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On June 29, in PennEast Pipeline Co., LLC v. New Jersey et al., No. 19-1039, the Supreme Court rejected New Jersey’s sovereign immunity arguments and held that Section 717f(h) of the Natural Gas Act (NGA) authorizes Federal Energy Regulatory Commission (FERC) certificate-holders to condemn all necessary rights-of-way to construct pipelines, whether owned by private parties or by states.  “Because the [NGA] delegates the federal eminent domain power to private parties, those parties can initiate condemnation proceedings, including against state-owned property.”

Chief Justice Roberts authored the 5-4 opinion, joined by Justices Breyer, Alito, Sotomayor, and Kavanaugh.  The Court reversed and remanded the Third Circuit’s judgment.  In a prior post, we discussed that judgment and other factual and legal background of the case.Continue Reading Supreme Court Holds that Natural Gas Act Delegates Eminent Domain Power, Allowing FERC Certificate-Holders to Condemn State-Owned Property

On April 28, the Supreme Court will hear oral argument in PennEast Pipeline Co., LLC v. New Jersey et al., No. 19-1039, a case with significant implications for pipeline projects.  The main issue is whether the Natural Gas Act (NGA) delegates the federal government’s eminent domain power to Federal Energy Regulatory Commission (FERC) certificate holders and allows them to sue a state to condemn land in which the state claims an interest, or whether the Eleventh Amendment immunizes states from such lawsuits.
Continue Reading Supreme Court to Hear Arguments regarding Natural Gas Act and Eminent Domain Power

As we reported in an earlier posting, on June 4, 2020, the Massachusetts Attorney General’s Office (“AGO”) filed a petition, which requested the Massachusetts Department of Public Utilities (“DPU”) to open an investigation into potential changes to local natural gas distribution company (“LDCs”) operations to support the Commonwealth’s legislatively mandated greenhouse gas (“GHG”) emission limit reductions (the “Petition”). Specifically, the AGO’s Petition seeks to evaluate the industry, regulatory and policy adjustments that are requisite to meet the state GHG limits, and to “determine what near and long-term adjustments are necessary to maintain a safe and reliable gas distribution system and protect consumer interests as the Commonwealth transitions” to carbon neutrality by 2050.
Continue Reading Massachusetts DPU Opens Investigation into Natural Gas Distribution Companies

On June 4, 2020, the Massachusetts Attorney General (AG) filed a Petition which requested the Massachusetts Department of Public Utilities (DPU) to open an investigation into the potential changes to support the Commonwealth’s legislatively mandated greenhouse gas (GHG) emission limit reductions (the Petition).  Specifically, the AG’s Petition seeks to evaluate the industry, regulatory and policy adjustments necessary to meet the state GHG limits, and to “determine what near and long-term adjustments are necessary to maintain a safe and reliable gas distribution system and protect consumer interests as the Commonwealth transitions” to carbon neutrality by 2050.
Continue Reading Key Northeastern States Take Steps to Study the Transition to Net-Zero GHG Emissions

On June 22, 2020, the Federal Energy Regulatory Commission (“Commission”) issued an Order on Petition for Declaratory Order finding that it has concurrent jurisdiction with bankruptcy courts to review and address the disposition of Commission-jurisdictional natural gas transportation agreements sought to be rejected through bankruptcy. Specifically, the Commission found that, “Where a party to a Commission-jurisdictional agreement under the [Natural Gas Act] seeks to reject the agreement in bankruptcy, that party must obtain approval from both the Commission and the bankruptcy court to modify the filed rate and reject the contract, respectively.” This is the first time the Commission has made such a finding with regard to jurisdictional agreements pursuant to the Natural Gas Act (“NGA”) and it did so in a well-supported, clear and convincing way.
Continue Reading FERC Declares It Has Concurrent Jurisdiction With Bankruptcy Courts When Debtor Seeks To Reject Natural Gas Transportation Agreements

On May 21, 2020, the Federal Energy Regulatory Commission (“Commission”) issued a Policy Statement on Determining Return on Equity for Natural Gas and Oil Pipelines in Docket No. PL19-4-000, that revises its policy for analyzing the return on equity (“ROE”) for interstate natural gas and oil pipelines based on the methodology established for analyzing electric utility ROEs in Opinion Nos. 569 and 569-A, with certain exceptions to account for the “statutory, operational, organizational and competitive differences among the industries.” Specifically, the Commission stated that it will: (i) determine just and reasonable natural gas and oil pipeline ROEs by averaging the results of the Discounted Cash Flow (“DCF”) model and the Capital Asset Pricing Model (“CAPM”) analyses, giving equal weight to both models; (ii) retain the existing two-thirds/one-third weighting for the short-term and long-term growth projections in the DCF model; (iii) exclude the Risk Premium model as modified in Opinion No. 569-A; (iv) consider using Value Line data as the source of the short-term growth projection in the CAPM; (v) consider proposals to include Canadian companies in pipeline proxy groups while continuing to address outliers in pipeline proxy groups on a case-by-case basis, refraining from applying specific outlier tests; and (vi) encourage, or perhaps require, oil pipelines to file updated FERC Form No. 6, page 700 data for 2019 to reflect the revised ROE policy established in the Policy Statement. Importantly, parties are not permitted to seek rehearing of the Policy Statement because it is only a statement issued to provide guidance and regulatory certainty.
Continue Reading FERC Revises Policy for Analyzing Pipeline Return on Equity

Facing criticism that they impede sustainable development, traditional cross-border investor protections are eroding. More balanced stabilization and equitable treatment provisions allow greater discretion to regulate environmental and social impacts. Enhanced due diligence, focused on project impacts, international standards, CSR obligations and regulatory discretion in applicable treaties or investment contracts, can help offset this increased risk.
Continue Reading Eroding Investor Protections: Managing CSR and Political Risk in the Sustainable Brave New World

On March 2, 2020, the Environmental Protection Agency (EPA) proposed its new Multi-Sector General National Pollutant Discharge Elimination System Permit (MSGP), which authorizes the discharge of stormwater associated with industrial activity. 85 Feb. Reg. 12,288 (March 2, 2020). The 2015 MSGP expires on June 4, 2020. The MSGP authorizes stormwater discharges associated with a wide range of facilities and activities, including oil and gas, mining and mineral processing and manufacturing, among other operations.
Continue Reading EPA Proposes New Multi-Sector General Permit for Industrial Stormwater

From California to the South China Sea, uncertainties surrounding offshore oil and gas platform decommissioning regulations and financial obligations pose a significant risk to the environment and to responsible natural resource development. “Rigs to reefs” decommissioning pioneered in the US Gulf Coast provides a model promising reduced costs, a net reduction in environmental impacts and enhanced ecological benefits; welcomed in some jurisdictions and questioned in others, time will tell whether RTR can deliver its promises.
Continue Reading Offshore Platform Sustainable Decommissioning – “Rigs to Reefs” Goes Global