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Emails Show Rover Demolished Historic House to Avoid Regs, FERC Says

FERC has denied Rover Pipeline LLC’s appeal for a blanket certificate, claiming that email correspondence between the company and contractors confirmed suspicions that a historic home in Ohio was purposefully demolished to avoid additional costs and prolonged regulatory proceedings.

The latest revelations in the ongoing saga involving the Rover project were disclosed in the Federal Energy Regulatory Commission’s Thursday order denying the rehearing request. In 2015, Rover purchased the 1843 Stoneman House, which sits near a compressor station along the planned route, and was eligible for listing in the National Register of Historic Places. Rover eventually demolished the house, which FERC said it discovered during certificate proceedings for the project.

The Commission denied a blanket authorization for routine construction activities when the certificate was issued earlier this year over what it viewed as Rover’s “intentional demolition” in violation of the Natural Gas Act, federal historic preservation laws and other regulations. A blanket certificate allows developers to conduct some construction activities without regulatory approval, but FERC said at the time that the company couldn’t be trusted to comply with its requirements.

Rover has maintained that it bought the property to use as office space and only demolished it after learning that the home wasn’t suitable. In its Thursday order, FERC revealed that emails with contractors demonstrated that Rover “contemplated demolishing the Stoneman House before purchasing the property.” Rover asked its contractors immediately before buying the property if tearing down the historic house was permitted, according to FERC’s interpretation of the emails.

The contractor acknowledged that no one could stop Rover from demolishing the house, but said doing so would be a “politically risky strategy,” FERC said in quoting from the correspondence. The contractor instead advised that Rover consider alternate locations for the house, which could be costly and difficult. Absent any action, the contractor advised Rover that it would likely have had to work through additional regulations with the Ohio State Historic Preservation Office to resolve adverse impacts the project would have had on the property.

“Rather than pursuing either suggestion, Rover demolished the house,” FERC said in its order. “Based on this evidence, the Commission concluded that Rover both understood the requirements of section 106 [of the National Historic Preservation Act] and demolished the house with the intent to avoid the section 106 process.”

FERC’s Office of Enforcement issued a notice of alleged violations in July, determining that Rover had “falsely promised” to avoid adverse impacts to the property and made “several misstatements” in docketed responses to the Commission’s questions about why it purchased the property and demolished the house. An enforcement investigation is still pending. 

A spokesperson for Rover parent Energy Transfer Partners LP (ETP) declined to comment on Friday. But the company argued in its request for rehearing that FERC failed to prove it demolished the house intentionally and said the Commission ignored evidence that it notified state officials of its plans for demolition and was under no obligation as a private property owner to notify FERC about its plans for a house that was only eligible for historic registration.

Rover has continued to battle with federal and state regulators for most of the year including about drilling fluid spills. It’s had to push through work stoppages and has aired heated public exchanges over its dissatisfaction with regulators, particularly in Ohio, where the spills occurred.

The 710-mile, 3.25 Bcf/d mega project is designed to deliver Marcellus and Utica shale gas to markets in the MIdwest, Gulf Coast and Canada. The pipeline is partially in service, flowing slightly under 1 Bcf/d east-to-west from Cadiz, OH, to Defiance, OH. ETP, partnered with private equity on the project, plans to bring Phase 1B extending service to Seneca, OH, online by the end of the month. Full service is still scheduled by the end of March.

Meanwhile, a Delaware Chancery Court judge ruled Friday that affiliate Energy Transfer Equity LP (ETE) should not receive a nearly $1.50 billion breakup fee in its failed attempt to merge with Williams. ETE was forced to terminate the merger in June. The court ruled at the time that while ETE did not violate the terms of the agreement, it failed to receive an opinion from its tax attorneys at Latham & Watkins LLP. ETE’s counterclaim seeking the breakup fee was therefore not viable, the court said.

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