Academic journal article Energy Law Journal

A Policy Analyst's View on Litigation Risk Facing Natural Gas Pipelines

Academic journal article Energy Law Journal

A Policy Analyst's View on Litigation Risk Facing Natural Gas Pipelines

Article excerpt

I. Introduction and Context

As we explain on our website, ClearView Energy Partners, LLC, is a Washington, D.C.-based research firm that identifies and quantifies non-fundamental energy risks for financial investors and corporate strategists.1 We write research for major energy producers, consumers, and investors. Our work focuses on underappreciated and sometimes abstruse economic and policy issues that have potential to disrupt supply, demand, and price expectations. The conclusions in this article are based on the research developed by ClearView as a whole and on the sector-specific research I have authored.

A.ClearView's Perspective - Looking at Outcomes Against a Backdrop of "Enabling" Versus "Limiting" Action

In analyzing U.S. energy policy, we at ClearView begin with an oversimplified taxonomy that groups government actions into two basic categories: "enabling" actions that primarily facilitate business and economic activity and "limiting" actions that primarily protect health, safety, and public resources.2

My firm considers legislation from Congress to be the most durable government policy action as it tends to be the most difficult to revise.3 Changing the law requires an act of Congress, which to date remains constrained by parliamentary procedures that necessitate supermajority support, such as the Senate's 60vote rule on cloture (the filibuster).4 In addition, depending on the political orientation of the President and the composition of Congress, the potential for a veto by the Executive Branch could raise the hurdle to statutory revisions.5 Laws are also subject to judicial review for consistency with the Constitution.6 I would offer the Clean Air Act and Endangered Species Act as examples of "limiting statutes" and the Mineral Leasing Act (MLA) and the Federal Land Policy and Management Act as examples of "enabling" statutes. 7 In other words, "enabling statues" represent a "how to get it done" regime of requirements versus "whether it can get done" set of hurdles.

My colleagues and I consider regulations to be the second most durable, as these are promulgated subject to notice and comment procedures pursuant to the Administrative Procedures Act (APA).8 Regulations (rulemakings) are subject to judicial review for both consistency with the requirements of the APA (i.e., not arbitrary and capricious, supported by substantial evidence, consistent with the underlying law the agency is charged with administering and with the Constitution).9 Revising or repealing a regulation may be harder than adopting a new one, as previously explored in depth in the November 2017 edition of the Energy Law Journal.10

ClearView also posits that regulatory agencies may be inherently "enabling" or "limiting," depending on the statutes they administer.11 In this context, I would characterize the Environmental Protection Agency (EPA) as inherently limiting.12 Designated in July 1970 and effective December 2 of that year, the EPA was created to domicile the in-house environmental departments of various federal agencies.13 President Richard Nixon explained that "a strong, independent agency is needed. That agency would, of course, work closely with and draw upon the expertise and assistance of other agencies having experience in the environmental area."14 Among its first four tasks was "[t]he establishment and enforcement of environmental protection standards consistent with national environmental goals."15 A failure to demonstrate that a particular project or activity can meet certain pollution limits can result in a denial of a needed permit.16

In contrast, I would characterize the FERC, the U.S. Army Corps of Engineers, the Interior Department (Bureau of Land Management), and the Agriculture Department (Forest Service) as generally "enabling" agencies given the premises of the underlying statutes they administer. For example, the Bureau of Land Management (BLM) was created in 194617 to administer the MLA, among others. …

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