Amicus Curiae Brief — Spire Missouri Inc., et al., Petitioners v. Environmental Defense Fund, et al.

No. 21-848

In the Supreme Court of the United States

SPIRE MISSOURI INC., ET AL.,

Petitioners,

v.

ENVIRONMENTAL DEFENSE FUND, ET AL.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF AMICI CURIAE

AMERICAN GAS ASSOCIATION,

INTERSTATE NATURAL GAS ASSOCIATION OF

AMERICA, NATIONAL ASSOCIATION OF

MANUFACTURERS, AND AMERICAN PUBLIC

GAS ASSOCIATION

IN SUPPORT OF PETITIONERS

Joshua P. Morrow

LEHOTSKY KELLER LLP

919 Congress Ave

Austin, TX 78701

Steven P. Lehotsky

Counsel of Record

Michael B. Schon

LEHOTSKY KELLER LLP

200 Massachusetts Ave. NW

Washington, DC 20001

(512) 693-8350

steve@lehotskykeller.com

TABLE OF CONTENTS

Table of Authorities ............................................................... ii

Interest of Amici Curiae ...................................................... 1

Summary of Argument ......................................................... 3

Argument ................................................................................ 5

I. Millions Of Americans Depend On The

Predictable, Disruption-Free Supply Of

Natural Gas From Interstate Pipelines. ............... 5

A. Local distribution companies are the

bridge between pipelines and end users. ....... 6

B. Spire STL transports the gas that Spire

Missouri currently provides to end

users. ................................................................... 8

II. The D.C. Circuit’s Approach All But

Eliminates Disruption As A Factor

Weighing Against Vacatur. ..................................... 9

A. Residential consumers face drastic

disruptions when a local distribution

company’s supply of natural gas is

interrupted. ........................................................ 9

B. Industrial users and electric generators

depend on reliable natural gas service. ....... 12

C. Disruptions in already-operational

pipelines significantly increase the cost

of capital. .......................................................... 13

D. The D.C. Circuit failed to consider

these significant disruptive

consequences of vacatur................................. 15

III. Review Is Imperative Because The D.C.

Circuit Hears The Vast Majority Of Cases

Involving Interstate Pipeline Permitting. .......... 16

Conclusion ............................................................................. 17

(i)

ii

TABLE OF AUTHORITIES

Page(s)

CASES

Allied-Signal, Inc. v. U.S. Nuclear

Regulatory Comm’n,

988 F.2d 146 (D.C. Cir. 1993) ................................... 4, 14

Comcast Corp. v. F.C.C.,

579 F.3d 1 (D.C. Cir. 2009) ............................................15

Dep’t of Homeland Sec. v. Regents of the

University of Cal.,

140 S. Ct. 1891 (2020) .....................................................15

Envtl. Def. Fund v. FERC,

2 F.4th 953 (D.C. Cir. 2021) .................................passim

Duquesne Light Co. v. Barasch,

488 U.S. 299 (1989) .........................................................13

Fed. Power Comm’n v. Hope Nat. Gas Co.,

320 U.S. 591 (1944) .........................................................13

United Fuel Gas Co. v. R.R. Comm’n of

Kentucky,

278 U.S. 300 (1929) ...........................................................6

STATUTE

15 U.S.C. § 717f .................................................................. 8, 9

Mo. Rev. Stat. § 393.130.1 ......................................................7

66 Pa. Cons. Stat. § 2207 ........................................................7

iii

OTHER AUTHORITIES

American Gas Association, Frequently

Asked Questions About Natural Gas

Market Trends: Natural Gas Pipeline

Safety (2018) ....................................................................10

Elizabeth Sendich, The Importance of

Natural Gas in the Industrial Sector,

U.S. Energy Information Administration Working Paper Series (Feb. 28,

2014)..................................................................................11

Federal Energy Regulatory Commission,

Energy Primer: A Handbook for

Energy Market Basics (Apr. 2020) ......................... 7, 13

FERC & NERC Staff Report, The February 2021 Cold Weather Outages in

Texas and the South Central United

States (Nov. 2021) .............................................................9

John D. Quackenbush, A Cost of Capital

and Capital Markets Primer for Utility

Regulators (April 2020) .................................................14

Letter from Adolphus M. Pruitt, St. Louis

City NAACP, to FERC regarding

Spire STL Pipeline (Nov. 2, 2021) ................................12

Letter from Roy W. Brown, Vice President,

Curiam, to FERC regarding Spire STL

Pipeline (Oct. 12, 2021) ...................................................12

Melissa N. Diaz, Cong. Research Ser.,

R46723, U.S. Energy in the 21st

Century: A Primer (2021) .......................................... 5, 6

Texas Comptroller of Public Accounts, The

Economic Impact of the Storm, 2021

Fiscal Notes: Special Edition (Oct. 2021) ....................12

iv

U.S. Energy Information Administration,

Natural Gas Explained (Dec. 7, 2021) ..........................9

U.S. Pipeline and Hazardous Materials

Safety Admin., General Pipeline FAQs,

(Nov. 6, 2021) .....................................................................3

INTEREST OF AMICI CURIAE

Amici Curiae American Gas Association, Interstate

Natural Gas Association of America, National Association

of Manufacturers, and American Public Gas Association1

represent hundreds of companies that together transport

and distribute the vast majority of the Nation’s residential

and commercial natural gas supply—and thousands of

companies that rely on that supply. Amici and their members have a substantial interest in the continued development and operation of interstate natural gas pipelines.

These companies’ customers depend on the predictable

and reliable service of natural gas to heat their homes and

to run their businesses. Amici urge review because the decision below, by all but ignoring potential disruption as a

factor weighing against vacatur, reduces reliability in the

natural gas transmission and distribution system.

The American Gas Association (“AGA”) was founded

in 1918 and represents more than 200 local energy companies that deliver clean natural gas throughout the United

States. AGA’s members operate critical infrastructure:

there are more than 74 million residential, commercial,

and industrial natural gas customers in the Nation, of

which 95% receive their gas from AGA members. AGA advocates for natural gas utility companies and their customers, and it provides a broad range of programs and services for member natural gas pipelines, marketers, gatherers, international natural gas companies, and industry

associates. Today, natural gas meets more than 30% of the

Pursuant to this Court’s Rule 37.6, amici affirm that no counsel for

a party authored this brief in whole or in part or made a monetary

contribution intended to fund the preparation or submission of this

brief, and that no person other than amici and their counsel made

such a monetary contribution. Counsel of record for all parties received timely notice of amici’s intent to file this brief, and all parties

have consented to its filing. See this Court’s Rule 37.2(a).

1

(1)

2

Nation’s energy needs. The local distribution companies

that AGA represents own and operate natural gas pipeline

systems that typically receive natural gas that has been

transported on the interstate pipeline system. These companies deliver natural gas to end users, including residential and commercial users as well as industrial customers

and electric generators.

The Interstate Natural Gas Association of America

(“INGAA”) is a trade organization that advocates for regulatory and legislative positions of importance to the natural gas pipeline industry in North America. INGAA’s 26

members represent the vast majority of the interstate natural gas transmission pipeline companies in the United

States. These companies operate 200,000 miles of pipelines and serve as an indispensable link between natural

gas producers and consumers.

The National Association of Manufacturers

(“NAM”) is the largest manufacturing association in the

United States, representing small and large manufacturers in every industrial sector and in all 50 States. Manufacturing employs more than 12 million men and women,

contributes $2.3 trillion to the U.S. economy annually, has

the largest economic impact of any major sector, and accounts for nearly two-thirds of all private-sector research

and development in the Nation. NAM is the voice of the

manufacturing community and the leading advocate for a

policy agenda that helps manufacturers compete in the

global economy and create jobs across the United States.

The American Public Gas Association (“APGA”) is

the trade association for approximately 1,000 communities

across the U.S. that own and operate retail natural gas distribution entities. These include municipal gas distribution

systems, public utility districts, county districts, and other

public agencies, all locally accountable to the citizens they

serve. Public gas systems operate as not-for-profits and

3

focus on providing safe, reliable, and affordable natural

gas to their customers while supporting their communities

by delivering gas to be used for cooking food, drying

clothes, heating space and water, and transportation.

These fuels are also used for various commercial and industrial applications, including electricity generation.

SUMMARY OF ARGUMENT

Interstate natural gas pipelines are “[t]he arteries of

the Nation’s energy infrastructure.” U.S. Pipeline and

Hazardous Materials Safety Admin., General Pipeline

FAQs, https://www.phmsa.dot.gov/faqs/general-pipelinefaqs (last updated Nov. 6, 2018). They move gas that heats

millions of American homes and that generates approximately 40% of the Nation’s electricity. Demand for natural

gas continues to increase because it is an abundant, affordable, and reliable energy source. Investment in and development of this critical infrastructure will be needed for the

foreseeable future. Meeting this demand requires the existence of predictable and consistent policies and regulations affecting pipeline operations.

Federal law allows a natural gas pipeline to operate

only if the pipeline operator first obtains a Certificate of

Public Convenience and Necessity (“Certificate”) from the

Federal Energy Regulatory Commission (“FERC”).

These Certificates are required before construction can

begin on a pipeline. FERC’s decisionmaking regarding

such Certificates is subject to judicial review under the

Administrative Procedure Act. But a Certificate may go

into effect even before judicial review concludes, and may

require, as did the Certificate in this case, that the developer complete construction within a fixed period of time.

Once a Certificate is effective, pipelines are entitled to rely

on it by beginning construction and by using the pipeline

to deliver natural gas. Stakeholders across the supply

chain make long-term plans in reliance on FERC’s

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Certificates, which significantly affect individuals, businesses, and the companies that serve pipelines.

Any uncertainty regarding the effectiveness of a Certificate for a pipeline that is already operational (such as

Spire STL) and delivering gas to a local distribution company (such as Spire Missouri) jeopardizes individuals’ ability to obtain the gas needed to heat their homes, and it will

ultimately increase the price of natural gas to individuals

and businesses. The D.C. Circuit’s decision brushed aside

these potentially devastating effects and reduced to a near

nullity the role that potential “disruptive consequences”

play in the analysis of whether to vacate an agency action

as opposed to remand. Allied-Signal, Inc. v. U.S. Nuclear

Regul. Comm’n, 988 F.2d 146, 151 (D.C. Cir. 1993).

FERC’s subsequent intervention, granting a temporary

Certificate, has prevented these calamitous effects from

occurring. Pet. Supp. 3-4. But that does not excuse the

D.C. Circuit’s failure to consider them in the first place.

Vacatur of operational authority threatens residential

and commercial consumers with drastic and unpredictable

disruptions in service. When a pipeline shuts down, alternative sources of natural gas supply can take months to

secure. In the end, however, a viable alternative source of

energy may not even be available for the pipeline’s customers. Even if consumers are able to secure an alternate

supply of energy, the process of doing so can take substantial time, and the consumers typically must pay a substantial premium to do so. In the interim, homes go without

heat (creating especially dangerous conditions in the winter months) and businesses shut down (often sending

workers home without a paycheck).

No court should take such an extreme step—vacating

of a Certificate for an already operational pipeline—without fully considering the potential ramifications of its action. The decision below did not weigh, however, and in

5

fact hardly even acknowledged, the deleterious consequences of vacatur. If disruption of such magnitude does

not require serious consideration before vacatur of a Certificate providing operating authority, then the disruption

factor itself is meaningless.

Equally concerning, as Petitioners emphasize, there is

no uniform standard by which courts can evaluate the disruptive effects of their orders. Pet. 13-14. That citizens in

one area of the country may lose access to natural gas under the same set of facts that would leave citizens in another area undisturbed is a powerful factor favoring review by this Court.

ARGUMENT

Amici submit this brief to underscore how dangerous

it is to the operation of critical infrastructure that supplies

natural gas to America’s homes and businesses for courts

to do what the D.C. Circuit did below: treat disruptive consequences as an afterthought in analyzing whether to shut

down a pipeline while FERC considers challenges to the

pipeline’s legal authority to operate on remand.

Although the decision below directly affects a single

pipeline that supplies natural gas to only one (important)

market in the country, the principle at stake is of immense

importance. If courts are free to brush aside the disruptive

consequences that vacatur of an agency action may have

on an operating business, then interstate pipelines and local distribution companies inevitably will have greater difficulty providing a steady and cost-effective supply of natural gas to American homes and businesses. The millions

of customers that Amici’s members serve cannot afford

that result, and this Court should intervene to prevent it.

I. MILLIONS OF AMERICANS DEPEND ON THE

PREDICTABLE, DISRUPTION-FREE SUPPLY OF

NATURAL GAS FROM INTERSTATE PIPELINES.

The Nation’s “natural gas transmission network

6

consists of around 300,000 miles of pipeline.” Melissa N.

Diaz, Cong. Research Ser., R46723, U.S. Energy in the

21st Century: A Primer at 13 (2021), https://crsreports.congress.gov/product/pdf/R/R46723. “These natural

gas lines feed around 2.3 million miles of regional pipelines

in some 1,500 local distribution networks which serve

nearly 70 million customers.” Id. Together, these pipelines

form a system that safely and efficiently links natural gas

production sources to millions of residential, commercial,

and industrial consumers. See id. As part of that system,

large, typically interstate, pipelines transport natural gas

from the companies that produce natural gas to local distribution companies and to community owned natural gas

distribution entities who deliver the gas to end users.

A. Local distribution companies are the bridge

between pipelines and end users.

The disruptive effects to companies, consumers, and

the economy of shutting down an operating pipeline because of an agency’s error are perhaps most apparent at

the end of the natural gas supply chain. Local distribution

companies are local—they operate in specific geographies, within which they are the last link in the natural gas

supply system. They bring the gas from interstate pipelines to the local consumers (families, and industrial and

commercial users), generally through smaller, local pipelines. Retail customers usually have access to natural gas

only through a single local distribution company that

serves a specific area. Not only are interstate pipelines the

primary source of supply for many local distribution companies, but for many such companies, there is not even a

viable alternative. End-users thus feel the impact of any

failures in the upstream transportation system on which

local distribution companies depend.

Because natural gas service is so important to individual Americans and to the businesses that employ them,

7

local distribution companies are highly regulated at both

the state and local levels. State law generally charges

those companies with an obligation to serve. See, e.g., Mo.

Rev. Stat. § 393.130.1; 66 Pa. Cons. Stat. § 2207. “The primary duty of a public utility is to serve on reasonable

terms all those who desire the service it renders.” United

Fuel Gas Co. v. R.R. Comm’n of Kentucky, 278 U.S. 300,

309 (1929). This obligation means that the highest priority

for a local distribution company is the delivery of natural

gas to its customers safely, reliably, responsibly, and at

just and reasonable rates. See Federal Energy Regulatory Commission, Energy Primer: A Handbook for Energy Market Basics at 127 (Apr. 2020) (hereinafter “FERC

Energy

Primer”),

https://www.ferc.gov/sites/default/files/2020-06/energy-primer-2020_Final.pdf

(“A[]

[local distribution company] * * * is concerned with obtaining sufficient volumes of natural gas to serve variable

customer demand at the lowest possible price.”).

Local distribution companies cannot satisfy their obligation to serve—they cannot provide cost effective and reliable service—unless they can depend on safe and reliable

transportation of natural gas over interstate pipelines.

They thus work with interstate transporters (and with

suppliers) to ensure reliable delivery of adequate volumes

of natural gas. A local distribution company’s supply must

always be sufficient to meet demand not only on ordinary

days but also on “peak-days,” when demand for natural

gas is at the maximum.

Meeting peak and ordinary demand requires longterm coordination and planning. Natural gas cannot be

easily “shifted” across long distances when demand in one

part of the country spikes. Accordingly, local distribution

companies must predict (often through sophisticated models) how much gas their customers will need and when.

This culminates in long-term supply plans between the

distributors and the transporters aimed at, once again,

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cost effective and reliable service.

Through these agreements, local distribution companies can commit to using a pipeline to transport natural

gas before a pipeline is built and thus serve as “anchor

shippers” for interstate pipelines. This arrangement creates mutual benefit because it brings both local distribution companies and interstate pipelines a measure of confidence regarding future supply and demand.

B. Spire STL transports the gas that Spire Missouri currently provides to end users.

This case is an illustrative example. Spire Missouri, the

local distribution company for the St. Louis area, entered

into a long-term, 20-year agreement for natural gas from

Spire STL’s pipeline. That pipeline, in turn, received a Certificate from FERC, which authorized the pipeline’s construction and operation under Section 7(c) of the Natural

Gas Act, 15 U.S.C. § 717f(c). In reliance on the long-term

contract (and the Certificate, which required the pipeline to

be built in two years), Spire Missouri allowed some of its

transportation contracts with other pipelines to expire, and

one of the previous physical delivery points that was used

under those contracts is no longer operational.

The Spire STL pipeline is a necessary component in

the system that enables Spire Missouri to satisfy the obligation to serve that it owes to its customers. For example,

Spire Missouri estimates that “without [the] STL Pipeline,

up to 133,000 homes and business[es] would have been

without gas service as a result of Winter Storm Uri” in

February 2021. Pet. App. 392a. Even if alternative supply

had been available during the storm, it would have come

with a “$300 million” price tag. Id. These avoided disruptions and costs are “concrete historical evidence of the

supply security and cost benefits that STL Pipeline provides” now that it is in operation. Pet. App. 394a.

Spire STL’s arrangement with Spire Missouri is not

9

unique, but rather one example of the countless arrangements between interstate natural gas pipelines and local

distribution companies across the country. If other courts

follow the precedent established below and vacate Certificates for operational pipelines without due regard for the

disruptive consequences thereof, then millions of Americans will face the same damaging service losses and cost

increases that are now threatening Spire Missouri and its

customers.

II. THE D.C. CIRCUIT’S APPROACH ALL BUT

ELIMINATES DISRUPTION AS A FACTOR WEIGHING

AGAINST VACATUR.

The D.C. Circuit should have considered, but did not,

the gravity of the disruptions that vacatur could cause to

Spire Missouri and to its customers. Similar disruptions

are threatened anytime a court vacates a Certificate of

Public Convenience and Necessity for an operational pipeline, because the Certificate is required for both construction and operation. 15 U.S.C. § 717f(c)(1)(A). Each local

distribution company’s mission to provide cost effective

and reliable service to consumers usually requires longterm contracts with pipelines that rely on such Certificates.

A. Residential consumers face drastic disruptions when a local distribution company’s

supply of natural gas is interrupted.

Disruptions to natural gas supply result in significant

consequences for the individuals and families that depend

on local distribution companies for residential service. Approximately “half of the homes in the United States use

natural gas for space heating.” U.S. Energy Information

Administration,

Natural

Gas

Explained,

https://www.eia.gov/energyexplained/natural-gas/use-ofnatural-gas.php (last updated Dec. 7, 2021). Families and

individuals also use natural gas “to heat their homes and

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prepare warm meals for their families.” Letter from Adolphus M. Pruitt, St. Louis City NAACP, to FERC regarding Spire STL Pipeline at 1 (Nov. 2, 2021), https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20211104-5006 (click “Generate PDF”) (hereinafter

“NAACP Letter”).

The reliable supply of natural gas is something that

many Americans cannot do without. Because customers in

many markets have access to supply only through a single

local distribution company, the company mission to plan

for and provide cost effective and reliable supply is imperative. When supply is unexpectedly interrupted, people

suffer. “After the city of Denton, Texas, lost its gas supply,

it was forced to cut power to nursing homes and water

pumping stations.” FERC & NERC Staff Report, The

February 2021 Cold Weather Outages in Texas and the

South Central United States at 10 (Nov. 2021),

https://www.ferc.gov/media/february-2021-cold-weatheroutages-texas-and-south-central-united-states-ferc-nercand. In the St. Louis area in particular, “the thousands of

households who are living at or below the poverty line”

would feel a “disproportionate impact” of supply disruptions due to the “daily inequities” that they already face.

NAACP Letter, supra, at 1.

The severity of a natural gas disruption cannot be

cured instantaneously. Unlike electric outages, natural

gas service does not return after a few minutes with the

flicker of a bulb. Instead, when there is a disruption (or

outage) in gas service, the local distribution company must

take several steps to ensure the safety of gas consumers

and restore service, a process that may take several

days—or even weeks depending on the scope of the outage. Before reinstating service, the local distribution company generally must send a qualified service technician

into each home to perform a series of safety inspections to

help ensure that there is no risk involved in restoring gas

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service to the home or building. See American Gas Association, Frequently Asked Questions About Natural Gas

Market Trends: Natural Gas Pipeline Safety at 3 (2018),

https://www.aga.org/globalassets/research--insights/pipeline-safety-faq_final.pdf. This process must be performed

individually for every home that loses service. Id. Once it

is safe, a technician then must relight each customer’s pilot

lights. Id. Disruption can therefore cause ripple effects

that last long after the initial disruption is itself cured.

The decision below did not specifically consider (or

even mention) these disruptive effects to American families and businesses. Pet. App. 39a. Petitioners recognize

that these effects have not arisen, but that is solely because FERC has granted Spire STL a temporary Certificate. Pet. Supp. 3-4. Amici emphasize, however, that the

D.C. Circuit’s refusal to meaningfully engage with the risk

that vacatur of the Certificate poses is an error that could

lead to customers losing access to natural gas during the

winter months. See Pet. 39a. Instead of discussing those

risks, the court held that the undefined potential for “some

disruption” could not outweigh the supposedly “serious

deficiencies” that the court identified in the record (i.e., in

FERC’s error). Id. But “some disruption,” id., of service

by Spire STL could result in tens of thousands of customers facing life-threatening cold conditions without heat for

their homes. FERC’s use of emergency authority does not

excuse the D.C. Circuit’s failure to properly analyze the

disruptive effects caused by vacatur of a Certificate for an

operational pipeline.

An analysis that weighs the gravity—the “serious[ness],” id.—of the agency’s error must also weigh the

gravity of the disruptive consequences of vacatur. Otherwise, the mismatch all but eliminates potential disruptive

consequences as a factor weighing against vacatur. The

decision below falls into exactly this trap. See id. The D.C.

Circuit discussed the “serious[ness]” of what it considered

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to be an error in exhaustive detail, Pet. 31a-38a, but then

it failed to consider the seriousness of the disruptive consequences of vacatur, id. at 39a. This error is especially

striking when the potential disruptions at issue included

leaving families without heat during winter.

B. Industrial users and electric generators depend on reliable natural gas service.

Demand for natural gas comes from a variety of industrial sectors, including electric generators, and also “manufacturing, construction, agriculture, and mining,” all of

which also contribute to “economic activity broadly.” Elizabeth Sendich, The Importance of Natural Gas in the Industrial Sector at 2, U.S. Energy Information Administration Working Paper Series (Feb. 28, 2014),

https://www.eia.gov/workingpapers/pdf/natgas_indussector.pdf. When supply is unexpectedly interrupted, so too

are the critical industrial and manufacturing processes

that depend directly on natural gas or indirectly on the

electricity that generators supply. Reliable industrial supply is particularly important at present, when supply

chains are already stretched thin and many companies use

just-in-time delivery and inventory systems.

For example, Curiam, a pharmaceutical company,

commented in the FERC proceeding below that it manufactures its “potentially life-saving diagnostic” radiopharmaceuticals “in suburban St. Louis” at a facility that receives natural gas from Spire Missouri. Letter from Roy

W. Brown, Vice President, Curiam, to FERC regarding

Spire STL Pipeline at 1-2 (Oct. 12, 2021), https://elibrary.ferc.gov/eLibrary/filelist?accession_number=2021

1013-5190 (click “Generate PDF”). The natural gas that

Curiam receives allows it to operate the “critical equipment” without which it is “unable to produce product” for

its more than “14 million patients around the world.” Id.

The disruptive effects that interruptions in industrial

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supply can cause do not stop at a business’s walls. Instead,

these effects ripple, at minimum, into the local economy.

When supply interruptions force businesses to close,

hourly and other non-salaried employees risk losing their

ability to earn a paycheck. Further, where reliable access

to natural gas is less secure, businesses are less likely to

open or maintain facilities. And where disruptions affect a

large number of users or affect an industry that is particularly important, the negative effects can be felt on an

even broader scale.

For example, Winter Storm Uri caused major interruptions of natural gas supply in Texas, and these caused

particularly severe disruptions to the “chemical plants[]

[that] make up nearly 75 percent of U.S. chemical production and contribute to the manufacture of ingredients necessary for disinfectants, plastic bottles, fertilizer, pesticides and packaging.” Texas Comptroller of Public Accounts, The Economic Impact of the Storm, 2021 Fiscal

Notes: Special Edition at 5 (Oct. 2021), https://comptroller.texas.gov/economy/fiscal-notes/2021/oct/docs/fn.pdf.

As is typical, these disruptions were not solved the moment that upstream service was restored. See id. (describing “damaged equipment” and “slowing supply lines”).

The decision below did not expressly consider, much

less weigh, any of the disruptions that vacatur could cause

to industrial sectors that rely on natural gas. Pet. 39a. Nor

did the decision mention the effects that residential users

must endure when they lose electricity due to a disruption

in the supply of natural gas to generators. That failure sets

a troubling precedent that warrants this Court’s review.

C. Disruptions in already-operational pipelines

significantly increase the cost of capital.

Interstate pipelines, like other large infrastructure

projects, are often financed via debt. The cost of that capital is reflected in the debt’s interest rate and in the terms

14

that lenders impose on construction projects. When a project’s overall risk increases, the cost of capital for the project increases, too, as lenders demand a return that reflects the risk they bear. See Fed. Power Comm’n v. Hope

Nat. Gas Co., 320 U.S. 591, 603 (1944) (“[R]eturn * * *

should be sufficient to assure confidence in the financial

integrity of the enterprise, so as to * * * attract capital.”).

When the durability of FERC’s Certificates of Public

Convenience and Necessity becomes less certain, lenders

are willing to provide capital for pipelines only at increased rates. Put differently, overall project-finance

costs for interstate pipelines will increase if pipelines that

are already operational are subject to disruptive shutdowns based on FERC’s remediable errors during the

certification process. See Duquesne Light Co. v. Barasch,

488 U.S. 299, 312 (1989) (warning against risks that

“imped[e] [a utility’s] ability to raise future capital”).

Local distribution companies also feel the effects of increased capital costs, first in the prices for transport and

supply, but also in their own capital costs. This is because

any additional risk in the interstate pipelines that local distribution companies depend on makes investment in those

companies that much riskier. “Credit quality * * * is dependent both on the amount of debt issued by a company

as well as the stability of a company’s cash flow.” FERC

Energy Primer at 130 (emphasis added).

Nor do these costs stop with the companies. Instead,

“risks faced by utility investors are important to utility

customers because risks to investors get reflected in the

capital costs to the utility which are ultimately paid for by

customers.” John D. Quackenbush, A Cost of Capital and

Capital Markets Primer for Utility Regulators at 8 (April

2020),

https://pubs.naruc.org/pub.cfm?id=CAD801A0155D-0A36-316A-B9E8C935EE4D. Even where consumers can bear these increases, prohibitively high capital

15

costs stifle competition by making it harder for new companies to enter the market. This can dampen innovation

and, again, ultimately lead to higher prices for consumers.

D. The D.C. Circuit failed to consider these significant disruptive consequences of vacatur.

The D.C. Circuit acknowledged that “[t]he decision

whether to vacate depends on the seriousness of the order’s deficiencies * * * and the disruptive consequences of

an interim change that may itself be changed.’” Pet. App.

39a (quoting Allied-Signal, 988 F.2d at 150-51). Although

it considered the “serious[ness]” of the errors that it identified in some detail, Pet. App. 31a-38a, the decision effectively gave no consideration to the potential consequences

of vacatur. Instead, the court stated that it understood

that “there may be some disruption,” but that disruption

“is weighty only insofar as the agency may rehabilitate its

rationale.” Id. at 39a (quotation omitted).

The court’s unbalanced test—weighing the “serious[ness]” of the error, but ignoring the seriousness of any

disruptive consequences—results in a two-factor analysis

that only considers one factor. See id. The D.C. Circuit’s

decision did not address the customers who might go without gas. It did not address impacts on local distribution

companies and their long-term supply plans. It did not address industrial users that will face increased costs. It did

not address the natural gas utilities that will face higher

capital costs. And it did not address the homes and families

that risk losing electricity if electric generators do not

have access to a reliable supply of natural gas. That failure

reduces Allied Signal’s second factor to a nullity. See id.

The decision below defended its unbalanced test on the

theory that disruption on any scale “is weighty only insofar as the agency may be able to rehabilitate its rationale.”

Id. (citing Comcast Corp. v. FCC, 579 F.3d 1, 9 (D.C. Cir.

2009)). But Comcast Corp. addressed only “whether

16

vacatur is likely to be unduly disruptive of the agency’s

regulatory program”—not whether and when a court

should consider how disruption would affect hundreds of

thousands of citizens that are outside the agency’s direct

regulatory authority. 579 F.3d at 9 (emphasis added). In

any event, because the decision below did not foreclose

FERC from rehabilitating its rationale on remand, Pet.

App. 39-40a, the D.C. Circuit should have meaningfully

weighed vacatur’s disruptive consequences rather than

brushing them aside.

Amici fear that natural gas companies and the customers that rely on them will face severe disruptions across

the country if courts do not adequately address the significant negative impacts that can occur when an agency decision that private parties reasonably relied on gets overturned. Just as the agencies themselves must consider reliance interests before changing course, Dep’t of Homeland Sec. v. Regents of the University of Cal., 140 S. Ct.

1891 (2020), so too should the courts.

III. REVIEW IS IMPERATIVE BECAUSE THE D.C.

CIRCUIT HEARS THE VAST MAJORITY OF CASES

INVOLVING INTERSTATE PIPELINE PERMITTING.

As Petitioners emphasize, the D.C. Circuit hears an

outsized majority of administrative law cases. Pet. 25.

Cases raising the question presented are unlikely to arise

in other circuits. It is therefore imperative that the D.C.

Circuit give proper consideration to the potential for disruption before ordering vacatur—especially for critical infrastructure that affects hundreds of thousands of citizens.

Finally, FERC’s Temporary Certificate Order does

not change the need for review. See Pet. Supp. at 3-7. The

possibility of a temporary Certificate played no part in the

D.C. Circuit’s analysis, and therefore it cannot justify that

analysis. On the contrary, FERC’s extraordinary intervention occurred only because of the “emergency” that the

17

court’s vacatur caused. But there is no guarantee that

FERC will always intervene so actively. This leaves the

pipeline industry and those who depend on it, including

families, businesses, and others who reasonably rely on final orders like the one at hand facing calamitous risk.

CONCLUSION

The Court should grant the petition for a writ of certiorari.

Respectfully submitted,

Joshua P. Morrow

LEHOTSKY KELLER LLP

919 Congress Ave

Austin, TX 78701

January 6, 2022

Steven P. Lehotsky

Counsel of Record

Michael B. Schon

LEHOTSKY KELLER LLP

200 Massachusetts Ave. NW

Washington, DC 20001

(512) 693-8350

steve@lehotskykeller.com