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Judges appear skeptical of FERC tolling order practice, uncertain on remedy

Highlights

DC Circuit hears case on FERC gas order procedure

Commission faces stiff questioning in oral argument

Washington — The Federal Energy Regulatory Commission faced skeptical questioning Monday from US Court of Appeals for the District of Columbia Circuit judges about its practice of putting off rehearing decisions on natural gas pipeline authorizations, even as the same judges wrestled with the implications of unsettling the current system.

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For over three hours, the court heard oral argument in the case involving the 196.5-mile, 1.7 Bcf/d Atlantic Sunrise project. While the pipeline is already in service, the case has broad implications for future gas project timelines as it calls into question FERC's tolling order practice which has had the effect of slowing judicial appeals from opponents while projects are built.

The full DC Circuit is rehearing a three-judge panel ruling that upheld FERC orders on Atlantic Sunrise but in which a concurring opinion by Judge Patricia Millett assailed FERC's approach as putting landowners into "administrative limbo" while pipeline companies can seize property and start work (Allegheny Defense Project v. FERC, 17-1098)

Responding to Millett's admonitions and the appeals court decision to reconsider the case, FERC has announced plans to act more quickly on pipeline rehearing orders, including dedicating staff to the effort.

QUESTIONING FERC ATTORNEY

FERC attorney Robert Kennedy was asked to reconcile the disparate legal treatment of FERC's orders in two different legal settings — appeals court review of FERC orders, and eminent domain proceedings.

Judge Thomas Griffith said he was troubled by a situation in which FERC's certificate orders are considered as final in district court determinations about property rights, while at the same time FERC doesn't treat the order as final. Opponents have not been able to appeal the non-final orders in appeals courts.

And Judge Gregory Katsas questioned whether there was any other legal context in which a non-final order is allowed to have collateral legal consequence outside the court or agency making the order. "I can't think of any," Katsas said.

Millett, for her part, pressed FERC on whether landowners are afforded prompt post-deprivation judicial review of the determination that the property is being taken for the public use.

Kennedy asserted that FERC's certificate review process provides reasonable notice and opportunity to be heard, satisfying a requirement for a hearing for constitutional purposes.

"So judicial review of the public use determination isn't relevant?" Millett pressed. "Is it or is it not part of what the Constitution requires?" she said, proceeding to ask whether FERC can toll a rehearing request indefinitely.

UNCERTAIN REMEDY

While most of the judges appeared unsatisfied with the status quo, they struggled with what remedy the court could provide.

Representing the landowner petitioners, attorney Siobhan Cole fielded multiple questions about what outcome would help her clients or get them to appeals court sooner, while staying within the bounds of the Natural Gas Act.

Judges seemed to hold differing views on whether the problem could be solved if FERC issued rehearing orders that kicked off a more robust rehearing process. They posed hypotheticals, such as whether the certificate orders could then be considered non-final, effectively stopping eminent domain and construction. Another possibility floated was for the FERC orders to then be subject to judicial review, with potential for FERC to stay the judicial proceedings if it needed more time to decide on the merits of rehearing.

Cole, at one point, sought to clarify that her clients could be satisfied if the finality of the FERC order is stripped in the event of a grant of rehearing, or a situation where despite a substantive grant of rehearing, jurisdiction for review is conveyed upon the courts so that the aggrieved party could petition the appeals court for review.

Separately, John Stoviak, counsel for Transcontinental Gas Pipe Line, warned of "cataclysmic" consequences if the FERC orders authorizing Atlantic Sunrise were to be vacated by the court in terms of denying thousands and thousands of people heat and energy and electricity throughout the US that use the gas from the pipeline every day.