Litigating Construction Notices: “Opportunities Multiply as They’re Seized”

Natural Gas Projects
May 1, 2017

The primary objective of natural gas pipeline project opponents is to attempt to delay each decision necessary to authorize construction, with the hope that even if such challenges are not ultimately successful, the cumulative effect will be to doom a project by killing it with a thousand cuts. Our data shows that since 2013, the time it takes to move through the stages of the FERC review process has, for most, but not all, projects been markedly lengthening. The one bright spot has been the fairly static process of moving from granting the certificate to the commencement of construction, with exceptions driven primarily by projects saddled by state permitting issues. But on April 4, a well-funded opponent of natural gas pipelines unveiled a new attack related to this phase of the permitting process that may extend the time to begin construction. 

At oral argument before the D.C. Circuit Court of Appeals on April 4, the judges asked the petitioner in the case, Delaware Riverkeeper, why it had not appealed the Notice to Proceed with Construction, rather than the Certificate Order, because the Notice to Proceed is what gave the pipeline (Williams’ Transco) the authority to begin construction. Appealing a Notice to Proceed with Construction, which is almost always issued by FERC Staff pursuant to a delegation provided in the Certificate Order and does not usually contain any legal reasoning, is a new litigation tactic that may prove effective for pipeline opponents.

Just three days after the D.C. Circuit made this suggestion, intervenors in Spectra Energy’s Atlantic Bridge Project filed for a rehearing on the Notice to Proceed, which had been issued on March 27, to commence construction only in Connecticut. Similarly, on April 14 and April 24, intervenors in Kinder Morgan’s Connecticut Expansion Project sought rehearing or a stay of the Notice to Proceed issued in that case, and the two U.S. Senators from Massachusetts (Markey and Warren) filed a letter requesting a reversal of the Notice to Proceed.

Kinder has not yet responded to the requests for a stay or rehearing in its case, but Spectra has. While Spectra’s response argues that the Notice to Proceed was appropriately issued, it concedes that such Notices are, in fact, final orders that are subject to rehearing and that the delegation to Staff is valid primarily because such orders only become final if: “the parties decide not to seek Commission rehearing or if the Commission leaves those actions undisturbed. Thus, it is the Commission’s action-declining to grant rehearing or granting rehearing and upholding or reversing the . . . decision-that finally commits the Commission’s imprimatur.”

Therefore, it appears as though opponents will now have a new decision to contest to delay future projects by challenging Notices to Proceed before FERC and in federal court. Even if such challenges are ultimately unsuccessful, such a tactic may lead FERC to modify the process for the issuance of such notices to include a more thorough review by the Office of General Counsel, and perhaps inclusion of the legal reasoning supporting the basis for issuing each notice. Any such changes to the current efficient use of a delegated order will likely lengthen this phase of the process. Pipeline developers may now need to provide the legal reasoning necessary for FERC to issue a carefully crafted and legally unassailable Notice to Proceed to keep the delay to a minimum.

Our dynamic forecasting project model takes into account all manner of events that occur throughout a project that could influence the timing of all major permitting events, including its in-service date. As you might expect, we will continue to watch this new development to determine whether opponents are able to seize upon this opportunity. And for current customers, we’ll continue to keep you informed of such requests for rehearing or stays that occur in the projects in which you are interested.

 

Regulatory Phase Durations Over Time 

FERC Decision

Notice to Proceed with Construction