By Rich Heidorn Jr.

The D.C. Circuit Court of Appeals indicated Thursday it will reconsider its precedent that allows FERC to issue “tolling” orders to indefinitely delay action on requests for rehearing.

The court vacated an August 2019 ruling by a three-judge D.C. Circuit panel that rejected challenges to FERC’s approval of Williams’ Atlantic Sunrise natural gas pipeline project, scheduling an en banc oral argument for March 31 (17-1098).

The project, an expansion of the existing Transco pipeline between northern Pennsylvania and South Carolina, began service late last year after winning FERC approval in February 2017 (CP15-138). (See FERC OKs Pipelines, Delegation Order Before Losing Quorum.)

The three-judge panel unanimously rejected the challenges by environmental groups and landowners, but Judge Patricia Millett wrote a concurring opinion sharply critical of FERC, saying it had “transformed this court’s decisions upholding its tolling orders into a bureaucratic purgatory that only Dante could love.”

Millett’s concurrence took no issue with her colleagues’ rejection of complaints that FERC failed to consider the pipeline’s downstream greenhouse gas emissions or to substantiate market need for the project.

But she expressed sympathy for pipeline opponents’ complaint that FERC denied them due process by allowing construction to begin before the certificate of public convenience and necessity could be challenged in court.

Parties seeking judicial review of such a certificate must first seek rehearing from the commission. Because the Natural Gas Act says rehearing requests are deemed denied if the commission fails to act within 30 days, FERC regularly issues tolling orders granting rehearing “for the limited purpose of further consideration.” It also uses tolling orders to circumvent the 30-day deadline on rehearings under the Federal Power Act.

The commission issued a tolling order in response to a request for rehearing and stay of the Atlantic Sunrise certificate order, then took no action on the stay motions for more than five months before denying them.

Pipeline opponents also sought rehearing of the commission’s Sept. 15, 2017, order granting Williams permission to begin construction. The company began construction that day.

In December 2017, more than nine months after the first rehearing request and three months after construction began, FERC rejected the appeals, making its decisions finally subject to court review.

Millett acknowledged that the D.C. Circuit has previously ruled that the commission’s tolling orders qualify under the NGA as an action upon the rehearing request, effectively stopping the 30-day clock.

“But the commission has twisted our precedent into a Kafkaesque regime,” she wrote. “Under it, the commission can 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. The commission does so by casting aside the time limit on rehearing that Congress ordered — treating its decision as final-enough for the pipeline companies to go forward with their construction plans, but not final for the injured landowners to obtain judicial review. This case starkly illustrates why that is not right.”

She noted that the court’s acceptance of tolling orders started in a case that involved disputes over money, not property. “Because disputes over monetary payments can be fixed later, the consequences of commission delay were temporary and remediable,” she said. “But allowing the commission to take its time while private property is being destroyed is another thing altogether.”

Millett said the court could require more timely action by the commission on rehearing requests, or FERC could decline to issue construction orders until it resolves certificate rehearing requests on the merits.

“If that is too administratively burdensome, then the commission could try the easiest path of all: take absolutely no action on the rehearing application. That would have the effect of denying the request as a matter of law. And that approach would have opened the courthouse doors to the homeowners … five months before construction started.”

FERC declined to respond to the ruling, saying it doesn’t comment on court proceedings.

ClearView Energy Partners analyst Christi Tezak said FERC’s tolling orders “may be vulnerable to prospective change” but that the court is unlikely to reject the commission’s use of precedent agreements as evidence of the need for new pipelines, although it was part of the homeowners’ appeal.

“Regardless of how this case plays out, we see little risk to the operation of the Atlantic Sunrise project at this time,” Tezak said in a note to clients. “We also would note that neither the FERC’s [National Environmental Policy Act] review nor its contentious policies on downstream greenhouse gas (GHG) emissions appear to be at issue in this en banc review.”