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A Win for LOCE - D.C. Circuit Remand in City of Oberlin v. FERC!

As my fellow appellate practitioners are all too painfully aware,  successfully challenging FERC orders on appeal is neither an easy nor expeditious feat.  First, there’s the slog through the underlying proceedings, then the interminable wait for the FERC order on rehearing and finally, the oral arguments before the appeals court where you can only hope that the panel will grant more than a few minutes for you to make your argument.
And after that, there’s the excruciating period before the decision drops and the all too frequent loss that inevitably results because you’ve chosen to take on a matter that in a best case scenario carries a 15 percent chance of a victory. 
Yet every so often, chance does indeed swing your way and you pull out a win that erases the all those losses from your mind and emboldens you to return to the Sisyphus-ian task of rolling that rock back up the appellate mountain.
For my firm, last Friday was one of those days:  along with my Ohio co-counsel David Mucklow and Aaron Ridenbaugh, we won a remand for the City of Oberlin of FERC’s certificate order for the NEXUS Pipeline from the D.C. Circuit in City of Oberlin v. FERC.  In this dispatch, I’ll share a behind the scenes look at what it was like to handle the case along with some analysis. For a deep dive into substance, take a look at my colleague Robert Thomas’ post at Inverse Condemnation
 
By way of background, the NEXUS pipeline is a 257-mile greenfield 36-inch diameter pipeline designed to provide 1.5 million dth/day of gas from the Appalachian Basin to markets in North Ohio, Michigan and the Dawn Hub in Ontario Canada. NEXUS secured precedent agreements for 59 percent of the total project capacity or 885,000 dth/day. Of that amount, however, at least 260,000 dt/day would flow to Canada per the terms of two precedent agreements. The pipeline ran through property owned by my client, the City of Oberlin and my co-counsel’s private landowner clients who among other things, challenged the lack of need for the project as well as the Commission’s reliance on export contracts to show need for an interstate gas pipeline under Section 7 of the Natural Gas Act.  Throughout the case, the Commission ignored these arguments -claiming that the pipeline was not for export because it did not directly cross the border and minimizing the amount of gas destined for export.
 
By the time the case reached oral argument, the Commission had already won several victories in pipeline certificate cases, including another one of my cases Birckhead v. FERC, where the D.C. Circuit held that it was troubled by the Commission’s refusal to consider downstream impacts of pipelines on climate change but nevertheless affirmed.  So I wasn’t particularly hopeful about my chances by the time the case reached oral argument. I played that to my advantage, opening by telling the court that our case stood apart from the many others where the Commission had prevailed.  The opening - which Judge Srinivasan called “provocative” - must have worked because the panel focused on the export challenges and eminent domain at oral argument.
 
Post-oral argument, our clients faced yet another obstacle. NEXUS, which had already taken the City’s and landowner’s property through eminent domain strong armed them into agreeing to settlements on compensation and then filed a motion to dismiss the case as moot since our clients no longer owned the property.  The Commission joined in the motion. This forced me to quickly prepare and file a response, which despite my panic turned out pretty well.  Just two weeks later, the panel denied NEXUS’ motion so the case moved forward.
 
Ultimately, the court held that “these facts do not explain why it is lawful for the FERC to predicate a Section 7 finding of project need on precedent agreements with foreign shippers serving foreign customers…FERC may issue a certificate for the “transportation in interstate commerce.”  Accordingly, the court remanded  the case to FERC "for further explanation of why -- under the [NGA], the Takings clause, and the precedent of this Court and the Supreme Court -- it is lawful to credit precedent agreements with foreign shippers serving foreign customers toward a finding that an interstate pipeline is required by the public convenience and necessity under Section 7 of the Act." The court also elaborated on standing, explaining that “The law of our circuit is clear that a landowner is injured in fact when she is put to the choice of having to either reach an agreement with a pipeline seeking to access her property or have her property condemned."
 
What’s next?  The court did not vacate the certificate so the pipeline will continue to operate, which means that an order on remand may be slow in coming.  Moreover, the remand may not necessarily resolve the underlying legal issues since the Commission could potentially find that NEXUS pipeline has sufficient domestic capacity to justify a Section 7 certificate even if the exports are not included.  This may not be so, however, The case  for some of the pending LNG projects where pipelines have been constructed solely to carry gas from the source to the terminal and do not serve any domestic need.
If you have any other questions about this case or other federal court appeals, please contact me at carolyn@carolynelefant.com or by phone at 202-297-6100. Happy to help you out.
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