[Federal Register Volume 85, Number 129 (Monday, July 6, 2020)]
[Rules and Regulations]
[Pages 40113-40116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13015]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 153 and 157
[Docket No. RM20-15-000; Order No. 871]
Limiting Authorizations To Proceed With Construction Activities
Pending Rehearing
AGENCY: Federal Energy Regulatory Commission, Department of Energy.
ACTION: Final rule.
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SUMMARY: The Federal Energy Regulatory Commission (Commission) issues
this final rule to amend its regulations to preclude the issuance of
authorizations to proceed with construction activities with respect to
natural gas facilities authorized by order issued pursuant to section 3
or section 7 of the Natural Gas Act until either the time for filing a
request for rehearing of such order has passed with no rehearing
request being filed or the Commission has acted on the merits of any
rehearing request.
DATES: This rule is effective August 5, 2020.
FOR FURTHER INFORMATION CONTACT:
Tara DiJohn, Office of the General Counsel, Federal Energy Regulatory
Commission, 888 First Street NE, Washington, DC 20426, (202) 502-8671,
tara.dijohn@ferc.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
1. By this final rule, the Federal Energy Regulatory Commission
(Commission or agency) is revising its regulations to preclude the
issuance of authorizations to proceed with construction activities with
respect to a Natural Gas Act (NGA) section 3 authorization or section
7(c) certificate order until the Commission acts on the merits of any
timely-filed request for rehearing or the time for filing such a
request has passed. This rule ensures that construction of an approved
natural gas project will not commence until the Commission has acted
upon the merits of any request for rehearing. The rule imposes no new
obligations on the public.
II. Background
2. The NGA vests the Commission with jurisdiction over the
transportation and wholesale sale of natural gas in interstate
commerce.\1\ To meet these aims, the NGA declares that ``the business
of transporting and selling natural gas for ultimate distribution to
the public is affected with [the] public interest.'' \2\
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\1\ 15 U.S.C. 717(a).
\2\ Id.
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3. Before a company can construct a natural gas pipeline, it must
obtain approval from the Commission under NGA section 7(e), which
provides that the Commission ``shall'' issue a certificate if it
determines that a proposed pipeline ``is or will be required by the
present or future public convenience and necessity.'' \3\
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\3\ Id. 717f(e).
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4. If the Commission grants a certificate of public convenience and
necessity, the NGA authorizes the certificate holder to exercise
eminent domain authority if it ``cannot acquire by contract, or is
unable to agree with the owner of property to the compensation to be
paid for, the necessary right-of-way to construct, operate, and
maintain a pipe line or pipe lines for the transportation of natural
gas[.]'' \4\
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\4\ Id. 717f(h). The NGA specifies that any such condemnation
proceedings shall take place in the federal court for the district
in which the property is located or in the relevant state court.
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5. Separately, NGA section 3 prohibits the import or export of
natural gas between the United States and a foreign nation without
``first having secured an order of the Commission authorizing it to do
so.'' \5\ NGA section 3 authority is divided between the Department of
Energy, which oversees the import or export of the natural gas
commodity,\6\ and the Commission, which oversees the siting,
construction, and operation of import or export facilities.\7\ The
Commission ``shall'' authorize proposed import or export facilities
unless it finds that construction and operation of the proposed
facilities ``will not be consistent with the public interest.'' \8\
Unlike section 7, section 3 does not provide for the acquisition of
lands through eminent domain.
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\5\ 15 U.S.C. 717b.
\6\ Id. 717b(a)-(c). In 1977, Congress transferred the
regulatory functions of NGA section 3 from the Federal Power
Commission to the Department of Energy. 42 U.S.C. 7151(b)
(Department of Energy Organization Act). The Department of Energy
delegated back to the newly created Federal Energy Regulatory
Commission the limited authority under NGA section 3(e) to approve
the physical facilities. 15 U.S.C. 717b(e).
\7\ 15 U.S.C. 717b(e). See DOE Delegation Order No. 00-004.00A
(effective May 16, 2006) (renewing delegation to the Commission
authority over the construction and operation of LNG facilities);
see also 43 FR 47,769, 47,772 (Oct. 17, 1978) (1978 delegation); 42
U.S.C. 7172(e) (Commission authority includes any matter assigned by
the Department).
\8\ 15 U.S.C. 717b(a).
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6. Pursuant to the NGA, the Commission can approve a proposed
[[Page 40114]]
project subject to ``such reasonable terms and conditions as the public
convenience and necessity may require.'' \9\ The certificate orders
typically include conditions a company must meet before construction or
operation of the project may begin, and typically provide that a
company must receive written authorization from the Director of the
Office of Energy Projects (or the Director's designee) before
commencing construction of any project facilities.\10\ The purpose of
requiring a written request for authorization to commence with
construction activities (often referred to as a notice to proceed) is
not to reexamine the underlying Commission order; rather, it is to
ensure that the Commission's preconstruction requirements have been
met.
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\9\ Id. 717f(e).
\10\ See, e.g., Florida Gas Transmission Co., LLC, 170 FERC ]
61,200, 62,335 (2020) (Environmental Condition 9 requires Florida
Gas to ``receive written authorization from the Director of OEP
before commencing construction of any project facilities. To obtain
such authorization, Florida Gas must file with the Secretary
documentation that it has received all applicable authorizations
required under federal law (or evidence of waiver thereof)''); Gulf
South Pipeline Co., LP, 170 FERC ] 61,201, 62,348 (2020) (same).
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III. Discussion
7. In recent years, the Commission's NGA sections 3 and 7
proceedings have seen increased interest and participation by
stakeholders, such as landowners, community members, non-governmental
organizations, property rights advocates, and governmental entities,
who have raised concerns about proposed projects. The Commission's
order granting an authorization under section 3 and/or section 7 fully
considers all stakeholder concerns raised during the proceeding.
8. If a party is dissatisfied with the Commission's NGA section 3
authorization or section 7 certificate determination, it may apply for
rehearing.\11\ The application must ``set forth specifically'' the
grounds for rehearing.\12\ On rehearing, the Commission is authorized
to ``grant or deny'' the request, ``or to abrogate or modify its
order[.]'' \13\ ``Unless the Commission acts upon the application for
rehearing within thirty days after it is filed, such application may be
deemed to have been denied.'' \14\ Often, because of the complex nature
of the matters raised, the Commission issues an order (known as a
tolling order) by the thirtieth day following the filing of a rehearing
request, in order to allow additional time for the Commission to
provide thoughtful, well-considered attention to the issues raised on
rehearing.\15\
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\11\ 15 U.S.C. 717r(a).
\12\ Id.
\13\ Id.
\14\ Id.
\15\ See, e.g., Cal. Co. v. FPC, 411 F.2d 720, 721 (DC Cir.
1969); Kokajko v. FERC, 837 F.2d 524, 525 (1st Cir. 1988) (``The
statutory language, . . . although requiring FERC to `act' upon the
application for rehearing within thirty days after filing, lest the
application is deemed denied, does not state . . . that FERC must
`act on the merits' within that time lest the application is deemed
denied.''); Gen. Am. Oil Co. of Tex. v. FPC, 409 F.2d 597, 599 (5th
Cir. 1969); Berkley v. Mountain Valley Pipeline, LLC, 896 F.3d 624,
631 (4th Cir. 2018); see also Del. Riverkeeper Network v. FERC, 895
F.3d 102, 113 (D.C. Cir. 2018) (rejecting a due process challenge to
Commission tolling orders).
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9. The rehearing process serves as a mechanism for the Commission
to carefully consider the arguments presented, in order to resolve
disputes or bring its expertise to bear on complex, technical matters
before they are potentially presented to the courts. The Commission
balances the interests of numerous stakeholders and renders decisions
that address challenging technical, economic, and environmental
matters, as well as complex legal issues. This takes time. Only after
resolving these ``difficult problems'' \16\ does the Commission issue
an order on the merits of a rehearing request.
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\16\ FPC v. Colo. Interstate Gas Co., 348 U.S. 492, 501 (1955).
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10. Once the Commission issues an order on the merits of a
rehearing request, a party may seek judicial review of the Commission's
order. An application for agency rehearing is a prerequisite to
judicial review, and only those objections raised on rehearing may be
presented to the court of appeals.\17\ Congress specified that an
application for rehearing ``shall not, unless specifically ordered by
the Commission, operate as a stay of the Commission's order.'' \18\
Thus, following issuance of an NGA section 7 certificate or section 3
authorization, a project sponsor may request that the Commission
authorize construction while rehearing is pending.
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\17\ 15 U.S.C. 717r(b).
\18\ Id. 717r(c).
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11. In order to balance our commitment to expeditiously respond to
parties' concerns in comprehensive orders on rehearing and the serious
concerns posed by the possibility of construction proceeding prior to
the completion of Commission review, we are exercising our discretion
to adopt a new regulation that precludes the issuance of authorizations
to proceed with construction of projects authorized under NGA sections
3 and 7 while rehearing of the initial orders is pending. This rule
ensures that construction of an approved natural gas project will not
commence until the Commission has acted upon the merits of any request
for rehearing, regardless of land ownership.
12. This final rule adds to our regulations new Sec. 157.23, which
provides that:
With respect to orders issued pursuant to 15 U.S.C. 717b or 15
U.S.C. 717f(c) authorizing the construction of new natural gas
transportation, export, or import facilities, no authorization to
proceed with construction activities will be issued:
(a) Until the time for the filing of a request for rehearing under
15 U.S.C. 717r(a) has expired with no such request being filed, or
(b) if a timely request for rehearing is filed, until the
Commission has acted upon the merits of that request.
13. In addition, we are revising Sec. 153.4 of our regulations to
incorporate a cross-reference to new Sec. 157.23.
IV. Information Collection Statement
14. The Paperwork Reduction Act \19\ requires each federal agency
to seek and obtain the Office of Management and Budget's (OMB) approval
before undertaking a collection of information (i.e., reporting,
recordkeeping, or public disclosure requirements) directed to ten or
more persons or contained in a rule of general applicability. OMB
regulations require approval of certain information collection
requirements contained in final rules published in the Federal
Register.\20\ This final rule does not contain any information
collection requirements. The Commission is therefore not required to
submit this rule to OMB for review.
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\19\ 44 U.S.C. 3501-3521.
\20\ See 5 CFR 1320.12.
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V. Environmental Analysis
15. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant effect on the human environment.\21\ The Commission
has categorically excluded certain actions from this requirement as not
having a significant effect on the human environment, including the
promulgation of rules that are clarifying, corrective, or procedural,
or that do not substantially change the effect of legislation or the
regulations being amended.\22\ This final rule disallows the issuance
of authorizations to proceed with construction activities until the
Commission acts on the merits of any
[[Page 40115]]
request for rehearing of an NGA section 3 authorization or section 7(c)
certificate order. Because this final rule is procedural in nature,
preparation of an Environmental Assessment or an Environmental Impact
Statement is not required.
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\21\ Regulations Implementing the National Environmental Policy
Act of 1969, Order No. 486, 41 FERC ] 61,284 (1987).
\22\ 18 CFR 380.4(a)(2)(ii).
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VI. Regulatory Flexibility Act
16. The Regulatory Flexibility Act of 1980 (RFA) \23\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
However, final rules promulgated without the publication of a general
notice of proposed rulemaking under section 553 of the Administrative
Procedure Act (APA) are exempt from the RFA's requirements.\24\
Pursuant to section 553(b)(3)(A) of the APA, ``rules of agency
organization, procedure, or practice'' may be published without general
notice of proposed rulemaking.\25\ Because this rule concerns only
matters of agency procedure--specifically, the Commission's internal
processes and procedure for issuing authorizations to proceed with
construction activities under an NGA section 3 authorization or an NGA
section 7(c) certificate order, the APA's public notice and comment
procedures do not apply. Accordingly, this final rule is exempt from
the requirements of the RFA.
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\23\ 5 U.S.C. 601-612.
\24\ Id. 604(a).
\25\ Id. 553(b)(3)(A).
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VII. Document Availability
17. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through FERC's Home Page (http://www.ferc.gov). At this time,
the Commission has suspended access to the Commission's Public
Reference Room due to the President's March 13, 2020 proclamation
declaring a National Emergency concerning the Novel Coronavirus Disease
(COVID-19).
18. From FERC's Home Page on the internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
19. User assistance is available for eLibrary and the FERC's
website during normal business hours from FERC Online Support at 202-
502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371. Email the Public Reference Room at public.referenceroom@ferc.gov.
VIII. Effective Date
20. The Commission is issuing this rule as a final rule without a
period for public comment. Public notice and comment, otherwise
required by 5 U.S.C. 553, do not apply to ``rules of agency
organization, procedure, or practice.'' \26\ This rule concerns only
matters of agency procedure, and will not significantly affect
regulated entities or the general public.
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\26\ 5 U.S.C. 553(b)(3)(A).
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21. This rule is effective August 5, 2020. As a matter of policy,
however, the Commission will not authorize construction to proceed
pending rehearing during the period before this rule becomes effective.
List of Subjects
18 CFR Part 153
Exports, Natural gas, Reporting and recordkeeping requirements.
18 CFR Part 157
Administrative practice and procedure, Natural gas, Reporting and
recordkeeping requirements.
By the Commission. Commissioner Glick is concurring in part and
dissenting in part with a separate statement attached.
Issued June 9, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
In consideration of the foregoing, the Commission is amending parts
153 and 157, chapter I, title 18, Code of Federal Regulations, as
follows:
PART 153--APPLICATIONS FOR AUTHORIZATION TO CONSTRUCT, OPERATE, OR
MODIFY FACILITIES USED FOR THE EXPORT OR IMPORT OF NATURAL GAS
0
1. The authority citation for Part 153 continues to read as follows:
Authority: 15 U.S.C. 717b, 717o; E.O. 10485; 3 CFR, 1949-1953
Comp., p. 970, as amended by E.O. 12038, 3 CFR, 1978 Comp., p. 136,
DOE Delegation Order No. 0204-112, 49 FR 6684 (February 22, 1984).
0
2. Revise Sec. 153.4 to read as follows:
Sec. 153.4 General requirements.
The procedures in Sec. Sec. 157.5, 157.6, 157.8, 157.9, 157.10,
157.11, 157.12, and 157.23 of this chapter are applicable to the
applications described in this subpart.
PART 157--APPLICATIONS FOR CERTIFICATES OF PUBLIC CONVENIENCE AND
NECESSITY AND FOR ORDERS PERMITTING AND APPROVING ABANDONMENT UNDER
SECTION 7 OF THE NATURAL GAS ACT
0
3. The authority citation for Part 157 continues to read as follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
0
4. Add Sec. 157.23 to subpart A to read as follows:
Sec. 157.23 Authorizations to Proceed with Construction Activities.
With respect to orders issued pursuant to 15 U.S.C. 717b or 15
U.S.C. 717f(c) authorizing the construction of new natural gas
transportation, export, or import facilities, no authorization to
proceed with construction activities will be issued:
(a) Until the time for the filing of a request for rehearing under
15 U.S.C. 717r(a) has expired with no such request being filed, or
(b) If a timely request for rehearing is filed, until the
Commission has acted upon the merits of that request.
The following will not appear in the Code of Federal Regulations
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Limiting Authorizations to Proceed with Construction Activities Pending
Rehearing
Docket No. RM20-15-000
GLICK, Commissioner, concurring in part and dissenting in part:
1. It is readily apparent that today's final rule attempts to
address some of the concerns raised in the Allegheny Defense Project v.
FERC proceeding before the U.S. Court of Appeals for the District of
Columbia Circuit (D.C. Circuit). In that proceeding, numerous groups
have objected to the Commission's practice of ``tolling'' for months,
or even years, requests for rehearing of certificates issued pursuant
to Sec. 7 of the Natural Gas Act,\1\ thereby preventing landowners
from seeking judicial review, even while pipeline developers are
permitted to condemn their land and start constructing a pipeline. In
her concurring opinion in Allegheny Defense Project, Judge Millett
correctly characterized the Commission's practice as a ``Kafkaesque
regime''--one that allows ``the Commission [to] keep homeowners in
[[Page 40116]]
seemingly endless administrative limbo while energy companies plow
ahead seizing land and constructing the very pipeline that the
procedurally handcuffed homeowners seek to stop.'' \2\ Now that the en
banc D.C. Circuit has heard oral argument on the legality of this
Kafkaesque regime, the Commission is finally deciding to stop allowing
developers to begin constructing a pipeline before the Commission's
rehearing process is complete. That is a step in the right direction.
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\1\ 15 U.S.C. 717f(c).
\2\ Allegheny Def. Project v. FERC, 932 F.3d 940, 948 (D.C.
Cir.) (Millett, J., concurring), reh'g en banc granted, judgment
vacated, 943 F.3d 496 (D.C. Cir. 2019).
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2. Nevertheless, I dissent in part from this final rule because it
does nothing to address the concern, articulated clearly in Judge
Millett's concurrence, that a pipeline developer should not be able to
begin the process of condemning private land before the owners of that
land can go to court to challenge the certificate. Eminent domain is
among the most significant actions that a government may take with
regard to an individual's private property.\3\ And the harm to an
individual from having his or her land condemned is one that may never
be fully remedied, even in the event they receive their
constitutionally required compensation.\4\ Bearing those basic facts in
mind, there is something fundamentally unfair about a regulatory regime
that allows a private entity to start the process of condemning an
individual's land before the landowner can go to court to contest the
basis for that condemnation action.
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\3\ Cf. Dolan v. City of Tigard, 512 U.S. 374, 384 (1994)
(observing that government action that provides for ``public access
[to private property] would deprive [the owner] of the right to
exclude others, `one of the most essential sticks in the bundle of
rights that are commonly characterized as property.''') (quoting
Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979)); Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982) (``[W]e
have long considered a physical intrusion by government to be a
property restriction of an unusually serious character for purposes
of the Takings Clause.''); Hendler v. United States, 952 F.2d 1364,
1374 (Fed. Cir. 1991) (``In the bundle of rights we call property,
one of the most valued is the right to sole and exclusive
possession--the right to exclude strangers, or for that matter
friends, but especially the Government.'' (emphasis in the
original)).
\4\ See Kimball Laundry Co. v. United States, 338 U.S. 1, 5
(1949) (``The value of property springs from subjective needs and
attitudes; its value to the owner may therefore differ widely from
its value to the taker.''); United Church of the Med. Ctr. v. Med.
Ctr. Comm'n, 689 F.2d 693, 701 (7th Cir. 1982) (``It is settled
beyond the need for citation . . . that a given piece of property is
considered to be unique, and its loss is always an irreparable
injury.''); accord Richardson v. City & Cty. of Honolulu, 124 F.3d
1150, 1168 (9th Cir. 1997) (O'Scannlain, J., concurring in part and
dissenting in part) (``Whether because of a sentimental attachment
to his property or a conviction that the property is actually worth
more than what the market will currently bear, a landlord might
choose not to sell, even at the `fair market value.''').
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3. That concern was central to Judge Millett's concurrence in
Allegheny Defense Project. Throughout her opinion, she touched on the
profound inequity of allowing a developer to condemn land and construct
a pipeline while the opponents of that pipeline are stuck in
``administrative limbo'' before the Commission.\5\ I see nothing in her
opinion that suggests that the problem created by the Commission's
abuse of tolling orders is limited to the actual construction of a
pipeline. To the contrary, Judge Millett pointed repeatedly to the
exercise of eminent domain prior to rehearing as an example of how the
Commission's use of tolling orders ``runs roughshod over basic
principles of fair process.'' \6\
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\5\ Allegheny Def. Project, 932 F.3d at 948, 950, 952-53, 956
(Millett, J., concurring).
\6\ Id. at 950 (Millett, J., concurring).
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4. And yet this final rule deals only with construction without
making any effort to address the exercise of eminent domain during that
period when the courthouse doors are closed to landowners seeking to
challenge the certificate. That is a shame. And the failure to do
anything in that regard is a striking contrast to the Commission's
supposed concern for landowners. Rather than remaining silent on this
situation, we ought to do everything in our power to address it and
ensure that certificate holders are not permitted to go to court before
landowners.
5. To that end, I believe that we should adopt a practice of
presumptively staying Sec. 7 certificates \7\ pending Commission
action on the merits of any timely filed requests for rehearing.\8\ A
practice along those lines would help protect landowners from an action
seeking to condemn their property by delaying the issuance of the
condition precedent for a condemnation action pursuant to the NGA.\9\
Only then will we have addressed the most glaring due process
shortcomings associated with the Commission's use of tolling orders in
NGA certificate proceedings.
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\7\ Unlike Sec. 7 of the NGA, Sec. 3 does not convey eminent
domain authority. See Limiting Authorizations to Proceed with
Construction Activities Pending Rehearing, 171 FERC ] 61,201, P 5
(2020). Accordingly, I do not believe it is necessary to
presumptively stay the Commission's Sec. 3 determinations. I do,
however, agree with my colleagues that it is appropriate to refrain
from issuing any notices to proceed with construction under both
Sec. 3 and Sec. 7 given the potential for irreparable harm due to
construction pursuant to either provision of the NGA. See id. P 11.
\8\ Under such an approach, the Commission could, in its
discretion, lift the stay in response to a showing from the pipeline
developer that it is necessary or appropriate to commence
condemnation proceedings prior to the Commission acting on
rehearing.
\9\ Multiple courts have contemplated a stay having an effect
along those lines. See, e.g., Mountain Valley Pipeline, LLC v. An
Easement to Construct, Operate & Maintain a 42-inch Gas Transmission
Line, No. 2:17-CV-04214, 2018 WL 1004745, at *5 (S.D.W. Va. Feb. 21,
2018) (``The landowners insist that the various challenges that
Mountain Valley faces before FERC and the courts of appeals counsel
against the granting of partial summary judgment. As explained
earlier, a FERC order remains in effect unless FERC or a court of
appeals issues a stay and no such stay has been issued here.''
(internal citations omitted)); In re Algonquin Nat. Gas Pipeline
Eminent Domain Cases, No. 15-CV-5076, 2015 WL 10793423, at *7
(S.D.N.Y. Sept. 18, 2015) (``Here, various interested parties have
filed Requests for Rehearing with FERC but, absent a stay by FERC,
those Requests for Rehearing neither prohibit these proceedings from
going forward nor affect Algonquin's substantive right to condemn or
the need for immediate possession.''); Tenn. Gas Pipeline Co. v. 104
Acres of Land More or Less, in Providence Cty. of State of R.I., 749
F. Supp. 427, 431 (D.R.I. 1990) (``Because in this case the
Commission's order has not been stayed, condemnation pursuant to
that order may proceed.'').
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6. During my time at the Commission, I have had the opportunity to
meet with many landowners who lost their property rights through
eminent domain proceedings authorized by the NGA. It is heartbreaking
to hear their stories of watching their land be condemned while the
Commission sat on rehearing requests, leaving them helpless to
challenge the certificate, even as it was used to seize their land. We
should be doing everything in our power to prevent such a patently
unfair result.
For these reasons, I respectfully concur in part and dissent in
part.
Richard Glick, Commissioner.
[FR Doc. 2020-13015 Filed 7-2-20; 8:45 am]
BILLING CODE 6717-01-P