Seeking to address due process concerns over its use of tolling orders, FERC said last week it will no longer permit gas pipeline developers to begin construction until it acts on the merits of any rehearing requests (Order 871, RM20-15).
The commission issued the final rule June 9 as it awaits a ruling by the D.C. Circuit Court of Appeals on its controversial practice of issuing tolling orders granting rehearing for the “limited purpose of further consideration.” Under the Natural Gas Act and Federal Power Act, rehearing requests are considered denied if not acted on by the commission within 30 days.
The commission typically takes months — in some cases years — before acting on the merits of the requests, during which pipeline developers have sometimes completed construction.
The D.C. Circuit previously ruled that issuing a tolling order within the 30-day time frame meant that FERC had “acted upon” the request under the language of the statute, and that parties must wait until the commission’s review of the request is actually complete before seeking relief in federal court. But at oral arguments in April, the court seemed to be rethinking its position. (See DC Circuit Skeptical of FERC Tolling Orders.)
D.C. Circuit Judge Patricia Millett has called the commission’s practice a “Kafkaesque regime” that allows “the commission [to] keep homeowners in seemingly endless administrative limbo while energy companies plow ahead, seizing land and constructing the very pipeline that the procedurally handcuffed homeowners seek to stop.”
FERC’s new policy applies to pipeline projects under Section 7 of the Natural Gas Act and import and export requests under Section 3.
The new rule follows Chairman Neil Chatterjee’s September 2019 pledge that FERC would seek to reduce tolling orders and act on landowner rehearing requests within 30 days. In February, the chairman announced the creation of a new rehearing section within the Office of the General Counsel to expedite action.
“These are complex issues, with a diverse array of stakeholder input, but I remain firmly committed to doing what we can to make the FERC process as fair, open and transparent as possible for all those affected while the commission thoroughly considers all issues,” Chatterjee said in a statement.
In a partial dissent, Commissioner Richard Glick called the policy change a “step in the right direction.” But he said it fell short because it still allows pipeline companies to commence eminent domain proceedings under Section 7 before landowners can go to court to challenge the certificate.
Glick said the commission should presumptively stay Section 7 certificates pending its action on the merits of any rehearing requests.
“The harm to an individual from having his or her land condemned is one that may never be fully remedied, even in the event they receive their constitutionally required compensation. Bearing those basic facts in mind, there is something fundamentally unfair about a regulatory regime that allows a private entity to start the process of condemning an individual’s land before the landowner can go to court to contest the basis for that condemnation action,” Glick wrote.
Although the rule will not take effect until 30 days after publication in the Federal Register, the commission said it will not authorize construction on any projects pending rehearing in the interim.
After issuing the ruling, FERC filed an “additional submission” advising the D.C. Circuit of its action.
In a note to clients, ClearView Energy Partners said the commission’s order is an attempt to preserve its ability to issue tolling orders and prevent certificates from being stayed during the rehearing process. “We also think that the FERC’s action lowers risk that it could lose the ability to toll rehearing action across all its activities, including the considerably more numerous electric proceedings it acts on each year,” ClearView said.
