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Collaborative Process Has Pluses, Minuses for Gas Pipelines

November 9, 1998
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Collaborative Process Has Pluses, Minuses for Gas Pipelines

Attorneys and executives that have used the collaborative process to reach agreement on thorny issues prior to filing hydropower relicensing applications touted the benefits of the procedures for the natural gas pipeline industry, but they stressed that the time involved and even the costs in some cases can be overwhelming.

This was a key message at last week's FERC staff workshop on a notice of proposed rulemaking (NOPR) that seeks to extend the use of the pre-filing collaborative process, which is being practiced in the hydropower industry now on a limited basis, to other regulated energy projects, including interstate gas pipelines. The Commission's proposal would provide a vehicle for pipelines and other stakeholders, such as disgruntled landowners and state agencies, to sit down and decide sticky environmental issues and possibly other matters prior to the filing of project applications.

The biggest pluses of a collaborative process are that it would eliminate the "surprises" that normally crop up in subsequent National Environmental Policy Act (NEPA) reviews since the issues would be debated up-front, would give applicants more control over the NEPA review process (they would be actual participants rather than onlookers), and would provide the means for stakeholders to agree early on how to study the key issues, workshop participants said.

The Commission staff believes the pipeline industry especially is ripe for the collaborative process because of mounting landowner dissatisfaction with new projects and the rising number of those projects. It estimated that applications for about 6 Bcf/d of pipeline capacity currently are pending at FERC with applications for 7.5 Bcf/d more on the horizon. The use of collaboratives could speed up the processing of these applications.

But the collaborative does exact a toll. For "folks that are contemplating this, I think it's tremendously important to really open your eyes to what the process means," said Timothy Lukas, a partner with the Hanover, ME, firm of Lukas &amp Ayer, which specializes in hydro project licensing. The amount of work involved "can't be overestimated."

In his role in a Washington Water hydro case over the past two years, he has been directly involved in more than 60 formal consultation meetings. "That's a tremendous workload for the applicants," as well as for other stakeholders. "I don't know anyone that hasn't gone into it and ended up a year or two later saying 'this was 20 times more work than I thought it would be,'" Lukas said.

And the collaborative process could be expensive, he and others advised. This is because applicants would be required to pay for the expenses to bring stakeholders to the negotiating table. This could include paying for environmental consultants, transportation costs, room and board, meeting rooms, administrative staff personnel and other items. This is a "hotly debated issue within the hydropower industry, and I would assume it would be the same in the gas industry," Lukas said. "At first don't want to fund the people that sit across the table from you. On the other hand, it's important to have them sitting across the table." In the end, many "will tell you that they got more than their money's worth out of it." Others pointed out that participants have to bear many of those same costs if projects are involved in formal hearings that can go on for years.

Although not the norm in the pipeline industry, one workshop attendee pointed out that the Portland Natural Gas Transmission project, which has faced "significant local opposition" in Maine, has used a variation of the collaborative process to smooth over local concerns. It did a "pretty good job" by holding public outreach meetings and by upgrading pipeline standards beyond what was required. "Actually [it] did many of the same steps you do in a collaborative when issues and local concerns were raised."

Most agreed that the collaborative process shouldn't be made mandatory. "I think applicants...and other parties need to believe that there's another option out there and it's [the] traditional process," agreed John Mohm, an attorney who has experience in both hydro cases and railway construction.

Mohm also believes that the pre-filing collaborative process should be confined to dealing with environmental issues. In its NOPR, the Commission has sought industry comment on what issues should be included. Financial information about a company applicant should be outside the scope of negotiations, Mohm said. "I think that the applicant needs to protect information that is confidential, that may be proprietary, that involves his long-term goal [and] his financial strategy. I don't think, for example, the comment in the rule [about] how are you going to finance this project is relevant in an open process. I think it gives too much of an opportunity for mischief by those who may be competitors." Nor, he added, should rates be discussed in an open-ended negotiation.

Susan Parker

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