Breaking: FERC Continues to Plead for Time to Issue Sabal Trail Order

As of late Friday, the case before the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) over whether to shut down operations on the Sabal Trail Pipeline and related projects, is now fully briefed. All parties appear to agree that a shutdown would lead to a disruption in the Florida power markets, establish new legal precedent, and negatively impact revenue streams for numerous companies. So, now that the parties have fully weighed in, we examine the potential scenarios and the likelihood that operations will be impacted.

Summary

In a customer note on February 1, we noted that the DC Circuit had denied requests by Sabal Trail and FERC for a rehearing of its August 2017 order, which found that FERC's greenhouse gas analysis was deficient. Typically in such cases, the appeal becomes final seven days after such a denial, when the court issues its "mandate," which is the official action taken to make its decision final and effective.

FERC issued its Final Supplemental Environmental Impact Statement (FSEIS), five days after the court's denial, and then asked the court to delay issuing the mandate for 45 days -- until March 23, 2018. The Sierra Club and other project opponents objected to this request to delay the mandate. If the mandate is issued prior to a FERC order reaffirming the Certificate of Public Convenience and Necessity for the project (Certificate), then the operations of the pipeline and the construction of the remainder of the project would be required to cease, unless FERC either issued an emergency Certificate or the United States Supreme Court issued an emergency stay. We believe any action by the Supreme Court is very unlikely.

Last Friday, FERC and the project proponents responded to the Sierra Club's objections. The project proponents contend that issuing "a mandate that would force the shutdown of the Project when FERC may reaffirm the Project's authorization within the next few weeks makes little sense." Meanwhile, the FERC reiterated that it needs 45 days to issue a revised Certificate order, without explaining why the time is needed. Now that the issue has been fully briefed to the court, how will it likely play out?

Read Through

The key takeaway is that FERC can control the outcome by promptly issuing an order that incorporates the FSEIS into its prior decision approving the Certificate. While the legal arguments get very technical very quickly, we have boiled it down to the following four scenarios:

Scenario	Likelihood	Impact on Operations
FERC issues an order incorporating FSEIS and reaffirming Certificate before D.C. Circuit rules.	Not likely, given FERC's continuing insistence that it needs until March 23.	None, because reaffirming the Certificate would allow continued operations.
D.C. Circuit issues order denying stay, but delays issuance of mandate for 7 days and FERC issues order reaffirming Certificate during 7 day period.	This appears to be the most likely outcome, as this allows the D.C. Circuit to keep pressure on FERC while giving FERC fair warning.	None, because reaffirming Certificate would allow continued operations.
D.C. Circuit issues order denying stay, but delays issuance of mandate for 7 days, but FERC fails to reaffirm Certificate during the 7 days.	Possible, if denial of the stay is issued before March 16, given FERC's continued insistence it needs until March 23 to issue its order.	Immediate shutdown of construction and operations unless FERC issues an emergency certificate or Supreme Court issues an emergency stay.
D.C. Circuit issues order denying stay and requiring immediate issuance of mandate.	This is Sierra Club's request, but proponents say it is not proper. Not likely, because there seems to be limited reason for the court to not give FERC at least 7 days to issue an order.	Immediate shutdown of construction and operations, unless FERC issues an emergency certificate or U.S. Supreme Court issues an emergency stay.

In summary, the D.C. Circuit has a choice -- either allow FERC the time it has requested, without any supporting justification, or issue the mandate and create a risk of disruption to the State of Florida's gas supply. At this point, we expect the court to issue the mandate on March 16 with a delayed effectiveness until March 23. Then, it will be up to FERC to meet its own deadline.