Commissioner James Danly Statement
January 27, 2021
Docket No. RM20-15-001
On June 9, 2020, the Commission issued a final rule providing that an authorization to proceed with construction activities for a Natural Gas Act (NGA) section 3[1] authorization or section 7(c)[2] certificate authorization will not be issued until the Commission acts on the merits of any timely-filed request for rehearing or the time for filing such a request has passed.[3] On July 9, 2020, the Interstate Natural Gas Association of America requested clarification or, in the alternative, rehearing, and Kinder Morgan, Inc. Natural Gas Entities and TC Energy Corporation requested rehearing of Order No. 871. Today’s order does not address any of these requests for rehearing, but instead establishes a briefing schedule for addressing several questions which touch on some, but not all, of the issues raised on rehearing, and additionally requests briefing on issues not raised on rehearing.
I dissent from today’s order because it: (1) falls short of the Commission’s obligation under the Administrative Procedure Act (APA) to address the arguments raised in requests for rehearing; and (2) will delay a ruling on the merits of the rehearing requests until approximately ten months after they were submitted, an action that surely is in tension with the U.S. Court of Appeals for the District of Columbia Circuit’s (D.C. Circuit) decision in Allegheny Defense Project v. FERC (Allegheny)[4] which prohibits the Commission from employing procedural means to delay judicial review of its orders.
Whether the Commission retains the regulation as it is currently written, modifies it, or vacates it, the Commission is required under the APA to explain its reasoning. In doing so, it must respond to arguments raised by litigants. This requirement is fundamental to administrative decision making.[5] The requests for rehearing assert that the adoption of the regulation was arbitrary and capricious due to a number of infirmities. Among them are:
- a claim that the regulation could be read to prohibit issuing an authorization to proceed with construction where a request for rehearing is filed by a party in support of the project (including by the project proponent itself);
- an argument that the rule would not allow an authorization to proceed with construction where the party requesting rehearing is not an affected landowner;
- a claim that the regulation, as drafted, might not allow the issuance of an authorization to proceed with construction when a rehearing request has been denied by operation of law due to Commission inaction;
- an argument that the rule, strictly construed, might not permit the issuance of an authorization to proceed with construction when the rehearing request concerns an amendment to an existing authorization or subjects unrelated to landowner concerns, such as rates; and
- potential indefinite delay in the issuance of an authorization to proceed with construction.
These are legitimate arguments. They deserve a response by the Commission. The Commission is obligated to provide those responses, but all are sidestepped in today’s order.
An inattentive reader who does no more than glance at the title of today’s order might well be lulled into believing that it accomplishes more than it really does. This order is styled “Order Addressing Arguments Raised on Rehearing and Clarification, and Providing for Additional Briefing.” Despite the title, the Commission neither addresses the arguments raised on rehearing nor provides any clarification. Instead, with no explanation other than a bald declaration that “[w]e believe that the issues raised regarding this rulemaking merit further consideration,”[6] today’s order lists a number of questions for further briefing. Although the enumerated questions may be relevant to some points raised in the requests for rehearing, the Commission fails to explain why it agrees or disagrees with those arguments or why it believes the record insufficient for the Commission to rule on those arguments.
To the extent that the Commission suggests a more complete record is needed to consider the requests for rehearing, I disagree. The Commission received three requests for rehearing that detail arguments the Commission had not considered in issuing the final rule. These arguments are straightforward—implicating neither complex facts nor difficult legal principles. Although I acknowledge that the Commission may well have needed more than thirty days in which to address those arguments, the six months that have elapsed surely were more than adequate, and I see no reason why the Commission needs the additional ninety-six days afforded by today’s order. Regardless, even if there were good reasons for needing more time, the Commission necessarily fails in its duties by offering no justification for further delay.
Moreover, the questions set forth for briefing are not confined to the issues properly raised on rehearing. One question asks whether the Commission should modify its practices or procedures to address concerns regarding the exercise of eminent domain while rehearing requests are pending before the Commission. No rehearing request suggests the Commission take this step. One wonders why this is the appropriate vehicle for such an inquiry, but it is not the proper vehicle to respond to arguments raised in the normal course of litigation.
The inquiry regarding eminent domain appears at odds with the Commission’s well-developed body of law declaring that it lacks the authority to restrict a certificate holder’s use of eminent domain once the certificate of public convenience and necessity is received.[7] I am not convinced that an automatic stay of the exercise of eminent domain pending Commission action on the merits of a rehearing request, which today’s order suggests the Commission will consider, can be reconciled with NGA section 19(c).[8] That section provides that “[t]he filing of an application for rehearing . . . shall not, unless specifically ordered by the Commission, operate as a stay of the Commission’s order.”[9] As such, the idea that the Commission may adopt practices or procedures (presumably) to automatically stay an authorization to restrict a certificate holder’s use of eminent domain would appear, at least on initial inquiry, to conflict with NGA section 19(c). At a minimum, if the Commission wants parties to address the question of whether the exercise of eminent domain should be stayed automatically during the pendency of rehearing requests, it should also have directed the parties to address the foundational question of the Commission’s legal authority to issue a rule mandating such a stay. I strongly encourage parties to address this question in their briefs, even though it was not specifically mentioned in the majority’s order.
The Commission’s failure to address the substance of the rehearing requests might be understandable if the order directing briefing had been issued earlier. Indeed, the Court in Allegheny suggested that it might be permissible for the Commission to provide for such supplemental briefing.[10] However, that suggestion was offered in the context of the Court’s discussion of a potential Commission order issued in connection with a timely ruling on rehearing within thirty days after a rehearing request.[11] Here, we are simply failing to perform our duties.
Finally, lest any reader of today’s order overlook it, let’s pause for a moment to consider the irony of what the Commission contemplates here. In the very same proceeding in which the Commission promulgated a rule specifically aimed at alleviating concerns that its tolling orders served only to “buy [the Commission] more time to act on a rehearing application and stall judicial review,”[12] the Commission attempts to buy more time by ordering further procedure after the statutory deadline to act on rehearing has passed and as judicial review is imminent, absent any modification in the meantime of the rule under review. I for one will be interested to see whether the D.C. Circuit countenances this action any more than it accepted the Commission’s use of tolling orders for the very same purpose. Time will tell.
For these reasons, I respectfully dissent.
[1] 15 U.S.C. § 717b (2018).
[2] 15 U.S.C. § 717f(c).
[3] See Limiting Authorizations to Proceed with Construction Activities Pending Rehearing, Order No. 871, 85 Fed. Reg. 40,113 (July 6, 2020), 171 FERC ¶ 61,201 (2020) (Order No. 871).
[4] 964 F.3d 1 (D.C. Cir. 2020) (en banc).
[5] See Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (“Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”) (emphasis added); New England Power Generators Ass’n, Inc. v. FERC, 881 F.3d 202, 211 (D.C. Cir. 2018) (finding “that FERC did not engage in the reasoned decisionmaking required by the Administrative Procedure Act” because it “failed to respond to the substantial arguments put forward by Petitioners and failed to square its decision with its past precedent”).
[6] Limiting Authorizations to Proceed with Construction Activities Pending Rehearing, Order No. 871-A, 174 FERC 61,050, at P 7 (2021).
[7] See, e.g., PennEast Pipeline Co., LLC, 174 FERC ¶ 61,056, at P 10 & n.17 (2021) (collecting cases).
[8] See 15 U.S.C. § 717r(c).
[9] Id. (emphasis added).
[10] See Allegheny, 964 F.3d at 16.
[11] See id.
[12] Id. at 9.