Federal Court Increases Democratic Leverage at FERC on Pipeline Standards

By Stephen Barlas, Washington Editor 

A federal court decision stopping operation of the Spire STL pipeline in Missouri strengthens the hands of the Democratic leadership of the Federal Energy Regulatory Commission (FERC) as it considers pipeline-opposed changes to its 1999 pipeline approval policy standards. 

The U.S. Court of Appeals for the District of Columbia, the second-highest court in the U.S. with authority over federal regulatory policy, on June 18, 2021, canceled FERC’s 2018 certification of the 66-mile St. Louis-area pipeline citing FERC’s failure to adequately determine if there was an actual need for the additional capacity. FERC’s 1999 pipeline policy statement lays out some general – some would argue vague – guidelines for proving “need.” The pipeline is already in operation and serves about 650,000 people according to the company. 

Jason Merrill, a spokesman for Spire, says the pipeline is still operating. “We’re evaluating our next steps,” he adds.  

Spire could petition the three-judge panel which issued the ruling for a rehearing within 45 days which would put off the requirement to close down the pipeline. The panel might then reverse its decision to cancel the pipeline, based on the loss of service to customers if Spire couldn’t contract with another pipeline. One attorney in Washington familiar with the case called the court’s vacating a certificate a drastic remedy which the court does not often use in FERC pipeline cases. In a similar situation a few years ago, the DC court vacated the certificate for the Sabal Trail pipeline. But FERC, under a Republican-controlled commission, reissued the certificate so there was no stoppage in service. But current FERC Chairman Richard Glick dissented when the Spire certificate was first approved so he may not feel moved to reissue it. 

To establish “need,” Spire leaned on its contract with its subsidiary, Spire Missouri, for 87.5 percent of the pipeline's capacity. Precedent agreements with subsidiaries and other connected partners are one of the aspects of the 1999 policy that FERC will examine. In particular, the appeals court said that FERC’s decision to approve the Spire pipeline “seemed to count the single precedent agreement between corporate affiliates as conclusive proof of need. Nothing in the Certificate Policy Statement endorses this approach.”  

FERC Democratic Chairman Glick said the appeals court’s decision “shows that when FERC cuts corners with its analysis, it puts its decisions – and the investments made in reliance on those decisions – at substantial risk.” He expressed his desire to revisit the Commission’s approach to assessing the need for an interstate natural gas pipeline in its currently pending notice of inquiry (PL18-1).  

The Environmental Defense Fund (EDF) asked FERC initially to take a second look at its decision to approve the pipeline. When the commission rejected the rehearing request in December 2019, the EDF filed its legal case with the DC Court of Appeals arguing FERC had not established need and that there had been self-dealing by Spire. A second petitioner who joined with the EDF filed a second complaint: that FERC should have done an environmental impact statement (EIS) instead of just an environmental assessment (EA). The court rejected this second argument because the petitioner, a woman who lived near the pipeline and complained about noise, emissions, eyesores and other things, did not have “standing.” But the standard for FERC to order a more searching, detailed EIS after an environmental assessment is performed is another issue FERC is considering as part of its work on a docket numbered PL18-1.  

The two Democratic commissioners (a third will be appointed later this summer when the term of the third Republican commissioner expires) have already signaled they want more impact statements. In fact, on May 18, at an open meeting, Chairman Glick and Commissioner Allison Clements issued partial dissents for two pipeline incremental expansion projects on grounds that FERC should have prepared an EIS to assess the risks related to climate change.  

Then, a little more than a week later, all five commissioners ordered EISs for somewhat small projects for which the staff had done EAs. The initiation of a follow-on EIS for each of the projects will add significant time to their FERC approval process. The impacted projects’ EAs were published either in first quarter 2021 or during the second half of 2020. Emily Mallen, an attorney in Washington with Sidley Austin, says, “Whereas FERC typically would commit to issuing an order within 90-days of completing an EA, the pipeline operators subject to the new notices should not expect decisions on their pending applications before December 2021. However, each notice provides a project-specific timeline.” 

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