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

Mark R. HaskellBrett 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.

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FERC Provides Additional Regulatory Relief and Guidance in Response to Coronavirus Pandemic

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

On April 2, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) announced several measures intended to provide relief to regulated entities responding to the COVID-19 pandemic. A summary of FERC’s previous COVID-19-related relief and guidance can be found here.

In a Policy Statement, the Commission indicated it will prioritize and expeditiously act on requests for relief filed by regulated entities in connection with ensuring business continuity of their energy infrastructure. In a series of notices and orders, the Commission also extended or clarified the relief available to regulated entities that are unable to meet certain deadlines or regulatory requirements as a result of their COVID-19 response. This relief includes:

    • Extension to June 1, 2020 for the following deadlines:
      1. Form Nos. 60 (Annual Report of Centralized Service Companies) and 61 (Narrative Description of Service Company Functions);
      2. Form No. 552 (Annual Report of Natural Gas Transactions); and
      3. Electric Quarterly Report Form 920.
    • Extensions to May 1, 2020 for the following deadlines for categories of filings that would otherwise be due on or before May 1, 2020:
      1. interventions, protests, or comments to a complaint;
      2. briefs on and opposing exceptions to an initial decision;
      3. answers to complaints and orders to show cause; and
      4. initial and reply briefs in paper hearings.
    • Waiver of FERC regulations governing the form of filings submitted to the Commission (e.g., provision of sworn declarations) through May 1, 2020.
    • Shortening of the answer period to three business days for motions for extensions of time due to COVID-19 emergency conditions. The Commission indicated it will also consider requests to shorten the comment period for motions seeking waiver of requirements in Commission orders, regulations, tariffs, rate schedules, and service agreements to as short as five days.
    • Temporary blanket waivers from document notarization and in-person meeting requirements established under open access transmission tariffs, or other tariffs, rate schedules, service agreements, or contracts subject to the Commission’s jurisdiction. These waivers are effective through September 1, 2020.
    • Extension of time for filing regional transmission organization (“RTO”)/independent system operator (“ISO”) Uplift Reports and Operator Initiated Commitment Reports required pursuant to Order No. 844 that were originally due between April and September 2020. These reports are now due to be posted on the RTOs/ISOs websites by October 20, 2020.

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FERC Issues Guidance and Regulatory Relief in Connection with Coronavirus Response

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

On March 19, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) announced several regulatory responses to the coronavirus pandemic and FERC Chairman Neil Chatterjee held a press conference to discuss the agency’s initiatives. The Chairman emphasized the capabilities of the Commission and its staff to work in a timely manner throughout the pandemic response, while striving to provide necessary flexibility to regulated entities.

The Chairman named Caroline Wozniak, a Senior Policy Advisor in the Office of Energy Market Regulation, as the point of contact for all energy industry inquiries related to the impacts of COVID-19. Members of the regulated community may e-mail PandemicLiaison@FERC.gov with questions for Commission staff.

Chairman Chatterjee clarified that the Commission will provide regulated entities with flexibility when needed, but emphasized the Commission is fully functioning and will try not to delay decisions. Chairman Chatterjee also stated his goal is to issue certain rehearing orders involving pipeline certificate projects challenged by affected landowners within 30 days, consistent with guidance from the Chairman issued on January 31, 2020.

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Council on Environmental Quality Seeks Public Comment on Draft NEPA Greenhouse Gas Emission Guidance

Brett A. Snyder and Lamiya N. Rahman

The Council on Environmental Quality has published Draft Guidance to federal agencies to evaluate the effects of greenhouse gas emissions under the National Environmental Policy Act. The Draft Guidance is largely consistent with the approach taken by the Federal Energy Regulatory Commission in recent natural gas infrastructure orders. Comments are due on July 26, 2019.

Introduction

On June 26, 2019, the Council on Environmental Quality (“CEQ”) published new draft guidance to clarify the scope of review federal agencies should undertake when considering the effects of greenhouse gas (“GHG”) emissions under the National Environmental Policy Act (“NEPA”) and related regulations.The Draft Guidance is intended to replace CEQ’s prior GHG-related guidance, which was adopted in 2016 and later rescinded pursuant to an Executive Order in 2017.2 The Draft Guidance is largely consistent with the approach taken by the Federal Energy Regulatory Commission (“FERC”) in recent natural gas infrastructure orders.

CEQ’s Draft Guidance

NEPA is a procedural statute that requires federal agencies to analyze the environmental impacts of any major federal action significantly affecting the quality of the human environment.3 Although NEPA does not mandate any particular substantive outcomes, it requires an agency to consider the direct and reasonably foreseeable indirect effects of a proposed action.4

The Draft Guidance states that “[a] projection of a proposed action’s direct and reasonably foreseeable indirect GHG emissions may be used as a proxy for assessing potential climate effects.”5 While direct effects are caused by an action and occur at the same time or place, indirect effects are caused by the action and are later in time or farther removed in distance but are still reasonably foreseeable. Thus, the proposed guidance suggests that quantification of emissions is sufficient to meet an agency’s obligation to assess effects of emissions.

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FERC Commissioners Approve the Venture Global Calcasieu Pass LNG Export Project but Signal Divisions in Approaches to Evaluating GHG Emissions

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

On February 21, 2019, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued an order authorizing Venture Global Calcasieu Pass, LLC (“Calcasieu Pass”) to site, construct, and operate a new liquefied natural gas (“LNG”) terminal and associated facilities (the “Export Terminal”) pursuant to section 3 of the Natural Gas Act (“NGA”).1 The Certificate Order also authorized TransCameron Pipeline, LLC (“TransCameron”) to construct and operate a new interstate pipeline under NGA section 7. Although the Certificate Order drew favorable conclusions in its environmental review of the projects, a concurrence by Commissioner LaFleur and a dissent by Commissioner Glick signaled growing dissatisfaction among half of the current Commission with respect to FERC’s practice of evaluating a project’s greenhouse gas (“GHG”) emissions.

The Certificate Order

The Export Terminal, to be located along the Calcasieu Ship Channel in Cameron Parish, Louisiana, will have a nameplate capacity of 10 million metric tons per annum (“MTPA”) and a peak capacity of 12 MTPA under optimal operating conditions. Natural gas will be delivered to the Export Terminal by TransCameron’s proposed 23.4-mile, 42-inch diameter interstate pipeline, which will extend from the Grand Chenier Station in Cameron Parish, Louisiana to the Export Terminal and will be able to provide up to 2,125,000 dekatherms per day (“Dth/d”) of natural gas transportation service. Continue reading “FERC Commissioners Approve the Venture Global Calcasieu Pass LNG Export Project but Signal Divisions in Approaches to Evaluating GHG Emissions”