2018 was a banner year for M&A activity in the energy space, with numerous high dollar value transactions in the upstream, midstream, downstream and oil field services (OFS) segments. As investors in the public securities markets have shown a significantly decreased appetite for new issuances of equity by energy companies, the preferred exit or growth strategy for 2018 has been through strategic mergers, acquisitions or divestitures. These transactions have manifested themselves in various forms: asset acquisitions and divestitures, private equity investment into “drillcos” with strategic oil and gas companies, public-public mergers between OFS companies and upstream shale drillers, and simplification transactions by master limited partnerships (MLPs) in the midstream space. In addition to all this M&A activity, one element has become significantly more prevalent in the oil and gas industry throughout 2018 and shows no signs of letting down for 2019: water.
Continue Reading Oil & Gas… & Water!

In recent litigation involving the development of interstate natural gas pipelines, one of the key issues has been whether the state has waived its authority under Clean Water Act section 401 by exceeding the one-year time period. In a separate case involving a series of hydroelectric facilities, the waiver period was again directly at issue. On October 1, at oral argument before the D.C. Circuit, the parties addressed whether California and Oregon had waived their water quality certification authority by having the applicant withdraw and resubmit its request for certification over a number of years. Notably, the judges seemed to agree that FERC could make a waiver determination before the end of the one-year time limit and that withdrawing and resubmitting an application may not always restart the clock.
Continue Reading During Oral Argument, D.C. Circuit Suggests Waiver Period for State Water Quality Certification May Be Less Than One Year

Earlier this month, the Pipeline and Hazardous Materials Safety Administration and the Federal Energy Regulatory Commission announced their intention to develop a memorandum of understanding (MOU) that would refine and reduce the permit application review process for proposed Liquefied Natural Gas (LNG) facilities. The announcement’s description of what the MOU will accomplish is consistent with the April 2018 multi-agency MOU: “The MOU will clarify each agency’s respective role in the permitting process for potential LNG projects, and implement procedures into the FERC’s authorization process that will leverage PHMSA’s safety expertise to evaluate potential impact to public safety.”

Continue Reading PHMSA and FERC Commit to Permitting Process MOU

On July 10, 2018, a panel of the United States Court of Appeals for the DC Circuit rejected an environmental group’s claim that FERC’s funding mechanism results in unconstitutional bias in favor of the pipeline industry. The court also rebuffed a due process attack on the Commission’s use of “tolling orders” to avoid automatic denial of rehearing requests after 30 days. The decision is noteworthy as it represents the latest rejection of similar constitutional challenges to FERC’s operations and practices that pipeline opponents have been raising with increasing frequency. The ruling also highlights the difficulty of bypassing the Natural Gas Act’s administrative rehearing and judicial review process through novel broadside attacks on the Commission’s general practices and procedures.

Continue Reading DC Circuit Tosses FERC Bias Claim, OKs Use of Tolling Orders

As the Trump Administration is pushing forward on its deregulatory agenda and, in particular, its efforts to improve the Endangered Species Act and its implementation by the US Fish and Wildlife Service and National Marine Fisheries Service, the Supreme Court is poised to hear a landmark case on designation of critical habitat under the ESA that could provide some guideposts for the services’ new regulations.
Continue Reading Supreme Court to Evaluate Critical Habitat Limits as Services Ramp up ESA Reform Efforts

In a decision issued on April 12, 2018, a Fourth Circuit panel held (2-1) that (1) even though a pipeline leak has been repaired and remediation is ongoing under the supervision of the state environmental agency, environmental groups have standing to sue the pipeline owner, and (2) plaintiffs’ allegation that groundwater continues to carry discharged pollutants to jurisdictional waters through a “direct hydrological connection” supports liability under the Clean Water Act.
Continue Reading Fourth Circuit Extends CWA Liability to Cover a Wholly Past Pipeline Spill

On March 12, 2018, the United States Court of Appeals for the Second Circuit affirmed a Federal Energy Regulatory Commission (FERC) order finding that delays by the New York Department of Environmental Conservation (NYDEC) in reviewing Millennium Pipeline Company’s application for water quality certification constituted waiver of NYDEC’s authority under the Clean Water Act (CWA). As we detailed in an earlier blog post, FERC found that NYDEC’s delay exceeded the one-year statutory period established by CWA Section 401. The Millennium case is just one of several interstate natural gas pipeline projects that have faced delays associated with the CWA Section 401 permitting process. (See, e.g., Atlantic Bridge Project, Atlantic Sunrise Project, Constitution Pipeline, Northern Access Project, PennEast Pipeline, and Spire STL Pipeline.) The Court’s decision resolves the nearly three-year permitting process for the Millennium Valley Lateral Pipeline and clarifies for other projects (and state agencies reviewing those projects) that the one-year waiver period begins when the state agency receives the initial request for certification.
Continue Reading Second Circuit Affirms Waiver Period for State Water Quality Certification Begins Upon Receipt of Request for Certification

Earlier this month, the United States House of Representatives Committee on Science, Space, and Technology published a staff report entitled “Russian Attempts to Influence U.S. Domestic Energy Markets by Exploiting Social Media.” The report is the result of the Committee’s investigation into Russian efforts to influence U.S. energy markets.  
Continue Reading House Committee Report Highlights Russian Use of Social Media to Disrupt Pipeline Projects

This week, the U.S. District Court for the Middle District of Louisiana granted a preliminary injunction, halting construction of the $750 million Bayou Bridge Pipeline. Judge Shelly D. Dick concluded that the U.S. Army Corps of Engineers, in authorizing the project, did not provide sufficient explanation for how the proposed off-site mitigation would compensate for the loss of wetlands impacted by construction. In addition, the Court found the Corps’ environmental analysis failed to sufficiently consider and address historical impacts to wetlands from similarly situated pipelines. Thus, the Court held that these deficiencies likely violated the National Environmental Policy Act (NEPA) and ordered the 162-mile oil pipeline to halt construction within the Atchafalaya Basin, a large wetland habitat for a variety of fish and wildlife species and a critical component of regulating flooding and stream recharge in the region. As we recently saw with the D.C. Circuit’s decision to vacate authorizations for the Sabal Trail Pipeline, this is another example of courts and environmental organizations relying on errors in a federal agency’s NEPA analysis to justify enjoining pipeline construction or operations.
Continue Reading Federal District Court Halts Construction of Louisiana Pipeline Due to Corps’ Failure to Explain Off-Site Mitigation

Federal agencies that authorize or permit large infrastructure projects, like interstate natural gas pipelines, are often subject to the requirements of the National Environmental Policy Act, and environmental organizations frequently rely on NEPA to challenge a project. The D.C. Circuit recently struck down a decision by the Federal Energy Regulatory Commission to approve the construction and operation of three interstate natural gas pipelines because the Court found defects in FERC’s NEPA analysis. The court’s decision to vacate FERC’s authorization now threatens to shut down the pipelines, including the Sabal Trail pipeline currently supplying natural gas to newly constructed power plants in Florida.
Continue Reading D.C. Circuit Raises the Stakes: NEPA Defect Sufficient to Halt Pipeline Operations