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FERC Upholds MVP Certificate in Split Decision as Commissioners Disagree on Pipeline Reviews

FERC in an order Friday upheld its decision approving the Mountain Valley Pipeline (MVP), striking down rehearing requests from numerous environmental groups opposed to the 303-mile, 2 million Dth/d greenfield Appalachia-to-Southeast natural gas project.

But dissenting opinions filed by the Federal Energy Regulatory Commission’s two Democratic commissioners showed agency leadership split on key issues as it prepares to revisit its natural gas infrastructure review process.

FERC denied rehearing requests challenging MVP and the related 600,000 Dth/d Equitrans Expansion Project, with the majority explaining its rationale over the course of more than 150 pages, including in-depth discussion defending, among other things, its analysis of climate change impacts and its reliance on precedent agreements to determine need for gas pipeline projects.

FERC’s approach to climate change analysis recently came under scrutiny in the courts when challengers were successful in upending the Commission’s certificate order approving a trio of Southeast pipelines focused on delivering gas into the Florida market.

The majority in Friday’s order maintained that FERC went beyond its scope to evaluate the greenhouse gas (GHG) emissions resulting from approving MVP and that the social cost of carbon methodology suggested by project opponents was not appropriate for the Commission’s purposes.

FERC said it “does not deny the link between GHG emissions and environmental impacts and climate change. However, linking particular GHG emissions to particular climate and environmental impacts in a way that results in analysis that is useful to the Commission for purposes of fulfilling its obligations under” the National Environmental Policy Act (NEPA) and the Natural Gas Act “is a different matter.”

Meanwhile, Commissioners Cheryl LaFleur and Richard Glick issued separate dissenting opinions, both urging a more robust approach to assessing climate change impacts in FERC’s NEPA reviews. LaFleur said she disagrees with the majority’s assessment of the usefulness of the social cost of carbon methodology.

“Much of the majority’s criticism simply reflects the fact that consideration of climate change in our pipeline reviews is difficult,” LaFleur wrote. “I agree that consideration of climate change is difficult. However, I do not believe that the difficulty of considering climate change relieves us of the obligation to consider climate change impacts as part of our environmental review.”

Glick similarly opined that “the Commission has the tools needed to evaluate the projects’ impacts on climate change. It simply refuses to use them.”

Both Glick and LaFleur questioned whether FERC erred in determining that constructing MVP is in the public interest.

LaFleur, who also dissented when FERC issued a certificate order approving MVP last year, reiterated her concerns about the similarities between MVP and the Atlantic Coast Pipeline -- another greenfield Appalachia-to-Southeast project that simultaneously secured FERC’s blessing last October.

“The projects, when considered collectively, pose significant environmental impacts. Both pipelines cross hundreds of miles of karst terrain, thousands of waterbodies, and many agricultural, residential, and commercial areas,” LaFleur wrote. “I believe we should have given more consideration to a merged system/one-pipe alternative option that could result in less environmental disturbance and fewer landowner impacts.

“...In circumstances of multiple projects proposed in the same region, with similar timing, I believe we should, in the future, consider a regional review for the development of natural gas infrastructure to assess both the need for pipeline capacity in the region, and the environmental impacts of multiple proposed pipelines on the region.”

Glick questioned FERC’s reliance on pipeline precedent agreements to determine whether a project is needed, especially if those agreements are among affiliates.

“Although precedent agreements can be useful in assessing whether a pipeline is needed, they may not be, in and of themselves, sufficient to make that demonstration and certainly are not when the precedent agreements involve affiliated entities,” Glick wrote. “...The developer of a potential pipeline, especially of a pipeline that is not clearly needed, still has a powerful incentive to secure precedent agreements with one of its affiliates. The Commission consistently relies on those agreements, by themselves, to conclude that a proposed pipeline is needed.

“This incentive to secure precedent agreements in order to make this showing is, at least potentially, sufficient for a pipeline developer’s corporate parent to cause one of its affiliates to enter into a precedent agreement with the developer,” he continued. “The Commission’s disregard of this incentive means that its exclusive reliance on precedent agreements cannot be the product of reasoned decision-making.”

The latest sparring over review methodology comes just months after FERC Chairman Kevin McIntyre said the Commission would be reviewing its decades-old policy governing how it evaluates gas pipeline proposals.

McIntyre told a Senate panel last week that he is personally committed to seeing the Commission accelerate its permitting of interstate natural gas pipelines, while also hiring more staff to address a backlog of permitting for liquefied natural gas (LNG) export infrastructure.

"I am, of course, but one of five voices on this Commission, and my colleagues are very thoughtful regulators in their own right," McIntyre said. "I anticipate the thoughtful input from each of them that I've come to expect.

"I will say for my own part, though, that I have no interest in initiating a review of our gas certificate policy area for the purpose of slowing anything down. My interest is in streamlining and making more efficient the processes that we have. I agree with the suggestion...that we need to be efficient in this area. For my own part, I endeavor to do exactly that."

MVP is under construction, with a targeted in-service date of later this year. The pipeline is routed from West Virginia to Virginia, where it would connect with Transcontinental Gas Pipe Line to move Marcellus and Utica shale volumes to the Southeast. The project also recently launched an open season to extend the system into North Carolina.

Last month, a federal court rejected FERC’s motion to suspend a petition for review of its certificate order for MVP until after it had ruled on the rehearing requests, allowing the challenge, brought by a number of environmental groups, to move forward.

Also last month, the U.S. Army Corps of Engineers suspended MVP’s Nationwide Permit 12 verifications until it could determine whether there were violations of the water quality certification in West Virginia.

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