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Faster Certificate Procedures Eyed at Commission

Faster Certificate Procedures Eyed at Commission

Regulations related to the construction of interstate gas pipeline facilities took center stage at FERC last week, with the Commission proposing on one hand two initiatives aimed at streamlining and expediting the certificate process for new projects, while at the same time seeking through a third measure to explore the possibility of involving landowners earlier on in the process - a move that, while generally viewed as inevitable and even necessary, could pose added headaches for gas pipelines.

FERC commissioners unanimously voted out three companion measures - a notice of proposed rulemaking (NOPR) that would expand the scope of blanket certificate authority for pipelines, as well as offer a number of other "housekeeping" changes to FERC's Part 157 regulations [RM98-9]; a second NOPR that would give gas pipelines the option to engage in a collaborative process - with landowners, environmentalists et al - to resolve conflicts prior to filing their applications [RM98-16]; and a notice of a technical conference to address, among other things, FERC's current landowner notification process [RM98-17].

The combined efforts "will be important to the rational and appropriate expansion of pipeline capacity in the future consistent with environmental requirements and landowners' needs, and [they] will expedite our procedures...," said Chairman James Hoecker.

The chairman singled out the proposed use of the collaborative process for gas pipeline projects as "particularly important...because it has as its goal the improvement of communication, enhancement of public participation in our process, and the resolution of conflicts early..." It would be modeled after the process being used on the hydroelectric side for the relicensing of projects. In certain hydro relicensing cases, "you identify all interested parties - landowners, resource agencies and any other interested [persons] - and bring them together...to talk through what the issues are, to come to some common understanding about what studies you're going to do, and to try to work out the terms and conditions under which the project will be relicensed in an 'informal, non-adversarial fashion' before the application is filed," a FERC staff member explained.

"We've had good success with it. We've probably got 30 hydro projects that are using those processes now. It has significantly accelerated the time between when the application's filed and when they issue [a] relicensing order, and we've avoided rehearings and court appeal[s]," he said.

Commissioner William Massey thinks the use of the collaborative process is "an idea that we should definitely explore." But it may not be appropriate in every case.

The Interstate Natural Gas Association of America (INGAA) also questioned whether the collaborative exercise would be of much value to pipelines. "The dynamics of hydro relicensing and building a new gas pipeline in terms of negotiating with intervenors are really a lot different," said Lorraine Cross, senior vice president of regulatory affairs. "In a hydro relicensing case, you're relicensing an existing facility and you're talking about adding new licensing conditions, which the intervenors will regard as having a benefit to them. So they obviously have an incentive to bring the negotiations eventually to a close because they can't get the benefits until then. In the meantime, the facility continues to operate status quo."

Comparatively, however, gas pipeline project cases usually are more contentious, she noted. "In some gas pipeline certificate applications, you have pipelines against pipelines, and they'll never give up." And then there is the growing opposition from landowners. She believes the collaborative process - which FERC proposes as an option but is considering making mandatory - only would work if pipelines already own the rights-of-way to their projects, such as in the case of the conversion of an oil pipeline to natural gas.

From the pipeline standpoint, Cross believes the Commission's NOPR addressing blanket certificate authority will be more valuable. It "sounds as if it would expand the scope of that regulation, which would mean that for a lot of what you might call routine projects that are now being treated as major Section 7 (c) applications [subject to a lengthy certification process], you can initiate construction at your own risk and expense without prior FERC approval." Using the expanded authority for projects such as use of temporary compression and uncontested abandonment "should save the Commission a lot of time and certainly will save us [the pipelines] a lot of time and expense."

For Massey, the proposed revisions to FERC's Part 157 regulations, the crux of which is the expansion of the blanket certificate authority, "aren't sexy, but...the combined effect, I think, will help us increase the speed with which the Commission can process certificate application[s]." Toward that objective, the Commission also proposed "to increase the spending limit on the construction and acquisition of facilities that can be acted on by the director of [the Office of Pipeline Regulation] from $5 million to over $19 million." The last time FERC raised the limit was in the mid-1980s. "So it's certainly time to take a look at that again with inflation and all." Specifically, the NOPR would allow pipelines to construct, operate, rearrange, replace or abandon more facilities than currently are covered under their blanket certificate authority; revise FERC regulations to facilitate construction of receipt points; allow pipelines to construct and operate temporary compression stations under their blanket certificate authority; require that prior-notice applications be noticed within 10 days of an application; and delegate to the director of the Office of Pipeline Regulation the authority to dismiss protests that don't raise substantive issues or fail to provide detailed reasons for an objection.

Pacifying Landowners

As for the third and last initiative, FERC plans to hold a technical conference in December to closely review its existing policy for notifying landowners. This is seen as a first step toward a possible NOPR or some other action that would propose changes. This largely is in response to mounting landowner dissatisfaction with the spate of pipeline projects proposed in densely populated areas of the country. In addition, it comes in the wake of legislation sponsored by Sen. Fred Thompson (R-TN) that would require landowners to be formally notified by certified mail of any pipeline projects that could cross their property.

"Right now we [FERC] require that the pipeline submit a list of landowners at the point where we give notice of our [environmental review]. Then that notice is mailed out to the list of landowners...That's sort of part way into the process. And the question that's being posed here is should that [landowner notification] be earlier," noted the FERC staff member.

INGAA's Cross said pipelines already have responded to the Commission, offering to voluntarily notify affected landowners situated along a project's right-of-way as soon as an application receives a docket number, which is the day after it's filed, and to send them a copy of a FERC brochure that describes in "pretty neutral terms what their rights are and how they could intervene in the process." The proposal still is pending.

Greater landowner involvement, which would result from this NOPR and the recent proposed rulemaking exempting certain off-the-record communications between FERC staff and landowners from ex parte rules, would undoubtedly complicate the certificate process for pipelines, Cross said, but she and others think it's an inevitable fact of life.

Presently, some of the "most pronounced" landowner concerns are being seen on the Independence Pipeline project, as well as with some of the other large new projects that would transport gas from Chicago to the East Coast, the FERC staff member noted. "It's interesting in parts of the country where oil and gas exploration and development are sort of part of the local economy, these [landowner] issues don't loom so large. That's part of the business climate there."

Also, although rising landowner dissatisfaction is owing in large part to new projects being sited in virgin and densely populated areas, "I think some of it stems from [the fact that] some companies are better at customer relations than others...I think that there's been some sort of public relations problems in some areas," he said.

Susan Parker

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