Commissioner James Danly Statement
November 18, 2021
Docket No. CP17-40-010
Item C-4
Today’s order grants a request for clarification, addresses the arguments raised on rehearing and denies a request for a stay[1] of the Commission’s September 14, 2021 order (September 2021 Order) authorizing a temporary certificate, sua sponte, to Spire STL Pipeline LLC (Spire).[2] I write separately to explain why the Commission should not have declined to decide whether Natural Gas Act (NGA) section 7(h)[3] confers eminent domain authority upon temporary certificate holders.
As an initial matter, it is necessary to acknowledge that the situation is dire. The winter is upon us, the temporary certificate is weeks away from expiration, and the customers served by Spire Missouri Inc. now rely upon Spire for natural gas. But, as I have said, this emergency is one of the Commission’s own making, and all of it was avoidable.[4] It was the Commission’s original certificate order that ran afoul of the Administrative Procedure Act (APA).[5] It was our mismanagement of the process in anticipation of, and in reaction to, the court’s vacatur and the issuance of the mandate[6] that now subjects the people of St. Louis to an uncertain future.
But even emergencies do not confer additional authority upon the Commission. The September 2021 Order is as unlawful now as it was at issuance because it failed to explain how NGA section 7(c)(1)(B),[7] a statutory provision of limited scope and narrow purpose, can be employed to allow continuation of service, especially in light of judicial authority to the contrary, though admittedly in dicta.[8]
To make matters worse, the Commission could have reached the same result had it simply issued a certificate under NGA sections 7(c) and (e).[9] Had we done so, we could have maintained the status quo, allowing Spire to continue operating through the winter and providing an opportunity for the Commission to consider how to proceed on remand. It is unfortunate; the Commission’s mismanagement has had a significant effect on the people of St. Louis. By way of example, the St. Louis Area Police Chiefs Association recently commented:
The urgency to remedy this situation is critical. First responder agencies and the public have started, and will need to continue, preparing for a potential state of emergency. This matter should not be the focus right now as there are many more pressing issues that require our time, attention, and money. Please act quickly so we can return our focus to serving and protecting the St. Louis region.[10]
At the risk of repeating myself: this “potential state of emergency” is one of our own making.[11]
As to today’s order, the Spire Landowners[12] and Niskanen Center[13] assert in their requests for rehearing that the NGA does not provide eminent domain authority to the holder of a temporary certificate issued under NGA section 7(c)(1)(B).[14] Niskanen Center also claims that the taking of property by the holder of a temporary certificate, issued without notice and hearing, works a violation of the landowners’ rights to due process of law under the Fifth Amendment.[15] Rather than answer either question, the Commission instead directs the parties to the courts.[16]
To start, I completely agree that the Commission should decline to address the constitutional questions raised on rehearing. My colleagues correctly recognize that the Commission similarly declined to address a constitutional question in PennEast Pipeline Company, LLC (PennEast).[17] Specifically, the Commission declined to answer a question regarding state sovereign immunity under the Eleventh Amendment and whether private parties have the power to hale states into court in order to exercise their eminent domain privileges under NGA section 7(h).[18]
I disagree, however, with the Commission’s refusal to address the question of whether section 7(h) confers eminent domain authority upon temporary certificate holders. Declining to answer this question, which focuses on a fundamental component of the statute administered by the Commission, is unwise. It is also inconsistent with the approach taken in PennEast where the Commission did answer a separate, statutory question—one directly related to the question at issue here.[19] When called upon to do so, the Commission interpreted the scope of a certificate holder’s eminent domain authority under NGA section 7(h). Despite the Commission’s holding in PennEast, in today’s order, the Commission finds that:
[a]lthough the courts have repeatedly held that Congress gave the Commission no authority to deny or restrict a certificate-holder’s exercise of the statutory right of eminent domain in a certificate issued pursuant to the procedures laid out in section 7(e), they have not had occasion to address whether the same holds in the case of a temporary certificate issued without those procedures. Accordingly, we believe that issue, which goes to the scope of section 7(h)—a provision that gives courts a particular implementing role—is an issue better resolved by the courts than the Commission.[20]
To require the parties to go to court in order to learn whether NGA section 7(h) confers eminent domain authority upon temporary certificate holders is irresponsible and unnecessary. The Commission implements NGA section 7 and some degree of deference is owed to the Commission’s reasonable interpretation of section 7(h).[21]
In PennEast, the Commission rejected the argument raised by then-Commissioner, now-Chairman Glick that the Commission should not interpret the scope of NGA section 7(h) because courts implement that provision of the NGA.[22] In response to similar arguments on rehearing, the Commission determined that
Congress put the burden of executing condemnation proceedings on state and district courts through NGA section 7(h), and the Commission has appropriately refused to adjudicate issues such as “the timing of acquisition or just compensation.” Nevertheless, the Declaratory Order was appropriate under our statutory mandate because it addresses the operation of NGA section 7(h) within the NGA’s “comprehensive scheme of federal regulation.” While Riverkeeper may disagree with the Commission’s interpretation, it is nonetheless our duty to ensure the faithful execution of the NGA, which includes the removal of uncertainty and termination of controversy.[23]
This rationale applies equally here. The fact that courts are the fora in which to bring eminent domain proceedings under NGA section 7(h) does not mean that the Commission has no authority to interpret that provision of the NGA.[24] In fact, in PennEast, the Commission did offer an interpretation of NGA section 7(h), with which the Supreme Court ultimately agreed.[25]
Why ought we decide this question? Because the Commission is particularly well-situated to determine the rights enjoyed by the holder of a temporary certificate under the statute that we administer. This is particularly true in this case—it is procedurally complicated, is being decided in light of an impending crisis, any decision on the matter almost certainly requires the interpretation of our own orders and, absent a declaration on the matter, leaves open a basic question of law implicating either the statutory or Constitutional rights of every party involved. Far from offending the courts for invading their prerogative, the courts would more likely be grateful were we to help inform their deliberations with a decision on the matter in the first instance.
The text of NGA section 7(h) states:
When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts.[26]
This language is broad, providing eminent domain authority to “any holder of a certificate of public convenience and necessity.”[27] The Spire Landowners and the Niskanen Center correctly point out that that NGA section 7(c)(1)(B)[28] does not use the phrase “certificate of public convenience and necessity,” but rather uses “temporary certificate.”[29] But, as if to intentionally muddy the waters, the September 2021 Order grants Spire “a temporary certificate of public convenience and necessity, pursuant to section 7(c)(1)(B) of the NGA, to operate the Spire STL Pipeline.”[30] Therefore, it appears that our September 2021 Order, by its plain terms, invests Spire with all of the privileges enjoyed by the “holder of a certificate of public convenience and necessity.”[31] Of course, whether that designation is consistent with the statute is an open question.[32]
And while the language of section 7(h) may be broad, the courts have explained that section 7(c)(1)(B) has limits: “[i]t was designed as a narrow exception to enable the companies and the Commission to grapple with temporary emergencies and minor acts or operations, like emergency interconnections to cope with breakdowns or sporadic excess demand for gas.”[33] Another potential limit was described in Algonquin Gas Transmission Company v. FPC, in which the court stated that “it is by no means clear [that] the statutory phrase ‘to assure maintenance of adequate service’ would be construed to include maintenance of a natural gas service no longer authorized by a valid outstanding certificate issued by the Commission under the provision of the Natural Gas Act.”[34] In addition to the courts’ discussion of the limits of this provision, the U.S. Court of Appeals for the First Circuit (First Circuit) also reviewed the legislative history of NGA section 7(c)(1)(B), noting that
“[t]he committee amendment (inserting the words ‘to assure maintenance of adequate service or to serve particular customers’) was made to limit the authority for granting a temporary certificate to emergency situations involving only a comparatively minor extension of the facilities of an existing system.” H.R. Rep. No. 1290, 77th Cong., 1st Sess. 5 (1941).[35]
These cases and the First Circuit’s discussion of the legislative history are instructive in considering the limits of NGA section 7(c)(1)(B).
But even as the courts have decreed the purpose of the temporary certificate to be narrow, it is unclear whether, given that narrowness, NGA section 7(h) rights attach. Are the “emergency interconnections to cope with breakdowns” the sort of “minor act” that require eminent domain to effectuate? Are eminent domain proceedings in federal court even amenable to gaining access to land on a temporary, emergency basis? How narrow should the temporary certificate be in the total absence of process afforded by the statute? The Commission is particularly well-suited to answer these questions. And, instead of providing guidance to Spire and to the parties arguing that eminent domain authority does not attach to temporary certificates, the Commission has instead side-stepped a difficult question and has perhaps even tacitly allowed for the exercise of eminent domain when the Commission has never declared that a temporary certificate holder has the authority to do so.
In fact, just last month, Spire successfully opposed a Motion to Dissolve Injunction and Dismiss Condemnation Action for Lack of Subject Matter Jurisdiction in federal district court.[36] The gravamen of that motion? It asked the court to find that section 7(h) eminent domain rights do not attach to temporary certificates issued under section 7(c)(1)(B). And the district court’s well-reasoned, text-based holding, in a nutshell, was “that a ‘temporary certificate’ under § 717f(c)(1)(B) is a ‘certificate of public convenience and necessity’ under § 717f(h)” and that condemnation rights attach.[37]
I take no position, in this statement, on the specific question of whether a temporary certificate holder has condemnation rights under NGA section 7(h). While there is much that weighs against such a determination, there is much that weighs in favor as well, not the least of which is a decision of a federal district court, the very entity that has, as the majority elegantly puts it, “a particular implementing role.”[38]
For these reasons, I respectfully dissent.
[1] See Spire STL Pipeline LLC, 177 FERC ¶ 61,114 (2021).
[2] Spire STL Pipeline LLC, 176 FERC ¶ 61,160 (2021) (September 2021 Order).
[3] 15 U.S.C. § 717f(h).
[4] See September 2021 Order, 176 FERC ¶ 61,160 (Danly, Comm’r, dissenting at P 3) (“The present circumstances, an ‘emergency’ of our own making, is not the kind of emergency for which section 7(c)(1)(B) was drafted. And we need not argue this from first principles.”).
[5] See id. (Danly, Comm’r, dissenting at P 3) (“[W]hat we have on our hands is an unlawful Commission response to the judicial vacatur of a certificate, itself a chastisement for our failure to adequately explain our decisions. In other words, the Commission did not satisfy its obligations under the APA in the first instance.”).
[6] See id. (Danly, Comm’r, dissenting at PP 6-10) (explaining the various actions that the Commission could have taken).
[7] 15 U.S.C. § 717f(c)(1)(B).
[8] See September 2021 Order, 176 FERC ¶ 61,160 (Danly, Comm’r, dissenting at P 3) (“The courts have already considered (if only as dicta) the very question of whether our emergency powers can be employed as a stopgap in the absence of a certificate.”) (emphasis in original) (citing Algonquin Gas Transmission Co. v. FPC, 201 F.2d 334, 341 (1st Cir. 1953)).
[9] 15 U.S.C. §§ 717f(c), (e); see September 2021 Order, 176 FERC ¶ 61,160 (Danly, Comm’r, dissenting at PP 7-8).
[10] St. Louis Area Police Chiefs Association, Comments, Docket No. CP17-40-007, at 1 (filed Oct. 28, 2021) (emphasis omitted).
[11] See supra P 2 & note 4. Additionally, while I still oppose as unlawful the form the September 2021 Order took, I nevertheless point out that the majority could have modified the temporary emergency certificate to be effective through the winter season or until the Commission acts on Spire’s July 26, 2021 request, whichever comes earlier. See 15 U.S.C. § 717r(a) (“Until the record in a proceeding shall have been filed in a court of appeals . . . the Commission may at any time, upon reasonable notice and in such manner as it shall deem proper, modify or set aside, in whole or in part, any finding or order made or issued by it under the provisions of this chapter.”).
[12] See Spire Landowners October 14, 2021 Rehearing Request at Appendix A (listing landowner intervenors requesting rehearing).
[13] Scott Turman, ST Turman Contracting, and Niskanen Center (collectively, Niskanen Center) jointly filed a request for rehearing on October 14, 2021.
[14] See Spire Landowners October 14, 2021 Rehearing Request at 7-8; Niskanen Center October 14, 2021 Rehearing Request at 6-7.
[15] See Niskanen Center October 14, 2021 Rehearing Request at 4-6.
[16] See Spire STL Pipeline LLC, 177 FERC ¶ 61,114 at PP 9-11.
[17] See id. P 11 n.25 (citing PennEast Pipeline Co., LLC, 170 FERC ¶ 61,064, at PP 27, 54-55 (2020) (explaining that in most circumstances an administrative agency will not adjudicate the constitutionality of congressional enactments; declining to address whether Congress’s delegation of eminent domain authority under section 7(h) can overcome state sovereign immunity under the Eleventh Amendment)).
[18] See PennEast, 170 FERC ¶ 61,064 at P 21 (“[W]e make no attempt to address the Eleventh Amendment question left unanswered by the Third Circuit: whether the NGA’s delegation of the federal government’s exemption from state sovereign immunity was a valid, constitutional exercise of federal power.”) (citations omitted); id. P 27 (“[W]e deny PennEast’s petition to the extent that it would require the Commission to evaluate the constitutional sufficiency of NGA section 7(h) for purposes of abrogating state sovereign immunity or delegating federal authority under the Eleventh Amendment”); id. P 55 (“[T]he Commission typically avoids opining on constitutional matters unless they are necessary to a particular decision.”).
[19] See PennEast, 170 FERC ¶ 61,064, reh’g denied, 171 FERC ¶ 61,135 (2020).
[20] Spire STL Pipeline LLC, 177 FERC ¶ 61,114 at P 10 (emphasis added) (internal footnotes and citations omitted).
[21] See PennEast, 171 FERC ¶ 61,135 at P 20 (“Our interpretation of section 7(h) of the NGA, a statute we administer, merits deference.”) (citing PennEast, 170 FERC ¶ 61,064 at P 15; City of Arlington v. FCC, 569 U.S. 290, 296, 307 (2013); Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 982 (2005); Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 (1984) (Chevron)); id. P 22 (rejecting an argument that “the Commission does not ‘qualify for Chevron deference’ when construing NGA section 7(h)”); PennEast, 170 FERC ¶ 61,064 at P 15 (“[O]ur interpretation of NGA section 7(h) merits deference. The Third Circuit’s ruling does not diminish the Commission’s authority to speak on a statute that we administer.”) (citations omitted).
[22] PennEast, 171 FERC ¶ 61,135 at P 22 n.68 (“the dissent’s objections necessarily turn on the argument that ‘the Commission has no role to play whatsoever in administering that provision,’ . . . . We disagree.”) (citing PennEast, 171 FERC ¶ 61,135 (Glick, Comm’r, dissenting at P 5).
[23] PennEast, 171 FERC ¶ 61,135 at P 22 (internal footnotes and citations omitted).
[24] In Allegheny Defense Project v. FERC, the U.S. Court of Appeals for the District of Columbia Circuit found that “Chevron deference d[id] not apply” to the Commission’s interpretation of NGA section 19(a). 964 F.3d 1, 12 (D.C. Cir. 2020) (Allegheny). The court reasoned that “statutory provisions addressing the jurisdiction of federal courts do not fit that mold” because “Federal agencies do not administer and have no relevant expertise in enforcing the boundaries of the courts’ jurisdiction.” Id. at 11 (citations omitted). The Commission’s interpretation of NGA section 7(h), however, is distinguishable from Allegheny. Yes, the courts implement NGA section 7(h). Unlike Allegheny, the Commission would not be interpreting the ambit of the courts’ jurisdiction. Instead, as the Commission did in PennEast, it would interpret the scope of the certificate holder’s entitlement to the privileges conferred by the temporary certificate issued by the Commission. This is undoubtedly relevant to the Commission’s expertise as the agency that administers the NGA.
[25] See PennEast Pipeline Co., LLC v. New Jersey, 141 S. Ct. 2244, 2263 (2021) (finding that “[b]y its terms, § 717f(h) authorizes FERC certificate holders to condemn all necessary rights-of-way, whether owned by private parties or States”); PennEast, 171 FERC ¶ 61,135 at P 41 (reaffirming “that NGA section 7(h) empowers natural gas companies, and not the Commission, to exercise eminent domain to acquire lands needed for authorized projects; and that this authority applies to lands in which states hold interest.”).
[26] 15 U.S.C. § 717f(h) (emphasis added).
[27] Id.
[28] Id. § 717f(c)(1)(B) (“That the Commission may issue a temporary certificate in cases of emergency, to assure maintenance of adequate service or to serve particular customers, without notice or hearing, pending the determination of an application for a certificate, and may by regulation exempt from the requirements of this section temporary acts or operations for which the issuance of a certificate will not be required in the public interest.”) (emphasis added).
[29] See Spire Landowners October 14, 2021 Request for Rehearing at 7-8; Niskanen Center October 14, 2021 Request for Rehearing at 6-7.
[30] September 2021 Order, 176 FERC ¶ 61,160 at P 1 (emphasis added) (citing 15 U.S.C. § 717f(c)(1)(B)); see id. at Ordering Para. (A) (“[a] temporary certificate of public convenience and necessity is issued to Spire STL Pipeline LLC . . . .”) (emphasis added).
[31] 15 U.S.C. § 717f(h).
[32] The Commission has in other circumstances included the term “public convenience and necessity” when discussing temporary certificates and NGA section 7(c)(1)(B). See, e.g., New Fortress Energy LLC, 176 FERC ¶ 61,031, at P 27 (2021) (“NGA section 7(c)(1)(B) provides, in pertinent part, that ‘the Commission may issue a temporary certificate [of public convenience and necessity] in cases of emergency’ to ensure service is maintained ‘pending the determination of an application for a certificate.’”) (quoting 15 U.S.C. § 717[f](c)(1)(B)) (alterations in original); Tex.-Ohio Pipeline, Inc., 58 FERC ¶ 61,025, at Ordering Para. (A) (1992) (issuing “[a] temporary certificate of public convenience and necessity”); Penn-York Energy Corp. & Nat’l Fuel Gas Supply Corp., 37 FERC ¶ 61,109, at Ordering Para. (A) (1986) (same); Transcon. Gas Pipe Line Corp., 34 FERC ¶ 61,402, at Ordering Para. (A) (1986) (same).
[33] Consumer Fed’n of Am. v. FPC, 515 F.2d 347, 353 (D.C. Cir. 1975); see Penn. Gas & Water Co. v. FPC, 427 F.2d 568, 574 (D.C. Cir. 1970) (“It appears that the provision of [section] 7(c) for temporary certificates was meant to cover a narrow class of situations, to permit temporary and limited interconnection, or expansion of existing facilities in order to meet such emergencies as breakdowns in the service of operating natural gas companies, or sudden unanticipated demands.”) (citing Algonquin Gas Transmission Co. v. FPC, 201 F.2d 334 (1st Cir. 1953)).
[34] Algonquin Gas Transmission Co., 201 F.2d at 341.
[35] Id. at 340.
[36] See Spire STL Pipeline LLC v. Jefferson, No. 18-cv-03204, slip op. (C.D. Ill. Oct. 27, 2021).
[37] Id. at 6; see id. at 7.
[38] Spire STL Pipeline LLC, 177 FERC ¶ 61,114 at P 10.