On April 3, 2019, the U.S. Court of Appeals for the D.C. Circuit (“D.C. Circuit”) issued an unpublished opinion dismissing challenges to three FERC orders that granted certificates of public convenience and necessity to Transcontinental Gas Pipe Line Company, LLC (“Transco”) for three interstate pipeline projects: the Virginia Southside Expansion Project, the Dalton Expansion Project, and the Atlantic Sunrise Project (see previous reports on challenges to the Atlantic Sunrise Project in the December 12, 2017 edition of the WER and the September 12, 2018 edition of the WER). The D.C. Circuit found that the North Carolina Utilities Commission (“NCUC”) and the New York State Public Service Commission (“NYSPSC”) lacked standing to challenge FERC’s orders because they did not show a “substantial probability” that gas transported by the Atlantic Sunrise Project would flow to their states, and did not provide any evidence of injury resulting from the Dalton Expansion and Virginia Southside Expansion Projects.
FERC Affirms Finding That New York Waived CWA Authority over Pipeline Permit
On April 2, 2019, FERC affirmed its decision that the New York Department of Environmental Conversation (“NY DEC”) waived its authority to issue or deny a Clean Water Act (“CWA”) section 401 water quality permit application filed by National Fuel Gas Supply Corporation and Empire Pipeline, Inc. (collectively, “National Fuel”) by failing to act on the application within one year of receipt. Specifically, FERC held that an agreement between NY DEC and National Fuel to alter the receipt date of the application did not extend the CWA’s statutory one-year deadline for NY DEC to act on the application.
First Circuit Finds FERC Certificate Preempts Application of Local Ordinance to Deny Gas Pipeline Project Permit
On March 19, 2019, the U.S. Court of Appeals for the First Circuit (“First Circuit”) found that FERC’s issuance of a certificate of public convenience and necessity (“CPCN”) authorizing Algonquin Gas Transmission, LLC’s (“Algonquin”) compressor station construction in the Town of Weymouth, Massachusetts (“Weymouth”) preempted Weymouth’s later denial of a Wetland Protection Ordinance (“WPO” or “Ordinance”) permit that ultimately prohibited Algonquin from constructing a compressor station in Weymouth. Notably, the First Circuit found that Weymouth’s WPO permit denial was preempted, in part, because FERC considered essentially the same environmental factors Weymouth relied on to deny the WPO permit.
FERC Conditionally Accepts MISO Tariff Amendments Related to Pseudo-Ties
On March 19, 2019, FERC conditionally accepted the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed tariff revisions to: (1) clarify how market participants with pseudo-ties outside of MISO can use virtual transactions to align Financial Transmission Rights (“FTRs”) and transmission usage charges; and (2) reduce the administrative charges assessed to market participants with a pseudo-tie of generation or load out of MISO.
U.S. District Court Judge Denies Motions to Withdraw PG&E Adversary Proceeding from Bankruptcy Court
On March 11, 2019, a U.S. district court judge in California denied FERC’s motion to withdraw the reference of Pacific Gas and Electric’s (“PG&E”) adversary proceeding from the U.S. Bankruptcy Court in the ongoing jurisdictional dispute between FERC and the bankruptcy court. In his ruling, Judge Haywood Gilliam Jr. of the U.S. District Court for the Northern District of California held that removal of the case from the bankruptcy courts was neither required nor permitted because the plain language of the Bankruptcy Code is sufficient to address the questions raised in the proceeding.
FERC’s New Approach to Measuring National GHG Emissions Leads to LNG Facility Approval
On February 21, 2019, FERC took “a new approach” to its approval of pending FERC-jurisdictional liquefied natural gas (“LNG”) projects by calculating the direct greenhouse gas (“GHG”) emissions from the operation of the project facilities and comparing those emissions to the national level. FERC’s approach was a step toward ultimately approving a proposed LNG project that was previously pulled from FERC’s December 2018 open meeting. Notwithstanding FERC’s approval, Commissioner Cheryl LaFleur reiterated her concern that while FERC’s disclosure of national comparison data is only the first step, “the Commission has not identified a framework for making a significance determination” based on GHG emissions. Meanwhile, Commissioner Richard Glick dissented, arguing that FERC’s GHG analysis fails to meet the requirements of both the Natural Gas Act (“NGA”) and the National Environmental Policy Act (“NEPA”), both of which require that FERC consider climate change implications in some manner. Separately, FERC approved two smaller gas pipeline projects, with Commissioner LaFleur issuing separate concurrences, and Commissioner Glick issuing separate dissents, in each.
D.C. Circuit Denies Petitions for Review of FERC’s Mountain Valley Pipeline Approval
On February 19, 2019, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued an unpublished opinion in Appalachian Voices v. FERC, No. 17-1271, denying petitions for review filed by Appalachian Voices, Chesapeake Climate Action Network, and the Sierra Club, among others (“Petitioners”), that challenged FERC’s issuance of a certificate of public convenience and necessity (“certificate”) for the 300-mile natural gas Mountain Valley Pipeline extending from Wetzel County, West Virginia to Pittsylvania County, Virginia. The D.C. Circuit’s order rejected all sixteen of the Petitioners’ challenges to FERC’s approval of the certificate, and notably concluded that: (1) market need for the project was demonstrated by long-term precedent agreements, even though the agreements were with affiliates, and (2) FERC’s estimate of emissions resulting from the end-use combustion of natural gas and explanation why the Social Cost of Carbon is not an appropriate measure of project-level climate change impacts were all that was required by the National Environmental Policy Act (“NEPA”).
Environmental Groups Request Congressional Hearing on FERC Approval of Interstate Gas Pipelines
On January 29, 2019, over 180 environmental organizations (“Environmental Groups”) wrote a letter to members of Congress requesting a congressional hearing into the approval process for interstate gas pipelines. The Environmental Groups argue that FERC approves nearly all proposed pipelines, abuses its eminent domain authority, and relies on erroneous data when evaluating whether to allow pipeline companies to begin construction.
DOE Announces New Funding for Improvements to Existing Coal-Fired Power Plants and Grid Modernization
On January 23 and 24, 2019, the Department of Energy (“DOE”) announced $78 million in federal funding to improve existing coal-fired power plants and for grid modernization. Both funding programs come from DOE’s Office of Fossil Energy.
FERC Initiates NGA Section 5 Investigations into Three Gas Pipelines’ Rates, Terminates Nine Other Proceedings in Response to Form 501-G Filings
On January 16, 2019, FERC launched investigations and initiated hearings pursuant to Natural Gas Act (“NGA”) section 5 into three natural gas pipeline companies in response to their Form No. 501-G filings to explore whether they have been over-recovering their costs of service. Separately, FERC also found that nine other gas companies sufficiently complied with FERC’s directives in Order No. 849 and terminated their Form No. 501-G proceedings without taking any further action.