The D.C. Circuit Court of Appeals has given the Federal Energy Regulatory Commission’s use of tolling orders to delay action on cases before the regulators a mixed decision. Challenges to the long-established FERC practice came this spring, when local landowners said the FERC rules, which essentially allowed natural gas pipelines to become fait accompli while the commission dithered over the case.
In a unanimous full ruling by the court, the highest in the land behind the U.S. Supreme Court, the D.C. circuit unanimously concluded that FERC’s use of tolling orders to extend its 30-day statutory deadline review pipeline approvals, in the words of Judge Patricia Millett, were invalid. “We hold that, under the plain statutory language and context, such tolling orders are not the kind of action on a rehearing application that can fend off a deemed denial and the opportunity for judicial review.”
The National Law Review commented, “The opinion makes it clear that the court believes FERC used tolling orders to deprive interested parties, particularly landowners and environmental organizations, of their right to judicial review of pipeline projects.” But the court added, “On the merits, we deny the petitions for review.” They based this on the long-enshrined doctrine of stare decisis, or deference to decisions already made.
At FERC, Republican chair Neil Chatterjee and the long Democrat, Richard Glick, long at loggerheads on gas pipeline certificate decisions, issued a joint statement in the Allegheny Defense Project pipeline case, proposing that Congress create a remedy to the practice of letting projects go ahead while the commission reviews them, rendering FERC’s decisions irrelevant.
They asked Congress to change the law “providing FERC with a reasonable amount of additional time to act on rehearing requests involving orders under both the Natural Gas Act and the Federal Power Act. We believe that any such legislation should make clear that, while rehearing requests are pending, the Commission should be prohibited from issuing a notice to proceed with construction and no entity should be able to begin eminent domain proceedings involving the projects addressed in the orders subject to those rehearing requests.”
In other FERC news, critics and backers of existing policy on incentive rates for electric transmission projects weighed in this week. In March, FERC proposed a rule that would abandon it’s decade-old approach of granting higher-than-market rates to transmission projects, under the 2005 Energy Policy Act. The current policy focuses on risks to the projects. The proposed approach would focus on economic benefits.
Under its new policy, FERC would award a bonus of 50 basis points on return on equity if a project’s economic benefits are in the top 75% of a sample of projects. Another 50-point adder could come for projects in the top 90% of benefits. There would be a 250-basis-points cap on ROE incentives. At the time, FERC Commissioner Richard Glick questioned whether the incentives would be other than economic gravy and would be just and reasonable.
As reported in spgobal.com, a group of state attorneys general led by Connecticut AG William Tong argued that the FERC plan “is a handout and must be rejected.” They argued that the proposal is “arbitrary and capricious,” without “evidentiary support.”
Even the Edison Electric Institute, the investor-owned lobbying group, had some qualms, although it generally support the plan. EEI said, “Transmission projects can provide multiple types of benefits contemporaneously and the commission’s transmission incentives policy should reflect this fact.”
A group of environmental organizations panned the FERC plan. The group, led by the Natural Resources Defense Council, said that the incentives are unnecessary, as the projects “will be invested in even without the additional ROE adder.” The green groups also said FERC should include greenhouse gas reductions when calculating project benefits, something the Republican-dominated FERC has been unwilling to be in gas pipeline cases.
— Kennedy Maize