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DC Circuit to review ruling on landowner 'limbo' in gas pipeline cases

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DC Circuit to review ruling on landowner 'limbo' in gas pipeline cases

In a case that could have implications for the timing of natural gas pipeline construction, the full U.S. Court of Appeals for the District of Columbia Circuit has agreed to reconsider a ruling on whether Federal Energy Regulatory Commission practices deprive property owners of a fair process in natural gas pipeline cases.

A three-judge panel of the D.C. Circuit in August upheld FERC on its orders approving the 196.5-mile, 1.7 Bcf/d Atlantic Sunrise project. But Judge Patricia Millet, in a concurring opinion, slammed FERC's practice of putting off ultimate decisions on rehearing orders for months, finding the agency's approach put landowners in "administrative limbo" while construction is allowed to proceed. (Allegheny Defense Fund v. FERC 17-1098)

Despite that concern from Millett, the August ruling found the three-judge panel was not empowered to overturn the D.C. Circuit precedent upholding FERC's practice of tolling decisions on rehearing.

Panel ruling vacated

Landowners in response pressed the full court to rehear the petition, and the court on Dec. 5 agreed to do so. It vacated the three-judge panel ruling and set a new oral argument before the en banc court on March 31.

Millett in her concurring statement in August faulted what she dubbed a "Kafkaesque" practice that "walls homeowners off from timely judicial review of the commission's public-use determination, while allowing eminent domain and functionally irreversible construction to go forward."

Atlantic Sunrise, a 1.7 Bcf/d Williams Partners LP pipeline project, has been in service since October 2018 and therefore appears unlikely to experience a disruption. The project connected Transcontinental Gas Pipe Line Co. LLC's mainline near the border with Maryland to high-production areas in northeastern Pennsylvania.

Possibility of process changes

Siobhan Cole, a partner with White and Williams LLP who represented landowners in the case, said that if the court ultimately rules in her clients' favor, it "would hopefully change the process for other landowners" by finding that tolling orders are not acceptable under the Natural Gas Act as they are currently being used. If tolling orders are found to be invalid, one possibility is that takings proceedings would be unable to go forward before court review of a FERC certificate order, she suggested.

"My clients and I are extremely encouraged by this outcome. It is a relief to feel like after a long battle, the D.C. Circuit, one of the most important courts, is hearing what my clients are having to say," she said.

Gary Kruse of LawIQ agreed that "it seems likely that the court will substantially restrict FERC's ability to use tolling orders while at the same time granting the pipeline the authority to begin construction." He said it appears the court understands it needs to revisit prior decisions en banc to adjust its precedents in light of how FERC has been using its authority granted in those prior decisions.

Remedies floated by Millett in her concurrence included requiring FERC to act in a timely manner on certificate order rehearing requests or FERC declining to issue construction orders until it resolves rehearing requests.

Responding to Millett's critique of the situation faced by landowners, FERC Chairman Neil Chatterjee in September announced he had directed FERC staff to prioritize making decisions on rehearing orders within 30 days on the "narrow set of rehearing requests involving landowner rights."

The action by the court case comes as eminent domain issues have been an active area of litigation involving interstate pipelines, amid a major build-out connecting shale gas supplies to markets and involving thousands of miles of pipeline.

Another potentially far-reaching case involving PennEast Pipeline Co. LLC in the U.S. Court of Appeals for the 3rd Circuit has called into question pipeline developers' ability to go into federal court to condemn lands in which states hold an interest.

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.