2020 Environmental Real Estate IssuesThe United States Court of Appeals for the District of Columbia Circuit (the “DC Circuit”) ruled the Federal Energy Regulatory Commission (“FERC”) must stop issuing “tolling” orders.  The ruling came in Allegheny Defense Project v. FERC, a case appealing FERC’s issuance of a permit for a natural gas pipeline.  Tolling orders prevent those challenging FERC decisions from being able to appeal in court, but do not prevent those granted permits from condemning land and constructing the natural gas pipelines.

Tolling Orders Extended the Time for FERC to Consider a Request for Reconsideration
When homeowners or others opposed to a permit lose before FERC, they must file a request for reconsideration with FERC before they can appeal to court.  The Natural Gas Act (“NGA”) says they can appeal only after FERC denies reconsideration, or 30 days after the reconsideration request if FERC takes no action.  Although the NGA makes no mention of tolling orders, for the last twelve years on every case where a landowner requested rehearing regarding a natural gas pipeline, FERC issued a tolling order stating the request for rehearing was granted for the limited purpose of giving FERC more time to consider the request for reconsideration.  FERC would then take additional time to evaluate the reconsideration request.

Permits Not Final for Appeal but Final for Condemnation and Construction
For appeal purposes, FERC does not complete final agency action until it denies reconsideration.  Only then can those opposed to FERC’s actions file an appeal. However, FERC’s actions are final, even while reconsideration is pending, for the purpose of allowing the pipeline companies to condemn the property needed to build the pipelines. Moreover, FERC could, and often did, issue orders allowing construction of the pipelines while FERC was evaluating the reconsideration requests.  In many instances, pipelines were fully built before FERC denied reconsideration, which only then allowed for appeal.

FERC Must Stop Issuing Tolling Orders
The DC Circuit considered the issue en banc, that is, before all active DC Circuit judges instead of before the typical three-judge panel.  The DC Circuit stated tolling orders that merely purported to give FERC more time to evaluate reconsideration requests were not authorized by the NGA.  Any such orders in the future would be treated as denying the reconsideration request, thus allowing appeal.

After reaching the decision on tolling orders, the DC Circuit considered the actual challenge to FERC’s grant of the permit; all judges agreed to uphold FERC’s issuance of the permit.

Two Concurring Opinions
Two judges wrote concurring opinions.  One concurrence (joined by two other judges) agreed regarding the analysis of tolling orders and noted FERC was still free to grant reconsideration, as long as it was making a substantive decision to reconsider and not merely extending the time for FERC to act.  This concurrence noted the potential difficulty in determining FERC’s motives in specific cases.  It also suggested courts explore the possibility that permits subject to substantive reconsideration should not be treated as final for condemnation purposes.

A single judge issued another concurrence, stating the text of the Natural Gas Act did not preclude FERC from issuing tolling orders and the majority disregarded DC Circuit precedent in forbidding them.

For a copy of the DC Circuit opinion, including the concurring opinions https://www.cadc.uscourts.gov/internet/opinions.nsf/EB2DC9BFC751F5E8852585970052BA45/$file/17-1098-1849493.pdf