Federal Energy Regulatory Commission Clarifies Application of Rule Limiting Construction Activities

On May 4, 2021, the U.S. Federal Energy Regulatory Commission (FERC or Commission) issued Order No. 871-B, an Order Limiting Authorizations to Proceed with Construction Activities. The order revises FERC regulations at 18 C.F.R. § 157.23(b) enacted in July 2020 following the issuance of Order No. 871.

The regulation now prohibits authorizations to proceed with construction for pipeline or liquefied natural gas (LNG) terminal facilities from issuing if a timely request for rehearing of a certificate order has been filed specifically opposing project construction, operation, or need until (1) the request is no longer pending before FERC, (2) the record of the proceeding has been filed with the court of appeals, or (3) 90 days have passed after the date that the request for rehearing may be deemed to have been denied under the Natural Gas Act’s (NGA) rehearing provisions at 15 U.S.C. § 717r(a).

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FERC Makes First Significance Determination on Greenhouse Gas Emissions

On March 22, 2021, the Federal Energy Regulatory Commission (FERC or Commission) for the first time issued an order that assessed whether greenhouse gas emissions related to a natural gas pipeline certificate project would significantly contribute to climate change. FERC purported to perform the assessment pursuant to its obligation under the National Environmental Policy Act (NEPA) to take a “hard look” at a project’s environmental impacts.

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Fifth Circuit Rejects Challenge to Texas LNG Project

On March 10, 2021, the U.S. Court of Appeals for the Fifth Circuit rejected a challenge to an opinion by the Fish and Wildlife Service (FWS) allowing a South Texas liquified natural gas (LNG) pipeline project to proceed. Sierra Club, et al. v. U.S. Department of Interior, et al. involved a proposed LNG pipeline that would pass through Cameron, Willacy, Kenedy, and Kleburg counties in south Texas. (more…)

FERC Revisits Certificate Policy Statement With New Focus on Environmental Justice and Greenhouse Gas Emissions

On February 18, 2021, the U.S. Federal Energy Regulatory Commission (FERC) reopened the comment period for its Notice of Inquiry (NOI) on the Certification of New Interstate Natural Gas Facilities. FERC applies its current policy, issued in 1999, to assess whether to issue interstate natural gas transportation facilities a Certificate of Public Convenience and Necessity (CPCN), a foundational permit required for their construction and operation. FERC must abide with its obligations under the Natural Gas Act and National Environmental Policy Act when considering pipeline certificate applications. FERC initially issued the NOI in April 2018, seeking comment on whether, and if so how, it should revise its approach to evaluating CPCN applications. The docket has been pending for nearly three years.

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Biden Administration to Review Environmental Regulations, Policies; Revokes Some Trump Executive Orders on Energy Infrastructure

On January 20, 2021, President Joe Biden issued an executive order, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” The order directs executive agency heads to review hundreds of agency actions implemented during the Trump administration, including more than 120 related to energy and the environment. In addition, the order suspends or revokes, in whole or in part, nearly one dozen executive orders issued by the prior president directly tied to energy infrastructure.

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U.S. Army Corps Proposes to Reissue and Modify Nationwide Permits

On August 3, 2020, the U.S. Army Corps of Engineers (Corps) released a prepublication version of a proposal to reissue and modify its existing 52 nationwide permits (NWPs) and issue five new NWPs. The Corps issues NWPs to authorize categories of activities in jurisdictional waters and wetlands under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act that will result in no more than minimal individual and cumulative adverse environmental effects. The Corps typically updates NWPs every five years, and the current NWPs are scheduled to expire on March 18, 2022. However, in response to President Donald Trump’s March 18, 2017, Executive Order 13783, which directed the heads of federal agencies to review regulations that potentially burden domestic energy production, the Corps identified nine NWPs that could be modified. In addition to revising those nine NWPs, the Corps is proposing to reissue the remaining NWPs so that all NWPs are on the same five-year cycle.

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Court Shuts Down Dakota Access Pipeline

On July 6, 2020, Judge James E. Boasberg of the U.S. District Court for the District of Columbia vacated the easement that had been granted to the Dakota Access Pipeline (DAPL) under the Mineral Leasing Act and ordered DAPL to be shut down in 30 days. (more…)

D.C. Circuit Declares Tolling Orders Impermissible Under the Natural Gas Act

On June 30, 2020, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) ruled en banc 10-1 in Allegheny Defense Project v. FERC to invalidate the Federal Energy Regulatory Commission’s (FERC) common practice of issuing tolling orders to extend the time for deciding rehearing requests under the Natural Gas Act (NGA) beyond the 30-day deadline set forth in the statute. The court found that a tolling order, in which FERC “grants rehearing” for the limited purpose of affording it additional time to act on a rehearing request, does not constitute “action” upon the rehearing request as required by the NGA. The decision reversed the approximately 50-year old D.C. Circuit precedent upholding the tolling order practice as permissible. The court derided the practice as an unauthorized way for FERC to stall for time while precluding parties aggrieved by FERC orders from seeking judicial review.

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U.S. Supreme Court Reverses the 4th Circuit on Appalachian Trail Access for Atlantic Coast Pipeline

On June 15, 2020, the Supreme Court of the United States decided United States Forest Service et al. v. Cowpasture River Preservation Association et al. (Cowpasture). In a 7-2 decision, the court authorized the U.S. Forest Service (Forest Service) to reinstate a special use permit under the Mineral Leasing Act of 1920 (Leasing Act) to allow the Atlantic Coast Pipeline (ACP) to cross a portion of the Appalachian National Scenic Trail (the Trail) that traverses the George Washington National Forest in West Virginia (GW Forest). The decision removes a significant obstacle to the ACP, but other legal roadblocks remain.

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U.S. Federal Energy Regulatory Commission Requires Interstate Natural Gas Pipelines to Recalculate Rates

On Jan. 12, the Federal Energy Regulatory Commission (FERC) issued data requests to four interstate pipelines that are proposing incremental recourse rates in pending Natural Gas Act (NGA) Section 7 certificate applications.1 This action was significant because it appears to be FERC’s first step toward responding to tax law changes in the Law to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, also known as the Tax Cuts and Jobs Act of 2017 (2017 Tax Act).

FERC permits pipelines and public utilities to recover their actual or potential tax expenses in their regulated rates. The 2017 Tax Act reduces the corporate tax rate to 21 percent and allows certain investments to receive bonus depreciation treatment. FERC asked each pipeline to 1) explain how the 2017 Tax Act impacts its proposed project cost of service and the resulting initial recourse rate proposal; 2) provide an adjusted cost of service and recalculated initial incremental recourse rates; and 3) provide all supporting work papers and formulas.2 (more…)