On April 30, 2020, FERC granted Tennessee Gas Pipeline Company, L.L.C.’s (“Tennessee Gas”) petition for declaratory order that requested authorization to charge market-based rates for its proposed firm flexible storage (“FS Flex”) service. In reaching its decision, FERC reviewed whether Tennessee Gas held significant market power in the relevant product and geographic markets where the FS Flex service was to be offered, with the geographic market including east Texas, Louisiana, Mississippi, and Alabama (“Gulf Coast Production Area”). FERC found that Tennessee Gas’s small market share and market concentration in the relevant markets adequately demonstrated that Tennessee Gas lacked market power and that there were no other factors indicating that Tennessee Gas would be able to exercise market power when providing the FS Flex service.
Continue Reading FERC Grants Tennessee Gas Market-Based Rate Authority for Proposed FS Flex Service

On April 10, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) granted Gulf South Pipeline Company, LP’s (“Gulf South”) petition for review in part, finding that FERC’s rejection of Gulf South’s proposed “incremental plus rates” for the Westlake Expansion Project, an expansion within the Lake Charles Zone, was arbitrary and capricious. In doing so, the D.C. Circuit found that FERC could easily distinguish between which customers are using the new facilities and which customers were using the gas pipeline’s existing facilities. The D.C. Circuit denied Gulf South’s petition for review on issues related to FERC’s denial of Gulf South’s proposed initial rate of return and depreciation rate for the Project, upholding FERC’s use of Gulf South’s last approved rate of return and depreciation rate.
Continue Reading D.C. Circuit Reverses FERC’s Rejection of “Incremental Plus” Rates for Gas Pipeline Expansion Project

On March 19, 2020, FERC authorized Jordan Cove Energy Project L.P.’s (“Jordan Cove”) Natural Gas Act (“NGA”) section 3 proposal to site, construct, and operate a liquefied natural gas (“LNG”) export terminal in Coos County, Oregon (“Terminal”) and Pacific Connector Gas Pipeline, LP’s (“Pacific Connector”) application under section 7(c) of the NGA and Parts 157 and 284 of FERC’s regulations that would allow it to construct and operate an interstate natural gas pipeline system connected to the Terminal (“Pacific Connector Pipeline”). The decision prompted a dissent from Commissioner Richard Glick, who argued that the majority’s decision did not adequately consider the impacts that the Terminal and Pacific Connector Pipeline will have on climate change and other environmental concerns.
Continue Reading FERC Approves Jordan Cove LNG Export Project, Prompting Dissent From Commissioner Glick

On February 10, 2020, FERC filed its Rehearing En Banc Brief (“Brief”) regarding opposition to FERC’s authorization of the construction of Transcontinental Gas Pipe Line Company, LLC’s (“Transco”) proposed Atlantic Sunrise Project (“Project”)—an interstate pipeline designed to supply enough natural gas to meet the daily needs of more than 7 million American homes. The United States Court of Appeals for the District of Columbia (“D.C. Circuit”) issued an opinion on August 2, 2019, upholding FERC’s decision to conditionally approve the Project. However, on September 16, 2019, Hilltop Hollow Limited Partnership, Hilltop Hollow Limited Partnership, LLC, and Stephen D. Hoffman (“Petitioners”) petitioned the court for rehearing of the court’s opinion en banc. The Petitioner’s main challenge was FERC’s usage of tolling orders, which allows FERC to delay rehearing after granting a pipeline certificate, as impermissible under the Natural Gas Act (“NGA”) and the Due Process Clause of the Fifth Amendment. The court granted that petition and vacated the underlying judgment in a December 5, 2019 order (see December 11, 2019 WER).
Continue Reading FERC Defends Use of Tolling Orders Before the DC Circuit En Banc

On January 30, 2020, FERC granted in part and denied in part a declaratory order petition filed by PennEast Pipeline Company (“PennEast”) requesting that the Commission interpret the scope of a natural gas pipeline company’s eminent domain authority under the Natural Gas Act (“NGA”). FERC’s order follows a September 2019 decision by the United States Court of Appeals for the Third Circuit (“Third Circuit”), In re PennEast Pipeline Company, LLC (see September 18, 2019 edition of the WER). FERC’s January 30 declaratory order agreed with PennEast that Congress intended the NGA to be a vehicle for granting condemnation authority, and therefore intended to delegate the federal government’s own exemption from state sovereign immunity under the Eleventh Amendment to a natural gas company that holds a valid, FERC-issued Certificate of Public Convenience and Necessity (“CPCN”). However, FERC refrained from deciding whether that delegation of power is constitutional. The order was issued on a 2-1 vote, with Commissioner Richard Glick dissenting on both procedural and substantive grounds.
Continue Reading FERC Concludes Natural Gas Act Delegates Authority to Pipelines to Condemn State Property

On January 10, 2020, FERC issued two separate orders approving Stipulation and Consent Agreements (“Agreements”) between the Office of Enforcement (“Enforcement”) and Emera Energy Incorporated (“Emera Energy”) and Exelon Generation Company, LLC (“Exelon”), respectively. Both Agreements relate to alleged violations of ISO New England Inc.’s (“ISO-NE”) Tariff. Specifically, with respect to Emera Energy, FERC alleged that Emera Energy violated the Tariff’s requirement that evidence supporting Fuel Price Adjustment Requests (“FPA Requests”) must reflect an arm’s length transaction. With respect to Exelon, FERC alleged that Exelon misreported the type and quantity of start-up fuel used by its Mystic 7 generating unit (“Mystic 7”). In both cases, FERC found that the Agreements were in the public interest and the Enforcement investigations were resolved on fair and equitable terms.

Continue Reading FERC Issues Two Orders Approving Civil Penalties and Disgorgement of Profits for Violations of ISO New England Inc.’s Tariff

On December 30, 2019, FERC accepted tariff revisions by the California Independent System Operator Corporation (“CAISO”) to apply three previously accepted-interim provisions designed to address the Aliso Canyon natural gas storage facility’s (“Aliso Canyon”) continued operational limitations and impacts on CAISO’s system.

Continue Reading FERC Accepts CAISO’s Tariff Revisions Addressing Aliso Canyon Natural Gas Constraints

On December 9, 2019, the U.S. Supreme Court decided not to revisit the U.S. Court of Appeals for D.C. Circuit’s decision in Hoopa Valley Tribe v. FERC, 913 F.3d 1099 (2019), allowing the lower court’s ruling to stand.  The key holding of the D.C. Circuit’s opinion, which concerned the ongoing Federal Energy Regulatory Commission’s (“FERC”) relicensing of the Klamath Hydroelectric Project, is that the States of California and Oregon waived their authorities under section 401 of the Clean Water Act (CWA), 33 U.S.C. § 1341, by failing to rule on the applicant’s submitted request for water quality certification within one year.  The D.C. Circuit held that the plain language of CWA section 401 establishes a maximum period of one year for states to act on a request for water quality certification.  Accordingly, the court further held that FERC erred in concluding that the “withdrawal-and-resubmittal” of the water quality certification application on an annual basis resets the one-year statutory time period for state action under section 401.
Continue Reading Supreme Court Declines to Hear Clean Water Act Section 401 Case

On December 5, 2019, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) granted a petition for rehearing en banc of an opinion it issued on August 2, 2019 (“August 2019 Opinion”) upholding FERC’s decision to conditionally approve the application of Transcontinental Gas Pipeline Company (“Transco”) to construct and operate the Atlantic Sunrise Project.  Petitioners challenge FERC’s use of tolling orders, which allow FERC to delay rehearing after granting a pipeline certificate, as impermissible under the Natural Gas Act and the Due Process Clause of the Fifth Amendment.  Specifically, Petitioners argue that FERC’s use of tolling orders in pipeline certificate proceedings unlawfully require challengers to wait for the rehearing order to issue before obtaining judicial review, while the pipeline can proceed with eminent domain proceedings and pipeline construction following the issuance of FERC’s certificate order.     
Continue Reading D.C. Circuit to Review FERC Tolling Orders En Banc

On November 8, 2019, Representative Frank Pallone, Jr. (D-NJ), Chairman of the House  Energy and Commerce Committee, and Representative Bobby L. Rush (D-IL), Chairman of the Subcommittee on Energy (collectively the “Chairmen”), wrote a letter to FERC Chairman Neil Chatterjee expressing their concerns regarding FERC’s proposed changes to sections 201 and 210 of the Public Utility Regulatory Policies Act (“PURPA”).
Continue Reading House Energy and Commerce Chairs Pen Letter to FERC on Proposed PURPA Reform