For Whom the Bell Tolls – Orders Granting Rehearing

Natural Gas Projects
March 20, 2017

Decisions made at the Federal Energy Regulatory Commission (FERC) regarding natural gas pipelines are often contentious, and interested parties opposed to a certificate order must be strategic in their approach. Over the past several weeks, opponents to major projects, ranging from utilities to environmental groups, as well as project developers, including Energy Transfer and National Fuel, filed requests for rehearing. This week, in response to opponents of the Rover and Atlantic Sunrise projects, FERC issued “Orders granting rehearing.” These Orders do not actually “grant” a rehearing, but “toll” the time for FERC to make a decision, which may occur during construction. As such, Sierra Club indicated in its Atlantic Sunrise rehearing request that it will deem issuance of the “tolling order” as a denial and “seek immediate review of the Certificate Order in the Court of Appeals.”

Parties are provided the means to challenge FERC decisions by way of requesting a rehearing, but this underlying process is oftentimes the subject of great disapproval from project opponents. But why? Primarily because the process surrounding a request for rehearing at the FERC, according to environmental groups, deprives them of judicial review. The FERC provides an opportunity to seek rehearing of a final Commission decision, or more simply, an Order. Unless the Commission “acts” upon a request for rehearing within 30 days after the request is filed, the request is denied. 

Projects that received their Certificates prior to the loss of quorum are likely to receive delegated orders approving construction from the Office of Energy Projects, and be well underway before a quorum is present again. Project opponents, however, have to think more strategically than ever before. In the case of large, well-funded environmental organizations, such as the Sierra Club, that means determining the best way to use its resources. Interestingly, Sierra Club’s national chapter, rather than its local chapters which typically lead the effort to thwart projects, became involved in the Atlantic Sunrise and Rover projects. Is the Sierra Club’s new strategy to challenge the issuance of tolling orders in federal court?  

On the Atlantic Sunrise docket, the Sierra Club’s request for rehearing pointed out that, according to the Natural Gas Act, FERC “shall have power to grant or deny rehearing or to abrogate or modify its order without further hearing.” Sierra Club explains that rather than “act[ing] upon” a request for rehearing, the FERC issues an “order granting rehearing for further consideration,” or a “tolling order.” The language in tolling orders suggests that a rehearing has been granted, but that is a misnomer, as it simply affords the FERC time to delay its “act” beyond the 30-day clock. The FERC plainly provides that it has granted the tolling order “for the limited purpose of further consideration, and timely-filed rehearing requests will not be deemed denied by operation of law.” As such, those requesting rehearing are left in limbo, neither approved nor denied. What is the impact on those requesting rehearing?

For project opponents, the impact can be significant. Upon issuing a tolling order, the FERC carries on with its review of the pipeline project, granting notices to proceed with preparatory and construction activities. As a result, a pipeline can be constructed while those seeking to oppose the decision wait for action. Perhaps even more frustrating for project opponents is that without a final decision from the FERC on the request for rehearing they cannot take the issue to federal court. And this issue is further exacerbated by the lack of quorum at the FERC. While the Office of the Secretary can issue tolling orders in the Commissioners’ stead, the Secretary cannot “act” on the requests for rehearing themselves.

Total Number of Rehearing Requests