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Veteran Attorneys Don’t See Comparative Hearings of Pipeline Projects in FERC’s Future

With so many new pipelines proposed to transport Marcellus/Utica gas, environmental groups are calling for FERC to consider the projects collectively to determine whether all or any are necessary.

Last week, the Federal Energy Regulatory Commission (FERC) received a letter from more than 30 environmental groups calling for “a single, comprehensive regional review” of four major pipeline projects planned to cross through the Virginia and West Virginia mountains.

“Our region is facing an unprecedented level of natural gas infrastructure development,” the letter stated, noting that multiple major interstate pipeline projects have been proposed “in close proximity to one another.” The groups asked FERC to develop a programmatic environmental impact statement (EIS) to account for all of the projects proposed for the region.

Also last week, FERC received a letter from Berkeley, CA-based Water and Power Law Group PC urging the commission to prepare a programmatic EIS that the law firm argued would “improve their environmental review of applications for Marcellus Shale natural gas pipelines” under the National Environmental Policy Act (NEPA).

“To date, agencies have approached NEPA compliance for natural gas pipelines within the Greater Appalachia region on a project-by-project basis, without the benefit of a regional programmatic environmental impact assessment off of which project-specific NEPA documents could tier,” the law firm said.

Marcellus/Utica exploration and production companies have found themselves stuck in a production glut, with limited transportation out of the Appalachian Basin (see Shale DailyOct. 30). This has led to a large basis differential and a slew of pipeline proposals to increase takeaway.

At a cursory glance, there is the Atlantic Coast Pipeline (see Daily GPI, June 23), the Mountain Valley Pipeline (see Daily GPI, Oct. 23), Columbia Gas Transmission’s Leach XPress (see Shale Daily, June 8) and Spectra’s NEXUS Gas Transmission project (see Shale Daily, Jan. 9), among others.

The Water and Power Law Group letter is also addressed to the U.S. Forest Service, pointing to particular environmental concern over the Mountain Valley and Atlantic projects, which would both cross national forests in Virginia and West Virginia.

“Given the surge in pipeline proposals within the region, the reliance on project-by-project NEPA review has become increasingly ineffective and inadequate,” the law firm wrote. “FERC and Forest Service Staffs’ review is complicated by duplicative and potentially inconsistent information regarding baseline conditions, cumulative impacts, connected actions, indirect effects, and mitigation protocols provided by the applicants and stakeholders.”

But experts familiar with how FERC certificates pipelines said the commission is unlikely to stray from the precedent it has set for a project-by-project review of public need and environmental impact.

William Demarest, an energy attorney with Husch Blackwell, said environmental groups have been calling for a programmatic approach to reviewing pipeline projects for years.

“The environmental community has traditionally argued for a very expansive reading of other projects and other activities that must be considered in connection with a particular certificate application,” Demarest said. “Often those other activities or other projects are either completely unrelated, don’t serve the same purpose, or are speculative.”

Another attorney familiar with FERC proceedings noted that a programmatic EIS first requires a program, and under the federal Natural Gas Act, FERC’s role is limited to a market-based project-specific review of public necessity largely in terms of supply and demand.

Anything else would amount to controlling the market and picking winners and losers, the attorneys said, something FERC is unlikely to do based on past precedent. To be certificated a pipeline project must demonstrate it has customers and connections to supply. Any lenders called upon to help finance a project will have the same requirements. Often in the case of competing projects, one or more will drop out if the market doesn’t support them.

“If there is a market here for the service, then that is likely to be the controlling factor, and the individual impacts are largely localized,” Demarest said. “You look generally at the effect of the project on woodlands, endangered species, a host of items. But typically the commission rejects claims that you should, for example, consider the effect of sending more gas to the marketplace on global warming. Those kinds of considerations are beyond the scope of NEPA review and typically so too is the situation where you have multiple projects that are independently grounded in independent economic need.

“They may be going to the same place and starting in the same place, but that’s a function of supply and demand, where the demand is perceived to be and where the supply is.”

The market will determine which projects are necessary in that the pipelines without enough customers will drop out, according to Demarest.

But some of the opposition to the proposed Marcellus/Utica transmission pipelines appears rooted in a more fundamental objection to the hydraulic fracturing process and the industry as a whole, putting FERC in the middle of a controversy outside its purview.

Bill Yardley, president of U.S. transmission for Spectra Energy Corp., touched on the issue during a roundtable in Washington, D.C., last week (see Daily GPI, Oct. 28).

“The folks that really don’t want us to succeed have been struggling to win the battle at the production end,” Yardley said, and hydraulic fracturing for natural gas “is here to stay. Everybody enjoys cheap energy on the demand side, so attacking that is not a real winner. So they’re going to attack the delivery mechanism, and that’s who we are.”

Don Santa, president and CEO of the Interstate Natural Gas Association of America, echoed that assessment.

“Some who oppose pipelines seem to be using the FERC certificate process to wage a proxy war in opposition to natural gas, or to fossil fuels in general,” Santa said. “Still, landowners and local communities often raise legitimate concerns about proposed pipelines that can be considered and addressed within the FERC process.”

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