Commissioner James Danly Statement
May 6, 2022
Docket No. CP17-458-017

I dissent from today’s order[1] denying the request[2] filed by Midship Pipeline Company, LLC (Midship) to stay the portion of the Commission’s December 2021 Order[3] directing the Administrative Law Judge (ALJ) to determine the reasonable cost to complete restoration on the Sandy Creek Farm property.

I dissented from the December 2021 Order, and dissented again on rehearing, because I believed that establishing the ALJ hearing to be misguided.[4]  In my view, the Commission should have resolved this matter based on a paper hearing instead of burdening the parties with additional cost and delay.  After considering Midship’s arguments, which I acknowledge Midship previously made,[5] I am now convinced that the Commission’s December 2021 Order was not only misguided, but was ultra vires and that partial stay of that proceeding is warranted.

The majority argues that directing the ALJ to determine the costs of restoration was an appropriate exercise of its authority under section 14(a) of the Natural Gas Act (NGA).[6]  The majority claims that determining the cost of restoration would “assist the Commission in evaluating what further remediation is required.  For example, the cost of restoration may be relevant in comparing two different restoration methods that will have equal or similar results.”[7]

Although NGA section 14(a) authorizes the Commission to “investigate any facts,”[8] that authority is not without limit.  The Commission may only investigate facts that are “necessary or proper in order to determine whether any person has violated or is about to violate any . . . order thereunder.”[9]  Putting aside that the majority’s tepid declaration that information on restoration costs simply “may be relevant,” in my view, the majority has not—nor do I believe can—explain why determining cost is necessary or proper to then determining whether Midship has violated or is about to violate its certificate.

It goes without saying that the authority the Commission invokes in any certificate compliance order and proceeding must flow from the terms and conditions of the certificate.[10]  The alleged violation at issue here is that Midship is not in compliance with its certificate because of its “failure to correct ponding, restore preconstruction contours, and failure to remove construction debris.”[11]

Restoring preconstruction contours (which includes correcting ponding) and removing construction debris are required by two terms of the Commission’s Upland Erosion Control, Restoration, and Maintenance Plan (FERC Plan)[12] which Midship is required to implement pursuant to its certificate.[13]  Section V.A.5 of the FERC Plan requires certificate holders to “[g]rade the construction right-of-way to restore pre-construction contours and leave the soil in the proper condition for planting.”[14]  Section V.A.6 of the FERC Plan requires certificate holders to “[r]emove construction debris from all construction work areas unless the landowner or land managing agency approves leaving materials onsite for beneficial reuse, stabilization, or habitat restoration.”[15]  By analogy, these requirements are the equivalent of saying “paint a portion of a wall so that it matches the existing paint” and “clean up after yourself.”

The relevant certificate terms specify only an outcome—meaning whether Midship has or will violate those terms turns only on one finding:  have the required outcomes (restoration of preconstruction contours and removal of construction debris) been achieved.  Put simply, did Midship complete its tasks or not.  And while the Commission oversees the restoration to ensure compliance, the cost of completing such compliance tasks, or for that matter the specific method by which those tasks are completed (so long as the pipeline company complies with the FERC Plan), are irrelevant.[16]  To continue the painting analogy, whether you paint the wall using a brush or a roller, and how much each method costs is of no concern to the Commission and lies outside our authority.

The purpose of this proceeding is apparent.  It is not to determine whether Midship has or will violate its certificate, specifically the FERC Plan.  That inquiry is simple and only requires the Commission to determine whether the draft restoration plan that Midship filed[17] meets the requirements in the FERC Plan.  And this inquiry is frequently made—it is bread and butter for the staff of the Office of Energy Projects because the FERC Plan is nearly always a certificate condition.[18]

No, the purpose of this proceeding is to rekindle stalled settlement negotiations between Midship and the landowner so that the Commission may avoid a contentious vote.[19]  The Commission directs the ALJ to identify a “reasonable” amount for Midship to pay the landowner to make the matter go away.  For what other purpose would the Commission make (what to my knowledge is) the unprecedented decision to establish an ALJ proceeding in order to determine whether the FERC Plan was violated (a simple fact-based inquiry), delay restoration (the purported goal of the entire proceeding) by another growing season,[20] or specifically allow “the ALJ [to] consider the costs of self-remediation[21] which the landowner states he “prefer[s]”[22] and which the Commission acknowledges is not required?[23]

Facilitating compromise between pipeline companies and landowners might be a laudable goal, and one that the Commission has legally achieved for Midship and many other landowners.[24]  The Commission, however, is a creature of statute and must only use the tools Congress has bestowed and do so within the boundaries of the authority conferred.[25]

For these reasons, I respectfully dissent.

 

 

[1] Midship Pipeline Co., LLC, 179 FERC ¶ 61,096 (2022) (Stay Order).

[2] Midship Pipeline Company, LLC April 18, 2022 Motion for a Partial Stay, Docket No. CP17-458-012, at 1.

[3] Midship Pipeline Co., LLC, 177 FERC ¶ 61,186 (2021) (Danly, Comm’r, dissenting) (December 2021 Order).

[4] See id. (Danly, Comm’r, dissenting at PP 3-5); Midship Pipeline Co., LLC, 178 FERC ¶ 61,202 (2022) (Danly, Comm’r, dissenting at PP 3-4) (Rehearing Order).

[5] See, e.g., Midship Pipeline Co., LLC January 18, 2022 Limited Request for Rehearing of December ALJ Order, Docket No. CP17-458-015, at 1 (“The instant request asks the Commission to vacate the portion of the Order which directs an [ALJ] to determine ‘the reasonable cost’ to complete the restoration of land belonging to Sandy Creek Farms.  As detailed below, that portion of the Order is ultra vires, as the Commission has no authority to direct payment of compensation for damages to landowners, or to assess the cost of those damages.”) (citation omitted).

[6] Stay Order, 179 FERC ¶ 61,096 at P 9 (citing 15 U.S.C. § 717m(a)).

[7] Id. P 9.

[8] 15 U.S.C. § 717m(a) (emphasis added).

[9] Id. (emphasis added).

[10] The Commission only has the power to enforce the terms of the certificate.  See 15 U.S.C. § 717f(e) (“The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.”).  Cf. 16 U.S.C. § 799 (“Each such license shall be conditioned upon acceptance by the licensee of all of the terms and conditions of this chapter and such further conditions, if any, as the Commission shall prescribe in conformity with this chapter, which said terms and conditions and the acceptance thereof shall be expressed in said license.”); Clifton Power Corp. v. FERC, 88 F.3d 1258, 1261-62 (D.C. Cir. 1996) (concluding that the Commission erred in finding the license required the licensee to operate the project in a run-of-river mode because the license order did not contain an explicit condition requiring the licensee to operate run-of-river).

[11] December 2021 Order, 177 FERC ¶ 61,186 at P 11.

[12] See FERC, Upland Erosion Control, Revegetation, and Maintenance Plan (2013), https://www.ferc.gov/sites/default/files/2020-04/upland-erosion-control-revegetation-maintenance-plan.pdf (FERC Plan).

[13] All pipeline companies that are constructing pipeline facilities that disturb soil must comply with the FERC Plan or other mitigation measures that provide equivalent or greater protections to the environment.  See 18 C.F.R. § 380.12(i) (“Resource Report 7 – Soils.  This report is required for all applications except those not involving soil disturbance . . . Resource Report 7 must: . . . (5) Describe proposed mitigation measures to reduce the potential for adverse impact to soils or agricultural productivity.  Compare proposed mitigation measures with the staff's current “Upland Erosion Control, Revegetation and Maintenance Plan,” which is available from the Commission Internet home page or from the Commission staff, and explain how proposed mitigation measures provide equivalent or greater protections to the environment.”).

[14] FERC Plan at 13.

[15] Id.

[16] C.f. Union Oil Co. of Cal. v. FPC, 542 F.2d 1036, 1039 (9th Cir. 1976) (stating that through NGA section 14(a), Congress gave the Commission “broad authority to gather data which would in any rational way aid it in the performance of its statutory function.”) (emphasis added).  This is not to say that the cost of a certificate condition is never relevant.  Indeed, the Commission must give some attention to cost in the certificate proceeding as it may only attach to a certificate “reasonable terms and conditions.”  15 U.S.C. § 717f(e) (emphasis added); see also Michigan v. EPA, 576 U.S. 743, 752 (2015) (explaining that the phrase “appropriate and necessary” in the Clean Air Act “requires at least some attention to cost”).  To my knowledge, the cost of implementing the FERC Plan (a minimum requirement) has never been contested.

[17] See Midship Pipeline Co., LLC October 15, 2021 Draft Restoration Plan, Docket No. CP17-458-000.

[18] See supra note 13.

[19] December 2021 Order, 177 FERC ¶ 61,186 at P 3 (“It appears there is an impasse between Midship and Sandy Creek Farms.  Therefore, recognizing the parties need additional assistance . . . .”).

[20] The ALJ is scheduled to issue an Initial Decision on September 14, 2022.  See Rehearing Order, 178 FERC ¶ 61,202 (Danly, Comm’r, dissenting at P 3 n.5).  The Commission will then have to issue an order on that decision which I have previously noted “in the last 3 years has—at the earliest—occurred over 14 months after the issuance of an initial decision.”  Id. (Danly, Comm’r, dissenting at P 3).

[21] Rehearing Order, 178 FERC ¶ 61,202 at P 11 (emphasis added).

[22] December 2021 Order, 177 FERC ¶ 61,186 at P 11.

[23] Id. P 12 (“While the company has latitude to resolve restoration disputes with landowners by providing the landowners with reasonable compensation to self-perform the required remediation work, it is under no obligation to do so.”).

[24] Id. P 1 (noting success of encouraging the parties to voluntary participate in the Commission’s Dispute Resolution Services).

[25] See Atl. City Elec. Co. v. FERC, 295 F.3d 1, 8 (D.C. Cir. 2002) (“As a federal agency, FERC is a ‘creature of statute,’ having ‘no constitutional or common law existence or authority, but only those authorities conferred upon it by Congress.’”) (quoting Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001)) (emphasis in original); see Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (“It is axiomatic that an administrative agency’s power to promulgate legislative regulations is limited to the authority delegated by Congress.”).

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