FERC on Friday gave Tennessee Gas Pipeline Co. LLC (TGP) the go-ahead on rehearing to construct and place into service by Nov. 1 its Northeast Upgrade Project. In doing so it shot down a now-familiar argument from the Sierra Club about infrastructure to serve shale gas production, and it saved TGP from having to get Congressional permission for a river crossing.
The expansion of the pipeline’s 300 Line is intended to move more Marcellus Shale gas to Northeast markets. It will complement a series of projects in place and yet to be constructed. Last week TGP mounted its opposition in court to environmentalists fighting the project.
In its order [CP11-161-001], the Federal Energy Regulatory Commission (FERC) denied requests for stay by the Sierra Club and a private New Jersey landowner and gave Kinder Morgan’s TGP additional time to complete the project. Late last May, FERC approved the project. However, on rehearing FERC considered multiple objections raised by environmental organizations led by the Sierra Club.
Sierra Club alleged that the Commission engaged in improper segmentation by not considering Northeast Upgrade along with three other projects on the eastern leg of TGP’s 300 Line (the 300 Line Project, MPP Project and NSD Project). Sierra Club said that since the combined projects loop the eastern leg of the 300 Line, are inter-related and inter-dependent, FERC should have completed a single environmental impact statement (EIS) on them instead of completing an environmental assessment (EA) on Northeast Upgrade.
FERC reiterated that it had “found that each project is a stand-alone project and designed to provide contracted-for volumes of gas to different customers within different timeframes. We also found that the 300 Line Project is currently in operation and is not dependent on the Northeast Upgrade Project facilities,” the Commission said. The argument of improper segmentation of review of Northeast Upgrade from NSD and MPP was rejected because it was raised for the first time during rehearing, FERC said.
A theme to some of Sierra Club’s other objections to the project was a broader resistance to Marcellus Shale gas development in general. Besides the impact of other TGP eastern leg projects, FERC should have considered the implications of further shale gas development due to approval of Northeast Upgrade, the Commission said in characterizing the Sierra Club position.
“Sierra Club maintains that the Commission is a ‘gatekeeper’ for private action arguing that upstream activities in the Marcellus Shale region will only proceed if the Commission continues to expand access to markets through approval of interstate pipeline projects,” FERC said, latter adding that it rejects the “gatekeeper” role under such circumstances.
It’s worth noting that in its unrelated opposition to liquefied natural gas (LNG) export projects, Sierra Club has made an analogous argument: that the development of LNG export capacity will lead to expanded (and undesirable) shale gas development in the United States. FERC has rejected the reasoning in LNG cases, too (see NGI, July 30, 2012).
In Northeast Upgrade, FERC responded that the EA “considered the general development of the Marcellus Shale region in the vicinity of the project…As explained in the May 29 Order, we correctly determined that a fuller analysis is not required by NEPA [National Environmental Policy Act] because the Marcellus Shale development is not causally-related, and anticipated future activities are not reasonably foreseeable…
“Development of natural gas resources in the Marcellus Shale region will continue even without the project, and unregulated developers will continue to build new wells and and gathering systems to serve the shale gas.”
Other arguments against the project made by Sierra Club were found to be lacking merit. FERC noted that 84% of the proposed segments of Northeast Upgrade are to be located within or parallel to existing rights-of-way.
FERC also considered and rejected the objections of New Jersey landowner George Feighner, who opposed the siting of a portion of the project’s Loop 323 on his property. The route of Loop 323 deviates from existing right-of-way in order to avoid the Delaware Water Gap National Recreation Area (NRA) and the jurisdiction of the National Park Service (NPS). To lay Loop 323 would require along existing right-of-way would require Congressional approval because of the protected status of the NRA, FERC said.
“While we recognized that the two alternative routes [for Loop 323] considered in the EA would result in less environmental impact, we found that they were not reasonable or practical because of the land use conflict raised by the NPS, FERC said.
“…[G]iven the uncertainty of obtaining favorable legislation, as well as the timing of any such legislation or action, approving one of the alternative routes and requiring Tennessee to pursue Congressional authorization would likely result in the project not getting built in time to meet the demand evidenced by [TGP’s signed customer] precedent agreements.”
The $376 million project will allow an additional 636,000 Dth/d to be transported along Tennessee’s 300 Line in Pennsylvania to an interconnect with Algonquin Gas Transmission in Mahwah, NJ, to serve the Northeast. To create the additional capacity, Tennessee, proposed upgrading the remaining 24-inch diameter parts of the 300 Line by constructing five 30-inch diameter loops and modifying four compressor stations. The five loops (totaling 40.3 miles) will close out the remaining unlooped segments of Tennessee’s existing 300 Line east of Bradford County, PA into New Jersey.
Separately last week, TGP filed a complaint in federal court in Scranton, PA, to enjoin the Pennsylvania Environmental Hearing Board (EHB) from holding a hearing Monday (Jan. 14) to consider environmentalists’ petitions to block Northeast Upgrade.
The pipeline, which seeks both preliminary and permanent injunctions, asked the district court to direct the EHB to dismiss the pending appeals and to order the nonprofit watchdog groups, Delaware Riverkeeper Network and Responsible Drilling Alliance, to stop pursuing relief before the board.
The EHB hearing is “preempted by federal law” because the permits at issue were required by the Federal Energy Regulatory Commission and/or because consideration of the permits by the Pennsylvania board would “unreasonably delay construction” of the project in violation of an order in May by FERC to approve the Northeast Upgrade expansion, argued the Houston-based pipeline, which is a subsidiary of Kinder Morgan Operating LP.
An injunction of the EHB hearing “is necessary to prevent immediate and irreparable harm to Tennessee and project shippers, who have contracted for all of the additional gas transportation capacity to be created by the project,” Tennessee told the U.S. District Court. The EHB has jurisdiction to hear appeals of actions taken by the Pennsylvania Department of Environmental Protection (DEP).
Tennessee’s lawsuit names the Delaware Riverkeeper Network, Responsible Drilling Alliance, the Pennsylvania EHB and individual board members as defendants, arguing that they are interfering with Tennessee’s construction of the natural gas pipeline in Pennsylvania’s Bradford, Wayne and Pike counties, and in New Jersey. Tennessee alleges that Delaware Riverkeeper and the other defendants are attempting to use the Pennsylvania EHB appeal process to sidestep federal law.
The opponents of the pipeline project have asked the EHB to supersede three permits from the Pennsylvania Department of Environmental Protection related to the Tennessee project, which includes constructing close to 40.5 miles of 30-inch diameter gas pipeline, as well as modifications and upgrades to existing compressor stations in Pennsylvania and New Jersey to meet the growing gas demand in the Northeast.
FERC vests exclusive jurisdiction for review of its decisions with either the U.S. Court of Appeals for the District of Columbia Circuit or with the circuit court in which the project at issue is located; here, that would be the Third Circuit, not the EHB. Such a review only may occur 60 days after FERC has ruled on pending requests for rehearing. The request to rehear the agency’s decision on the Tennessee project still is pending before the Commission, so the right to seek appellate review of agency is not yet at hand.
According to Tennessee, the project must be completed and placed into service by Nov. 1 to satisfy its contractual commitments to project shippers and to meet the demands for natural gas that peak at that time of the year in the region.
“The project construction schedule is carefully crafted to comply with a number of environmental permits and clearances, many of which allow only limited time windows to perform certain critical construction activities,” Tennessee said in its complaint. “Missing these deadlines would cause Tennessee to miss the Nov. 1, 2013 project completion deadline.”
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