By Kennedy Maize
The U.S. Supreme Court Tuesday (Oct. 14) refused to hear an appeal from a tiny West Virgina coal company to a Federal Energy Regulatory Commission ruling in favor of a large natural gas company. It’s a dispute over whether mining on the coal company’s land could endanger a Columbia Gas Transmission Co.’s pipeline sitting above where the mining would occur. The case is RDFS LLC v. FERC (24-1262).
In 1983, FERC granted Columbia Gas the right to run a pipeline through land in Wetzel, County, W.Va. to serve customers in Pennsylvania and West Virginia. As FERC explains, RDFS LLC of Burton, W.Va., acquired the land in 2021, subject to an easement allowing Columbia’s pipeline to continue operating. RDFS announced in 2023 that it would begin mining under the pipeline.
When Columbia found that the mining operation could cause the area “to sink by as much as four feet” under pipe, the company approached RDFS about mitigation measures. The two companies couldn’t agree. Columbia then asked the U.S. District Court for the Northern District of West Virginia for access to the land. The pipeline company won there and in the 4th Circuit Court of Appeals. The district court granted a preliminary injunction allowing Columbia to proceed with its mitigation efforts.
RDFS simultaneously petitioned FERC to strip Columbia of its 1983 approval of the pipeline. FERC rejected that petition as “untimely.” RDFS then challenged FERC in federal court and lost. The Supreme Court refused to grant certiorari. Case closed.
In separate federal court actions on September 30, the D.C. Circuit Court of Appeals in two upheld FERC and overturned it in two cases involving the Tennessee Gas Pipeline Co. Tennessee Gas won and lost.
In the first case, Antero Resources Corp. v. FERC, the issue was FERC’s approval of Kinder Morgan’s Tennessee Gas two-tier rate plan for a gas pipeline expansion supporting gas shipper Antero Resources Corp.’s increased deliveries through West Virginia, including four new compressor stations in Kentucky.
FERC approved the project in 2016 and in 2021 gave another green light to a Tennessee Gas rate plan for Antero, resulting in higher rates for Antero compared to other shippers. Antero sued, charging the rates were discriminatory.
A three-judge panel of the D.C. Circuit agreed with Antero, concluding that FERC was “arbitrary and capricious” under the Administrative Procedures Act. The court found that FERC’s OK for the two-tier rate was contrary to long-standing “cost causation principals.”
Writing for the panel, Judge Naomi Rao, said, “As a practical matter, this allocation has resulted in Antero paying two to three times the fuel rate of other shippers on the same pipeline.” She added, “The tariff requires Antero to always pay the highest marginal fuel rate, irrespective of whether the expansion capacity is being used.”
“In effect,” Rao said, “Antero’s gas would be treated as if it were always the last— and therefore most marginally expensive—to move through the pipeline. No party protested, and FERC accepted the tariff.”
Rao wrote that the impact of the FERC rate order wasn’t apparent early. The impact of the 2016 FERC decision with the two-tier rates became clear in 2020 when Tennessee Gas filed its annual rate update. Antero then saw its fuel rate jump “from 4.62 percent to 6.59 percent. The rate for every other shipper, meanwhile, decreased from 2.71 percent to 2.44 percent.” Antero asked for a technical conference, which FERC denied. FERC again approved the rate in 2021.
The court vacated FERC’s 2021 rate approval, remanding the issue to FERC, saying the commission “must decide whether to direct Tennessee Gas to file a new fuel rate tariff under the NGA or utilize NGA authority to establish a just and reasonable fuel rate for Tennessee Gas.”
In a second case on the same day at a different panel, Sierra Club and Appalachian Voices v. FERC, the court rejected an environmental challenge to FERC’s 2024 approval of a Tennessee Gas 32-mile pipeline expansion letting the Tennessee Valley Authority replace two 1968 vintage coal-fired power plants totaling 2,470-MW of capacity with one 1,450-MW combined cycle gas unit at its Cumberland station near Clarksville, Tenn.
"The Sierra Club’s petitions are meritless"
Environmental advocates charged that FERC failed to follow the National Environmental Policy Act (NEPA) and the Natural Gas Act (NGA). Their NEPA claim was a fairly standard objection that FERC’s 576-page environmental impact statement didn’t adequately evaluate alternatives and didn’t properly calculate the emissions in the coal-to-gas conversion.  They said FERC violated the NGA by finding that the project would serve market needs and that its benefits exceed its costs.
The court’s judgment was short and severe: “The Sierra Club’s petitions are meritless.”
The NEPA arguments appeared doomed from the start, as the court predicably cited the recent Supreme Court’s Seven County Infrastructure Coalition v. Eagle County, Colorado case, which constituted an interpretation of the high-court’s earlier Raimondo decision. Writing for the court, Judge Justin Walker raised Seven County: “The bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.”
On the NGA issues, the plaintiffs argued that FERC should have looked more closely at TVA’s market need determination as TVA “is not subject to routine oversight from a utility regulator like a state commission.” Walker wrote, “Though the TVA is not subject to state supervision, it is hardly a rogue entity.” It must follow “least cost planning” rules and is subject to Congressional scrutiny.
As for the Sierra Club’s boiler plate objection that FERC didn’t properly weigh benefits and harms, Walker wrote, “This argument simply repeats objections that we have already considered and rejected.”
Judge George Katsas agreed with Walker’s analysis. Judge Cornelia Pillard disagreed with the court’s rejection of one part of the plaintiffs’ arguments and the court’s conclusion. She did not write separately.
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