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Collaborative Process Has Pluses, Minuses for Gas Pipelines
Attorneys and executives that have used the collaborativeprocess to reach agreement on thorny issues prior to filinghydropower relicensing applications touted the benefits of theprocedures for the natural gas pipeline industry, but they stressedthat the time involved and even the costs in some cases can beoverwhelming.
This was a key message at last week’s FERC staff workshop on anotice of proposed rulemaking (NOPR) that seeks to extend the useof the pre-filing collaborative process, which is being practicedin the hydropower industry now on a limited basis, to otherregulated energy projects, including interstate gas pipelines. TheCommission’s proposal would provide a vehicle for pipelines andother stakeholders, such as disgruntled landowners and stateagencies, to sit down and decide sticky environmental issues andpossibly other matters prior to the filing of project applications.
The biggest pluses of a collaborative process are that it wouldeliminate the “surprises” that normally crop up in subsequentNational Environmental Policy Act (NEPA) reviews since the issueswould be debated up-front, would give applicants more control overthe NEPA review process (they would be actual participants ratherthan onlookers), and would provide the means for stakeholders toagree early on how to study the key issues, workshop participantssaid.
The Commission staff believes the pipeline industry especiallyis ripe for the collaborative process because of mounting landownerdissatisfaction with new projects and the rising number of thoseprojects. It estimated that applications for about 6 Bcf/d ofpipeline capacity currently are pending at FERC with applicationsfor 7.5 Bcf/d more on the horizon. The use of collaboratives couldspeed up the processing of these applications.
But the collaborative does exact a toll. For “folks that arecontemplating this, I think it’s tremendously important to reallyopen your eyes to what the process means,” said Timothy Lukas, apartner with the Hanover, ME, firm of Lukas & Ayer, whichspecializes 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 twoyears, he has been directly involved in more than 60 formalconsultation meetings. “That’s a tremendous workload for theapplicants,” as well as for other stakeholders. “I don’t knowanyone that hasn’t gone into it and ended up a year or two latersaying ‘this was 20 times more work than I thought it would be,'”Lukas said.
And the collaborative process could be expensive, he and othersadvised. This is because applicants would be required to pay forthe expenses to bring stakeholders to the negotiating table. Thiscould include paying for environmental consultants, transportationcosts, room and board, meeting rooms, administrative staffpersonnel and other items. This is a “hotly debated issue withinthe hydropower industry, and I would assume it would be the same inthe gas industry,” Lukas said. “At first blush…you don’t want tofund the people that sit across the table from you. On the otherhand, it’s important to have them sitting across the table.” In theend, many “will tell you that they got more than their money’sworth out of it.” Others pointed out that participants have to bearmany of those same costs if projects are involved in formalhearings that can go on for years.
Although not the norm in the pipeline industry, one workshopattendee pointed out that the Portland Natural Gas Transmissionproject, which has faced “significant local opposition” in Maine,has used a variation of the collaborative process to smooth overlocal concerns. It did a “pretty good job” by holding publicoutreach meetings and by upgrading pipeline standards beyond whatwas required. “Actually [it] did many of the same steps you do in acollaborative when issues and local concerns were raised.”
Most agreed that the collaborative process shouldn’t be mademandatory. “I think applicants…and other parties need to believethat there’s another option out there and it’s [the] traditionalprocess,” agreed John Mohm, anattorney who has experience in bothhydro cases and railway construction.
Mohm also believes that the pre-filing collaborative processshould be confined to dealing with environmental issues. In itsNOPR, the Commission has sought industry comment on what issuesshould be included. Financial information about a company applicantshould be outside the scope of negotiations, Mohm said. “I thinkthat the applicant needs to protect information that isconfidential, that may be proprietary, that involves his long-termgoal [and] his financial strategy. I don’t think, for example, thecomment in the rule [about] how are you going to finance thisproject is relevant in an open process. I think it gives too muchof an opportunity for mischief by those who may be competitors.”Nor, he added, should rates be discussed in an open-endednegotiation.
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