The US Court of Appeals for the DC Circuit ruled that the Federal Energy Regulatory Commission (FERC) acted properly when it granted extensions of the construction deadlines for a pipeline and a liquefied natural gas (LNG) project.

In Petitions for Review challenging FERC’s actions, Sierra Club asserted that FERC failed to follow its own regulations by not determining that “the environmental and other public interest findings…can be expected to remain valid” through the extensions. It also alleged the companies had not made the required demonstration of good faith efforts to meet the original deadlines.

In disagreeing, the DC Circuit said that FERC’s determination of what is “appropriate” to consider when evaluating extension requests is discretionary and entitled to deference.

Adequate Analysis of Intervening Statute and Status of Environmental Permits
For the pipeline, the DC Circuit rejected Sierra Club’s argument that FERC was arbitrary and capricious in evaluating if the pipeline’s “need” remains because of an intervening New York statute, which may significantly lower New York’s natural gas demand. The Court held that FERC’s determination that the statute would not undermine the fundamental “need” determination was within FERC’s discretion and entitled to deference.

The DC Circuit also said granting the extension despite the pipeline company’s failure to have secured all its environmental permits was within FERC’s discretion under the circumstances, which included years of litigation with the State of New York on which the company eventually prevailed.

Delay in Investment Decisions Not Fatal
For the LNG project, FERC was within its discretion to accept the company’s “good cause” submission based on the company’s failure to make investment decisions necessary to meet the original deadline, due to COVID-19 uncertainties. Sierra Club argued that the company’s lack of specifics regarding investment rendered FERC’s action arbitrary and capricious. In rejecting this argument, the Court said Sierra Club was advocating “an unduly high level of stringency.”

To see the opinion 22-1233-2047423.pdf (