D.C. Circuit to Review FERC Practice Called ‘Kafkaesque’ (1)

The D.C. Circuit will take a closer look at a federal energy agency’s review practice that has long frustrated natural gas pipeline challengers and was recently derided by one judge as a “Kafkaesque regime.”

The U.S. Court of Appeals for the District of Columbia Circuit on Dec. 5 agreed to rehear a case involving the Transcontinental Pipeline’s Atlantic Sunrise project, which cuts through Pennsylvania and connects to a broader East Coast network of natural gas infrastructure. Transco is a subsidiary of the Williams Cos. Inc.

The nonprofit Allegheny Defense Project, other environmental groups, and Pennsylvania landowners are challenging the Federal Energy Regulatory Commission’s approval of the project and its delay in resolving administrative challenges.

At issue in the rehearing is FERC’s use of “tolling orders” to respond to administrative challenges to pipeline approvals. Under the Natural Gas Act, FERC has 30 days to respond to challenges. It uses tolling orders to extend that deadline.

Challengers generally can’t go to court to oppose a pipeline until FERC issues a final decision on an administrative challenge. Tolling orders can drag out the timeline so long that construction on a project is complete before a landowner, environmental group, or other challenger has had an opportunity to go to court.

“That can put a party at a disadvantage and may frustrate whatever ultimate review they get,” said Jessica Bell, a clean energy attorney for New York University’s State Energy & Environmental Impact Center.

‘Seems so Unfair and Wrong’

The D.C. Circuit in August upheld FERC’s permits for the project, rejecting a legal challenge from environmentalists and landowners. But Judge Patricia A. Millett issued a concurring opinion that accused FERC of creating a “Kafkaesque regime” that leaves homeowners in “seemingly endless administrative limbo.”

The court’s Dec. 5 order directs the parties to address the issues raised in Millett’s opinion. Oral arguments are set for March 31.

White and Williams LLP attorney Siobhan Cole, who represents Pennsylvania landowners in the case, said her clients are relieved the court is addressing “a system which seems so unfair and wrong.”

“My clients are thrilled that after this long battle where they have felt that no one was willing to listen to them that they are now being heard and that they have the ear of the full D.C. Circuit,” she said, noting that the landowners started fighting the Atlantic Sunrise pipeline plans in 2016.

The D.C. Circuit rarely grants rehearing requests.

Though the pipeline is already constructed and in service, Cole said the court’s decision to review the issue could make future pipeline proceedings fairer.

Broader Impacts

Avi Zevin, a senior attorney for NYU’s Institute for Policy Integrity, said the court’s final ruling could have big consequences both for how FERC reviews pipelines under the Natural Gas Act and how it reviews electricity-related issues under the Federal Power Act because FERC has adopted the same legal reasoning for using tolling orders in both areas.

“So a court decision that broadly calls into question FERC’s interpretation that it can toll Congress’s 30-day deadline for FERC action on rehearing could upend FERC’s approach to major electricity action as well,” Zevin said in an email.

Landowners, environmental groups, and other frequent pipeline litigators have for years pushed FERC to halt its practice of routinely issuing tolling orders. The agency declined to comment on the court’s decision to review the issue.

The Sierra Club and Appalachian Mountain Advocates are representing environmentalists in the case.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Environment is operated by entities controlled by Michael Bloomberg.

The case is Allegheny Defense Project v. FERC, D.C. Cir., No. 17-1098, 12/5/19.