... New Year Brings Leadership: A Look at Continued Pipeline Disputes and Litigation - North American Energy Pipelines

New Year Brings Leadership: A Look at Continued Pipeline Disputes and Litigation

The New Year brings a leadership change to the Department of Energy, the possibility of one or more new commissioners at Federal Energy Regulatory Commission (FERC), and the continuation of long-simmering pipeline disputes.

In with the New

Dan Brouillette has replaced Rick Perry as Secretary of Energy. A native of Louisiana, Brouillette has deep energy experience, for years working on the Hill with Representative Billy Tauzin (R- La.), serving as DOE’s Assistant Secretary for Congressional and Intergovernmental Affairs during the George W. Bush administration, afterwards as a vice president of Ford Motor Co., and more recently as Deputy Secretary of Energy. His confirmation process was lightning fast and remarkably bipartisan. Brouillette was nominated on Nov. 7, 2019, and voted out of the Senate Energy Committee a week later. Perry resigned on Dec. 1, and the Senate confirmed Brouillette the very next day by a vote of 70-15.

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Last September, James Danly, the current General Counsel, was nominated to fill one of two open FERC commissioner seats. Despite Democrats’ complaints the Republican Danly was not being paired with a Democrat nominee (i.e., renewable energy lawyer Allison Clements), his nomination was voted out of committee on the same day as Brouillette by a 12-8 vote. Ranking member Joe Manchin (D-W.Va.) even backed him. But there is a wrinkle. Because the Senate was focusing on year-end spending bills and other matters, Senate Majority Leader Mitch McConnell could not schedule a floor vote on Danly. Under the Senate’s rules, nominations not acted on during the session in which they were made must be made again before the Senate can take action in a future session. As a result, on Jan. 3, Danly’s nomination was returned to the White House for renomination. The renomination will likely renew requests that the president pair Danly’s nomination with a Democratic nominee and restore the Commission to a full quorum. It is unclear what will happen, much less when. And so, the saga continues.

FERC Environmental Clashes Continue

At FERC, the chasm remains wide between Republicans and Democrats, especially regarding the environmental analysis required to authorize new interstate natural gas pipeline facilities. A case in point involves Adelphia Gateway, LLC (Docket No. CP18-46), which involves the acquisition and repurposing of an existing non-jurisdictional, 88-mile system in Pennsylvania and construction of two new 16-in. diameter laterals and new compression facilities. On December 20, 2019, FERC granted Adelphia certificate authorization. Consistent with prior certificate orders, Commissioner Glick (D) dissented:

The Commission again refuses to consider whether the Project’s contribution to climate change from GHG emissions would be significant, even though it quantifies the direct GHG emissions from the Project’s construction and operation as well as a fraction of its downstream GHG emissions. * * * Claiming that a project has no significant environmental impacts while at the same time refusing to assess the significance of the project’s impact on the most important environmental issue of our time is not reasoned decision making.

In contrast, Commissioner McNamee (R) penned a 37-page concurring opinion in Adelphia to address “a misinterpretation of the Commission’s authority under the NGA and NEPA” and “assist the Commission, courts, and other parties in their consideration of the Commission’s obligations under the NGA and NEPA.” In a nutshell, Commissioner McNamee explains that FERC does not have: (1) “authority to deny a certificate application based on the environmental effects from the upstream production or downstream use of natural gas,” nor (2) “the ability to establish measures to mitigate GHG emissions — Congress [in the Clean Air Act] exclusively assigned authority to regulate emissions to the EPA and the States.” At bottom, Commissioner McNamee concluded: “I recognize that some believe the Commission should do more to address climate change. The Commission, an energy agency with a limited statutory authority, is not the appropriate authority to establish a new regulatory regime.” And so the saga continues.

Keystone XL’s Troubles Persist

The Keystone XL pipeline has been embroiled in litigation for years. The pipeline would transport up to 830,000 barrels of crude oil from western Canada to existing pipeline facilities in Nebraska. But before the pipeline can cross the international border, it must receive a Presidential Permit. TC Energy Corporation applied to the Secretary of State for the permit in 2008. After a seven-year regulatory rollercoaster, Secretary of State John Kerry denied the permit. At the invitation of President Donald Trump, TC Energy reapplied in 2017 and was issued a permit by the Under Secretary of State for Political Affairs. That permit was challenged in court: plaintiffs claimed that the permit was both substantively and procedurally defective and requested injunctive relief. A Montana federal judge ruled in their favor, requiring that the underlying 2014 environmental impact statement be updated and issuing an injunction preventing any activities to further pipeline development. TC Energy appealed.

In 2019, Trump issued an Executive Order changing the Presidential Permit process: the Secretary of State would continue to receive applications and conduct necessary analysis, but the President would decide whether to issue a new permit. Acting under this new process, Trump issued a new permit that superseded and revoked the 2017 permit and ended the litigation.

But the 2019 permit was challenged in court. The plaintiffs claimed that the permit violates the Property and Commerce Clauses of the Constitution and that the President’s action was ultra vires (and of no legal force). They once again sought an injunction. TC Energy and the federal government asked the court to dismiss the litigation. On Dec. 20, 2019, the judge denied the motions to dismiss, which means the litigation will proceed. However, the judge denied the injunctive relief, because no work is planned until the spring.

In the meantime, on Oct. 30, 2019, a rupture of the Keystone pipeline (not Keystone XL) in North Dakota resulted in a crude oil spill. Citing prior spills, several Congressional Democrats sent a letter to the Governmental Accountability Office (GAO) stating that the spills are “particularly concerning as TC Energy continues to pursue additional build-out of the Keystone Pipeline System with the Keystone XL Pipeline.” Accordingly, the House Democrats asked GAO to “conduct a thorough review that examines the compliance of TC Energy with all special permitting conditions and enforcement action requirements. GAO should also assess whether PHMSA has exercised proper enforcement.” And so the saga continues.

Washington Watch is a regular report on the oil and gas pipeline regulatory landscape. Steve Weiler is partner at Dorsey & Whitney LLC in Washington, D.C. Contact him at weiler.steve@dorsey.com.

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