Project Opponents – Condemnation Conundrum for Rover?

Natural Gas Projects
February 13, 2017

The impact of the Federal Energy Regulatory Commission’s (FERC) lack of quorum is not yet well understood. With no precedent to lean on, there is plenty of room for speculation. And with each passing day, we gain additional  clarity into what to expect. Project delays may be a byproduct. But in addition to being driven by the complex web of necessary state and federal permits and consultation, new variables involving condemnation litigation may emerge, due to an odd procedural matter created by the lack of a quorum.

Upon learning that the FERC would not have a  quorum, the pipeline industry expressed its concerns about the potential for additional delay for project development. Newly appointed FERC Chairman LaFleur responded to these docketed letters, announcing that the FERC would work to address as many issues as possible before losing a quorum. As promise, FERC issued a higher than average number of Orders in the course of a couple days, including Rover’s Certificate. Project developers fortunate enough to receive a Certificate will not likely be impacted, because a notice to proceed with construction can be issued by FERC staff. But new concerns surrounding a lack of quorum exist, despite FERC’s  delegating some authority to the staff.  

Following the approval of Spectra’s Atlantic Bridge Project, Senators Elizabeth Warren and Edward Markey filed a letter with the FERC expressing their concern with what a lack of quorum would mean for pipeline opponents. In particular, the senators expressed  concerns regarding the ability of opponents to pursue rehearing of a decision. As such, the senators suggested that the FERC should rescind its decision on the Atlantic Bridge. Typically, opponents of a project’s approval may seek rehearing of the order issuing a Certificate by requesting a rehearing no later than 30 days after issuance of a final decision. However, a request for rehearing can only be ruled upon by the Commissioners, and not staff, leaving opponents with no relief until an additional Commissioner is appointed. Does this leave pipeline opponents with nowhere to turn?

Rover Moves to Condemn Land

Rover Pipeline has begun pursuing formal condemnation of land along the project’s route, in order to acquire the rights-of-way and easements necessary to construct and operate its pipeline, after negotiations with the private landowners to obtain the rights-of-way and easements have failed. But once FERC issues the certificate, deviations from the approved route are exceedingly rare, with exceptions adding variability to project timeframes. To date, Rover has initiated condemnation proceedings  in federal court in Ohio, Michigan, West Virginia, and Pennsylvania to acquire the rights-of-way and easements. Condemnation  proceedings are common for interstate pipeline  projects. Project developers have the right to acquire  rights-of-way and easements from private landowners, but obtaining such rights-of-way and easements for government-owned or tribal property and property already dedicated to a public use, such as railroads, parkland and existing utility corridors, is not so clear cut. Typically, early and effective strategic analysis and engagement with landowners along proposed routes minimizes legal challenges and reduces costly and unreasonable compensation claims.

Why are condemnation proceedings in Rover critical? This week, ETP answered that question:

It is critical that Rover be able to provide the contractors with access to all affected properties along the route, including the Subject Easements sought to be obtained in the Verified Complaint, for pre-construction and construction work along the route of the Rover Project. Without immediate access to the all easements along the route, placing the Rover Project in service by year end or sooner will be irreparably jeopardized and frustrated. Failure to gain immediate access to all easements along the route of the Rover Project will put Rover at significant risk of being unable to meet its contractual and regulatory deadlines and obligations.

In other statements Rover calculated the financial exposure associated with its obligations to pay standby fees and move around costs to its contractors. So aside from the intense project deadlines, what makes Rover’s situation somewhat novel include: the voluminous number of landowner defendants (e.g., approximately 180 in just Michigan), which involve a variety of private landowners and property already dedicated to a public use, and  no foreseeable ability for project opponents to request a rehearing of the FERC’s decision.

For the purposes of this Insights, we’ll briefly focus on the latter.  A party seeking to challenge the proposed route or any aspect of the FERC Certificate must file an application for rehearing within 30 days with  FERC, so that the FERC’s action on rehearing may be reviewed by the appropriate court of appeals. And an appeal must be filed within 60 days after FERC issues its decision on the application for rehearing. No appeals can be made without a rehearing at the FERC. Are project opponents, therefore,  left without a means of judicial review? As a result, landowners may aggressively pursue remedies during condemnation instead. More will be known in the next couple weeks.

The impact of the FERC’s lack of quorum goes beyond its own proceedings. As a result, administrative appeals appear to be stalled and typical means of appeal by way of comments are ineffective. So the question still stands: What will the FERC do in this unique time to provide for appeals of its existing decisions? Will they allow for requests beyond their 30-day limit?

Certificate Proceeding Cumulative Protestor Count- Individuals Excluded