Yesterday, EPA and the US Army Corps of Engineers (together, the Agencies) signed and made available a pre-publication version of the highly anticipated repeal of the 2015 WOTUS Rule, which will place the entire country under the pre-2015 Rule regime while the Trump administration works to complete its replacement WOTUS definition. Continue Reading Long-Awaited Repeal Rule Ends Patchwork of WOTUS Implementation

Over the last year or so, anti-pipeline forces have increasingly used “tree sitting” to obstruct natural gas infrastructure projects. The tactic involves individuals who climb trees slated for removal in a proposed pipeline project and stay there—sometimes for months and often aided by family, friends or others—forcing project developers to take various countermeasures.

Earlier this month a Virginia federal district judge rejected a novel effort by Mountain Valley Pipeline, LLC (MVP) to join certain unnamed tree sitters (“Tree Sitter 1” and “Tree Sitter 2”) as defendants in a pending Natural Gas Act (NGA) eminent domain action to condemn easements over land in southwestern Virginia for construction of the Mountain Valley Pipeline.[1] In addition to interfering with its use of the easements being condemned, MVP alleged that the “tree sitters” or their supporters had assaulted a security officer who was part of a tree clearing crew on the project. Notably, though it declined to join the “tree sitters” as parties, the court observed that MVP still had other available remedies against them. Continue Reading Pipeline Company Can’t Join “Tree Sitters” in NGA Condemnation Action, But Still Has Other Remedies Against Them, Virginia Federal Court Says

On August 12, 2019, the US Fish and Wildlife Service (USFWS) and the National Marine Fisheries Service (NMFS) (together, the Services) signed final rules instituting the first comprehensive revisions to the Endangered Species Act (ESA) regulations in 33 years. The Services made substantial and broad revisions to their regulations concerning the process and standards for listing species and designating critical habitat, the scope of protections for threatened species and the process for consultation with federal agencies. Continue Reading FWS and NMFS Complete Long-Awaited, Comprehensive Revision of ESA Regulations

The Trump administration’s recent executive order, Promoting Energy Infrastructure and Economic Growth (April 10, 2019), signals potentially significant changes to the regulatory landscape for domestic energy infrastructure generally and LNG in particular. Among the notable features of the order (in addition to directives to EPA regarding Clean Water Act water quality certifications) are the provisions directing US DOT to (1) update its 49 C.F.R. Part 193 regulations for LNG facility safety and (2) issue regulations allowing LNG to be transported in approved rail tank cars. The order sets an ambitious deadline for these actions, requiring both to be completed by May 10, 2020. Continue Reading LNG a Focus of Recent Executive Order

On April 12, 2019, the US District Court for the Northern District of California entered an order vacating the Department of the Interior’s (DOI) repeal of the 2016 Valuation Rule due to violations of the Administrative Procedures Act (APA). The 2016 Valuation Rule made changes to the government’s methods for valuing oil, gas and coal produced on Federal and Indian lands. The court’s ruling on the APA claims may impact the Trump administration’s repeal and replace rulemakings that are scheduled to be finalized in the near future. Continue Reading Decision Vacating DOI Valuation Rule May Impact Future Rulemakings

Over the past several decades, significant tension has developed between the federal role in overseeing and authorizing certain types of energy infrastructure projects and states’ roles in regulating water quality under the cooperative federalism structure of the Clean Water Act (CWA or the Act). This tension has played itself out in various contexts, but the most pronounced in recent years has been the battle over CWA Section 401 water quality certifications for energy infrastructure projects, in particular interstate natural gas pipelines.

 

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In Algonquin Gas Transmission, LLC v. Weymouth Massachusetts, a First Circuit panel last month ruled that a statute of limitations defense is inapplicable to a Natural Gas Act (NGA) preemption claim against a locality. The court also held that the Federal Energy Regulatory Commission’s (FERC) longstanding policy of “encourag[ing] cooperation between interstate pipelines and local authorities” doesn’t impose a legally enforceable duty on pipeline companies to go through local regulatory review processes before filing an NGA preemption suit.[1]

Procedural background

 In January 2017, FERC issued Algonquin Gas Transmission, LLC (Algonquin) an NGA Section 7(c) FERC certificate to construct and operate an interstate natural gas transportation project that included a new compressor station in the Town of Weymouth, Massachusetts. The certificate conditioned construction of the station on a consistency determination from the Massachusetts Office of Coastal Zone Management (OCZM) under the Coastal Zone Management Act (CZMA). OCZM, however, declined to issue the consistency determination unless Algonquin first obtained a local wetlands permit from the Town of Weymouth under a Massachusetts wetlands protection regime that allows localities to adopt and enforce regulations more stringent than those imposed by the state.[2]

The Town denied Algonquin’s permit request, but the Massachusetts Department of Environmental Protection (MassDEP) reversed the locality after an administrative appeal by the company. The Town, however, appealed the reversal, which then prompted MassDEP to stay the proceedings pending a judicial determination of whether the local permit requirement was preempted by the NGA. As a result, Algonquin filed a declaratory judgment action in Massachusetts federal district court seeking a ruling that the NGA preempted the local permit requirement and an injunction prohibiting the Town from enforcing it. The district court granted Algonquin’s motion for summary judgment on both conflict and field preemption grounds and enjoined enforcement of the local regulations.[3] Undeterred, the Town appealed that ruling to the First Circuit.

Statute of limitations inapplicable to preemption claim

The Town argued, among other things, that Algonquin’s preemption claim was time-barred. There being no applicable federal statute of limitations, the Town urged the First Circuit to “borrow” a Massachusetts 60-day limitations period applicable to state law writs of certiorari for challenging quasi-judicial actions. The court rejected that argument, however, holding that Algonquin’s suit for declaratory and injunctive relief was essentially “equitable in nature” as to which no statute of limitations applied.[4]

FERC’s “cooperation” policy does not create a legally enforceable duty

Like most NGA section 7(c) certificates, Algonquin’s certificate referenced a longstanding Commission policy that “encourages cooperation between interstate pipelines and local authorities” with respect to any local permits potentially applicable to jurisdictional natural gas transportation facilities.[5] FERC further explains, however, that any such local permits “must be consistent with the conditions of [the] certificate,” and that state or local regulators cannot “prohibit or unreasonably delay the construction or operation of facilities approved by the Commission.”[6]

The Town argued that FERC’s cooperation policy imposed a legal duty requiring Algonquin to “make a reasonable attempt to obtain [local permit] approval” before asking the district court to declare the local requirements preempted.[7] The First Circuit disagreed, noting that “Weymouth provides no support for the existence of such a duty under federal law,” and that FERC’s policy “does not require such cooperation from Algonquin; it merely ‘encourages’ it.”[8]

Other arguments and rulings

The First Circuit panel also rebuffed the Town’s argument that the case wasn’t ripe because the FERC certificate imposed conditions on project construction other than the OCZM consistency determination that remained unsatisfied. Despite the unsatisfied conditions, the court found the case to be ripe because the relief Algonquin sought was “neither ‘advisory’ nor ‘irrelevant;’” if granted, it “would finally remove a principal impediment that stands in the way of a final action by” OCZM, thereby clearing “a procedural logjam that would not otherwise be cleared.”[9]

The panel also disagreed with the Town’s argument that the district court’s preemption determination was erroneous. The appellate court, however, affirmed only on conflict preemption principles, holding it unnecessary to address the lower court’s additional ruling applying broader principles of field preemption.[10] Among other things, the panel found that the Town based its local permit denial on conclusions that were directly at odds with FERC’s findings in the certificate concerning the project’s environmental, safety, siting and other considerations. In the court’s view, the locality’s permit denial created an “effectively complete obstacle to FERC’s ultimate determination that ‘public convenience and necessity’ ‘require’ that the Weymouth Compressor Station be built.”[11]

Observations and implications

In Algonquin, the Town of Weymouth, wittingly or unwittingly, tried to use FERC’s cooperation policy together with a statute of limitations defense to put the pipeline company in an untenable “heads I win tails you lose” position. In one breath, the Town asserted that Algonquin breached a “duty” arising from FERC’s cooperation policy by not taking enough time to navigate the local permit and appeal process before filing a preemption suit. Then, in the other breath, the Town claimed that Algonquin waited too long to sue, arguing that the company’s lawsuit was time-barred under a short state law statute of limitations.

The First Circuit’s rejection of those two arguments should help prevent similar “Catch-22” [12] scenarios from arising in the future, but without unduly hampering cooperation between pipeline companies and local/state regulators of the type encouraged by FERC’s policy. By holding that FERC’s cooperation policy doesn’t create a legal duty, interstate natural pipeline companies aren’t forced to waste time and money slogging through unnecessary local or state permitting regimes before seeking judicial relief on NGA preemption grounds. At the same time, the court’s no-statute-of-limitations ruling should make pipeline companies feel less compelled to race to court the instant a potential preemption situation arises. Instead, they can try to work out potential conflicts with local or state regulators without fear that doing so might create a statute of limitations problem if a preemption suit were later to become necessary— a result that seems fully consistent with the letter and spirit of FERC’s cooperation policy.

 

[1] __ F.3d __, No. 18-1686, 2019 U.S. App. LEXIS 8097, at *12, 19-20 (1st Cir. March 19, 2019).
[2] The district court held that the local ordinance was not “promulgated under the rights” of Massachusetts under the CZMA, and, therefore, not saved from federal preemption by the NGA’s savings clause, 15 U.S.C. § 717b(d) – a ruling that apparently wasn’t challenged on appeal. See Algonquin Gas Transmission, LLC v. Weymouth Conservation Comm’n, No. 17-10788-DJC, 2017 U.S. Dist. LEXIS 213024, at *14-15 (D. Mass. Dec. 29, 2017).
[3] Algonquin Gas Transmission, LLC, 2019 U.S. App. LEXIS 8097, at *8.
[4] Id. at *11. The court ruled that the Town potentially could have relied upon the doctrine of laches, but the Town failed to raise that argument. Id. at *12.
[5] Id. at *20.
[6] Algonquin Gas Transmission, LLC, 158 FERC ¶ 61,061, at P61 (Jan. 25, 2017).
[7] Algonquin Gas Transmission, LLC, 2019 U.S. App. LEXIS 8097, at *19-20.
[8] Id. at *20.
[9] Id. at *14-15.
[10] Id. at *15-20.
[11] Id. at *19 (citations omitted; emphasis in original).
[12] Joseph Heller, Catch 22 (Simon & Schuster 1961).

On Wednesday, April 10, President Trump signed an Executive Order (EO), titled Promoting Energy Infrastructure and Economic Growth, that requires the US Environmental Protection Agency (EPA) and other federal agencies to undertake a series of regulatory actions to clarify the Clean Water Act (CWA) § 401 water quality certification process. CWA § 401 provides states with the opportunity to evaluate the potential water quality impacts from discharges of proposed projects by certifying whether the discharge will comply with applicable water quality standards. States can waive this requirement, and if they do not act within “a reasonable period of time (which shall not exceed one year) after receipt” of a request for certification, waiver is automatic. 33 U.S.C. § 1341(a). A handful of states have relied on this process to thwart the development of energy infrastructure projects, either by denying certification due to concerns unrelated to water quality (such as opposition to hydraulic fracturing, climate change concerns, etc.) or by ignoring the statutory time period to reach a determination.

For the full article, visit our sister site, The Nickel Report Blog.

On March 21, 2019, the Federal Energy Regulatory Commission (Commission or FERC) held its monthly open meeting. Highlights of the meeting included the following:

  • Electric Transmission Incentives Policy (Docket No. PL19-4-000)
    • The Commission issued a Notice of Inquiry (NOI) seeking comments on the scope and implementation of its electric transmission incentives regulation and policy.
    • Section 219 of the Federal Power Act directs the Commission to use transmission incentives to help ensure reliability and reduce the cost of delivered power by reducing transmission congestion. The Commission issued Order No. 679 in 2006 to establish its approach to transmission incentives and set forth a series of potential incentives that it would consider. The Commission subsequently refined its approach in a 2012 policy statement.
    • The NOI seeks comments in response to questions addressing many matters, including several that have not previously been addressed by the Commission’s transmission incentive policy, including:
      • Whether incentives should continue to be granted based on a project’s risks and challenges or should be based on the benefits that a project provides.
      • Whether incentives should be used to incentivize projects that promote reliability, economic efficiency, address persistent geographic needs, make transmission system operation more flexible, enhance physical and cyber security, increase grid resilience, improve existing transmission facilities, encourage interregional transmission projects, unlock locationally constrained resources, place non-incumbent transmission developers on a level playing field with incumbents, and encourage development of transmission in non-RTO/ISO regions.
      • Whether the types of incentives the Commission currently awards remain relevant and appropriate and whether the goals of the incentives could be incentivized more efficiently. This includes the ROE adder incentives for transmission-only companies, for joining an RTO/ISO, and for the use of advanced technology. This also includes non-ROE incentives, such as regulatory asset/deferred recovery of pre-commercial costs/CWIP, hypothetical capital structure, recovery of costs of abandoned plant, and accelerated depreciation.
      • The mechanics, implementation, and evaluation of the effectiveness of incentives (including the potential development of metrics to evaluate their impacts).
    • Commissioner LaFleur highlighted a number of matters in which she looked forward to comments. This included the Transco adder and the RTO participation adder, which she stated had been controversial in recent Commission or court orders. In addition, she referenced the interplay between Order No. 1000 and the Commission’s incentives policy. She noted that there was a clear need to construct new transmission to ease the interconnection of location-constrained renewables. She also noted that interregional transmission has proven tremendously difficult to site and construct and looked forward to comments regarding whether anything in the incentive policies could help this transmission built. Finally, she indicated that she looked forward to comments on changes to support competitive transmission processes.
    • Commissioner Glick continued to express concern that the Commission has been too generous in rewarding incentives.
    • Comments are due 90 days after the notice is published in the Federal Register, and reply comments are due 30 days later.

 

For more coverage of the FERC Open Meeting, visit our sister site, The Nickel Report.

While coming from opposite ends of the political spectrum, the administrations of US President Donald Trump and Mexico’s recently elected chief executive, Andrés Manuel López Obrador (commonly referred to as “AMLO”), have each heralded significant policy shifts with potential to affect bilateral relations as well as international energy markets.

The Trump administration’s trade and immigration policies have attracted significant attention, but the current US administration’s environmental policy shifts also pose the potential for significant impacts on global markets, particularly in the energy sector. Under the Obama administration, for example, the executive branch often opposed or heavily restricted energy projects on the basis of environmental concerns ranging from alleged impacts of unconventional oil and gas production (e.g., hydraulic fracturing, or “fracking”) to asserted climate impacts of fossil fuel combustion for electric power generation—both domestically and in overseas markets, such as China. Continue Reading US-Mexico Energy & Environmental Policy Transition: Opportunity Amidst Uncertainty?