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Special Edition: Will the Bell Soon Toll for FERC's Tolling Order Practice? 

This Special Edition of our newsletter is dedicated to coverage of the heightened scrutiny that FERC's tolling order practice received this past week from both the DC Circuit and Congress, culminating in an en banc oral argument and a congressional subcommittee investigation both covered in this issue.  As discussed, these events signal that the bell may soon toll for FERC tolling orders.

These recent events coupled with the Covid-19 pandemic have also lead to personal reflection and a desire to reach out to colleagues to discuss new developments. In this issue, I’ll share the evolution of my views on FERC’s tolling order practice, and how I tried - albeit unsuccessfully - to use Zoom to transform court watching into a bonafide spectator sport. 

I hope that you and your families are staying healthy and sane during these uncertain times.  Reach out any time. 

All the best, 
In this Issue:

Opinion: From FERC Attorney to Landowner Rights Lawyer, the Evolution of My Views on FERC Tolling Orders

Back when I started my career as a baby attorney at FERC, one of my first tasks was to draft tolling orders for the rehearing requests assigned to me. Though I always aimed to complete draft orders on rehearing requests within a week or two of receiving an assignment (I was an energetic, eager beaver back in the day), I knew that my drafts would languish  for weeks or even months in my supervisors’ in-boxes awaiting their review.  And so, I'd always churn out a tolling order granting rehearing for the limited purpose of considering the requests right from the get go. 
At the time, I never questioned the practice. Sure, I'd familiarized myself with the provisions of the Federal Power Act  Section 313b  which like its Natural Gas Act review provision twin likewise required FERC to act on a rehearing request within 30 days or it would be deemed denied. Truth be told, I bought the argument that a tolling order constituted action within the meaning of the statute. Plus back then, the Commission also summarily denied at least a few of the less meritorious rehearing challenges within the 30-day window — so when we issued a tolling order promising further review, it carried some weight.
In any event, as best I can recall, rehearing requests were not as common back then. That’s because parties were required to file appeals of FERC orders and only if an appeal was denied could they seek rehearing.  But if an appeal was denied, many parties often passed on rehearing, thus culling the number of orders under review (As best I recall, FERC eliminated the mid-level appeal stage around 1990, so that challenges to initial orders would go immediately up on rehearing).

Because I grew up on tolling orders, the practice never seemed strange to me. And even when my practice transitioned from a steady diet of renewables and more hardcore electric work (PURPA, mergers, transmission planning and rates) to pipeline work, my views didn’t evolve. When other practitioners questioned the due process of implications of orders languishing for six months or more before litigants could get into court, I responded that it really didn't matter because even if a case went to court immediately, it would still be a year before petitioners could get relief. And in any event, I explained, the DC Circuit would never agree to overrule tolling orders since it would invite a flood of petitions for review of FERC orders which are not exactly the courts' favorite pastime. 

Yet as I've become more immersed in representing landowners in pipeline proceedings and witnessed firsthand what it’s like to stand by and watch your trees razed and your property assaulted for a pipeline, my views have changed. After all, it is tough to explain to a landowner why their due process rights aren't violated when they spend months waiting for resolution of a rehearing order before FERC while the pipeline is taking away their property from them in condemnation proceedings in federal court. And it's hard to tell landowners that no, there isn't any other way to stop the carnage on their property other than seeking a stay from FERC or rolling the dice on an impossible mandamus action in federal court that’s going to cost thousands of dollars to pursue.  In short, looking at tolling orders from the perspective of my landowner clients rather than an insular FERC practitioner, even I had to admit that the optics of FERC's tolling order practice are dismal.

Much as I came to see that tolling orders were unfair,  I still believed that decades of precedent barred meaningful challenge. 
But in the wake of FERC’s quorum loss back in 2017, I saw a slim opening to void a FERC tolling order. In that case, FERC issued a certificate over my clients’ objection. By the time we sought rehearing, FERC had lost its quorum but nonetheless, issued a tolling order. I immediately sought judicial review of the FERC order and argued that the tolling order was an invalid “non action” due to the lack of quorum. Instead of rejecting my petition as incurable premature in response to FERC’s motion to dismiss, the DC Circuit kept jurisdiction and deferred the argument regarding the validity of the tolling order to the merits. The court then forced FERC to file the record which FERC did, right after pushing out an order on rehearing on the merits. Ultimately the parties dropped the challenge the validity of the tolling order since FERC’s denial of rehearing made the finality issue moot.

Ultimately, it took a non-FERC attorney - Siobhan Cole of White Williams to raise the full blown due process challenges to FERC's tolling order that are now before the court.   Cole's advocacy ultimately persuaded me that the time had come to revise FERC's current tolling order practice.

Cole's arguments likewise captured the attention of Judge Millett, whose scathing critique of FERC's practices in her concurring decision in Allegheny Defense Project v. FERC  lead to the D.C. Circuit's decision to take up the issue en banc. In the meantime, other landowner organizations, including Niskanen Center lead by  David Bookbinder  have pressed the problems with FERC's certificate process including the tolling order on the Hill and in other proceedings.

This past week, the D.C. Circuit held a three and a half hour en banc oral argument on the legality of FERC's tolling order practice, while the House Oversight Subcommittee on Civil Rights and Civil Liberties heard video testimony on the topic. Both of these events are discussed in detail below and both proceedings brought to bear a harsh spotlight on a FERC practice that I and most other energy attorneys had grown too jaded to challenge.  

Now, 32 years after embarking on my career in energy law, I -- along with others in the industry and landowners across the country -- eagerly await to hear whether the bell will toll for FERC tolling orders. The time for change has come.  Let justice ring. 

DC Circuit's Historic En Banc Oral Argument

Monday, the United States Court for the District of Columbia Circuit (DC Circuit) held oral argument in its en banc review  of the December 2019 decision in Allegheny Defense Project v. FERC - an historic event for three reasons.  First, the fact that D.C. Circuit granted en banc review at all is a rare event, occurring in just .15 percent of cases between 2001 to 2009, and just 8 en banc grants between 2010 and 2017. Second, because of coronavirus, the court conducted telephonically rather than in person - which was less awkward than you might imagine and resulted in a relatively orderly argument as counsel responded to the judges' questions one at a time.  But what stood out most about yesterday's argument was the subject matter itself as the D.C. Circuit took up the legality of FERC's tolling order practice which has had the D.C. Circuit's blessing since California Company v. Federal Power Comm'n, 411 F.2d 720 (D.C. Cir. 1969) which was decided 50 years ago.
 
Some Background
 
For those unfamiliar, a tolling order is a device used by FERC to circumvent the thirty-day timeline for acting on requests for rehearings -- a jurisdictional prerequisite to obtaining judicial review under Section 717r of the Natural Gas Act. Under the Natural Gas Act, FERC must act on requests for rehearing within 30 days or those requests are deemed denied, and FERC's order is rendered final for purposes of judicial review.  Because 30 days is not very long and because FERC would prefer the opportunity to bolster its reasoning on rehearing before an order is challenged in court, FERC routinely grants limited grant of rehearing stops - or tolls - the 30 day statutory clock for action, thereby giving FERC more time to act.
 
For most seasoned energy practitioners - myself included -  the legality of FERC's tolling order practice was long regarded as settled, having been affirmed by circuit courts in multiple jurisdictions. But increasingly, as landowners and environmental groups have challenged FERC pipeline certificates, FERC's tolling order practice has come under fire.  That's because as landowners' rehearing challenges to the public purpose for the FERC certificate languish before FERC, companies have free reign to initiate eminent domain actions to take property for their pipelines before any final determination as to whether the pipeline serves a public purpose.  (Landowners are barred from contesting the purpose of a pipeline during condemnation because such challenges are regarded as a collateral attack on the FERC certificate - see e.g.,PennEast Pipeline Co. v. Permanent Easement of 0.06 Acres in Moore Twp., CIVIL ACTION No. 18-524, at *14 (E.D. Pa. Sep. 17, 2019)
("[D]defendants argue that the FERC Order does not support a public purpose...plaintiff correctly points out that once a FERC certificate is issued, judicial review of the FERC certificate itself is only available in the circuit court.").
 
Thus, it's not surprising that the case at the heart of the D.C. Circuit's en banc review of FERC's tolling order practice involves two private landowners, Hilltop Hollow and Steven Hoffman. The landowners argued that FERC's delay in resolving their challenge to the Certificate Order approving the Atlantic Sunrise Property violated their due process rights.  The landowners contended that while their challenge to FERC's order was tied up before the agency, the company was able to initiate an eminent domain proceeding in federal court to take their property without a pre-deprivation hearing regarding public use. It's this point that captured Judge Patricia Millett's attention during oral argument and was the focus of her scathing concurrence describing the FERC process as "Kafkaesque" which ultimately prompted the grant of en banc review.
 
Argument Summary
 
Yesterday's lively en banc oral argument went on for three and a half hours. Several judges, including Griffith, Katsis and Millett expressed concern over the disparate legal consequences of tolling orders which hold landowners' challenges in limbo while allowing the company to proceed in eminent domain - often before full review of whether the project serves a public purpose.  Judge Garland - initially part of the panel that heard the original case - tried to figure out whether there might be a way to distinguish between those tolling orders where FERC simply attempted to buy itself time and block appellate jurisdiction and "honest rehearing requests" where FERC genuinely intended to address the merits of a case. Judge Pillard was likewise sympathetic, but correctly observed that the tolling order delays posed the most serious problem in cases involving the prospect of irreparable harm because if FERC were to deny a stay pending rehearing (as it always does), parties' only option is to seek mandamus relief from the court -  an extraordinary and rarely granted remedy.
 
What's Next?
 
Based on the argument, the Court appears poised to order FERC to change its ways. But how? Most judges did not seem impressed with Chairman Chatterjee's promise to set up a special office to more quickly process landowner complaints -  an opportunistic measure  announced back in January with the sole purpose of staving off judicial reform. Other suggestions raised by the judges included allowing FERC to issue tolling orders but giving landowners the option to seek immediate review and a stay at the court, or allowing FERC to retain jurisdiction over rehearing requests provided it stayed the certificate while challenges were pending.  Landowners' counsel indicated that these options would be acceptable to her clients, though the judges also grappled with the validity of this approach under the Natural Gas Act.
 
Another approach which received less discussion would be to overrule precedent affirming use of tolling orders and force FERC to act within 30 days as required by the language of the Natural Gas Act. I suspect that many of the judges were not keen on this approach which could flood the court with FERC cases which aren't exactly the court's most favorite topic.  I should add that from a practitioner's perspective, FERC action isn't necessarily desirable either since many of my clients lack the means to fund an appellate proceeding that follows directly on the heels of a rehearing request.  And unless judicial review is coupled with a stay, the company could still move forward in court in eminent domain. 
 
Finally, it bears noting that both FERC's and the intervenor gas company's promise that landowners have a remedy in the form of just compensation even if a project goes forward is not just "cold comfort" (as FERC counsel admitted) but it is also flatly wrong.  For starters, many communities - such as the homeowners I represented in Minisink Residents for Environment and Safety v. Fed. Energy Regulatory Comm'n,  762 F.3d 97 (D.C. Cir. 2014) did not have property taken when an industrial compressor station was plopped down across the street from their homes. Nevertheless, their property values declined precipitously, and at least two families were forced to move due to nuisance and fumes. Just compensation would not have helped them if the court had reversed.
 
What's more, just compensation presupposes that a taking is lawful to begin with - which begs the purpose of review.  Consider my client the City of Oberlin which challenged whether FERC properly found that the NEXUS Pipeline served a public use within the meaning of the Takings Clause when a large portion of its capacity was destined for export. The City's rehearing request sat for ten months before it was decided and in the interim, the City's property was taken in eminent domain and the City was forced to enter into an easement to preserve its right to put in a municipal water system and declined compensation). And once that happened, the pipeline tried to dismiss the City's challenge as moot.  
 
As it turned out, the Oberlin court allowed the City's case to proceed and found that FERC's order left considerable doubt as to whether the project serves a public use within the meaning of the Takings Clause.  The case was remanded to FERC back in November 2019 for further action and is likewise languishing. Meanwhile, all the just compensation in the world won't cure the harm to the City if it turns out that the certificate authorizing the take was constitutionally deficient.
 
Final Predictions
Based on the en banc arguments, I predict that the D.C. Circuit will modify FERC's current tolling order practice though how that may look remains to be seen. Post-argument, one thing is clear: FERC's tolling order practice in its current form has reached its expiration date.

The Congressional Subcommittee on Civil Rights and Civil Liberties Takes On Tolling Orders

As the D.C. Circuit deliberates the fate of FERC tolling orders, the House Subcommittee on Civil Rights and Civil Liberties undertook an investigation of the FERC Pipeline approval process. On April 28, 2020, the Committee
released preliminary investigative findings  showing that the natural gas pipeline approval process used by the Federal Energy Regulatory Commission (FERC) unjustly tramples on the rights of private landowners.  Along with two landowners, Richard Averitt and Maury Johnson, I offered testimony about the process for the Committee's Video Report.
 

Lessons from Inaugural Coffee + Court

I've always thought that like the Olympics, baseball or other athletic games, court-watching ought to be a communal spectator sport. After all, both sports and court involve competition pitting one side against another, live action and suspense. However, unlike spurts games, court proceedings, especially most oral arguments, aren't always broadcast live, plus, a courtroom requires the kind of silent decorum that a stadium or arena does not.

But all of that changed with the Covid-19 quarantine. Suddenly, oral arguments which once took place IRL migrated online, and lawyers who congregated in courtrooms are now confined to home offices with extra time that's no longer spent on commutes.  And so it seemed like an ideal opportunity to experiment with communal court viewing, where my colleagues and I could listen to an oral argument from the comfort of our individual homes but still together on Zoom.

Thus was born my idea for Coffee + Court which I launched spur of the moment on the eve of the Allegheny Defense Project v. FERC oral argument. By now, I'd been using Zoom regularly for webinars, litigation team meetings and depositions and I felt comfortable using it as a platform for a meeting. However, because I hadn't planned in advance and was eager to attract a crowd, I set up the meeting without the same level of security that I would use for my work matters.

The event began auspiciously enough. I greeted my dozen guests and had a chance to pregame the event here.  At 9:30, I shared my screen and clicked us into the D.C. Circuit streaming argument. But about 20 minutes disaster struck: the meeting was interrupted by loud music and an obscene doodle that blocked my screen. I locked down the room,  but struggled to find the offending interloper.  By the time I did, most guests had left to watch on their own at the D.C. Circuit site.

Although my first Court + Coffee event was sabotaged, I can still see the value. I enjoyed the sense of camaraderie listening to the argument with colleagues and in the future, I can envision better planned events where other lawyers can lead the discussion. That said, I also learned my lesson from my inaugural event which is never to assume that an event is so insignificant that it won't attract a hacker and to always use appropriate security, no exceptions.  

A crisis like the Covid-19 quarantine can make our lives miserable but they can also give rise to new opportunities and ways of doing business. With Court + Coffee and the legal profession's newfound facility with online communication tools, I discovered a way to convert court-watching into an enjoyable, recreational sport for a geek like me.

Let's go petitioners!
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