Reed Smith Client Alerts

On June 9, 2020, the Federal Energy Regulatory Commission (FERC) issued Order No. 871,1 which amends its regulations to prohibit pipeline construction, until: (1) an order addressing requests for rehearing is issued; or (2) the 30-day time period for the filing of requests for rehearing has expired with no requests being submitted. The new regulations may significantly affect the length of time needed for pipelines to complete construction projects that attract opposition.
Natural Gas Pipeline in Floating Storage and Regasification Unit

While the majority opinion in Order No. 871 makes no reference to Allegheny Defense Fund v. FERC, the order appears to be in response to concerns raised by the D.C. Circuit and certain parties in that proceeding. Allegheny involved a petition for review of FERC orders approving an application to construct interstate pipeline facilities pursuant to section 7(c) of the Natural Gas Act (NGA). While the D.C. Circuit upheld FERC’s orders granting the application, the court granted rehearing en banc to consider issues raised by FERC’s practice of issuing “tolling” orders after requests for rehearing are submitted.

The NGA requires parties to file, and FERC to rule upon, requests for rehearing prior to seeking judicial review of FERC orders. The NGA requires FERC to act upon requests for rehearing within 30 days, but, in many instances, FERC issues a tolling order within the 30-day period in order to permit more time for the consideration of issues raised in requests for rehearing. Requests for rehearing do not affect the validity of FERC’s initial order. In Allegheny, the D.C. Circuit noted that the use of tolling orders may place certain parties at a disadvantage. In particular, if a pipeline has received a FERC order granting an application to construct facilities, the pipeline may take steps to begin construction or to commence eminent domain proceedings, even if parties have filed requests for rehearing of the order granting the construction application. If FERC issues a tolling order in response to the parties’ requests for rehearing, the pipeline may commence construction or condemn property before the parties are able to obtain appellate review of FERC’s orders.

Oral argument on the D.C. Circuit’s en banc review of the tolling order practice was held earlier this spring, and it appeared as though several judges on the D.C. Circuit had concerns about FERC’s practice of issuing tolling orders. In particular, the judges raised questions about the effect of tolling orders in pipeline certificate proceedings.