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

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

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

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

Last week the Federal Energy Regulatory Commission (FERC) made some headway in how it evaluates greenhouse gas (GHG) emissions from natural gas-related projects. In recent FERC pipeline certification proceedings, the two Democrats on the Commission have been critical of how FERC addresses a project’s potential GHG emissions and climate change impacts. With only four active

“According to FERC, it is now commonplace for states to use Section 401 to hold federal licensing hostage.”

These are the words the DC Circuit used in Hoopa Valley Tribe v. Federal Energy Regulatory Commission, No. 14-1271, p. 10 (D.C. Cir., Jan. 25, 2019), to describe the state of play on § 401 certifications affecting hydroelectric facility licensing or re-licensing applications. CWA § 401(a)(1) requires, as a prerequisite for federal permits for activities that may result in a discharge into the navigable waters, that affected states certify that any such discharge will comply with applicable, enumerated provisions of the Clean Water Act. But, if a state fails or refuses to act on a request for certification within “a reasonable period of time (which shall not exceed one year) after receipt of such request,” the statute deems the certification requirements waived.
Continue Reading Act or Waive: DC Circuit Construes CWA § 401’s One-Year Deadline for State Action Applications

On Friday, a court ruling provided some clarity regarding the Clean Water Act (CWA) § 401 water quality certification process. As forecasted in our November 1, 2018 blog post (below), the US Court of Appeals for the DC Circuit has ruled that a state waives its CWA § 401 authority when, pursuant to a written agreement, an applicant repeatedly withdraws and resubmits its request for water quality certification in order to restart the one-year waiver clock. Hoopa Valley Tribe v. FERC, No. 14-1271 (D.C. Cir. Jan. 25, 2019). According to the Court’s opinion, this sort of arrangement serves to circumvent the Federal Energy Regulatory Commission’s (FERC) “congressionally granted authority over the licensing, conditioning, and developing of [the] project,” and “if allowed, the withdrawal-and-resubmission scheme could be used to indefinitely delay federal licensing proceedings and undermine FERC’s jurisdiction to regulate such matters.”
Continue Reading UPDATE: During Oral Argument, DC Circuit Suggests Waiver Period for State Water Quality Certification May Be Less Than One Year

Last week, the US District Courts for the Eleventh and Sixth Circuits joined a growing chorus of other circuits holding that a Natural Gas Act (NGA) condemnor can obtain immediate, pre-trial possession of condemned land through a preliminary injunction (PI) remedy so long as it demonstrates its substantive power of eminent domain as a FERC certificate holder under NGA § 7(h).[1] The Sixth Circuit’s ruling also rejected arguments that export-related aspects of a domestic pipeline project somehow negated a pipeline company’s public interest showing, required for obtaining a PI granting immediate possession. In addition, the two rulings address several commonly-arising procedural issues in a manner favorable to pipeline companies seeking immediate possession in NGA condemnations.
Continue Reading Two More Circuits Give Thumbs-Up to Preliminary Injunctions Granting Immediate Possession in NGA Condemnation Actions and Clarify Other Common Procedural Issues

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