Commissioner James Danly Statement
May 4, 2021
Docket No. RM20-15-001
I dissent in full from today’s order modifying and expanding Order No. 871.[1] As an initial matter, I write to state that I would grant rehearing on all matters and repeal the rule.
The Commission promulgated Order No. 871 on June 9, 2020, in advance of the decision in Allegheny Defense Project v. FERC,[2] the en banc proceeding before the U.S Court of Appeals for the District of Columbia Circuit (D.C. Circuit) that addressed longstanding objections to the Commission’s practice of relying upon tolling orders to delay answering requests for rehearing.[3] In recognition of the injustice of the Commission’s practice of tolling rehearing requests indefinitely, and that practice’s consequent denial of an opportunity for litigants to perfect their appeals, the Commission issued Order No. 871 in an attempt to balance the interests of potential appellants with those of pipelines by delaying the issuance of notices to proceed with construction.[4] On June 30, 2020, the D.C. Circuit issued its en banc opinion in Allegheny in which it found that the Commission was prohibited from indefinitely tolling requests for rehearing and finding that parties were entitled to petition for review once a rehearing request had been denied by operation of law.[5] The D.C. Circuit, having rightly imposed the discipline the Commission was unwilling or unable to impose upon itself, obviated the pressing need animating the Commission’s decision to delay the issuance of notices to proceed. In light of the D.C. Circuit’s re-enforcement of the statutory scheme governing rehearing and appeal, the Commission today need not go any further than has the court. Nor do I see any real risk that a pipeline will commence construction before a party has the opportunity to petition for review. As the Commission itself states, “on average, natural gas companies should not have expected to receive authorization to proceed with construction sooner than three months after order issuance.”[6] Accordingly, I see no reason why this rule—promulgated in the face of litigation and in light of legitimate, unresolved concerns for the competing rights of the parties before the Commission—is still required by law or prudence. I would repeal it in full and instead rely wholly upon the rehearing and appeal provisions ordained by Congress to balance our litigants’ various interests.
I also write separately in order to highlight a handful of self-evident legal infirmities that might form the basis of an aggrieved party’s appeal. With this order, the Commission has, for the third time in as many months, dramatically increased the uncertainty faced by the natural gas industry by changing its policies so as to make it harder to rationally deploy capital, accurately assess risk, or predict Commission action.[7] Worse yet, the Commission fails in this order to satisfy its obligations under the Administrative Procedure Act (APA) and implements policies that conflict with the plain text of the Natural Gas Act (NGA), the most obvious of which is our new, unnecessary, and unjustifiable presumption to stay certificate orders.
I. The Commission fails to respond to arguments raised in briefing
Turning first to the most basic of APA violations, the Commission declines to even acknowledge, let alone respond to, the arguments raised by the Interstate Natural Gas Association of America (INGAA) that the issuance of Order No. 871-A was improper.[8] INGAA argues:
(1) Order No. 871 was promulgated in violation of the notice-and-comment requirements of the Administrative Procedure Act, and that procedural deficiency cannot be cured by Order No. 871-A or other after-the-fact processes; (2) Order No. 871-A appears to invite comments on issues that were not raised in Order No. 871 or in the requests for rehearing of that Order, while ignoring other issues that were raised in requests for rehearing of that Order; (3) Order No. 871-A does not address the merits of the requests for rehearing of Order No. 871 or modify Order No. 871 in any respect, and likewise fails to explain why the Commission views the existing record as insufficient to rule on the prior requests for rehearing; and (4) Order No. 871-A contemplates a schedule that effectively delays a Commission ruling on the merits of the requests for rehearing of Order No. 871 until ten months after they were submitted, which violates the text and spirit of the D.C. Circuit’s recent en banc decision in Allegheny Defense.”[9]
I for one would be interested to hear the Commission’s response.[10] Whether the Commission’s refusal was intentional or a consequence of hasty action, the Commission’s decision to ignore arguments properly raised runs contrary to the APA and stands as an obvious failure to engage in reasoned decision making.[11] In addition to the APA violation I describe above, there are a number of other legal infirmities that require attention.
II. The Commission’s new policy presumptively staying NGA section 7(c) certificate orders is contrary to law
The Commission’s new policy establishing a presumptive stay in section 7(c) certificate proceedings is simply beyond the Commission’s authority. The power of eminent domain is surely profound and formidable. I cannot fault my colleagues for the anxiety they have expressed over its wise and just exercise. However, the Commission, as a mere “creature of statute,” can only act pursuant to law by which Congress had delegated its authority.[12] Congress conferred the right to certificate holders to pursue eminent domain in federal district court or state court,[13] having recognized that states “defeat[] the very objectives of the Natural Gas Act”[14] by conditioning or withholding the exercise of eminent domain. Congress has made that determination. It has codified it into law. The Commission, as an executive agency, is empowered only to implement Congressional mandate, not to second-guess Congressional wisdom.
It is true that while “the Commission lacks the authority to deny or restrict the power of eminent domain in a section 7 certificate,”[15] “the Commission unquestionably may . . . stay its own orders.”[16] The Commission, however, has no authority to presumptively stay section 7 certificate orders.
The Commission appears to rely on APA section 705 to issue its presumptive stay, but that section does not grant such power.[17] APA section 705, titled “Relief pending review,” provides “[w]hen an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review,”[18] meaning the stay must be tied to litigation.[19] The Commission’s presumptive stay is not even tied to an application for rehearing let alone any litigation. Further, given the lack of discussion on how the Commission will implement this new policy, the assumption that the mere existence of a “landowner protest” automatically means that a stay is required in the interest of justice is rather questionable. Will the Commission stay a certificate where there is a protest by a landowner with property interests that abut the proposed right-of-way but are not subject to condemnation? And the Commission’s policy applies to where there is a “landowner protest.” Will the Commission apply the stay where a landowner protested but did not intervene? What about in the case where the landowner joined a protest, but may not have active interests in the proceeding? Some commenters have suggested that NGA section 19(c) grants the Commission such power.[20] The Commission does not acknowledge or adopt these arguments. Even so, NGA section 19(c) does not grant the Commission the power to stay its orders before a rehearing application is even filed.[21] Section 19(c) sets forth the rule—that “[t]he filing of an application for rehearing under subsection (a) shall not . . . operate as a stay of the Commission’s order”—and the exception to that rule—“unless specifically ordered by the Commission.”[22] In order for the exception to apply, the general rule must first apply: that is, someone must have filed a request for rehearing. Further, the Commission’s new policy elevates the stay from being the exception to being the rule itself, assuming the legislative power to amend section 19(c) to read: an order is stayed unless specifically ordered by the Commission. Only Congress can amend a statute.
Let us also not forget that identical phrases in the same statute are normally given the same meaning.[23] NGA section 19(c) provides that “[t]he commencement of proceedings under subsection (b) of this section shall not, unless specifically ordered by the court, operate as a stay.”[24] Imagine a scenario in which, in the course of a one-off proceeding, a court of appeals announced that, going forward, it would begin presumptively staying an entire category of Commission orders before a petition is filed. Article III courts, of course, have their own procedures, traditions, and powers. Still, such reading of the statute is absurd.
Many are quick to turn to NGA section 16 when all else has failed. However, the Commission likewise cannot rely on NGA section 16 in support of a presumptive stay. Section 16 of the NGA does not represent an independent grant of authority: “[t]he Commission shall have power to perform any and all acts, and to prescribe, issue, make, amend, and rescind such orders, rules, and regulations as it may find necessary or appropriate to carry out the provisions of this chapter.”[25] This does not create new powers under the NGA or supersede section 19(c), which sets forth the conditions for granting a stay. Moreover, like its counterpart in Federal Power Act section 309,[26] the use of NGA section 16 must be “consistent with the authority delegated to it by Congress.”[27]
I am aware of no other grant of authority that the majority may be relying upon in support of its new presumptive stay policy.[28] At its root, the Commission’s presumptive stay policy impermissibly does what the Commission says it cannot do: the stay is designed to restrict the use of eminent domain.[29] It impedes a certificate holder’s right to exercise eminent domain immediately upon the issuance of the certificate, while claiming to allow the pipeline to “continue to engage in development related activities that do not require use of landowner property or that are voluntarily agreed to by the landowner.”[30] It effectively permits the stay to be lifted so long as there is “a commitment by the pipeline developer not to begin eminent domain proceedings until the Commission issues a final order on any landowner rehearing requests.”[31] How a pipeline can conduct any activity authorized by a stayed certificate or why a pipeline would request to lift a stay other than to exercise eminent domain are questions that beg clarification.
Even if it were not ultra vires, the Commission’s interpretation results in unfair surprise. Since at least 1965, the Commission (and the Federal Power Commission) have placed the burden on movants for stays to show that they will be irreparably injured in the absence of a stay.[32] The Commission’s policy has been to “refrain from granting stays in order to assure definitiveness and finality in Commission proceedings.”[33] Now after merely asking, “[s]hould the Commission modify its practices or procedures to address concerns regarding the exercise of eminent domain while rehearing requests are pending,”[34] in an order on rehearing where the issue of eminent domain was not raised, the Commission suddenly departs from its policy favoring finality and shifts the burden to the pipeline before a rehearing is even filed. The Commission never announced that it was considering a presumptive stay policy or under what authority. In fact, many commenters did not address the presumptive stay. Those harmed by this surprise issuance should consider that agencies are not given deference “when there is reason to suspect that the agency’s interpretation ‘does not reflect the agency’s fair and considered judgment on the matter in question.’”[35]
III. The Commission’s decision is bad policy
On top of being unlawful, the presumptive stay is also bad policy. Contrary to the Commission’s claims, the presumptive stay does not strike the appropriate balance between pipelines and landowners.[36] There can be no “balance” when the Commission violates clear Congressional mandate and attempts to withhold a statutory right afforded to certificate holders, especially when applied to applications already pending before the Commission.[37]
Further, the Commission’s attempt to downplay the industry’s concerns (including delayed project timelines, increased regulatory uncertainty, and higher likelihood of project terminations) because “any stay will last no longer than approximately 150 days following the issuance of a certificate order”[38] is, to put it mildly, unconvincing. Requiring the passage of four months before a certificate can go into effect is significant, especially since the time required for processing applications has already dramatically increased.[39] “Many of the proposed projects before the Commission, some pending for more than a year, are critical to addressing supply issues and strengthening our energy infrastructure.”[40] It is not inconceivable that those projects whose applications have been pending for more than a year ultimately will be canceled as a result of delay. By way of example, nearly two years ago, Dominion Energy Transmission, Inc. withdrew its application for a certificate for its Sweden Valley Project that it had filed seventeen months prior.
Finally, in yet another unexplained deviation from its past precedent, the Commission holds that, in the event the Commission were to grant rehearing for the purposes of requesting further briefing in order to substantively reconsider a ruling, “the original authorization would no longer be in effect and the provisions of Order No. 871 would no longer apply since there would be no final order pursuant to which a notice to proceed could be issued.”[41] The Commission provides no citation for this holding, the consequences of which are that granting rehearing for purposes of further consideration causes the original order to be vacated. Not only does the holding find no support in NGA section 19, but it is also contrary to the decades of Commission practice wherein the issuance of tolling orders for the purposes of further consideration did not vacate the original order.
Further, this holding will wreak havoc on the Commission’s administration of other provisions under the NGA and FPA. For example, if the Commission requests further briefing in response to a request for rehearing of an NGA section 4 or FPA section 205 order on a proposed rate change, what rate should be charged? Or if the Commission requests further briefing on a request for rehearing of a complex order regarding market design, what rules apply to an auction that occurs before the Commission rules on the rehearing request? Would a request for further briefing vacate a Commission order under NGA section 5 or FPA section 206 finding that a certain rate or tariff provision is not just and reasonable and reinstate the prior rate or tariff provision? Is it only orders issued pursuant to NGA section 7 that are vacated when the Commission requests further briefing and, if so, what is the statutory basis for such a distinction? The Commission appears not to have even considered these far-reaching consequences of its holding and provides no explanation as to how these and many other difficult issues should be dealt with.
IV. Conclusion
In the past three months, with barely any warning or process, the Commission has called every existing certificate into question in Algonquin, reversed years of significance analysis in Northern, and written the right to seek eminent domain upon receipt of a certificate out of the Natural Gas Act. As the Commission continues issuing such unlawful and ill-conceived orders, we will see further severe curtailment of investment in and construction of critical natural gas infrastructure which will inevitably drive up prices and gravely jeopardize reliability.
For these reasons, I respectfully dissent.
[1] 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).
[2] 964 F.3d 1 (D.C. Cir. 2020) (en banc) (Allegheny).
[3] See Order No. 871, 171 FERC ¶ 61,201 (Glick, Comm’r, concurring in part and dissenting in part at P 1) (“It is readily apparent that today’s final rule attempts to address some of the concerns raised in the Allegheny Defense Project v. FERC proceeding before the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit).”).
[4] See id. P 11.
[5] See Allegheny, 964 F.3d at 18-19.
[6] Limiting Authorization to Proceed with Construction Activities Pending Rehearing, 175 FERC ¶ 61,098, at P 37 (2021) (Order No. 871-B).
[7] See N. Nat. Gas Co., 174 FERC ¶ 61,189 (2021) (Danly, Comm’r, dissenting at P 2) (Northern); Algonquin Gas Transmission, LLC, 174 FERC ¶ 61,126 (2021) (Danly, Comm’r, dissenting at P 32) (Algonquin).
[8] See, e.g., INGAA February 16, 2021 Initial Brief at 7-8.
[9] Id. (emphasis in original).
[10] See Limiting Authorizations to Proceed with Construction Activities Pending Rehearing, Order No. 871-A, 86 Fed. Reg. 7643 (Feb. 1, 2021), 174 FERC ¶ 61,050 (2021) (Danly, Comm’r, dissenting) (Order No. 871-A).
[11] See 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”); Canadian Ass’n of Petroleum Producers v. FERC, 254 F.3d 289, 299 (D.C. Cir. 2001) (“Unless the Commission answers objections that on their face seem legitimate, its decision can hardly be classified as reasoned.”) (citations omitted); Tesoro Alaska Petroleum Co. v. FERC, 234 F.3d 1286, 1294 (D.C. Cir. 2000) (“The Commission’s failure to respond meaningfully to the evidence renders its decisions arbitrary and capricious.”).
[12] Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002) (“As a federal agency, FERC is a ‘creature of statute,’ having ‘no constitutional or common law existence or authority, but only those authorities conferred upon it by Congress.’”) (quoting Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)); see Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (“It is axiomatic that an administrative agency’s power to promulgate legislative regulations is limited to the authority delegated by Congress.”).
[13] See 15 U.S.C. § 717f(h).
[14] S. Rep. No. 80-429, at 3 (1947).
[15] Order No. 871-B, 175 FERC ¶ 61,098 at P 45. It should be recognized that the Commission again preemptively answers a question that it directly posed in the pending Notice of Inquiry (NOI) for which comments are due May 26, 2021: “Under the NGA, does the Commission have authority to condition a certificate holder’s exercise of eminent domain?” See Question B6 in Certification of New Interstate Nat. Gas Facilities, 174 FERC ¶ 61,125, at P 15 (2021). The Commission continues to lull people into believing that the answers to the questions appearing in the NOI have yet to be resolved.
[16] Order No. 871-B, 175 FERC ¶ 61,098 at P 46.
[17] See id. P 46 n.91 (citing 5 U.S.C. § 705). I am unaware of Commission precedent that relies on APA section 705 as authority to stay Commission orders (other than a handful of hydropower cases granting the stay of the commencement of construction deadline).
[18] 5 U.S.C. § 705 (emphasis added).
[19] See Bauer v. DeVos, 325 F. Supp. 3d 74, 106 (D.D.C. 2018) (“Most significantly, the relevant equitable considerations are not free-floating but, rather, must be tied to the underlying litigation.”).
[20] See Public Interest Organizations February 16, 2021 Brief at 13-14 (arguing the Commission has discretion under NGA section 19(c) to stay a certificate order); Niskanen Center, et al. March 3, 2021 Reply Brief at 4 (“[T]he NGA’s only mention of an agency stay is in Section 19(c) . . . . The NGA also does not constrain the Commission’s authority as to when it can ‘specifically order’ a stay . . . .”).
[21] See 15 U.S.C. § 717r(c).
[22] Id.
[23] Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 232 (2007) (“identical words and phrases within the same statute should normally be given the same meaning”) (citation omitted).
[24] 15 U.S.C. § 717r(c) (emphasis added).
[25] Id. § 717o.
[26] 16 U.S.C. § 825h.
[27] Verso Corp. v. FERC, 898 F.3d 1, 7 (D.C. Cir. 2018) (quoting Xcel Energy Servs. Inc. v. FERC, 815 F.3d 947, 952 (D.C. Cir. 2016)); see id. at 10 (“Section 309 accordingly permits FERC to advance remedies not expressly provided by the FPA, as long as they are consistent with the Act.”) (emphasis added) (citing TNA Merch. Projects, Inc. v. FERC, 857 F.3d 354, 359 (D.C. Cir. 2017) (citing Niagara Mohawk Power Corp. v. Fed. Power Comm’n, 379 F.2d 153, 158 (D.C. Cir. 1967))).
[28] To the extent that the Commission believes that by “applying the criteria for granting a stay on a case-by-case basis” cures any legal infirmity, it is wrong. Order No. 871-B, 175 FERC ¶ 61,098 at P 51 n.103. It is illogical to have a presumption in advance of a rehearing request and is contrary to the plain text in the NGA.
[29] See id. P 45.
[30] Id. P 49.
[31] Id. P 51 (emphasis added).
[32] See, e.g., Consol. Edison Co. of N.Y., 33 F.P.C. 965, at 969 (1965) (“Four tests have been prescribed by the Court of Appeals, each of which an applicant for stay must satisfy in order to justify the extraordinary relief represented by a stay of an administrative order.”) (citations omitted); see also Midcontinent Indep. Sys. Operator, 151 FERC ¶ 61,220, at P 27 (2015) (“Otter Tail has not met the burden to show that it will suffer irreparable injury without a stay and that a stay is in the public interest.”), vacated and remanded for reasons not applicable, Ameren Servs. Co. v. FERC, 880 F.3d 571 (D.C. Cir. 2018); Bradwood Landing LLC, 128 FERC ¶ 61,216, at P 10 (2009) (“We find that Oregon has not met its burden to demonstrate that it will suffer irreparable harm absent the granting of a stay.”); Acadia Power Partners, LLC, 108 FERC ¶ 61,076, at P 5 (2004) (“We will deny El Paso’s request for a stay, as we find that El Paso has failed to meet its burden of demonstrating that it will suffer irreparable harm absent a stay.”); Se. Hydro-Power, Inc., 74 FERC ¶ 61,241, at 61,825 n.12 (1996) (“the burden is on the movant . . . to demonstrate why its request for a stay is justified”); Constr. Work in Progress for Pub. Utils., 24 FERC ¶ 61,071, at 61,190 (1983) (“the burden is upon petitioners for such extraordinary action to show that significant harm will be incurred and that the equities favor granting the stay.”); Exemption from the Licensing Requirements of Part I of the Fed. Power Act of Certain Categories of Small Hydroelectric Power Projects with an Installed Capacity of 5 Megawatts or Less, 20 FERC ¶ 61,061, at 61,134 (1982) (“In the context of their request for a stay . . . the burden is upon the petitioners for such extraordinary action to show that significant harm will be incurred and that the equities favor granting the stay.”); Cities Serv. Oil Co., 53 F.P.C. 8, at 8-9 (1975) (“The applicant for a stay has the burden of establishing, absent the grant of such relief, it would be irreparably harmed.”); Columbia Gulf Transmission Co., 37 F.P.C. 310, at 310 (1967) (“It is settled that in order to establish a case for a grant of extraordinary relief in the nature of a stay the applicant has the burden of establishing that absent the grant of such relief it would be irreparably injured.”) (citation omitted).
[33] SFPP, L.P., 166 FERC ¶ 61,211, at P 7 (2019) (“When considering requests for a stay of Commission action, the Commission’s general policy is to refrain from granting stays in order to assure definitiveness and finality in Commission proceedings.”); see also Millennium Pipeline Co., L.L.C., 141 FERC ¶ 61,022, at P 13 (2012) (“Our general policy is to refrain from granting stays in order to assure definiteness and finality in our proceedings.”) (citation omitted); Midwestern Gas Transmission Co., 116 FERC ¶ 61,182, at P 158 (2006) (“The Commission’s general policy is to refrain from granting stays of its orders, in order to assure definiteness and finality in Commission proceedings.”) (citation omitted); Guardian Pipeline, L.L.C., 96 FERC ¶ 61,204, at 61,869 (2001) (“The Commission’s general policy is to refrain from granting stays of its orders, in order to assure definiteness and finality in Commission proceedings.”) (citations omitted); Bos. Edison Co., 81 FERC ¶ 61,102, at 61,377 (1997) (“However, the Commission follows a general policy of denying motions for stay based on a need for finality in administrative proceedings.”); CMS Midland, Inc., 56 FERC ¶ 61,177, at 61,630-31 (1991) (“We follow, however, a general policy of denying motions for stays, based on the need for definitiveness and finality in administrative proceedings.”) (citations omitted); Holyoke Water Co., 30 FERC ¶ 61,283, at 61,575 (1985) (“The Commission has followed a general policy of denying stays, unless a party has demonstrated that it will be irreparably injured in the absence of a stay.”) (citations omitted).
[34] Order 871-A, 174 FERC ¶ 61,050 at P 7.
[35] Christopher v. SmithKline Beecham Corp., 567 U.S. at 155 (citation omitted); see also Kisor v. Wilkie, 139 S. Ct. 2400, 2421 (2019) (“And recall too that deference turns on whether an agency’s interpretation creates unfair surprise or upsets reliance interests.”).
[36] Order 871-B, 175 FERC ¶ 61,098 at P 49.
[37] See U.S. Senators Hoeven, Manchin, Barrasso, Tester, Capito, Sinema, Cassidy, Cornyn, Cramer, Crapo, Cruz, Daines, Hagerty, Hyde-Smith, Inhofe, Lankford, Marshall, Moran, Risch, Rounds, Sullivan, Tillis, Thune, Toomey, and Wicker, Letter, Docket No. PL18-1-000, at 1 (filed April 30, 2021) (“Delaying and moving the regulatory goalposts on projects filed in good faith is contrary to the otherwise equitable application of the Policy Statement that all stakeholders expect. At a minimum, these projects should not be subject to newly contemplated considerations that fall outside the scope of the current Policy Statement or go beyond the Commission’s statutory authority.”).
[38] Order 871-B, 175 FERC ¶ 61,098 at P 49.
[39] See, e.g., Northern Natural Gas Company February 5, 2021 Motion for an Expedited Order for the Northern Lights 2021 Expansion Project under CP20-503 (requesting expedited action for application filed on July 31, 2020); Iroquois Gas Transmission System, L.P. January 26, 2021 Request for Prompt Issuance of Certificate of Public Convenience and Necessity under CP20-48 (requesting expedited action for application filed on February 3, 2020).
[40] U.S. Senator Hoeven, et al., Letter, Docket No. PL18-1-000, at 1 (filed April 30, 2021) (emphasis added).
[41] Order No. 871-B, 175 FERC ¶ 61,098 at P 27.