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Williams CEO Warns of Sierra Challenge to Gas Pipelines

Williams CEO Alan Armstrong last week called on the natural gas industry to join the fight against the Sierra Club's legal challenge the issuance of nationwide permits (NWP) to natural gas pipelines to cross streams/wetlands during the construction of projects. A win by the environmental group in federal court would require pipeline companies to go through the onerous process to obtain individual Section 404 permits under the Clean Water Act (CWA) for each water crossing in their project.

He asked the industry to "start paying attention" to a lawsuit filed by the Sierra Club challenging Corps of Engineers-issued general permits to cross water bodies during pipeline construction. "Those things are going to be big. They're bigger than just causing a delay. They are big enough to really stop us from being able to use natural gas as a resource because the utilities and power generators...don't have the luxury of sitting back and waiting to see if the industry wins these fights," Armstrong told the Natural Gas Roundtable in Washington, DC.

The electric side has to "make decisions today about what [they're] going to use for their power generation source, and when they see things like that [Sierra Club complaint], they're going to say, 'OK, I told you we couldn't rely on natural gas.' So I ask you to really pay close attention to this," he said. "And realize that if you're on the production end or if you're on the consumption end of this, you better understand that the expense of that infrastructure can impose volatility into these markets that can wreck a tremendous opportunity." Following the roundtable, Armstrong met with a White House staffer to discuss the issue.

The environmental group filed the lawsuit in the U.S. District Court in the Western District of Oklahoma, challenging the Corps issuance of a NWP 12 (reauthorized NWP earlier this year) for the crossing of streams and wetlands for the Cushing, OK-to-Port Arthur, TX portion of the Keystone Pipeline. The case has wide implications for all pipelines, including natural gas, according to law firms watching the case.

The Corps issues two types of permits for water crossings -- individual permits and the NWPs. NWPs are issued for a category of activities that the Corps determines will have only a limited impact on the aquatic environment. Pipelines favor NWPs because they can use the permit multiple times for separate water crossings along a project's path. Moreover, the National Environmental Policy Act (NEPA) review of an NWP is performed at the rulemaking stage and not each time a company seeks to use the NWP. Nor are there any public notice and comment requirements involved.

In contrast, the process involving an individual permit of a single stream/water crossing typically takes much longer and is more complicated, triggering a NEPA review in each case an individual permit is issued. "Many projects have died as a result of prolonged NEPA challenges" to individual permits, wrote the law firm of Jackson Kelly PLLC in a review of the Sierra Club vs. Keystone case.

NWP 12 authorizes crossings related to the construction of lines, both oil and gas, provided the activities do not result in the loss of greater than 1/2 acre of waters in the United States for each single and complete project. The Sierra Club argued that the use of NWP 12 was inappropriate in the case of Keystone Pipeline because individual stream crossings would result in disturbance to more than 1/2 acre of water.

"The result of NWP 12 [reauthorization] is to allow the Corps to 'piecemeal' large interstate pipeline projects like the Keystone Pipeline Gulf Coast Project into several 1/2 acre 'projects' so as to avoid the individual permit process under the CWA, which would require public notice and comment and an analysis of the overall project's impacts and alternatives pursuant to NEPA and CWA," the Sierra Club said in its lawsuit.

It has asked the court to declare NWP 12 invalid and to issue a preliminary and permanent injunction against the Keystone project. The Sierra Club challenge is "[getting] things completely balled up right now," Armstrong said. "A lot of these environmentalist groups that are opposing the development of natural gas have determined that they can't do a lot about stopping somebody from drilling on their own private land, but it's a whole lot easier to attack a linear project that's got to cross public lands, got to cross streams, got to cross roads [and] got to cross federal lands.

"So that is where they're attacking [the industry]. Keystone Pipeline is a great example of that. We [in the gas industry] are going to see that in a big way as we start to develop natural gas infrastructure in the U.S."

There will be a price for the opposition from environmental groups and states. Armstrong said a small pipeline that Williams was building in Northeast Pennsylvania, which had a wall thickness of only one-half inch, turned out to be two and a half times more costly to lay than a deepwater pipeline with a wall thickness of 1.75 inches. The higher cost was due to the "lack of cooperation [among the parties], the amount of jurisdictional overlaps, the amount of redos [and] the amount of stop and starts...And guess who's going to wind up paying for that? It's going to be the consumer," he said.

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