Given the nation’s growing appetite for natural gas, especially by the power generation sector, state and local governments are going to have to step up to the plate and play a greater role in the coordination of permitting and environmental-review efforts so that the pipeline and distribution infrastructure needed to support the expanding demand can be built, according to a new joint report.

“The current natural gas infrastructure was not planned to meet the expected rate of natural gas consumption growth [that] the nation will see in the next decade…More than 90% of all planned new power generation in the United States will be fueled by natural gas. Almost all small, supplemental back-up generating units…are powered by natural gas,” according to a final report of the Pipeline Siting Workgroup of the Interstate Oil and Gas Compact Commission (IOGCC) and the National Association of Regulatory Utility Commissioners (NARUC).

The National Petroleum Council has estimated that more than 38,000 miles of new interstate pipelines and 263,000 miles of new distribution lines will be required to satisfy the expanding consumption. The bulk of the permits for these new lines will come from states and local agencies, the report noted. “However, only a few states have effective coordination of the natural gas pipeline permitting process,” it said, adding that the lack of this coordination “can add many months — and sometimes years — to building a pipeline.”

The joint report called on states and local agencies to take several steps to end the “duplicative” layers of regulation slowing the pace of pipeline construction. For starters, “every governor should establish within the office of governor a coordinating effort to organize and expedite the activities of all state and local natural gas permitting entities. The purpose…would be to monitor the process and encourage prompt consideration, while eliminating duplication of effort,” it said.

“States should identify all of the participants in the permitting process and coordinate regulatory roles,” with the objective being to process information only once, the report noted. “States should consider naming a lead agency, which would have the authority to monitor processing schedules within existing regulatory requirements.

The joint IOGCC-NARUC work group also encouraged states to work jointly with the federal government on new pipeline projects. President Bush endorsed this cooperation in an executive order that created a federal interagency task force charged with “setting up appropriate mechanisms to coordinate federal, state, tribal and local permitting in geographic areas where increased permitting activity is expected.”

While the key is to eliminate duplicative regulation, reduce costs and shorten the review period for pipeline projects, the joint working group emphasized that this should not be done at the expense of state regulatory oversight.

In an effort to further ease the regulatory logjam, “states should consider [establishing] a special task force of state environmental experts to focus and coordinate all environmental issues” related to the construction of new pipelines, the report said. “When time-sensitive issues arise, the governors need a plan for reaction, which would be coordinated with federal entities where appropriate.”

The work group also called on states to “encourage research spending” by government, university and pipeline sources to “continue the development of pipeline installation techniques to disturb less surface, complete the installation more quickly and enhance safety.”

It also suggested that the states become active partners in FERC’s pipeline pre-filing meetings with citizen groups, and that they consider developing similar citizen meetings for intrastate pipeline projects.

In addition to the IOGCC and NARUC, other participants in the Pipeline Siting Workgroup were the Department of Interior, the Federal Energy Regulatory Commission, the American Gas Association and the Department of Energy.

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