[00:00:01] Speaker 03:
Case number 22-1233, Sierra Club petitioner versus Federal Energy Regulatory Commission.

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Mr. Matthews for the petitioner, Ms.

[00:00:11] Speaker 03:
Chu for the respondents, Mr. Joyce for the respondent interveners.

[00:00:31] Speaker 07:
Good morning, Mr. Matthews.

[00:00:32] Speaker 07:
You may proceed when you're ready.

[00:00:35] Speaker 00:
Good morning, Your Honor, and may it please the Court.

[00:00:36] Speaker 00:
Nathan Matthews on behalf of the petitioner of Sierra Club.

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I'd like to reserve three minutes for rebuttal.

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We have two cases today that challenge FERC orders of approving extensions of the lines for construction of natural gas infrastructure projects.

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This case challenges the Northern Access Pipeline, a 99-mile pipeline that would connect Pennsylvania and New York.

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And we have two issues on this case regarding FERC's finding that there was good cause for an extension and FERC's handling of changed circumstances.

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On good cause, I'd first like to set the context for where these deadlines come from.

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FERC sets a deadline for the construction of infrastructure projects because FERC recognizes the findings underlying its public convenience and necessity determinations can grow stale with the passage of time, and FERC recognizes that there can be market disruptive effects from having approved pipelines that aren't actually built.

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has strong reasons for including these deadlines in its orders.

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And the Natural Gas Act and FERC regulations do not provide a right to an extension.

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FERC provides that it may extend a deadline upon the showing of good cause.

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And that showing of good cause is appropriate to not extend a deadline unless there's a good, excuse me, a good reason why the developer has failed to meet its prior commitments.

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Here on the good cause inquiry,

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The developer for years prior to the extension failed to take action to renew permits that are essential to completion of the pipeline.

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Typically the Clean Water Act section 404 permit and the approval under the Endangered Species Act.

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And FERC has never made a finding of good cause for an extension and issued an extension in circumstances like this before.

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FERC has never held that where there's a permit that the applicant needs before the applicant can proceed

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but that the applicant is neither making progress towards attainment of that permit, nor has explained why the applicant is not doing so, that the applicant has good cause for an extension.

[00:02:32] Speaker 07:
So it seems to me that good cause is a potentially broad concept.

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And your position seems to want us to require a specific aspect of good cause, which is due diligence.

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I take your position to be that,

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National fuel must show due diligence, and they did not do so in this case.

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But this diligence requirement does not seem to be consistent with other formulations of the good cause requirement.

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Even in the second case that you're arguing today, you acknowledged that the standard is good faith efforts to meet the deadline, but encountered circumstances that prevented them from doing so.

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So I guess my question would be like, where do you get this diligence requirement?

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And then I want to explore why you think they weren't diligent in this case.

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So we get it from FERC.

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I mean, FERC's orders have said that what good faith efforts to complete the project means is diligent or active pursuit of the project.

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And our claim isn't quite.

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They've also said interested in pursuing the project.

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It's not in every case sort of homing in on diligence, is it?

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No, I agree that FERC has not consistently or clearly defined

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what the standard is.

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Also, our claim here is not quite that the facts here conclusively established that they failed to meet the standard.

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It's that we have facts that the inaction on these permits at least indicates that they were not engaged in good faith pursuit of the project or acting diligently or whatever the standard was.

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There was evidence that calls could cause into question, and that nowhere in the record did FERC confront that evidence, even though Sierra Club in New York repeatedly called FERC's attention to it.

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So the argument here is a failure to consider an important part of the problem claim, rather than a claim that they reached facts or a conclusion that was definitely wrong.

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So it seems that FERC considered the fact that there was litigation that cast into doubt whether this project could conclude.

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And so that takes us through, I think, August 20 of 2021, and then

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National Fuel asks for its extension five months later in January.

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And it seems that in the overall scheme of things, they were litigating this issue, which was an important issue, and that shows that they were in good faith, interested in doing the project and in good faith pursuing it by litigating this issue.

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And then there's this five month gap.

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And I take you to be saying that because they didn't pursue renewal of two of these,

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many permits during this five-month gap, they did not show good cause for an extension?

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It just seems very- A few answers to that question, Your Honor.

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One is that it's not just the five-month gap between when the deadline for petitioning for cert or the second circuit decision expired and they filed their application.

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We also point to the time between when the application for an extension was filed and when FERC actually acted on that application.

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But they did do something there on their chart.

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There was... I don't believe that they do anything, but I... I think there was, I can't... There's a reference to something that happened up through a date that may have included September 20 to 21, but that's not related to the permits we're talking about here.

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They also mentioned there, I draw a distinction between times when permits were issued based on outstanding applications and times when the applicant actually did something to advance those permits.

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But part of our argument is that after August 2021, there was no action on behalf of the applicants.

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to pursue these permits that are the ones that the applicant themselves said are why they needed a longer extension than you might otherwise think.

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We didn't just pick these permits out of nowhere.

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These are the two that they said, even though it's only going to take us 12 months to build the project and it's only going to take us six months to buy the materials, we need an extra year on top of that to go ahead and redo these permits.

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And we said, well, why haven't you started that already?

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That leads to the second part of this, which is that there is nothing in the record that asserts that they could not have renewed these permits while that litigation was pending.

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And it's clear that they could have.

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But is that the standard?

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That they could not have done so means that they are not in good faith pursuing the project.

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How much time do you think should have gone by after August of 2021 before they had to start?

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I mean, our view is that they should have been acting in anticipation of being prepared to start construction, or at least being prepared to start buying the materials at that time, that they should not have waited until this time.

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And we're not.

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setting up an impossible hurdle.

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If you look at their prior extension requests, the National Fuels 2018 extension request that led to the extension in January of 2019, or their premature 2020 extension request, at those times, National Fuels said, even though the Section 401 litigation is ongoing, we're still taking action to renew these 401 ESA permits.

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They showed that they could do both at the same time.

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And that's what other pipeline developers do too, is that they

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work to clear everything at once, because for these projects.

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But if I may, it seems to me that you're saying that if they, because they did not more promptly try to renew two out of many permits, that precludes a finding that they acted in good faith to move this project forward?

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No.

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That requires work to address whether that inaction is consistent with the funding.

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But if it's not required, they can find good faith without addressing this specific issue, can they not?

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FERC has to ask whether there was some way in which the 401 litigation did justify the failure to pursue those permits.

[00:08:25] Speaker 07:
I think they have to address this.

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We think the FERC has to address the issue.

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We don't know that the answer to that has to be based on facts not on the record here, but if FERC conducted an inquiry that the failure to pursue these permits definitely doomed the good cause finding.

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But we do think that FERC had to address it and address whether or not these

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failures to act consistent with them.

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So I have a record site now at J.A.

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14.

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In April of 2022, they submitted a renewal request for the programmatic P.A.G.

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10 permit.

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That's I don't believe J.A.

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182.

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J.A.

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140.

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That is not related to the two permits that we're concerned with here.

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That is not part of the Clean Water Exception 404 permit.

[00:09:21] Speaker 07:
Yes, but it shows that they are moving forward with the project.

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That they didn't go forward with two permits doesn't mean that they weren't in good faith trying to bring this project forward.

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We believe that there's a question on that front that we needed to confront, that every other pipeline developer

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tries to clear all of the hurdles rather than doing it one at a time.

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And that's, in fact, what National Fuel did here with its initial approvals and its conduct up into 2020.

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And so if National Fuel knows that it's not going to be able to build without a 404 permit, it isn't bothering to get a 404 permit.

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We think that that shows a lack of seriousness in pursuing this project.

[00:10:00] Speaker 05:
Well, let me ask you.

[00:10:01] Speaker 05:
Congress didn't set a standard time or even any guidelines and left it to the commission

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And I get your point about there's one way to look at these things and say, you don't get any extension unless you've done absolutely everything.

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There's no give here.

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And even though you're spending money on litigation, even though you're spending money on planning, even though you're spending money on other construction related to the pipeline, there are important things that are not happening.

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And those things are significant to the extent that the project can't go forward unless these permits not only are obtained, but that they remain current.

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So my question to you is, precisely what must this court say

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regarding the standard that FERC has to apply.

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I mean, we're obviously not going to say, well, if there are eight things you have to do, you've got to do at least six of them for the obvious reasons.

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But the sort of judgment call that you're asking for here is I understand it and I may misunderstand it.

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is it's not enough even though we're in a pandemic.

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And even though the agency has had other cases where it's well aware of what's happening to the supply chain and other matters that are adversely affecting construction and employment and the ability to move projects forward, that's not good enough that we require that

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the developer individually show that it expected to get supply A within six months, and now it's been told by the supplier, it's not going to get it for 12 months.

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Is that the type of standard?

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In other words, the cases I've seen are where the developers

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keep a finger in the pie, but the hand is busy doing something else.

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I don't see that record this way.

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And yet what you're arguing is supported by the record.

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The developer did not do certain things.

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But why would we find that the commission here has acted arbitrarily or it's failed even

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to recognize that there is this issue.

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How do you write that opinion?

[00:13:17] Speaker 00:
Well, I can try to simplify that in a couple ways for you, Your Honor.

[00:13:22] Speaker 05:
All right.

[00:13:23] Speaker 00:
First of all, in this case, there is nothing in the record, no assertions that the pandemic or supply chain issues had anything to do with the delay here.

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That's it.

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What?

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that there's nothing about the pandemic in this, in case 22-1233 about the Northern Access Pipeline.

[00:13:41] Speaker 05:
I'd be happy to talk about the pandemic in the next- But the commission references other cases.

[00:13:48] Speaker 00:
I don't believe the commission is referencing the pandemic cases in the record here, although I couldn't swear to that.

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I can answer some of the other questions about, you know, we are not saying that the court needs to make a judgment call of

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is pursuing six out of eight things enough or something like that.

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The order that we're asking for here is to say to the commission, you were confronted, that the commission was confronted with evidence indicating that the developer was not pursuing this project as vigorously as it had been before and as vigorously as other developers do.

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And the commission needed to say something about that, to acknowledge that evidence and either say- So that's what I'm getting at.

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What is the standard?

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You say not doing as much as other developers.

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Well, are other developers doing six out of eight things?

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I mean, how do you put some specificity into this when good cause as Judge Pan emphasized is such a broad term and judgment calls, depending on the project, depending on the developer, what reputation may or may not exist, et cetera.

[00:15:02] Speaker 00:
So in the other cases that FERC cited here, the developers were doing eight out of eight things.

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There is no case that FERC cited where the developer

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was leaving something on the table and saying, we'll get to that later.

[00:15:16] Speaker 07:
That means it's sufficient, but not necessarily necessary.

[00:15:19] Speaker 07:
Those are examples of people who did, but FERC never said, we must do this in every case in order to show good cause.

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But FERC needs to acknowledge that the facts here are different than in its prior cases and explain why that difference doesn't matter.

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And so given that this is something that FERC has never done before,

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and that nowhere in the record did FERC say, we are not bothered by the failure to renew this 404 permit.

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FERC just didn't acknowledge it at all.

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FERC didn't defend or provide a basis for this court to determine or for us to determine whether or how it actually thought about whether doing six out of eight things was enough.

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And the two things that were not done are the specific ones that the developer called to FERC's attention

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as being, hey, we haven't done these things and we need more time for them.

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We didn't pick some random T that wasn't crossed out of the record.

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We said, if you're gonna need more time to do this, you ought to explain why you haven't done it yet.

[00:16:19] Speaker 07:
And you're asking for a vacator.

[00:16:20] Speaker 07:
So you're saying because they didn't try to renew these two out of many permits during this five-month period, they should go back to the drawing board and start over?

[00:16:29] Speaker 00:
We are asking for a vacator.

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That's the default remedy, and neither of the respondents

[00:16:35] Speaker 07:
You're not asking for it in the other case.

[00:16:37] Speaker 00:
No, we're not in the other case.

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In this case, none of the respondents disputed that the vacatur was the appropriate remedy.

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And in just last month, this court affirmed in the Eagle County, Colorado versus Surface Transportation Board case that where the government and the respond and the intervenors don't dispute the vacatur is the appropriate remedy, the court will not depart from that default.

[00:17:00] Speaker 00:
So we are asking for vacatur.

[00:17:02] Speaker 00:
We didn't understand it to be in dispute here.

[00:17:05] Speaker 00:
If the court disagrees, that is not the most important issue to us in this case.

[00:17:14] Speaker 05:
I see that I'm well over time and we've- Let me just ask you, counsel, since you're familiar with these cases on the ground.

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What I'm not grasping in the argument

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is we send this back to the agency and the agencies.

[00:17:35] Speaker 05:
Yes, we know that the developer wasn't doing this, but we're not worried about that for the following four reasons.

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Your discussion with Judge Pan suggests that would be satisfactory to you.

[00:17:51] Speaker 00:
Well, I don't know that the commission would be able to come up with four reasons on remand as to justify this.

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So I think that

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It's not clear, like, if the commission could come up with reasons and justify them and explain why, although their prior practice was to grant extensions when people were pursuing all options, they were relaxing that standard, or that was sufficient but not necessary, as you stated, that would be a more robust record for the commission to try and stand on than what they have here.

[00:18:18] Speaker 00:
But I'm not sure that the commission will actually go there on remand.

[00:18:24] Speaker 05:
So is your concern in part, I mean, you say this never happened before.

[00:18:28] Speaker 05:
Well, FERC didn't exist back in some of the earlier epidemic days.

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So now we have COVID come and it is different and all kinds of things are happening that are unprecedented.

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It's the concern here that

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The commission just gave too light a hand to the good cause standards such that it's been melted down almost to, well, if you're still interested in the project and you've done a few things, that's enough.

[00:19:17] Speaker 05:
You haven't abandoned the project.

[00:19:20] Speaker 05:
Is that where we are?

[00:19:24] Speaker 00:
In the, our concern is that that was where we've ended up for the two cases that are before the court today.

[00:19:28] Speaker 00:
I don't believe that the commission had been there previously.

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I also want to reiterate that there is nothing in the record for the Northern Access case arguing that the pandemic was in any way a problem for this pipeline.

[00:19:42] Speaker 00:
But yes, I mean, our concern is that we do not know exactly what the commission interprets the good cost standard to be.

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over an issue in the background of both of these cases.

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But in both cases, our concern is not so much with the standard, but either the failure to confront evidence before it that appears to lean against the commission's position or the failure to present any evidence supporting the commission's position.

[00:20:09] Speaker 00:
And so whatever the standard is, these evidentiary and factual questions are things that the commission needed to talk about.

[00:20:15] Speaker 00:
And then had the commission actually addressed those evidence, then maybe we would have something to say about what the standard is

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whether it was met here, but we don't even get there yet because the commission is not confronting the evidence, much less explaining why the evidence does or does not fall short of its standard.

[00:20:34] Speaker 07:
I just want to ask, do either of my colleagues want to hear about the second issue in this case, about the Climate Act?

[00:20:45] Speaker 05:
I'm not going to ask any questions now about that.

[00:20:49] Speaker 04:
Well, I would like to ask, I guess,

[00:20:51] Speaker 04:
Assuming it wasn't waived, what is your best authority that the commission has to consider these state statutes?

[00:21:02] Speaker 04:
I mean, I can see where 50 different states might come up with legislation that someone would argue is going to affect FERC.

[00:21:17] Speaker 00:
So our authority is the Environmental Defense Fund versus FERC case, which says that FERC needs to look at evidence about diminishing or lack of growing demand.

[00:21:29] Speaker 00:
So New York isn't trying to regulate the pipeline.

[00:21:31] Speaker 00:
New York is just regulating gas demand and projects that it's going to do so quite effectively with an 83 to 95% reduction in gas demand over the life of the pipeline.

[00:21:42] Speaker 00:
And so the Environmental Defense Fund

[00:21:45] Speaker 04:
This isn't just serving New York.

[00:21:49] Speaker 00:
Go ahead.

[00:21:52] Speaker 00:
It is predicated in part on servicing New York.

[00:21:54] Speaker 00:
Even FERC's brief says that the FERC found that the pipeline was in the public interest because it would deliver gas to local distributors in New York.

[00:22:02] Speaker 00:
And in city of Oberlin, this court held that when one of the pillars supporting FERC's decision is undermined, this court will not just assume that the remaining pillars could bear the weight.

[00:22:14] Speaker 07:
So looking at the record, JA 179, that's paragraph 32 of the permit, it says the total incremental firm service, 140,000 DTH per day, 28%, is delivered to the Tennessee system for markets in the northeastern U.S., so not specifically New York.

[00:22:34] Speaker 07:
And then the remaining 357,000 will be carried over the system for intended delivery into Canada.

[00:22:43] Speaker 00:
Yeah, FERC also remarked that the remaining, the 357,000 was not necessarily going to go to Canada, and it contended.

[00:22:50] Speaker 07:
It has an option for delivery, but it's intended for Canada.

[00:22:53] Speaker 07:
So it just doesn't seem that the bulk of this gas is going to New York.

[00:22:59] Speaker 00:
No, it's, yeah, the 140,000 is 27% of the gas, which is, I think, similar to the percentage it was issued.

[00:23:05] Speaker 07:
That's not all going to New York either.

[00:23:06] Speaker 07:
It's going to the northeastern US.

[00:23:08] Speaker 00:
So it would have been fine for FERC to say that the reduction in New York demand is not a concern because we are confident that there is enough demand in other states, but FERC didn't say that.

[00:23:20] Speaker 07:
FERC did not say we are not relying on the New York demand because... So FERC said there are no other factors that will affect our decision that there's necessity, and they said that

[00:23:33] Speaker 07:
this gas is fully subscribed for 15 years.

[00:23:36] Speaker 00:
They said that this gas is fully subscribed from a producer.

[00:23:38] Speaker 00:
They have someone who wants to sell the gas.

[00:23:40] Speaker 00:
The precedent agreement does not give any evidence that there's someone who wants to buy the gas.

[00:23:47] Speaker 07:
So if we have evidence that actually there isn't a buyer.

[00:23:53] Speaker 00:
Ferc's practice as a firm in environmental defense fund versus FERC is that precedent agreements, whether it's with a buyer or a seller is important

[00:24:02] Speaker 00:
evidence, but it's not necessarily sufficient evidence.

[00:24:06] Speaker 00:
And the precedent agreements typically are only one side of it.

[00:24:09] Speaker 00:
It's a producer and the pipeline or the pipeline and a buyer, but it doesn't get you from a producer to an end user.

[00:24:16] Speaker 07:
But why isn't it enough to say that we don't think there are new factors that affect our decision making and this is fully subscribed?

[00:24:24] Speaker 00:
Because Environmental Defense Fund versus FERC said that it is arbitrary for FERC to rely exclusively on precedent agreements.

[00:24:32] Speaker 00:
in its finding of public interest, when the precedent agreement is with us.

[00:24:35] Speaker 07:
But aren't you too late to raise that?

[00:24:37] Speaker 07:
Because you should have raised that when they issued the certificates.

[00:24:40] Speaker 00:
No, because when they issued the certificate, we didn't have evidence that there was a decline in demand.

[00:24:45] Speaker 00:
They issued the certificate in 2017.

[00:24:46] Speaker 07:
No, but that's a different issue.

[00:24:48] Speaker 07:
You're saying they can't rely on the precedent agreement.

[00:24:51] Speaker 07:
They relied on the precedent agreement to issue the certificate, and you can't collaterally attack that now.

[00:24:56] Speaker 00:
Well, so our claim is that we can, but it's not a collateral attack, because we are not arguing that the certificate was invalid when issued, and we aren't arguing that there wasn't a need for the pipeline when it was issued.

[00:25:06] Speaker 00:
But in 2019, when New York decided to reshape its gas markets, that's a new factor that shows that there is no longer demand.

[00:25:15] Speaker 07:
But they relied on these precedent agreements in 2017 to say there's enough demand, and that has not changed.

[00:25:21] Speaker 07:
And you can't attack that now.

[00:25:23] Speaker 00:
Our claim on the change circumstances issue is that FERC cannot extend the deadline without amending the certificate.

[00:25:32] Speaker 00:
FERC has to use its 15 U.S.C.

[00:25:36] Speaker 00:
7170 authority if it wants to extend the deadline.

[00:25:39] Speaker 07:
That would be only if, though, this new factor affected

[00:25:45] Speaker 07:
the grounds that relied upon in the initial certificate.

[00:25:48] Speaker 07:
Every petition to extend is not a reopening of the entire certificate process, is it?

[00:25:55] Speaker 00:
We don't think the court needs to decide that issue, but we do think that the court needs to address that in the specific case of extending a deadline.

[00:26:03] Speaker 07:
Right.

[00:26:04] Speaker 07:
You're saying every time somebody moves to extend a deadline, they have to re-examine all of the assumptions?

[00:26:09] Speaker 07:
in the certificate, and that seems really unwieldy and not required at all.

[00:26:13] Speaker 00:
So the reason we think that is because FERC has said that the reason it put a deadline there in the first place was to guard against changed circumstances.

[00:26:23] Speaker 07:
So the Algonquin gas standard is that

[00:26:29] Speaker 07:
If a certificate holder files an extension of time within a timeframe during which the environmental and other public interest findings underlying the commission's authorization can be expected to remain valid, the commission generally will grant an extension of time if the movement demonstrates good cause.

[00:26:46] Speaker 07:
So they just have to demonstrate good cause unless you can show that there actually has been something that makes the original authorization not valid, right?

[00:26:57] Speaker 00:
I respectfully disagree that if the purpose for setting the deadline is to protect against change circumstances and FERC can only amend that deadline based on a consideration of the appropriate or whether it's appropriate to do so under the statute.

[00:27:11] Speaker 00:
In deciding whether it's appropriate to remove a protection, you have to ask whether the thing you were protecting against has occurred.

[00:27:18] Speaker 00:
We're fine with FERC presuming that the initial conditions would still be valid.

[00:27:25] Speaker 00:
But that has to be a rebuttable presumption.

[00:27:27] Speaker 00:
And so here, where we have this drastic change in the New York energy landscape in the form of the Climate Act, FERC has to at least consider the Climate Act as whether it rebuts the presumption that the original findings remain valid.

[00:27:42] Speaker 00:
And FERC, in the companion case, the Cheniere, Corpus Christi, stage three case.

[00:27:47] Speaker 07:
I just want to say that FERC did talk about the Climate Act.

[00:27:50] Speaker 00:
FERC talked about the greenhouse gas regulation part of the Climate Act.

[00:27:53] Speaker 00:
FERC did not talk about the market and need parts of the Climate Act in the record.

[00:27:58] Speaker 07:
Under the paragraph about NEPA, I think it did, didn't it?

[00:28:03] Speaker 00:
I don't believe so, Your Honor.

[00:28:09] Speaker 07:
In paragraph 18,

[00:28:11] Speaker 07:
Discussing NEPA, it says, there has not been a showing of significant new circumstances or information germane to environmental concerns, the proposed action, or its impacts.

[00:28:20] Speaker 07:
I guess it didn't specifically talk about the Climate Act.

[00:28:22] Speaker 00:
No.

[00:28:23] Speaker 00:
And this Court has said that asserting that a factor is considered is not the same thing as actually considering it.

[00:28:28] Speaker 00:
As far as I can tell in the extension order,

[00:28:33] Speaker 00:
Burke hasn't even demonstrated that it was aware of our argument in New York's arguments about decreasing gas demand in New York, undercutting need for the pipeline.

[00:28:54] Speaker 07:
But even if it were true that there's a Climate Act and it's going to reduce demand in New

[00:29:02] Speaker 07:
if none of the gas or the vast majority of the gas isn't going to New York, that wouldn't affect their findings.

[00:29:10] Speaker 00:
Perk says in its brief that it approved this pipeline in part because it would deliver gas to New York gas distributors.

[00:29:16] Speaker 00:
So the Environmental Defense Fund versus FERC standard doesn't say that FERC couldn't.

[00:29:21] Speaker 07:
Well, distributors, but the end market has to be New York for the Climate Act to be part of this.

[00:29:27] Speaker 00:
Yeah, I think that this is a term of art.

[00:29:29] Speaker 00:
The distributors here, I understand, to refer to actually municipal groups or folks who are going to distribute it to folks using it in New York.

[00:29:37] Speaker 00:
You can ask for clarification on that.

[00:29:40] Speaker 00:
OK.

[00:29:41] Speaker 00:
Fair enough.

[00:29:41] Speaker 00:
So this is similar to the good cause argument.

[00:29:45] Speaker 00:
We are not arguing that it would have been impossible for FERC to build a record with any set of facts that shows that this pipeline remains in the public convenience and necessity.

[00:29:58] Speaker 00:
But New York made a drastic change in its energy market, and that's environmental defense fund versus FERC says that FERC has to confront that.

[00:30:08] Speaker 00:
Maybe FERC says we've considered this evidence, but because enough of this gas is going to be going to other states, we're comfortable with saying that this pipeline remains in the public interest and that the precedent agreements outweigh that other evidence.

[00:30:20] Speaker 00:
But that has to be a explicit discussion that simply did not happen here.

[00:30:29] Speaker 07:
Anything else from my colleagues?

[00:30:31] Speaker 04:
Not from me, no.

[00:30:33] Speaker 07:
Thank you.

[00:30:34] Speaker 07:
Thank you.

[00:30:35] Speaker 07:
We'll give you two minutes.

[00:30:54] Speaker 06:
Good morning, your honor.

[00:30:55] Speaker 06:
I apologize.

[00:30:57] Speaker 06:
Let me just adjust these microphones.

[00:30:59] Speaker 06:
Take your time.

[00:31:06] Speaker 06:
Good morning.

[00:31:06] Speaker 06:
May it please the court?

[00:31:07] Speaker 06:
Susanna Chu for FERC.

[00:31:12] Speaker 06:
Let me start with the good cause standard.

[00:31:15] Speaker 06:
Your honors are correct.

[00:31:17] Speaker 06:
Of course, the Congress did not set out a standard for good cause here.

[00:31:21] Speaker 06:
The commission takes a case-by-case approach to each of these extension requests.

[00:31:26] Speaker 06:
And here, looking at the grand scheme of things, as you pointed out, Judge Pan.

[00:31:30] Speaker 06:
Excuse me, counsel.

[00:31:31] Speaker 05:
I'm going to ask you to speak more loudly.

[00:31:36] Speaker 06:
I apologize.

[00:31:37] Speaker 06:
It's all right.

[00:31:38] Speaker 06:
Is this better?

[00:31:40] Speaker 05:
A little.

[00:31:42] Speaker 05:
Try really loud.

[00:31:43] Speaker 05:
I don't know what's happened, but the microphones just aren't that strong this morning.

[00:31:49] Speaker 06:
got it okay um yeah that's better thank you okay the commission takes a case-by-case approach to each of these extension requests and as Judge Pan was observing in the grand scheme of things national fuel had been tied up in litigation for four years at least

[00:32:09] Speaker 06:
with Sierra Club and with New York State over a Clean Water Act permit that was existential for the pipeline.

[00:32:18] Speaker 06:
If that permit, if the commission's waiver finding had been overturned by the Second Circuit, that would have been the end of the pipeline.

[00:32:26] Speaker 06:
Now, the commission found in its extension order at paragraph 15 that the National Fuels litigation efforts demonstrated its efforts to pursue this project

[00:32:38] Speaker 06:
And the commission has also explained, there's no commission order requiring project sponsors to go out on a limb and keep every single permit up to date and refreshed for the duration of any litigation delay that it might encounter.

[00:32:57] Speaker 06:
And in fact, in one of the cases that has been cited in these briefs, Constitution Pipeline,

[00:33:02] Speaker 06:
The Commission found that a project sponsor's litigation of New York State's denial of a water quality certification showed that the project sponsor was, quote, diligently pursuing completion of the project.

[00:33:16] Speaker 06:
That's Constitution Pipeline 169 FERC 61102 at paragraphs 21 to 22.

[00:33:27] Speaker 06:
The Commission has also clarified in the Constitution Pipeline case that

[00:33:32] Speaker 06:
How the project sponsor goes about satisfying the conditions for certification is up to the project sponsor.

[00:33:40] Speaker 06:
There is a degree of business judgment involved here.

[00:33:43] Speaker 06:
These permits are interconnected, and the commission leaves that to the project sponsors to decide how best to satisfy the conditions needed to get the notice to proceed from the commission to actually commence construction.

[00:34:01] Speaker 06:
So this is a flexible standard.

[00:34:06] Speaker 06:
The commission is looking at these requests case by case.

[00:34:14] Speaker 06:
It's making a determination based on the good faith efforts.

[00:34:17] Speaker 06:
It's not grading the relative diligence of the project sponsors.

[00:34:22] Speaker 06:
It doesn't grant extensions just to those project sponsors to get an A plus as the diligence.

[00:34:28] Speaker 06:
And here it found that national fuel met its requirements for a good cause extension.

[00:34:35] Speaker 07:
When you make a determination as to whether an extension is appropriate, does that extend to the length

[00:34:43] Speaker 07:
of the extension because here you granted a very lengthy extension and Sierra club says that you granted a three year extension of a two year deadline and the construction takes 12 months.

[00:34:55] Speaker 06:
Yes, so just to clarify, Your Honor, there had been a first extension here.

[00:35:01] Speaker 06:
So initially, when the certificate order issued in 2017, the commission had attached a two-year deadline saying that it expected construction would take approximately two years.

[00:35:13] Speaker 06:
However, after that, once national fuel became embroiled in the litigation over the water quality certification,

[00:35:21] Speaker 06:
The commission actually had already granted a three-year extension.

[00:35:25] Speaker 07:
But this new extension was an additional 35 months.

[00:35:27] Speaker 06:
That's correct.

[00:35:28] Speaker 07:
And that's because... So why is that when the initial deadline was only two years and it only takes 12 months to construct?

[00:35:34] Speaker 06:
Right, so the commission had before it the extension request from National Fuel, which said that several things had to happen.

[00:35:42] Speaker 06:
One of them was that permits had to be refreshed and that might take approximately six to 12 months.

[00:35:49] Speaker 06:
And then it cited the need to obtain long lead time materials and estimated that might take approximately one year.

[00:35:57] Speaker 06:
And of course, we should remember that this is during the pandemic when I think we might all know that it was incredibly difficult for builders to obtain normal contracting supplies, not to mention large diameter pipeline.

[00:36:13] Speaker 06:
And the third thing was that the construction itself was estimated to take a year.

[00:36:19] Speaker 06:
And we should consider also that

[00:36:22] Speaker 06:
You know, as part of this process, once all the permits are refreshed, National Field would actually have to return to the Commission and show that it has met all the environmental conditions of the certificate order and that it has obtained all of the permits and therefore it should get a notice to proceed.

[00:36:40] Speaker 06:
But that's a process, you know, that is additional time.

[00:36:45] Speaker 06:
So that's why here the Commission granted a three-year extension.

[00:36:53] Speaker 06:
I can address the Climate Act, if Your Honors would like.

[00:36:59] Speaker 06:
So Judge Pan, you were correct.

[00:37:03] Speaker 06:
The commission's certificate order made no finding of market need based on end use within New York State.

[00:37:11] Speaker 06:
That's that certificate order, paragraph 32.

[00:37:19] Speaker 06:
And the commission actually cited that paragraph in the extension order at paragraph 18, note 48, JA9.

[00:37:29] Speaker 06:
That's where the commission finds no reason to revisit the certificate order's need findings.

[00:37:36] Speaker 06:
And it cited the certificate order at paragraphs 31 and 32, which are at JA179.

[00:37:42] Speaker 06:
And I think I don't need to repeat all of that, but as you have observed, the pipeline is designed to serve producers who wanted to move natural gas into Canada with the option for delivery to New York State.

[00:37:55] Speaker 06:
So there's no basis to say that there was a finding of market need based on end use in New York.

[00:38:03] Speaker 06:
I also want to point out that the environmental defense fund case relating to the Spire pipeline

[00:38:10] Speaker 06:
is completely irrelevant to this case.

[00:38:14] Speaker 06:
That case arose during the certificate stage when the commission was making an initial market need determination.

[00:38:21] Speaker 06:
And the court in that case did find that the commission had failed to address

[00:38:26] Speaker 06:
certain evidence that undermined the reliability of those precedent agreements.

[00:38:32] Speaker 06:
And that's not the case here.

[00:38:34] Speaker 06:
Here, we're in a totally different proceeding, an extension of a deadline, and the certificate order has been closed, and there's no allegation anywhere in the record

[00:38:50] Speaker 06:
about record evidence of self-dealing or otherwise that would undermine the affiliate precedent agreements that underpin the Commission's market need finding here.

[00:39:04] Speaker 06:
So here the Commission found that there were no new factors that would require it to go back and reassess its market need findings or to certificate order.

[00:39:15] Speaker 06:
The project remained fully subscribed.

[00:39:19] Speaker 06:
The pipeline

[00:39:20] Speaker 06:
had acted to pursue the project by actively litigating the Second Circuit Water Quality Certification in addition to other cases that Council for National Fuel might point out.

[00:39:34] Speaker 06:
So I think in this case, the commission was amply within its discretion in extending this deadline.

[00:39:43] Speaker 06:
Any questions from my colleagues?

[00:39:45] Speaker 04:
None from me.

[00:39:47] Speaker 07:
No, thank you.

[00:39:49] Speaker 07:
All right, thank you very much.

[00:40:13] Speaker 01:
Judge Rogers, can I start with you off the bat and make sure I've got the mics in the right place?

[00:40:18] Speaker 01:
Great.

[00:40:19] Speaker 01:
Can you hear me?

[00:40:21] Speaker 01:
Thank you.

[00:40:22] Speaker 01:
Thank you.

[00:40:23] Speaker 01:
May it please the court, Eamon Joyce, on behalf of the National Fuel Intervenors.

[00:40:28] Speaker 01:
I don't have much to add to what FERC had to say, but I'll touch on the WQC briefly and then touch on the Climate Act a little bit.

[00:40:37] Speaker 01:
Look, from the sponsor's perspective, the WQC is, as FERC said,

[00:40:42] Speaker 01:
fatal.

[00:40:43] Speaker 01:
If you don't have it, the project's dead.

[00:40:45] Speaker 01:
And so to plow forward on other fronts is a very dangerous game.

[00:40:50] Speaker 01:
And Burke rightly recognized the economic problems of potential economic problems of doing that.

[00:40:58] Speaker 01:
Judge Pan, I think you correctly pointed out that nonetheless, national fuel made efforts to drive the project forward.

[00:41:05] Speaker 01:
Those are listed on 138 through 140.

[00:41:08] Speaker 01:
I think if you're keeping score at home, what you'd find is we

[00:41:11] Speaker 01:
obtained seven of the 10 federal permits listed there and four of the six state permits.

[00:41:17] Speaker 07:
So did you do anything to make that happen though because it wasn't clear from that chart what you had done or whether these things just

[00:41:26] Speaker 07:
We're based on work that had been done previously.

[00:41:28] Speaker 01:
So it's a combination, right?

[00:41:30] Speaker 01:
We submitted new speedies permits.

[00:41:33] Speaker 01:
Those are listed to New York State leading and there's a long history of back and forth on speedies that extended into September of 2021.

[00:41:44] Speaker 01:
Judge Pan, you pointed out that there are the hydrostatic permits that extended into April of 22, new submissions there.

[00:41:53] Speaker 01:
We point out in our brief, I recognize it's outside the record at the time of the extension, but we've worked on wetlands in 2022.

[00:42:00] Speaker 01:
In 2023, we've acquired property via eminent domain.

[00:42:05] Speaker 01:
This is not an abandoned project.

[00:42:08] Speaker 01:
This is a project that National Fuel is very much trying to move forward on to Sierra Club's response that in reply and stated here that other pipelines have done more.

[00:42:19] Speaker 01:
I think I have two top level responses to that.

[00:42:22] Speaker 01:
One, that argument only makes sense if you understand what Sierra Club's ultimate goal here.

[00:42:26] Speaker 01:
which is to stop pipeline infrastructure.

[00:42:28] Speaker 01:
The two projects they point to, Constitution and Penn East, are projects where sponsors plowed forward and canceled the projects.

[00:42:39] Speaker 01:
In each of those projects, they wrote off pre-tax over $300 million because the projects couldn't get completed.

[00:42:47] Speaker 01:
The second thing I'll say is to do that,

[00:42:50] Speaker 01:
whatever the business judgment, runs headlong into problems that this court has repeatedly found of pipeline companies.

[00:42:59] Speaker 01:
I think these came to a head before this court in Anbanque, Allegheny Defense, where this court worried about the real world implications of continuing to go forward on a project where litigation hasn't been resolved.

[00:43:14] Speaker 01:
National Fuel took a business-responsible approach to this project and an overall responsible approach to this project that avoided the kind of litigation that this Court's been faced with.

[00:43:26] Speaker 01:
The last thing I'll say, I see I'm out of time, but if I may, just on the Climate Act,

[00:43:33] Speaker 01:
whether you do this in terms of waiver or in terms of an issue presented, my friend on the other side says, well, the EDF issue didn't arise until after the extension.

[00:43:44] Speaker 01:
That just doesn't make sense in terms of what ended up happening then.

[00:43:50] Speaker 01:
The only statement about demand as to this project came from DEC, not Sierra Club, and that's at pages 53 and 54 of their brief.

[00:44:00] Speaker 01:
Excuse me of their first submission, which just said the need for the project should be assessed In light of the climate act.

[00:44:09] Speaker 01:
There's nothing about the producer.

[00:44:11] Speaker 01:
There's nothing EDF related there Sierra Club filed an opposition to our extension request The only thing they said about the climate act is on j67 It's not a demand argument.

[00:44:26] Speaker 01:
It's a greenhouse gases argument

[00:44:28] Speaker 01:
Then Sierra Club comes back at JA 154 on rehearing, makes for the first time a demand argument, and it's a mealy-mouthed one, not directed at the producer, not an EDF argument, making this case squarely controlled by Oberlin.

[00:44:47] Speaker 01:
All they say is, Climate Act likely undercuts or reduces demand, not squaring up to the producer or any of those issues at all.

[00:44:55] Speaker 01:
Unless there are further questions, Your Honors.

[00:44:57] Speaker 01:
Rest on the briefs.

[00:44:59] Speaker 07:
Thank you.

[00:45:02] Speaker 07:
We'll give you two minutes.

[00:45:18] Speaker 00:
Thank you, Your Honors.

[00:45:19] Speaker 00:
A couple points.

[00:45:20] Speaker 00:
On the good faith standard, or good cause, Perk's language is good faith efforts to meet the deadline.

[00:45:28] Speaker 00:
It's not good faith efforts to move the project forward and construct eventually.

[00:45:32] Speaker 00:
And so that does entail an obligation to actually pursue on as many fronts as you need to try and get to that deadline, rather than just to say, we're going to do this one piece at a time.

[00:45:44] Speaker 07:
I'm sorry, so you interpret the good faith standard to require

[00:45:48] Speaker 07:
national fuel to move full speed ahead despite the litigation in the Second Circuit?

[00:45:53] Speaker 00:
Not exactly.

[00:45:54] Speaker 00:
We agree that it was prudent to not start construction while the litigation was going on in the Second Circuit.

[00:45:59] Speaker 00:
But we argued that they should have been prepared to be ready to be able to start construction once that litigation was resolved.

[00:46:05] Speaker 07:
You're saying they had to do that, or else they weren't acting in that way.

[00:46:10] Speaker 00:
That's the argument we made during the proceedings before FERC, and that's the argument that we think FERC failed to address here, where FERC did not address

[00:46:17] Speaker 00:
their failure to keep other permits current so that they would have been ready to proceed once the second circuit litigation was involved.

[00:46:27] Speaker 00:
The FERC articulates a standard as good faith efforts to meet the deadline.

[00:46:32] Speaker 00:
We don't need to argue that they should have been bringing out the cutting crease and doing bulldozers while the litigation was going on, but they should have been ready to start construction.

[00:46:40] Speaker 00:
The other point I'd like to make is that in its brief, FERC admitted that some of this gas is going to New York, and FERC did not take the position in the record year that the pipeline was in the public interest because all of the gas could go someplace else.

[00:46:54] Speaker 00:
43 of FERC's brief, they argue that gas would not go to New York alone.

[00:47:00] Speaker 00:
They argue that it would not necessarily undermine the finding of the public interest if some of the gas demand in New York was decreased.

[00:47:08] Speaker 00:
But finding that it wouldn't necessarily undermine it doesn't say we considered the issue and found that it doesn't.

[00:47:14] Speaker 00:
And on page 42 of the brief, they say that the pipeline will be transporting gas to markets

[00:47:20] Speaker 00:
Northeastern United States, as well as local gas distribution companies, power generators in New York and elsewhere.

[00:47:26] Speaker 00:
So even in the briefs, Ferck's argument was not that New York doesn't matter for this pipeline.

[00:47:31] Speaker 00:
They said New York is just part of the puzzle.

[00:47:35] Speaker 00:
And then lastly, this parent argument on waiver, we responded in the briefs to the arguments about whether our rehearing request was adequate.

[00:47:44] Speaker 00:
Council for Interveners just argued that

[00:47:46] Speaker 00:
I understand him to possibly be arguing we waived issues by not raising them at the protest stage.

[00:47:51] Speaker 00:
Issues about the Climate Act impacts on gas demand, as interveners acknowledged, were raised by New York, which in its comments said the Gas Act undercuts gas demand in New York.

[00:48:02] Speaker 00:
New York pointed out that the Climate Act

[00:48:05] Speaker 00:
was going to lead to a mandatory 83 to 95% production in gas use in New York.

[00:48:12] Speaker 00:
And although the Natural Gas Act imposes an exhaustion requirement where we have to only rely on issues on our own rehearing request, before the rehearing stage, there's no argument requirement for specificity that we have to have been the one to raise the issue before FERC.

[00:48:25] Speaker 00:
As long as FERC was made aware of the issue, that's enough.

[00:48:30] Speaker 00:
I see that I'm again over time, but if there are any questions.

[00:48:35] Speaker 07:
very much.