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Justice Department defends FERC against allegations of 'structural bias'

TheU.S. Justice Department stepped in to defend FERC against an environmentalgroup's charges that the commission has been corrupted by a link between itsfunding and natural gas industry fees.

"TheUnited States respectfully expresses its view that plaintiffs' generalallegations of structural bias fail to demonstrate that FERC's fundingmechanism offers a possible temptation to favor natural gas pipeline applicantsbecause the number of pipeline applications FERC approves does not increaseFERC's revenues above Congress's annual appropriation," the JusticeDepartment wrote in a May 10 statement of interest.

TheU.S. Justice Department told the U.S. District Court for the District ofColumbia that the requirements of the Omnibus Budget Reconciliation Act of1986, which have FERC recover its costs through annual assessments and otherfees from regulated entities, do not violate the neutrality requirements of theFifth Amendment's due process language. Pipeline application approvals have norelevance to the commission's ability to comply with its obligations under thebudget act, the department said.

Astatement of interest allows the Justice Department to express its views whilenot taking a formal position in the case.

TheDelaware Riverkeeper Network used strong words in announcing its against FERC,calling the commission "a corrupt, rogue agency" that is "infectedby structural bias" in favor of gas infrastructure because of thefinancial link between the agency and the industry.The case is unfolding against a background of regulatory and against gas pipeline projects inthe U.S. Northeast.

TheJustice Department statement backed up arguments made by FERC attorneys in aMay 3 motion to dismiss the lawsuit. The commission argued that DelawareRiverkeeper does not have "a concrete, particularized, and redressibleinjury" needed to establish standing. The commission also said the group "cannotdemonstrate actual or structural bias, as the commission's revenue does notincrease by approving a natural gas pipeline application."

PennEastPipeline Co. LLC also asked the court to dismiss the suit in a May 10 motion,calling it an implausible attempt by Delaware Riverkeeper to stop pipelinedevelopment in general, and the company's proposed 1-Bcf/d pipeline fromPennsylvania to New Jersey in particular.

"Althoughthey routinely and vigorously oppose such projects in proceedings before thecommission and in the federal courts of appeals, they now ask this districtcourt for the unprecedented relief of declaring the commission's statutoryfunding mechanism facially unconstitutional," PennEast wrote. "Moreegregiously, plaintiffs ask this district court to find that the fundingmechanism has fatally prejudiced — albeit in entirely speculative andunspecified ways — the commission's ongoing certificate review of PennEast'spipeline project, while those proceedings remain ongoing."

PennEastis backed by AGL Resources Inc.,New Jersey Resources Corp.'sNJR Pipeline Co., Public ServiceEnterprise Group Inc.'s PSEGPower LLC, SouthJersey Industries Inc.'s SJI Midstream, andUGI Corp.'sUGI Energy Services.(U.S. District Court for the District of Columbia Civil Action No. 16-0416)