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

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.
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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.”
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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.
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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.
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The issuance of FERC and PHMSA’s Memorandum of Understanding (MOU) last month potentially signals an improved review and authorization process for Liquefied Natural Gas (LNG) projects, but only time will tell how the MOU will work in practice and if it will achieve its stated goal of increasing efficiency and effectiveness of the application review process in a manner that will “reduce expenses for LNG project applicants . . . and the U.S. taxpayer.” Perhaps as an indication of things to come in the FERC/PHMSA partnership under the MOU, FERC issued environmental schedules for twelve pending LNG projects on the very day that the MOU was issued that, according to the Commission, reflect FERC’s “efforts in recent months to streamline its review process for LNG project applications,” including by entering the MOU with PHMSA.
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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.”

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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.

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Two notable developments in the past few weeks signal potential changes ahead to the policies and timeframes for pipeline approvals, particularly natural gas pipelines under Federal Energy Regulatory Commission (“FERC” or the “Commission”) oversight. These developments reflect both the increased public scrutiny of the pipeline approval process seen in recent years and the emphasis placed by the current administration on expediting review and approval of major infrastructure projects, two factors that are in some tension with each other.
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