5 takeaways from 2020’s energy battles

Source: By Niina H. Farah, E&E News reporter • Posted: Sunday, January 3, 2021

Landowners, environmentalists and Native American tribes scored victories this year as federal judges took aim at President Trump’s “energy dominance” agenda and challenged long-standing government policies.

In the final year of the Trump administration, the courts cleared the way for property owners to more easily challenge natural gas pipelines, bolstered technology to support renewable energy development and axed permits that violated federal environmental laws.

Major projects like the Atlantic Coast pipeline were canceled following mounting lawsuits. Federal judges also sought to block the Dakota Access and Keystone XL pipelines, potentially casting a pall over development of new oil and gas transport projects under an incoming administration that is much more skeptical of expanded fossil fuel production.

The courts also began considering challenges to the Trump administration’s deregulatory agenda, possibly shaping the Biden administration’s options for crafting its own controls on greenhouse gas emissions from power plants and the oil and gas sector.

Next year is likely to bring fewer major energy projects, as President-elect Joe Biden has promised to take a firmer stance on greenhouse gas emissions and has proposed banning new permits for fossil fuel leasing on public lands.

The Biden administration’s move away from expedited permits is likely to slow down the process, but the approvals that do make it through will be less vulnerable to legal challenges, said Christi Tezak, managing director of ClearView Energy Partners LLC.

“The delay you have in the permit process will result in a better permit once you get it, even though opponents will still hate it,” she said. “So the risk of having it be returned in court will be lower.”

Here are some of the most important developments in energy law in 2020:

Pipelines lost big

Oil and gas pipelines were in the headlines this year as major projects were canceled or faced court orders to stop their operation or construction.

In July, Dominion Energy Inc. and Duke Energy Corp. pulled the plug on the controversial Atlantic Coast natural gas pipeline. The decision to end the project due to legal, economic and regulatory uncertainty came less than a month after the pipeline developers won a Supreme Court battle over its route beneath the Appalachian Trail (Energywire, July 5).

Earlier this year, Williams Cos. Inc. said it would cancel its Constitution pipeline. The natural gas project had faced years of courtroom battles in New York and Pennsylvania before its backers pulled funding (Energywire, Feb. 24).

Other major pipelines — such as TC Energy Corp.’s Keystone XL and Energy Transfer LP’s Dakota Access — lost key approvals this year, though the ultimate fate of the projects will be in the hands of either the courts or the Biden administration.

This spring, the U.S. District Court for the District of Montana axed a streamlined water permit for the Keystone XL pipeline and effectively blocked the Army Corps of Engineers from using its Nationwide Permit 12 program for all new projects, sending ripples across a number of industries (Energywire, April 16).

The Supreme Court eventually intervened in the case and limited the ruling’s application only to Keystone XL.

This summer, the U.S. District Court for the District of Columbia ordered the Dakota Access pipeline be shut down and drained of oil. The decision followed an earlier ruling that found the Army Corps had violated the National Environmental Policy Act when it determined it did not need to complete a more stringent review of the pipeline’s crossing beneath Lake Oahe, located just a half-mile from the Standing Rock Sioux reservation (Greenwire, July 6).

The U.S. Court of Appeals for the District of Columbia Circuit blocked the Dakota Access shutdown order while the court considers whether the Army Corps must redo its analysis.

Landowners scored a win

A high-profile case this year drew attention to the fate of landowners whose land is condemned to make way for natural gas pipeline construction.

This summer, the D.C. Circuit rejected the Federal Energy Regulatory Commission’s policy of using “tolling orders” to effectively delay when landowners can sue in federal court to challenge seizures of their land (Energywire, July 1).

The decision issued by the full panel of active D.C. Circuit judges reversed a policy that has been one of the “largest injustices” in property rights, said Robert McNamara, a senior attorney at the Institute for Justice.

“To have that removed formally and judicially is hugely important,” he said.

Still, experts warned that many more changes are needed at FERC to make condemnation fair for landowners whose property is taken.

Landowners now need a clearer procedure for getting their property back or having it restored if a project doesn’t go forward, said Carolyn Elefant, a former FERC lawyer who is now in private practice.

“At the end of the day, I think there is a need for more changes at the eminent domain level,” she said.

The D.C. Circuit’s tolling orders decision may not end up changing much in practical terms for landowners, other than the procedures around going to court, said David Bookbinder, chief counsel at the Niskanen Center.

“Now all the judges got a chance to see just what happens to landowners during the course of this,” he said. “Its greatest value may turn out to be the education of the judges.”

NEPA got ‘some teeth’

NEPA played an important role in court rulings this year that tossed out federal approvals for oil and gas lease sales.

That’s a shift from past court decisions that have sent NEPA analyses back to the federal government but declined to scrap the reviews altogether, said Sarah Stellberg, a staff attorney at Advocates for the West.

“The whole point is to have the analysis done before the project is approved,” she said. “If you just order the agency to go back after it has committed itself to that outcome, what you’re going to get is more paperwork instead of an unbiased look at the decision.”

A ruling from the U.S. District Court for the District of Idaho tossed out a Bureau of Land Management instruction memorandum shortening time frames for public comment on lease sales within greater sage grouse management areas, and tossed out a series of lease sales (Energywire, Feb. 28).

That decision, like the ruling in the Dakota Access pipeline case, signaled that federal agencies will face real consequences for violating NEPA, said Stellberg, who represented the environmental groups opposing BLM in the leasing case.

“If there is a real risk the leases can actually be vacated, that gives NEPA some teeth,” she said. “And we hope that will dissuade them from shortcutting NEPA reviews and shortcutting public involvement going forward.”

The court decisions may also be a reaction to analysis produced under the Trump administration specifically, said Tezak of ClearView.

“I think that the willingness to vacate in terms of the pipeline permits in particular is actually a function of a poorer-quality rushed permit than a change in the bench,” she said.

Courts are weighing climate oversight

Legal rulings on the Trump administration’s moves to limit federal agencies’ authority to control pollution from the oil, gas and power sectors could shape the Biden team’s options for regulating greenhouse gas emissions in the future.

The D.C. Circuit this year heard marathon arguments in — but did not decide — a dispute over the Trump administration’s repeal of the Obama-era Clean Power Plan and its decision to replace the regulation with the Affordable Clean Energy rule, which was widely panned for failing to set any emissions limits.

If the D.C. Circuit reaches a decision on the ACE rule, it could define how expansively or restrictively EPA can read its authority to regulate emissions under the Clean Air Act.

In the more likely event that the court does not have the opportunity to decide the case, watch out for a third round of litigation on this issue when the Biden administration finalizes its own approach to addressing power plant emissions, said Caitlin McCoy, a staff attorney at Harvard Law School’s Environmental & Energy Law Program.

“It’s very possible what’s going to happen with that is the Biden administration will come in, they will immediately begin work on rescinding ACE and crafting something new — a CPP 2.0,” she said.

The Biden administration could also face limited options for controlling methane emissions on public lands, based on a pair of federal district court rulings this year that axed both Obama- and Trump-era standards for oil and gas operations.

This fall, the U.S. District Court for the District of Wyoming scrapped the Obama rule controlling the sector’s emissions of the potent greenhouse gas on public lands — a decision that could affect how the new administration handles cost-benefit analysis, as well as some aspects of BLM’s authority to address waste (Energywire, Oct. 9).

About three months earlier, the U.S. District Court for the Northern District of California tossed out the Trump administration’s rule repealing the Obama standard (Energywire, July 24).

While both rulings are currently on appeal, the decisions could still hold up BLM’s effort to address methane under the new administration, said Hana Vizcarra, another staff attorney at Harvard.

“They are going to have to figure out a new way to approach methane emissions on public lands,” she said.

FERC boosted renewables

Federal judges this year offered further affirmation of FERC’s power to regulate the federal electricity wholesale market — a decision that brings sources other than fossil fuels closer to being competitive in those markets.

This summer, the D.C. Circuit upheld FERC’s authority to issue its Order No. 841 promoting the participation of energy storage technologies in wholesale markets (Energywire, July 13).

“I think it is not only one of the most significant decisions of this year but one of the most significant decisions in the last several years,” said Joel Eisen, a law professor at the University of Richmond.

The ruling is also likely to help FERC defend its Order No. 2222, which removed barriers for rooftop solar and other distributed energy resources to participate in regional wholesale markets (Energywire, Sept. 18).

“I would expect that this case and [FERC v. Electric Power Supply Association] in the Supreme Court before it will form the core of FERC’s argument that it has substantial authority over what goes on in the wholesale markets,” Eisen said, referring to a 2016 ruling from the high court upholding a FERC policy that helped incorporate electricity from renewable sources.

“We are going to see a greatly expanded suite of storage and renewable resources participating in the wholesale markets, certainly over the next four years,” he added.