The federal budget signed by President Clinton last week setaside funding to help jump start negotiations among jurisdictionalfederal agencies on an agreement to coordinate interagency reviewof natural gas pipeline projects, paving the way for potentiallyquicker certification at FERC in the end.

Specifically, the budget earmarks an additional $100,000 inannual funding for the White House Council of Environmental Quality(CEQ) to come to the table with six other federal agencies todiscuss and potentially sign a memorandum of understanding (MOU),which would establish “a general framework for cooperation andparticipation” among the agencies when reviewing gas pipelineprojects. Although it has supported the effort, CEQ has claimed inthe past that it lacked the funding and staff resources it neededto engage in the MOU process. Interagency cooperation also has beenstymied in the past by agency turf battles.

A VA-HUD Appropriations conference report, which was passed byboth the Senate and House earlier this month, directs that theadditional budgeted money be used by CEQ to hire a staff so it cannegotiate on an MOU with respect to environmental review of gaspipeline projects. Congress believed this was a “good initialinvestment” in a “sound process” for interagency cooperation, saidGay Friedmann, vice president of legislative affairs for theInterstate Natural Gas Association of America (INGAA).

To spur the effort along, the interstate pipeline industry hasproposed a draft interagency agreement for the agencies to eithersign or to use as a model for their own accord. “The overallobjective is to build consensus among all involved agencies toassure the timely, cost-effective development of needed,environmentally sensitive natural gas pipeline projects,” theindustry draft agreement said. It proposes that information on apipeline project be “gathered, considered and relied upon” by theseven jurisdictional federal agencies in a single review process.The draft agreement seeks to “compile a common data-base” for allagencies to rely upon in order to “avoid duplicative requests.” Italso calls for agencies to “agree on appropriate major decisionpoints for significant decisions,” and to “agree to resolvepotential disputes by mutual agreement.”

For it to have any weight, all seven federal agencies ordepartments would have to sign the interagency agreement: CEQ,FERC, the Interior Department’s Bureau of Land Management and Fishand Wildlife Service, the U.S. Army Corps of Engineers, theEnvironmental Protection Agency, and the Advisory Council onHistoric Preservation. Each agency is responsible for implementingsome element of the National Environmental Policy Act (NEPA). FERCis the lead agency over NEPA, and is in charge of calling the otheragencies together to negotiate an MOU.

“We have been working for more than four years to get the NEPAagencies to agree that it would be worthwhile to sign onto a kindof shell agreement wherein they would just agree to sit down andtalk about how they were going to proceed in a coordinated mannerto review gas pipeline applications,” said Deborah Lawrence, vicepresident of government affairs for The Williams Cos. Inc.

“We have talked to each of these agencies and have receivedsupport. But we have not been able over the years to get FERC toconvene a meeting with all these agencies…so that they couldactually agree that they want to work on some kind of memorandum ofunderstanding,” said Lawrence, who, along with The Coastal Corp.and INGAA, has been at the forefront of this effort. Chairman JamesJ. Hoecker has long supported streamlining the NEPA-agency reviewprocess, she noted, “but given what FERC has done this year withits NOPR and NOI, it’s not probably their top thing to do.” Theother federal agencies “probably have other things on thefront-burner, too.”

Still, Lawrence holds out hope that the Commission will get theMOU process underway in the near term. She believes Hoecker offers”us a great window of opportunity” for this effort. But theCommission says the ball’s in Williams’ court now, and thatprogress on this issue will depend on the level of support that thepipeline can gather from the other federal agencies. “I thinkthey’re just forming contacts [at the agencies] at this juncture,and then we will follow up from there,” said Pat Jagtiani, gasadvisor to Hoecker. “It really is, I think, in a formulative stagewith them.”

An interagency agreement is crucial, pipelines contend, becauseit would help minimize the governmental red tape and “unnecessarybureaucratic barriers” associated with the existing environmentalreview process for gas pipelines, which is “typically protracted,expensive and of uncertain outcome.” A 1992 report by the GeneralAccounting Office revealed that FERC – in conducting 21 majorenvironmental reviews over a 28-month period – averaged 568 days tocomplete an environmental impact statement (EIS) and 348 days for aformal environmental assessment, according to a pipeline industryposition paper. This did not include additional time that may havebeen allotted for further environmental or permitting reviews byother federal agencies, it added.

A system that would coordinate the federal agencies responsiblefor enforcing NEPA would shorten the review process, andsubsequently could speed up certification of gas pipeline projectsat FERC, pipeline representatives believe.

At the same time, a coordinated system for agency review alsowould simplify matters. “Sometimes you [the pipeline] will try tocomply with the wishes of one agency, only to have the nextreviewing agency say ‘we don’t like the route; we need moreinformation.’ That leads to delay in the project, it costs more andit means we get our service to our customers that much later at adifferent costs. Sometimes a project can’t be built at all becauseyou missed the environmental window,” Williams’ Lawrence said.

Now is the time to streamline federal-agency review of gaspipeline projects as the industry faces the prospect of a 30-32 Tcfmarket in the 2010-2015 timeframe, she noted. “We need to be ableto build our pipeline infrastructure quickly and at reasonablecost. It takes about seven years to build a pipeline. We need toget pipelines in the ground for 2008.”

Susan Parker

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