On July 10, 2018, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) rejected the Delaware Riverkeeper Network’s and its director Maya van Rossum’s (collectively, “Appellants”) claim that FERC is incentivized to approve new natural-gas pipeline certificates in order to secure itself future funding sources.  The D.C. Circuit also rejected Appellants’ challenge to FERC’s use of tolling orders to meet its statutory deadlines for taking action on rehearing applications.

In 2016, while FERC was reviewing PennEast Pipeline Company, LLC’s (“PennEast”) application to construct a 114-mile natural-gas pipeline running through Pennsylvania and New Jersey, Appellants filed a complaint in federal district court seeking declaratory relief against the Commission and its members (“Complaint”).  The Complaint alleged that FERC’s funding structure (i.e., fees assessed on regulated industries) creates structural bias, in violation of the Due Process Clause of the Fifth Amendment to the U.S. Constitution, by encouraging FERC to approve more pipeline certification applications in order to secure additional sources for its future funding.  Appellants also argued that the Commission’s use of tolling orders to satisfy its thirty-day statutory deadline for acting on rehearing applications violates the Appellants’ due process rights under the Due Process Clause.  In response, FERC and PennEast moved to dismiss the Complaint and argued that Appellants had not identified any liberty or property interest protected by the Due Process Clause and that FERC provides all the process that is due.  The district court agreed and dismissed the Complaint for failure to state a claim (see March 27, 2017 edition of the WER).  The Appellants appealed to the D.C. Circuit.

The D.C. Circuit upheld the district court’s decision to dismiss the Complaint and rejected the Appellants’ Due Process claims.  First, the D.C. Circuit found that FERC does not control the fees collected from the natural gas industry (they are, by federal statute, credited directly to the U.S. Treasury), and that Congress specifies FERC’s total appropriation for its budget each year.  Applying Supreme Court precedent, the D.C. Circuit found these factors determinative, and held that “FERC’s funding structure is clearly constitutional.”  Second, the D.C. Circuit rejected Appellants’ challenge to the Commission’s use of tolling orders, finding that such use is permissible under the Natural Gas Act, which requires only that the Commission “act upon” a rehearing request within thirty days, not that it dispose of the rehearing request in that same thirty days.

A copy of the D.C. Circuit’s opinion is available here.