Pipeline Energy Infrastructure Legal Challenges

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The advent of fracking and other technological innovations has unleashed a new era of American energy independence, and increased energy production has required increased construction for pipeline and other related energy infrastructure projects.  With this construction has come a wave of litigation, as environmental organizations raise objections under the Clean Water Act, the National Environmental Policy Act, the Natural Gas Act, and a variety of other environmental statutes and property owners in the path of proposed pipelines try to avoid the exercise of eminent domain over their land.  Please join us for a teleforum that explores the challenges facing energy suppliers and property owners in today’s legal environment along with a look ahead to possible future developments.


Featuring:

Robert McNamara, Senior Attorney, Institute for Justice

Peter Tolsdorf, Vice President of Litigation and Deputy General Counsel, National Association of Manufacturers

 

Teleforum calls are open to all dues paying members of the Federalist Society. To become a member, sign up on our website. As a member, you should receive email announcements of upcoming Teleforum calls which contain the conference call phone number. If you are not receiving those email announcements, please contact us at 202-822-8138.

Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Environmental Law & Property Rights Practice Group, was recorded on Thursday, March 21, 2019, during a live teleforum conference call held exclusively for Federalist Society members.     

 

Wesley Hodges:  Welcome to the Federalist Society’s teleforum conference call. This afternoon’s topic is "Pipeline Energy Infrastructure Legal Challenges." My name is Wesley Hodges, and I’m the Associate Director of Practice Groups at The Federalist Society.

 

As always, please note that all expressions of opinion are those of the experts on today’s call.

 

Today, we are very fortunate to have with us Mr. Robert McNamara, who is a Senior Attorney with the Institute for Justice, as well as Mr. Peter Tolsdorf, who is Vice President of Litigation and Deputy General Counsel for the National Association of Manufacturers. After our speakers give their remarks today, we will move to an audience Q&A, so please keep in mind what questions you have for the cases they are discussing, or for the topic, or for just one of our speakers in particular. Thank you very much for sharing with us today. Peter, I believe the floor is yours to begin.

 

Peter Tolsdorf:  Well, thank you, Wes. It’s a pleasure to join The Federalist Society this afternoon, and I’m honored to take part in this discussion. I will be discussing today some of the environmental challenges that pipeline companies and the manufacturing industry have been facing in recent years with a focus on Section 401 of the Clean Water Act and NEPA reviews -- greenhouse gas impacts of NEPA reviews, and a recent decision involving a forest service permit for the Mountain Valley, for the Atlantic Coast Pipeline. With the renaissance in oil and gas production over the past decade, there has been even greater need than ever to transport the oil and gas from its sources to its destinations. In particular, with the Appalachian -- in the region in Appalachia regarding natural gas development, an increased need for pipeline infrastructure development needed to move the natural gas from that area to markets along the Northeast and Mid-Atlantic.

 

Additionally, with the surge of oil production, we need now to move oil out of certain portions of the middle part of the country to the populations, centers, and refineries along the Gulf Coast as well. With the proliferation of new pipeline infrastructure, there’s been increasing opposition to the new pipeline infrastructure. Keystone XL arguably started the opposition, and then, since some of the perceived successes there, opposition has spread to Dakota Access, to Mountain Valley, to Constitution, to the Atlantic Coast Pipelines and many others. And environmental groups and other opposition groups are becoming ever more creative in the legal theories they’re using against these pipelines and are utilizing all the tools in their toolbox to seek to slow and to stop new pipeline infrastructure development.

 

One area where they have had some success is through Section 401 of the Clean Water Act. That provision provides that an applicant for a federal permit or license to conduct any activity that may result in a discharge of a pollutant to waters of the United States, federal navigable waters under the Clean Water Act, must obtain a certification from the state in which the discharge originates that the discharge complies with the applicable water quality standards. When faced with a 401 application, the state has several options. They can grant the certification. They can impose conditions on their certification. They can deny the certification, or, if they do not act within a reasonable period of time, which may not exceed one year, the state is deemed to waive that certification.

 

Governor Cuomo in New York State has used his authority under Section 401 of the Clean Water Act to reject three significant oil and natural gas pipelines proposed for New York State: the Constitution Pipeline, the Northern Access Pipeline, and the Millennium Pipeline, as well. And that has generated significant litigation with some interesting decisions that continue to unfold with implications for pipeline infrastructure development and manufacturers in the United States. In two of those cases, the Federal Energy Regulatory Commission determined that the state did not act within the required one-year time period and, therefore, waived its authority. For the Northern Access Pipeline, in August of 2017, FERC found that New York State’s Department of Environmental Conservation failed to act on the application within the one-year time period and, therefore, waived its authority. A similar result with Millennium as well were they found that the state waived their authority.

 

It was not the case, however, with the Constitution Pipeline where the Federal Energy Regulatory Commission determined that, since Constitution had resubmitted its application, it had restarted the one-year clock for the 401 certification there. That triggered litigation. It went first to the Second Circuit Court of Appeals, and then that court found it lacked jurisdiction to consider certain aspects of the challenge. So litigation then proceeded to the D.C. Circuit Court of Appeals, where the case is pending and is going to be influenced in a very interesting way by a recent decision from the D.C. Circuit, which came out on January 25, the Hoopa Valley Tribe v. FERC case, where you had a situation where the states of California and Oregon required a license holder for a dam to resubmit its application frequently in order to restart the one-year clock for the Section 401 certification and did so for about a decade.

 

And then that was challenged, and the D.C. Circuit found that, when an applicant and a licensing authority have a written agreement to basically circumvent the one-year clock under Section 401 of the Clean Water Act, that the clock is not restarted, that the clock is the one-year clock contemplated for -- by Section 401 of the Clean Water Act. So there have been several interesting developments already under Section 401 of the Clean Water Act, and that litigation continues to play itself out. Constitution has asked the D.C. Circuit to consider this aspect of the Hoopa Valley ruling in its consideration and asked for a remand of the case as well. So we’ll see how that turns out.

 

And 401 has not been limited, unfortunately, to just the pipeline context. It has also been used to stymie coal export facilities along the West Coast of the United States. Governor Jay Inslee of Washington State used his authority under Section 401 of the Clean Water Act to deny a proposed coal export facility there for the necessary permits under the Clean Water Act, as well as the City of Oakland, California, denied a permit under Section 401 of the Clean Water Act for a proposed coal export facility there as well. So it’s certainly been a tool that has been effective in some circumstances in the toolbox here to oppose new pipeline infrastructure development. And there will be continued developments that will eliminate what the boundaries of that authority are for the states.

 

Another developing area for energy infrastructure development and environmental challenges is the scope of greenhouse gas review that is required under the National Environmental Policy Act for FERC to undertake for new pipeline infrastructure development. Back in 2015, there was the seminal case on this issue, Sierra Club v. FERC, which involved an environmental group’s challenge to the Sable Trail Pipeline and FERC’s, in the environmental group’s view, failure to do an adequate greenhouse gas analysis of the indirect effects of shipping the natural gas to the ultimate destinations through the Sable Trail Pipeline. And the claim there was that FERC did not undertake an adequate greenhouse gas analysis. The D.C. Circuit, there, did rule in favor of the environmental groups, in part because the new pipeline and the pipeline upgrades at issue were leading directly to three retrofitted and proposed new natural gas electric generation facilities.

 

So it was fairly clear, in that case, where the natural gas -- its ultimate destination would be. And therefore, D.C. Circuit found it was reasonably foreseeable what the gas would be used for and where it would go. However, that has not, so far at least, set a black letter rule that FERC must always consider greenhouse gas in its NEPA analyses. In fact, just recently last month, the D.C. Circuit ruled in Appalachian Voices v. FERC that FERC was not required to do, necessarily, a greenhouse gas analysis in that case and that its estimate of a hypothetically upper bounds of potential greenhouse gas impacts from the pipeline would be sufficient. And the Court there also rejected the social cost of carbon tool that environmental groups were seeking to have used in that case.

 

There’s another pending case in the D.C. Circuit, Otsego 2000 v. FERC, which involves a similar question of whether, and to what extent, greenhouse gas analyses are necessary for NEPA review under -- for new pipeline infrastructure development approved by FERC. The last case I just want to highlight, because it has potentially far reaching implications for oil and natural gas pipeline infrastructure, is a recent ruling from the Fourth Circuit, Cowpasture River Preservation Association v. U.S. Forest Service. This involved a challenge by an environmental group to a permit issued by the U.S. Forest Service for the Atlantic Coast pipeline. This is a proposed new major natural gas pipeline from West Virginia down to North Carolina. The situation that unfolded there is the company applied for a permit to cross Forest Service land, owned and managed by the U.S. Forest Service, that happened to go over, or actually under, the Appalachian Trail.

 

The Appalachian Trail system is managed by the National Park Service. And Congress has -- one interpretation is Congress has required that for any permits through National Park Service lands an actual vote of Congress is required in order to approve that crossing. Whereas, Forest Service lands are managed under the Mineral Leasing Act, and, therefore, there’s a process to get a Mineral Leasing Act Permit for crossing of Forest Service lands. The Appalachian Trail -- excuse me, the Atlantic Coast Pipeline specifically made a crossing over Forest Service lands, got a Forest Service permit under the Mineral Leasing Act. However, environmental groups claimed that, since the Appalachian Trail goes through the Forest Service lands, it’s, therefore, National Park Service lands and, therefore, managed by the National Park Service. And therefore, a crossing of National Park Service lands requires an actual vote of the U.S. Congress and approval of that crossing.

 

The U.S. Fourth Circuit Court of Appeals agreed with that reasoning. Dominion Energy, the sponsor of -- the primary sponsor of the pipeline, sought en banc review. The NAM filed an amicus brief in support of en banc review, which was denied, but the company’s made clear that they will be seeking certiorari to the U.S. Supreme Court to seek review of that case.

 

The implications of this case for pipelines throughout the East coast are rather -- could be potentially significant. There are currently 57 pipelines, existing pipelines, that cross underneath the Appalachian Trail and are subject to renewal, periodic renewal, under the Mineral Leasing Act. And if the reasoning of this decision stands, it could put at risk the renewals under the Mineral Leasing Act for those pipelines, as well, and call into question the ability of any pipeline to cross the Appalachian Trail, which runs from Georgia all the way up to Maine, without an affirmative vote of Congress. Which, of course, getting anything through Congress is challenging in recent years.

 

So we are hopeful the U.S. Supreme Court will grant review to hear this case and will provide appropriate relief here. And we will be filing in support of that case, as well, at the appropriate time. So those are the key areas that the NAM has been engaged in on environmental challenges, environmental-based challenges to new energy infrastructure development in the United States. There are a lot of other cases and challenges out there, including several on eminent domain, which I know that Bob will be covering. So I will pause there and turn it over to Bob or provide an opportunity for any questions, whatever the appropriate next step is.

 

Wesley Hodges:  Well, thank you so much, Peter. Bob, your turn for your remarks.

 

Robert McNamara:  Thank you. Thank you very much for the kind introduction, and thanks, Peter and everyone else, for taking the time to join the call. I appreciate the beginning focus on environmental challenges because I do think that’s where a lot of the conversation about pipelines happens. The question of environmental regulation, whether this project complies with environmental regulation, but essentially writ large questions about environmental regulation are questions about whether this project should be allowed to be built, whether there should be a permit issued for this project in the first place. And there’s a second question that kind of gets lost in the shuffle sometimes, which is with whose land can this project be built?

 

Obviously, pipeline projects involve the indication of eminent domain over wide expanses of land, and people, traditionally, don’t like having their stuff taken. And that is the other aspect of this litigation, and condemnation litigation about pipeline projects happens both at the state and federal level. And we’ll talk a little bit about state cases. I mostly want to focus on the federal process, which I think overlooks this distinction in ways that are detrimental, frankly, both to property owners and to pipeline companies themselves. At the state level, there’s been litigation in the past decade. Two different state high courts in Texas and in Pennsylvania have rejected pipeline takings, finding that the company doing the taking hadn’t sufficiently established that it was a common carrier, that it was authorized to use eminent domain.

 

And the traditional reason that private companies have been allowed to use eminent domain to build pipelines are the same reasons that private companies have been allowed to use eminent domain to build railroads. They’re a common carrier. They take things from the public for the public and, therefore, are entitled to be delegated the power of eminent domain. Different states have different standards they’ve imposed in terms of what actually constitutes a common carrier, what you have to do ex ante in order to qualify as a common carrier that can use eminent domain. But there has been a decent amount of litigation. There are ongoing cases pending in a number of states sort of working out where each state is going to draw that line. But where the line is not getting drawn, really, is in the federal courts, and I want to address most of my time to talking about the federal regulation of natural gas pipelines.

 

To construct a natural gas facility in the United States, you need a certificate from the Federal Energy Regulatory Commission, or FERC, and that is a process, again, largely devoted to these environmental questions, to where the pipeline’s going to be sited, to whether it complies with the various environmental and historical preservation laws. But the other thing that a FERC certificate gives you is the right to exercise eminent domain. Once a FERC certificate is issued, that essentially determines the certificate holder’s right to use eminent domain to take land necessary to build the approved pipeline. It is guaranteed and actually means that, when a company that holds a FERC certificate files a condemnation action, the property owner, or rather the district court in which the file the condemnation action, doesn’t have jurisdiction to decide any right to take questions.

 

If you’re a landowner in the path of a FERC approved pipeline, your moment to raise questions about the right to take your land is actually in the certificate approval process itself. Courts have consistently held that landowners are supposed to intervene in the certificate process, raise any of their objections there, and to the extent they don’t, the condemnation court doesn’t have jurisdiction to entertain questions about whether the condemnation is permissible under the Fifth Amendment, under the Religious Freedom Restoration Act, under any of the objections that one might want to raise to a federal condemnation. Those have to be raised by intervening in the certificate granting process itself. And this raises a few different problems that I think are kind of percolating with federal condemnations for natural gas pipelines.

 

One of them is just that the basic notice involved in the FERC certificate process itself. If you are a potentially affected landowner in the path of a proposed pipeline, you get notice. You get an enormous package of paper, a package of paper that, again, is largely devoted to the question of whether this pipeline should be permitted in the first place, whether it’s complying with environmental laws, whether this thing should be authorized. To use sort of a state law analogy, the FERC notices look a little bit like the zoning notices you would get if your neighbor wanted to build a new deck. So people read them, and they say, “Oh, my neighbor can build a new deck. I don’t mind if my neighbor is going to build a new deck.” And they don’t clearly tell you that this is your one moment in time to challenge the right to take your property in the future.

 

That is a problem. Two different appellate courts in the past 15 years or so, the Second Circuit and the Tenth Circuit, have held that there’s a due process right to the extent your formal right to challenge the government’s right to take your property is being extinguished in a proceeding. That right has to be clearly stated in the notice. You have to be directly informed of that in a way that a lot of FERC notices, I think, bury the information in ways that, honestly, I think pipelines should be as concerned about as property owners are because, fundamentally, what this does is it puts a time bomb in the line of any given pipeline project. A person who has not received adequate notice, a person who actually didn’t understand that their rights were being expired, when they get condemned, is going to have a due process argument that has been accepted by two different Courts of Appeals over the past 15 years.

 

It’s never been litigated in the FERC context, but it is lurking out there. I should note that FERC itself seems aware of this problem. Last year, they issued a notice of inquiry to solicit comments about adjusting their use of eminent domain, how they approve eminent domain. So there may be changes on the agency side coming on this front. But also, because the FERC process is structured as, essentially, an approval of whether the project can be built, FERCs findings are also dedicated to whether the project can be built. I mentioned earlier that there’s state court litigation about whether a given project is a common carrier and whether that justifies the use of eminent domain. FERC, in issuing a certificate, actually doesn’t address the question of whether the project is a common carrier.

 

I imagine many or most of them are, but it’s actually not a criterion for granting a FERC certificate, again, because the process does two things. It addresses whether you may build the project, and it addresses whether you may use eminent domain. But its criteria all go to process one; they don’t go to process two.

 

And kind of third and final way, and in some ways the most troubling way, that there are federal problems kind of percolating through the system in how pipelines are being built and how eminent domain is being used, is the actual manner in which land is transferred. Broadly speaking, the power of eminent domain is akin to -- the Supreme Court has likened it to an auction contract to buy land. The way eminent domain works is a condemner files an eminent domain action. The purpose of the eminent domain action is to litigate about the appropriate value of the property. And at the end of the case, the condemner has an option to buy the land at the adjudicated price.

 

The government doesn’t always want to wait for final judgment and so has a separate power, which is the quick take power. Under the Declaration of Taking Act, a condemner can grab immediate possession of the land upon payment of its best estimate of the appropriate just compensation for that land. And then the parties can litigate about whether there should be more compensation than that estimate.

 

The difficulty with the Natural Gas Act is the Natural Gas Act only delegates the ordinary power of eminent domain. It delegates the power to create this option contract. It doesn’t give certificate holders the power to use the Declaration of Taking Act to do the quick take. But what’s happening is it seems almost literally every time there’s a federal condemnation, the federal condemnation comes from a company that has a schedule. They have a construction schedule.

 

They file their lawsuit, and they say to the courts, “We have to meet our schedule. We need this land now. We can’t wait until final judgement. How about you enter a preliminary injunction giving us immediate possession of the land so that we can construct our pipeline?” And federal courts look at this and, by and large, say, “Well, your right to take is dispositively determined. I don’t have any jurisdiction to question that, so your eventual ability to condemn the land is all but assured. And you have very good arguments that you’re going to blow your schedule if you don’t have this land now, so I’m going to enter a preliminary injunction giving you immediate possession of the land.” And this essentially, for property owners, creates the worst of both worlds.

 

It has the immediate possession of the Declaration of Taking Act, but you don’t get compensation until final judgement, until the appropriate price of the property is adjudicated. And so from the property owner’s perspective, the upshot is they lose their land very early in the litigation, and they don’t actually get a single dollar of compensation for months or years afterwards, which is unique, as far as I can tell, in the practice of federal eminent domain. Any other federal condemnation, the money flows with the transfer of the land. It doesn’t do that in the context of nearly every Natural Gas Act condemnation because the land is transferred by preliminary injunction. This is the only context that I’m aware of, really, where substantive property rights like this are transferred by preliminary injunction. The courts have justified the transfer by saying that, since the right to take is predetermined in these cases, they’re only transferring a substantive right. They’re only adjusting the timing of possession. And the timing of possession of property is not a substantive right, which I, frankly, find a difficult argument to follow.

 

We all spent an awful lot of time in law school learning about life estates and springing executory interests and many other things that are all about the timing of property. There were weeks on end in property class that were just about the timing of possession. So property owners have been objecting to this system. They have largely been unsuccessful in the lower courts, though there are two currently pending petitions for certiorari of which I should disclose I am counsel of record on one with the U.S. Supreme Court. I think there’s a third one coming out of the Fourth Circuit in the coming weeks. So this is an issue that is also on the Supreme Court’s agenda with multiple circuits having weighed in, multiple groups of property owners all seeking certiorari.

 

I think plausible arguments on the pipeline company’s side that what they really need is immediate possession of the land, and the difficulty is they just have not been given the quick take power by Congress and instead have persuaded the district courts to create this neither fish nor fowl system of “take now; pay later” that is unique and uniquely burdensome on property owners in a way that I think is causing serious problems all across the country. I’ve gone on for quite a while, so I’m happy to stop there. And we can have some cross talk and some questions and hopefully a lively discussion.

 

Wesley Hodges:  Excellent. Well, thank you so much, Bob. Peter, do you have any comments you’d like to share before we move to questions?

 

Peter Tolsdorf:  No, nothing to add on the eminent domain piece. As manufacturers and the energy industry, we support a fair, sensible, efficient eminent domain process that results in just compensation under the Constitution. So nothing further to add on that one.

 

Wesley Hodges:  Wonderful. Well, thank you, Peter. It looks like we do have one question from the audience. Let’s go to our first caller.

 

Rod Sullivan:  Peter, this is Rod Sullivan in Jacksonville, Florida. I know you’re a lawyer, and if you can’t answer this, I understand. But I have a factual question. In light of the fact that natural gas is such a better choice for the environment than coal or heavy oil, what are these greenhouse gas analyses producing to show that a pipeline shouldn’t be constructed when it would be clearly beneficial from a greenhouse gas perspective?

 

Peter Tolsdorf:  First of all, thank you for your question. It’s an excellent one. So I’ll give the Sable Trail Pipeline analysis for example. When FERC had to go -- after the Sable Trail ruling, when FERC went back and did the greenhouse gas analysis for Sable Trail, one of the things it analyzed was the fact that the generation from natural gas would be displacing a certain amount of coal generation. And that would actually have net positive greenhouse gas impacts from the portion of the coal generation that the natural gas would be displacing. And FERC has done other greenhouse gas analyses on other pipelines and has looked at all the relevant factors. And so it’s certainly possible that you may end up with a net reduction in some circumstances.

 

And one of the challenges FERC has had, in addition to looking at the energy mix and the fuel mix there for the different sources, is what the natural gas will end up to be used for. If there is a new line that serves and existing interstate natural gas transmission line, there’s no way to know where those molecules will end up. They may end up being used for plastics, or they may be used for other feedstocks, for other chemical materials. They may be combusted in natural gas turbines. So there is an inherent degree of uncertainty that FERC has pointed to in their statements on this issue when you have natural gas going into the system, the interstate pipeline system, sort of how and where it will be used.

 

So there’s some challenges there, but certainly, to your question, when they’re looking at the fuel mix and considering these issues, when they have considered them, they have looked at sort of the relative contribution of natural gas versus coal versus other potential energy sources and taken that into account in their analysis.

 

Wesley Hodges:  Well, thank you, caller, for your question. It looks like we do have another question from the audience, so let’s go ahead and move to our next caller.

 

Roger Candelaria:  Hi, this is Roger Candelaria from Colorado, and thank you, first of all, to you fellows and The Federalist Society for such an interesting presentation. This may be, in some ways, a dumb question, but the 401 permit, that’s a federal statute. And so if the governor of a state has say over whether -- has discretion in some way over whether or not to approve something defined by federal law, it bothers me a little bit just in terms of the structure -- the constitutional structure, whether the decision like that shouldn’t be made by an Article III court, since it’s in a sense kind of quasi-judicial under federal law and whether or not it sort of -- the whole process, that structure, sort of defeats the duel sovereignty of checks and balances between the state sovereignty and federal sovereignty.

 

So I’m sure I’m missing some other questions that are related to the whole constitutional structure besides, not to mention, the Ninth and Tenth Amendments. But I wonder if you could comment on how you see those issues.

 

Peter Tolsdorf:  Thank you for your question. It’s an excellent one, and you are right to identify this aspect of Section 401 of the Clean Water Act. It is an area of the Clean Water Act where Congress did give states very specific powers. And in general, the Clean Water Act -- I believe it’s Section 101 of the Clean Water Act provides generally that states are in the driver’s seat on a lot of the Clean Water Act programs. And certainly for implementation, Section 402 of the Clean Water Act is the discharge permit section of the Clean Water Act, and I believe all but a handful of states actually administer the 402 program as states with some EPA oversight. So the framework of the Clean Water Act in general does have a lot of solicitude for the states and does provide the states with a lot of authority in the first instance.

 

And Section 401 is an example of that, where the statutory language clearly provides that states have the ability to grant, deny, condition, or waive the permits necessary for otherwise federal approvals for projects like the Section 7 permitting under the Federal Energy Regulatory Commission for natural gas pipelines that we’ve been talking about. There are limits to that discretion, but it is an area where the Clean Water Act, by statute, does provide states with some authority there. And the question that regulators and courts have been struggling with is, now that these powers are being used for purposes that go beyond environmental considerations, for example, a lot of the statements -- public statements by Governor Cuomo in New York related to Constitution and other pipelines clearly suggest that there are considerations at play beyond, perhaps, strictly environmental consideration.

 

There’s a question about, you know, what can be done to put some reasonable guardrails on that exercise of discretion. Enforcing the one-year time period is one aspect of it, and FERC is looking at that and has made some statements on that. And the courts have had their say on that so far. But your question’s a great one. I mean, it is a federal and state sharing of power in the Clean Water Act. And in some provisions, states have a bit more power, and in other provisions, the EPA and the federal government does. But you’re right to notice that.

 

Robert McNamara:  And it is worth noting here this structure of multiple decision makers imposes kind of a separate problem on the eminent domain front, which is the initial FERC approval. As I said before. FERC’s grating the certificate grants the power of eminent domain, delegates the power of eminent domain to the pipeline company, which puts the company and the courts and the property owners in this very unusual position where the company is condemning land, and they’re asking for a preliminary injunction to let them go onto your land and cut down all your trees. And the property owner says, “Well, what are you going to do with this?” And their response is, “We’re going to build a pipeline if Andrew Cuomo says it’s okay.”

 

Usually, once the government’s condemning, the government’s condemning for a project that has been approved. But these condemnations are happening kind of in the midst of this sort of multiple veto point system that injects a lot of uncertainty about whether these trees are being cut down for a project that is or is not approved. The eminent domain comes with the FERC approval because the statue assumes that FERC is in charge of approving whether the pipeline can be built. But actually, FERC isn’t the final word on whether the pipeline can be built. It’s just the final word on whether or not land can be taken for the pipeline.

 

Wesley Hodges:  Wonderful. Well, caller, thank you so much for your question. We do have another question in the cue. Let’s go ahead and go to our next caller.

 

Rod Sullivan:  Peter, this is Rod Sullivan again. You had mentioned the two coal projects in Oregon and California which had been stopped. Do you get the impression that they stopped the projects because they were anti-coal and that environmental concerns were just a pretext for stopping them? Or was there a deeper motivation besides that?

 

Peter Tolsdorf:  Thank you for your question. Based on public statements made by Washington State Governor Jay Inslee and his Deputy, Maia Bellon, and others that the Department of Environmental Conservation in Washington State, it is, I think, very clear to any casual observer, based on the statements that they’ve made, that it was politically motivated. And you may have seen Governor Inslee has announced a presidential bid for president, based in part on climate change and his efforts on climate change. And then in the Oakland, California, case, the Oakland City Council there had several public statements and tweets and other media posts make it clear that that is the driving force there as well.

 

And New York State as well. Governor Cuomo, he has made clear his support for clean energy and his efforts to get New York to be a, quote, "clean energy state." And so just based on the public statements that have been made, I think it’s reasonable to infer that political considerations are a significant factor here.

 

Rod Sullivan:  But the actually justification given was the fact that under 401 this was somehow going to adversely affect fisheries on the West Coast. Was that it?

 

Peter Tolsdorf:  For 401, yeah. Well, it was fairly broad. So it was the water quality impacts to the harbor where the coal terminal would be installed, then, broader environmental considerations as well. Which in our view are beyond the scope of the Clean Water Act since it’s about Clean Water, not about broader environmental considerations. But the primary hook was the impacts to the local harbor there with the construction activity that would be required to undertake the construction.

 

And keep in mind, this isn’t about discharge of pollutants to the waterways. This is about, basically, basic construction activity, earth moving and other construction activity required to construct the terminal and the loading facility for the ships. So they objected to turbidity and I recall some other localized, temporary impacts to the waterways related to the construction activity itself.

 

Rod Sullivan:  The broader environmental impact is that coal was going to be burned in Korea and China and that it’s going to contribute to the CO2 in the atmosphere. And that somehow falls under the federal government’s responsibility to regulate what generates electricity in other countries?

 

Peter Tolsdorf:  I do recall the concern being that the ultimate destination for the coal is western Asian markets, Korea in particular and Japan. I don’t recall -- it may have been in there, but I don’t recall the specific link being made back to the Clean Water Act through that. But that may have been. But certainly, the objection was the destination for this coal would be Asian markets where it would be burned for electricity and contribute to climate change.

 

Wesley Hodges:  Well, thank you so much, caller, for your question. We do have another question in the queue. Let’s go ahead and move to our next caller.

 

Caller 4:  I have a question that relates to eminent domain type issues. When an easement for a pipeline is obtained under threat of the exercise of eminent domain but the easement is actually acquired by contract and the pipeline company agrees to restore the land as near as practical to its original condition, if they fail to do so, is there any administrative remedy or recourse?

 

Robert McNamara:  Unfortunately, there probably is recourse, but the recourse is entirely under state law. For better or worse, courts consistently treat agreements signed in the shadow of eminent domain as arm’s length agreement. I think there’s very good practical reason to understand why they’re not arm’s length agreements. Just as in a bank robbery, that is not an arm’s length transaction when the bank teller hands the money to the gentleman with the gun. But nonetheless, if any condemnation outside the context of an actual court judgement is just treated as a contract, and failure to abide by the terms of that contract is a state court action against the private condemner here.

 

Wesley Hodges:  Wonderful. Well, thank you so much, caller, for your question. Seeing no immediate questions from the audience. Bob and Peter, I turn the mic back to you. Do you have any thoughts you’d like to go into more detail. We do have time for that. Otherwise, do you have any closing remarks for us today?

 

Peter Tolsdorf:  Peter Tolsdorf here. I’d just like to close by thanking The Federalist Society and all the callers on today’s call for calling in and listening. And the National Association of Manufacturers fights hard in the courts on these issues. On many of the cases I mentioned today, we filed legal briefs in support of manufacturers in the courts to insure the continued reliable supply of oil and natural gas and other refined products to consumers and businesses to continue to drive prosperity in this country. And we will continue the fight, and we appreciate all the support out there from our members and from the public.

 

Robert McNamara:  Yeah. And I would just like to echo the thanks. I appreciate the opportunity to talk to everyone. I think I would just say that I think pipeline construction is an especially interesting area of the law, particularly for people on the more Federalist Society end of the spectrum, because I think it kind of triggers two different instincts. I think people who lean more to the conservative side tend to be in favor of development, in favor of allowing development to proceed, but they also tend to be in favor of property rights and in favor of not displacing people from land that they’ve worked so hard to own.

 

I think the important thing to bear in mind in evaluating pipeline policy is to ensure that we don’t focus so much on the permitting aspect that we lose sight of the actual property owners who are frequently losing out in these transactions. Their rights matter, too. Their voices matter, and this is not just a debate about environmentalism. It’s actually a debate about specific individuals, and we should make sure we spare some of our focus for them. Thank you all very much.

 

Wesley Hodges:  Wonderful. Well, on behalf of the Federalist Society, I would like to thank our experts today for the benefit of their valuable time and expertise. We welcome all listener feedback by email at info@fedsoc.org. Thank you all for joining. This call is now adjourned.

 

Operator:  Thank you for listening. We hope you enjoyed this practice group podcast. For materials related to this podcast and other Federalist Society multimedia, please visit The Federalist Society's website at fedsoc.org/multimedia.