Lawmakers on the House Subcommittee on Energy and Power heard differing points of view over a draft bill that would reinforce the primacy of FERC over the construction of natural gas pipelines, and rein in permitting delays that the industry complains are hampering development.
In testimony on Tuesday, Donald Santa, CEO of the Interstate Natural Gas Association of America (INGAA), called the approval and permitting process for interstate natural gas pipelines "increasingly challenging," and adding that "there have been some trends in the wrong direction.
"What was once orderly and predictable is now increasingly protracted and contentious," Santa said. "Most energy experts agree that we will need more gas pipeline infrastructure to connect the new supplies of natural gas made available by the shale revolution, and to support increased demand for gas from the manufacturing and petrochemical sectors, electric generators and other end users.
"We need a process that balances thorough environmental review and active public involvement with orderly, predictable and timely approval and construction of necessary energy infrastructure. If enacted, the draft bill before the subcommittee today would modestly improve the permitting process by introducing additional transparency and accountability for federal and state permitting agencies."
Under the Natural Gas Act, the Federal Energy Regulatory Commission is the lead regulatory agency for the siting of interstate gas pipelines. Other federal and state agencies may participate in the development of a National Policy Act (NEPA) analysis for a pipeline project, but they are required to complete any permit reviews within 90 days of FERC issuing its final environmental document.
But the House panel said a study conducted by INGAA in December 2012 found that permitting delays exceeding 90 days had risen 28% since the Energy Policy Act was enacted in 2005. The study also found that delays of 180 days or more had increased 20% (see Daily GPI, Jan. 17, 2013).
"We support these steps, but continue to urge Congress to create real consequences for agencies that fail to meet reasonable deadlines," Santa said. "The intent that motivates the draft bill...will not be accomplished absent real consequences for agencies that fail to act."
Maine Gov. Paul LePage told the House panel that during the winter of 2012-2013, gas prices in New England spiked from $3/MMBtu to nearly $20/MMBtu, making them the highest in the world. Since then, the region has lost two major manufacturers, and many factories are now simply being idled during the winter.
"We need a sense of urgency at the federal level to approve interstate pipelines that will address these energy price spikes and get energy to the market," LePage said. "The draft bill before you would, in my view, help modestly.
"As you know, there are multiple federal agencies involved in the permitting process...The draft bill would continue to use the expertise of these agencies, but firmly establishes FERC as the lead federal agency to coordinate review of the projects...It makes no sense that it should take three to five years to construct a pipeline, especially when the economic consequences are massive."
But Carolyn Elefant, a board member for the Pipeline Safety Coalition, said her organization believes the proposed legislation is unnecessary.
"There is little evidence to suggest that state and federal permitting agencies are responsible for delays in the development of pipeline infrastructure," Elefant said. "Merely because a federal or state authorization issues after the 90-day deadline does not necessarily mean that the project itself is delayed."
Elefant said that for some authorizations, a regulatory agency has up to one year to take action. She added that pipeline applicants sometimes fail to provide enough information to regulators, or go against advice from regulators on particular projects.
"The proposed legislation attempts to address this situation by requiring an agency to identify these conditions early on, and provides for a process, mediated by FERC to resolve these disputes," Elefant said. "Yet this added procedure is unnecessary as well since there is no reason why the applicant cannot work with federal and state agencies, under the existing licensing framework, to resolve these issues earlier rather than later."