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INGAA Study Cites 'Best Practices' to Avoid Permitting Delays, Agency Conflicts

The natural gas industry bears as much of the responsibility for avoiding permitting delays and minimizing conflicts as do federal and state regulators, according to a new study issued by the INGAA Foundation last Monday.

"Many of the common best practices currently being employed by [project] applicants appear to be moderately to highly successful in avoiding intergovernmental conflicts, and streamlining the overall permitting process," said the INGAA Foundation-commissioned study, which was conducted by ENSR International of Fort Collins, CO, an environmental consulting firm.

Some of the recommended best practices include:

In addition, "to address agency staff resource constraints, a possible solution is additional funding for staff from either cost-recovery programs or third-party funding. The justification for this payment would be for the expeditious review of [an] applicant's permit," the 60-plus page study said. A cost-recovery program would allow the project applicant to reimburse the agency for existing staff labor and other costs associated with the permitting process. "As a result, agencies can dedicate [greater] numbers of staff to handle project loads."

The study noted that the chief contributors to permitting delays were inadequate staffing at agencies for processing permit applications and lack of knowledge by the agency staff regarding the federal permitting process and/or industry needs and constraints; communication difficulties between agencies and the project applicant; lack of communication and coordination between agencies; misunderstanding about what defines a complete application; lack of knowledge by the project applicant about the permit process; inconsistent application steps; deadlines and timeframes that were not properly communicated to the applicant; and deadlines and timeframes that differ by agency.

"The time required to obtain...numerous approvals and the time required to coordinate the various agencies has increased in recent years, undermining the efficacy of the FERC's pre-eminent role and the predictability and timeliness in the overall pipeline permitting process."

The number of federal agencies involved in pipeline approvals has mushroomed over the years to include the U.S. Forest Service, U.S. Fish and Wildlife Service, U.S. Army Corps of Engineers, Environmental Protection Agency, U.S. Advisory Council on Historic Preservation, Bureau of Land Management and others. "Coordinating agency efforts is often a challenge."

In addition, states are increasingly exercising their authority under the federal Coastal Zone Management Act (CZMA) to block pipeline projects. "Unprecedented conflicts have been widely publicized of late relative to the U.S. Department of Commerce's [CZMA] appeal rulings for two FERC-certificated projects," Millennium Pipeline and the Islander East Pipeline. Both projects have been in limbo for years as a result.

The INGAA Foundation study reviewed 13 gas projects to determine the extent to which intergovernmental conflicts were an impediment to permitting. "In a few case studies, it appeared that the state or local regulatory office purposely delayed the issuance of permits for reasons other than related to the permit," it said. "For projects that crossed tribal lands, the negotiations with the tribal entities required more time than anticipated, required more attention than anticipated, and required more costly lease arrangements than anticipated. In summary, crossing tribal land was usually the most significant labor and fee-intense factor for these projects."

Three projects that did not encounter significant impediments in permitting "employed extensive agency and public outreach programs," according to the study. "One project planned their construction schedule such that many of the sensitive issues (i.e. impacts to protected species) would be categorically avoided from the onset of the project planning phase. [Another] project employed a team permitting approach wherein the multiple agencies involved in the project met at least monthly to discuss the project and their status in the permitting review process," it said.

"The effects of the permitting conflicts studied invariably increased the costs of the project...but also negatively affected the siting of future pipeline projects," according to the study.

While the natural gas industry has experienced its fair share of project delays due to conflicts between federal agencies and with state agencies, the study noted that other industries have had an even worse time of it.

"The effects felt by many of the other industries appeared more extreme than the effects felt by the interstate natural gas industry. The reasons for this were two-fold. The first was that many of these other industries did not have the benefit of a process-supporting federal lead agency such as the FERC to shepherd the project process," it noted.

"A second reason that natural gas projects tended to be more successful (i.e. constructed) was that federal eminent domain allowed them to navigate land acquisition. The lack of such authority put other types of infrastructure projects at a disadvantage."

The interstate gas pipeline permitting process, although it has flaws, "appeared to take less time than most other energy facility and linear facility permitting processes" that were required to comply with the National Environmental Policy Act (NEPA), which ranged from 12 to 24 months and 12 to 72 months, respectively, the study said.

At the same time, it noted there were lessons for interstate gas pipelines to learn from some other industries. "The strides that the Federal Highway Administration (FHA) has made in streamlining its permitting processes within the U.S. stood out as a potential model for the pipeline industry."

Specific provisions of the FHA law "addressed coordinated and concurrent federal and state agency environmental review processes, created a dispute resolution process, and provided states with the authority to request funds to reimburse affected agencies for expenses. This allowance for financial reimbursement to the agencies helped to address resource constraint issues that often delayed the permitting process. These provisions could be considered for inclusion in similar legislation for natural gas pipeline projects."

There currently are two provisions in the pending comprehensive energy legislation that could eliminate project conflicts and permitting delays, according to the study. One would essentially eliminate the potential for de novo review of projects by federal and state agencies that do not participate in the FERC NEPA review process. "This provision will encourage federal and state agencies to contribute to the FERC's review of the proposed project before the issuance of a certificate, thus building consensus among the permitting parties relative to the approval or denial of a project applications. The provision's second benefit is that it will deter purposeful political delays by agencies."

Under the second provision, a project sponsor could petition for immediate review by the U.S. Court of Appeals for the District of Columbia Circuit to determine whether or not a permitting action, inaction or permit conditioning is unreasonable. "If found to be unreasonable or running counter to serving in the public convenience and necessity, the court can overrule the agency, determine the proponent in compliance with said law, and allow the proponent to move forward without further consultation with the agency," the study said.

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