United States: Natural Gas Infrastructure Opponents Appeal Loss In Their Campaign To Invalidate Federal Energy Regulatory Commission's Processes

Last Updated: June 12 2017
Article by Erik Swenson and Tyler J. Hall

Despite a series of lopsided losses, natural gas infrastructure opponents continue to probe the Federal Energy Regulatory Commission (FERC) and its infrastructure approval processes for systemic weaknesses. At the end of March, the United States District Court for the District of Columbia dismissed a complaint filed by the Delaware Riverkeeper Network (DRN) against FERC, rejecting DRN's claim that FERC is inherently and unconstitutionally biased in assessing and approving pipeline projects. Delaware Riverkeeper Network v. FERC, — F. Supp. 3d —, No. 16-416 (D.D.C. March 22, 2017).

Although DRN's action only directly involves the FERC approval of the proposed 120 mile long PennEast natural gas pipeline project (PennEast Pipeline), which would run through Pennsylvania and New Jersey, if successful, DRN's action would undermine the process used by FERC to review every pipeline and storage project subject to the Natural Gas Act.

DRN is a nonprofit organization, with over 16,000 members, that is active in regulatory proceedings that potentially impact the Delaware River and its associated watershed, tributaries and habitats, located in New Jersey, New York, Pennsylvania and Delaware.

After the developers of the PennEast Pipeline initially applied to FERC for a certificate of public convenience and necessity to allow them to construct the new pipeline, DRN filed a motion to intervene in the FERC review process. DRN then brought suit before the FERC review process was completed, alleging deficiencies in the process.

DRN argued that FERC's process is structurally biased because (1) FERC charges regulated natural gas companies fees covering the agency's operating costs; (2) FERC commissioners may be removed only for cause; and (3) FERC "is insulated from Congressional budgetary oversight." DRN claims that this bias is tantamount to a deprivation of due process rights guaranteed to all U.S. citizens under the Fifth Amendment to the U.S. Constitution.

The nature of this attack on FERC's consideration of the PennEast Pipeline application is of particular interest to natural gas infrastructure stakeholders (e.g., natural gas producers, natural gas marketers and transporters, natural gas infrastructure developers and operators, and natural gas consumers) because, rather than involving a claim of a particular error by FERC in executing its process or in reaching conclusions, DRN challenges the generic process employed by FERC for all natural gas infrastructure permitting. Thus, a win by DRN would require a fundamental change in the underlying FERC review process.

Two other noteworthy aspects of DRN's suit are (1) DRN's reliance on sensationalist concerns for bodily harm of its members living within "the blast radius" of a pipeline, rather than less attention grabbing claims of damage to the environment; and (2) the preemptory nature of the attack, which was launched without waiting for FERC to make a determination on the application. Regarding this latter point, energy infrastructure opponents have been seeking to stretch out the project approval process for many projects, perhaps hoping that the increased cost to developers and changing market conditions over time could kill projects, even if substantive law could not. Here, the use of an interlocutory appeal allows DRN to stretch out the process before a decision is rendered, thereby preventing the developer from proceeding with the project during the pendency of the appeal. In contrast, an appeal made after FERC had rendered an initial approval would have allowed the developer to proceed at its own risk during the appeal period. Historically, developers generally have done just that, reducing the effectiveness of the opposition's tactics.   

After determining that DRN did have proper standing in the suit (which was also a matter of dispute), the court rejected DRN's claim and granted FERC's motion for summary judgment. The court found that there is no inherent structural bias or appearance of structural bias in the FERC approval process "for the basic reason that approval of pipeline projects does not increase FERC's budget."

The court also denied DRN's claims of a procedural due process violation because it failed to articulate a protected liberty or property interest at stake that would be affected by the alleged bias. Although DRN asserted that Article I, section 27 of the Pennsylvania Constitution creates a property right in the environment that must be afforded due process protection in accordance with the Fifth Amendment to the U.S. Constitution, the court expressly rejected this argument. In doing so, the court noted that "it would be untenable for every citizen of Pennsylvania to have a federal due process right at stake any time the state takes action that could impact the environment." The court held that such environmental concerns and the enjoyment of wildlife do not qualify as "liberty interests" within the scope of the Fifth Amendment's due process clause.

Further, the court held that DRN had not plausibly pleaded that FERC's funding structure results in bias. Congress (and not FERC or the fees charged by FERC) determines FERC's budget. As such, FERC's budget has no relationship to the number of approved pipelines or the quantity of gas being transported by such pipelines. In addition, the court concluded that it is not plausible that FERC's budget would "dry up" if FERC stopped approving pipeline projects.

Although the court treated this as an open-and-shut case, on April 20, 2017, DRN filed a notice of appeal to the United States Court of Appeals for the District of Columbia Circuit. While DRN's chances of prevailing in this instance seem negligible, natural gas industry stakeholders should note that this case is part of a broader and persistent pattern of attack on natural gas production, transportation and export—a trend that is worth monitoring. Further, opponents continue to hone their attacks to maximize their effectiveness, even when the law and facts are not on their side. In some cases, individual action by stakeholders may be warranted to protect FERC's existing, thorough, but fair, processes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.