Acting in gas case, DC Circuit nixes FERC delays on rehearing decisions

Washington — The District of Columbia Circuit Court of Appeals concluded the US Federal Energy Regulatory Commission lacks authority to issue tolling orders that postpone rehearing decisions on natural gas project orders and delay opposing parties' efforts to file appeals court challenges.

The action would upend FERC's practice, up until recent months, of granting rehearing for the purposes of reconsideration in Natural Gas Act cases, holding off decisions on the merits for months and, in a few cases, years. Some landowners and environmental groups argued FERC's longstanding approach unfairly kept them out of courts while gas projects were largely built.

The 10-1 ruling's impact on gas projects may be muted, however, by the fact that FERC has already announced plans to dedicate more resources toward deciding within 30 days on rehearings in gas project cases that involve landowner issues. FERC also recently issued an instant final ruling barring it from approving construction while rehearing requests were pending.

But beyond gas project cases, the ruling is seen as applying more broadly to actions under the NGA and the Federal Power Act, adding to the workload of the energy regulator and allowing parties to get to court sooner.

'Unraveling' statutory arrangement

According to the opinion penned by Judge Patricia Millett: "The commission's unilateral use of tolling orders both to grant itself unlimited time to act without rehearing being deemed denied and to delay judicial review unravels Congress's arrangement" under the NGA.

Instead, the court held that "after 30 days elapsed from the filing of a rehearing application without commission action, the tolling order could neither prevent a deemed denial nor alter the jurisdictional consequences of agency inaction."

In making the finding, the full DC Circuit overturned prior court precedent, drawing a dissent from Judge Karen Henderson, who worried the majority showed little regard for stare decisis in overturning the court's position for over 50 years.

"I would leave it for the political branches to determine whether and how to limit FERC's use of tolling orders," Henderson wrote.

The court, however, left open the potential for FERC to allow itself more time for rehearing in earnest. And it said even after an appeal is filed, FERC retains authority to modify its order until the administrative record is filed in court.

In a concurring opinion, Judge Thomas Griffith noted that FERC could easily satisfy the 30-day timeframe by setting a briefing schedule or by ordering the pipeline to respond to claims. If FERC continues with undue delays, the court should entertain the possibility of mandamus relief, he wrote.

"The court's decision rightly jettisons the commission's signature stalling tactic," he wrote.

The case in question involved challenges to Transcontinental Gas Pipe Line's Atlantic Sunrise project (Allegheny Defense Project v. FERC, 17-1098). The DC Circuit acted en banc to overturn a finding on tolling orders by a three-judge panel of the same court. It upheld FERC's findings on the pipeline certificate order itself.

Ruling implications

William Scherman, a partner at Gibson, Dunn & Crutcher, said he believed FERC's instant final rule largely addressed multiple concerns expressed in the opinion June 30.

"I don't think the opinion properly takes into account the burden this will place on FERC and its staff across the board in both NGA and FPA cases, in [acting] a timely and comprehensive manner," he said. He added it gives justification for providing FERC with additional resources.

Carolyn Elefant, an attorney who has represented landowners, said the majority decision while welcome "was a bit underwhelming after all this time," and the concurring opinion did more to consider the impact on landowners. She added: "It will be interesting to see if any eminent domain courts will refrain from approving condemnations when a FERC order is still pending."

The Sierra Club welcomed the decision as ending a practice that allowed FERC to "prioritize the profits of polluters over the people and communities they should put first by delaying decisions indefinitely."

Rob Rains of Washington Analysis cast the impact as mostly "headline risk" for pipeline and LNG terminals. Federal courts that oversee eminent domain proceedings may be subject to "incremental delays" while courts await final FERC actions on rehearing, he said.

"On the electric side, we see little impact beyond some minor delay to changes in market participation rules, although consumer advocates and proponents of renewable generation are likely to use this decision to seek rehearing and challenge delays to rule changes in both [PJM Interconnection] and the [ISO New England]," Rains said in a note to clients.