ultimately denied landowners’ and environmental groups’ challenges to FERC’s approval of the Atlantic Sunrise interstate natural gas pipeline on the merits. However, the court’s rejection of FERC’s tolling order practice—which breaks with longstanding precedent and creates a circuit split—significantly affects proceedings under the NGA and likely implicates FERC’s rehearing procedures under the Federal Power Act (“FPA”).

The NGA requires natural gas companies to obtain a certificate of public convenience and necessity from FERC in order to construct and operate an interstate natural gas pipeline.2 Once such a certificate is issued, the NGA confers upon certificate holders eminent domain authority to obtain necessary rights-of-way.3

The NGA further provides that before a party can seek judicial review of a FERC order, it must apply for rehearing of the order.4 Upon receiving such an application, the NGA provides FERC the “power to grant or deny rehearing or to abrogate or modify its order without further hearing.”5 If FERC does not act on the application for rehearing within 30 days, the application “may be deemed to have been denied.”6 Given the complexities inherent in its proceedings, FERC’s practice has often been to issue tolling orders intended to “act upon” the rehearing requests within the 30-day timeframe (i.e., to avoid the requests from being deemed denied), without making a substantive merits decision on such requests. Petitioners in Allegheny Defense Project argued that FERC’s tolling order process unfairly stalls judicial review of FERC’s pipeline approvals, while pipelines are permitted by FERC and district courts to proceed with construction and exercise eminent domain authority, respectively, in the interim.

Please click here for the full client alert.

Energy Infrastructure Today: Permitting & FERC Case Law Updates

Margaret Anne Hill, Brett A. Snyder, Lamiya N. Rahman, Frank L. Tamulonis III, and Stephen C. Zumbrun

Stakeholders in the U.S. infrastructure industry should note that ongoing litigation and new court decisions issued in the first half of 2020 are reshaping the development of energy projects.

Energy developers should carefully review the impact of new rulings that have interpreted environmental analyses required for Clean Water Act (“CWA”) permitting as greenhouse gas emissions (“GHG”) on the complex regulation of infrastructure projects. At the same time, several other recent proceedings have raised questions about practices and procedures of the Federal Energy Regulatory Commission (“FERC” or “Commission”) regarding natural gas infrastructure.

In our recent webinar, Today’s Energy Industry: The Impact of Case Law on Energy Infrastructure Projects, we highlighted what you should know about recent legal developments related to energy infrastructure:

Permitting Update

  • Status of Nationwide Permit 12. In Northern Plans Resource Council v. U.S. Army Corps of Engineers, the Montana District Court vacated the U.S. Army Corps of Engineers’ Nationwide (“Corps”) Permit 12 disrupting permitting and enforcement under the CWA. The court later clarified that the ruling applies to new projects and not existing pipeline projects and the Ninth Circuit recently denied a request to stay the implementation of the order pending appeal.
  • Navigable Waters Protection Rule. Significant litigation is expected to challenge a new restrictive rule of what constitutes “waters of the United States” under the CWA. Infrastructure projects will also be impacted by the Supreme Court’s recent decision in County of Maui v. Hawaii Wildlife Fund.
  • National Environmental Policy Act GHG Review. The District of Montana ruled in Wildearth Guardians et al. v. U.S. Bureau of Land Management, that the Bureau of Land Management must consider cumulative GHG impacts of oil and gas lease sales. Litigation is expected to challenge whether the Corps has adequately considered GHG for Section 404 permits.
  • Climate Change Litigation. Many state and local governments continue to file common law lawsuits against oil and gas companies seeking damages for climate change mitigation measures. The 9th and 4th Circuits have rejected arguments that federal law applies to these disputes and similar cases are pending in the 1st, 2nd, and 10th Circuits. Also, in v. Exxon, the District of Massachusetts ruled that a suit alleging Exxon violated state fraud statutes should be litigated in state court.

FERC Update

  • Precedent Agreements as Evidence of Market Need. In a 2019 case, City of Oberlin v. FERC, the D.C. Circuit held that FERC failed to adequately explain why it is lawful to consider a proposed pipeline’s precedent agreements with foreign shippers serving foreign customers as evidence of market need for the pipeline. FERC recently addressed City of Oberlin and explained why precedent agreements between a proposed pipeline and LNG terminal were lawfully credited as evidence of market need for the pipeline.
  • FERC’s Tolling Order Practice. In Allegheny Defense Project v. FERC, the D.C. Circuit granted en banc rehearing over whether FERC violated the Natural Gas Act (“NGA”) and landowners’ due process by issuing tolling orders to extend the time to consider rehearing requests of FERC’s pipeline approval, while allowing a pipeline to begin construction and exercise eminent domain. On June 9, FERC issued a final rule to preclude natural gas projects under sections 3 and 7 of the NGA from proceeding with construction until FERC issues a decision on the merits of any request for rehearing.
  • Pipeline Right-of-Ways (“ROWs”) through the Appalachian Trail. In February, the U.S. Supreme Court heard oral argument over a 4th Circuit ruling that the U.S. Forest Service lacks authority to grant a pipeline ROW across the Appalachian Trail. On June 15, the Supreme Court ruled 7-2 that the Forest Service had authority to issue the pipeline ROW through the Appalachian Trail.
  • FERC Authority over Pipeline Transportation Service Agreements (“TSAs”) in Bankruptcy. Several pipelines recently have filed petitions for declaratory orders, requesting FERC to declare it has concurrent jurisdiction with bankruptcy courts over natural gas pipeline TSAs and that FERC approval is required to in order to modify or reject such contracts in bankruptcy. We are continuing to follow this area for developments.

We invite you to read, watch, and share the below resources from our recent webinar for further details. Contact any of us if you have questions about the impact of recent cases, decisions, and regulations on your energy project(s).

Please click here for the presentation materials and here to listen to the recording.

FERC Establishes Revised ROE Methodologies for Public Utilities and Pipelines

Mark R. Haskell, Brett A. Snyder, and Lamiya N. Rahman

On May 21, 2020, the Federal Energy Regulatory Commission (“FERC”) issued two orders addressing methodologies for analyzing the base return on equity (“ROE”) components of rates of FERC-regulated entities. In Opinion No. 569-A, FERC revised the methodology used under section 206 of the Federal Power Act (“FPA”) to evaluate the base ROEs of public utilities.1 In a separate Policy Statement, FERC clarified that the methodology established in Opinion No. 569-A applies, with certain exceptions, to natural gas and oil pipelines.2

Opinion 569-A

To change a public utility’s rates, including ROE, in a complaint proceeding under section 206 of the FPA, FERC must (i) make a finding that an existing rate is unjust and unreasonable; and (ii) determine a just and reasonable rate.3

FERC’s recent order arose from two complaint proceedings challenging the base ROE of Midcontinent Independent System Operator, Inc. (“MISO”) transmission owners.4 In November 2019, FERC issued Opinion No. 569, establishing a revised methodology to determine whether the existing base ROE was unjust and unreasonable under the first prong of FPA section 206, and if so, to establish a new just and reasonable replacement ROE under the second prong.5

Among other things, Opinion No. 569 relied on the discounted cash flow model (“DCF”)6 and capital-asset pricing model (“CAPM”)7 in the first prong of its FPA section 206 analysis, and declined to use two other models—i.e., the Expected Earnings8 and Risk Premium9 models. FERC adopted the use of ranges of presumptively just and reasonable ROEs that would be based on the risk profile of a utility or group of utilities. FERC gave equal weight to the DCF and CAPM models to establish composite zones of reasonableness. Absent evidence to the contrary, an ROE within the zone of reasonableness would be presumptively just and reasonable while an ROE outside this range would be presumptively unjust and unreasonable. FERC also relied on the DCF and CAPM models (and declined to use the Expected Earnings and Risk Premium models) in the second prong of its section 206 analysis in order to establish a new just and reasonable ROE.10

Please click here for the full client alert.