FERC "Tolling" Orders in Pipeline Authorizations

By Harvey Reiter

Last week, a DC Circuit panel consisting of Judges Millett, Pillard and Katsas dismissed as "incurably premature," a petition for review of a FERC (Federal Energy Regulation Commission) order granting authority for Kinder Morgan to build a natural gas pipeline. Narragansett Indian Tribal Historic Preservation Office v. FERC, No. 18-1069 (DC Cir. May 31, 2018). The petition was premature, the panel said, because "[a] party may not simultaneously seek agency reconsideration and judicial review of the same agency order."

But two weeks earlier the same panel denied FERC's motion to hold in abeyance judicial review of a FERC order granting Mountain Valley Pipeline a certificate pending FERC action on the petitioner's request for rehearing of the same agency order. The panel also directed FERC to transfer the administrative record to the court. Appalachian Voices, et al. v. FERC, No. 17-1271 (DC Cir. 2018). In February, the court had already ordered FERC, which had moved to dismiss the petition as "incurably premature," to include its argument on the motion to dismiss in its brief on the merits. FERC itself pointed out to the court that once it transferred the record to the court, the court's jurisdiction over the case would be exclusive, calling into question whether FERC could even issue a rehearing order. So what gives? Is the Appalachian Voices case an aberration?

The answer is a resounding "maybe." The order granting Mountain Valley a certificate was issued by FERC last October. The petitioners, Appalachian Voices and the Sierra Club, sought rehearing of the order in November. and a month later, FERC staff, using authority FERC had delegated, issued a "tolling order" — an order that granted rehearing solely for purposes of "further consideration." This had the effect of tolling final action on the rehearing indefinitely.1 Meanwhile, because an application for rehearing does not serve to suspend the effectiveness of the original certificate order, the pipeline company was authorized to proceed with construction.

Appalachian Voices and the Sierra Club asked FERC, and subsequently the courts, to stay the effectiveness of the October order but both motions were denied. These parties, however, had also filed a petition for review of FERC's October order right after FERC staff issued the December tolling order.

What distinguishes their case from the appeal of the FERC order in the Kinder Morgan case? Only FERC, Appalachian Voices argued, and not FERC's staff, could lawfully issue a tolling order because the statute requires FERC to act on a rehearing request within 30 days. FERC has no statutory authority to delegate that function to its staff when the request for rehearing is also paired with a motion for stay, they reasoned. That's because FERC's rules do not permit the agency to delegate actions on motions for stay to its staff.2

But even if FERC staff had proper delegated authority to issue a tolling order, Appalachian Voices reasoned an indefinite tolling order in pipeline certificate cases would still be unlawful because it would "preclude meaningful review." The typical tolling order lasts more than half a year. That's enough time, the petitioners argued, for construction to get well under way, for private property to be taken in eminent domain, for wetlands to be filled, trees cut and other changes to be made to the environment that cannot be undone. Put another way, the petitioners' argument is that justice delayed is justice denied.

So what do the court's procedural orders indicate? The decades-old rule of the DC Circuit is that appeals of FERC orders are "incurably premature" when the appellant seeks review of the same orders it has asked FERC to rehear.3 Is that rule dead? Almost certainly not. In the Kinder Morgan case, there was no challenge to a FERC-issued tolling order, only a case involving an appeal while a rehearing remained pending. The recent vintage of the Kinder Morgan order suggests that the principle remains firmly entrenched—at least where tolling orders are not at issue. And in all likelihood, the issuance of a valid tolling order in a typical rate case—unlike a case involving issuance of a hydroelectric license or gas pipeline certificate—is not likely to raise the issue posed in Appalachian Voices because the presumption is that where FERC has refund authority and the inherent authority to correct its own mistakes on rehearing, it can make parties whole on rehearing in rate cases.4

But the court's decision to permit full briefing and to certify the record in Appalachian Voices before FERC issues an order on rehearing, suggests that the court may be willing to examine the lawfulness of tolling orders where they may unfairly defer judicial review. Appalachian Voices argues that FERC has been using tolling orders in gas pipeline certificate cases in a way that denies the court's ability to enter "an effective remedial order."5 If the court agrees, it may significantly change how FERC employs the tolling order device in gas pipeline certificate cases. It is a case worth watching.

For more information on the dismissal of this petition, please contact, Kelly Daly, Dennis Lane, Harvey Reiter, Jonathan Schneider, Marcia Stanford, Jonathan Trotta or the Stinson Leonard Street contact with whom you regularly work.

  1. Although section 19(a) of the Natural Gas Act—and the parallel provision of the Federal Power Act – require FERC to "act[] upon the application for rehearing within thirty days," a number of courts have construed "acts" to encompass the issuance of a tolling order, and not to require an order on the merits. See, e.g., California Co. v. FPC, 411 F.2d 720 (DC Cir. 1969); Kokajko v. FERC, 837 F. 2d 524 (1st Cir. 1988); Gen.Amer.Oil Co. of Tex. v. FPC, 409 F.2d 597 (5th Cir. 1969).
  2. This is different from the tolling argument Sierra Club raised in another case last year. For a good portion of 2017 FERC was without an operating quorum. The Sierra Club had argued that without a quorum, any staff order tolling a rehearing would be null and void because there was no Commission in place to delegate tolling authority. "DC Circuit Case May Test Continuing Validity of FERC Delegations of Authority to Agency Staff Once Its Quorum Disappeared." FERC did have a quorum by November, 2017, when its staff issued the tolling order at issue.
  3. See, e.g., Clifton Power Corp. v. FERC, 294 F.3d 108 (DC Cir. 2002).
  4. See United Gas v. Callery Properties, 382 U.S. 223, 229 (1965); Cambridge Electric Light Co., 66 FERC ¶61,346 at 62,162 (1994); Xcel Energy Services Inc. v. FERC, 815 F. 3d 947, 954-56 (DC Cir. 2016).
  5. Citing FTC v. Dean Foods Co., 384 U.S. 597, 605 (1966).

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