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FERC pressed to comply with court remand on pipeline exports, eminent domain


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FERC pressed to comply with court remand on pipeline exports, eminent domain

The Federal Energy Regulatory Commission came under renewed pressure to follow a September 2019 court ruling that required a better explanation of the commission's treatment of exports of natural gas to justify market demand for pipelines.

"Nearly nine months have passed now since the mandate issuance and the commission has yet to comply with this court's judgment," attorney Carolyn Elefant wrote in a July 29 letter on behalf of the city of Oberlin, Ohio, to the U.S. Court of Appeals for the District of Columbia Circuit. Elefant asked the court to set a deadline for compliance. (U.S. Appeals Court for the District of Columbia Circuit docket 18-1248)

The case, City of Oberlin v. Federal Energy Regulatory Commission, stemmed from a lawsuit by landowners and the city against NEXUS Gas Transmission LLC, the developer of a 1.5-Bcf/d natural gas pipeline project. In its ruling Sept. 6, 2019, the appeals court declined to throw out FERC's certificate authorization of the project but found that the commission needed to supply a better explanation of its decision to credit agreements for gas export toward finding that a pipeline is required for public convenience and necessity, a finding essential to the grant of eminent domain authority that goes with the Natural Gas Act certificate. The court issued the mandate Nov. 4, 2019, making the judgment effective.

The 256-mile Nexus pipeline began operating in October 2018. It ships Appalachian gas supplies to Midwest markets and on to Canada's Dawn Hub in Ontario. Nexus is a joint venture of Enbridge Inc. and DTE Energy Co.

The case raised legal issues that could affect other gas transportation and export projects with significant export volumes. Since the court's decision, and before acting on the court remand, FERC has issued orders on several projects with large export volumes, including the 229-mile, 1.2 million-Dth/d Pacific Connector pipeline meant to serve the Jordan Cove LNG export project in Coos Bay, Ore., and the Rio Bravo pipeline intended to serve the 135.5-mile, 4.5-Bcf/d Rio Grande LNG project in Texas.

In remanding the matter back to FERC in 2019, the court found it "plausible that the commission will be able to supply the explanations needed."

Elefant said the delayed response from FERC was troubling in light of the D.C. Circuit's recent decision in Allegheny Defense Project, et al. v. Federal Energy Regulatory Commission that found that FERC could not delay review of its orders by withholding action through a tolling order. Elefant reminded the court of a concurring statement by one of its judges that something is amiss when landowners watch as their land is transformed without judicial consideration of the crucial question of whether the pipeline should exist.

"The commission's delayed response to this court's mandate has enabled the NEXUS pipeline to continue to operate on the city's property notwithstanding potential statutory and constitutional infirmities and in violation of the spirit, if not the holding in Allegheny Defense Project," Elefant wrote.

Maya Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.