Government: FERC Policy on ‘Cumulative’ Impact of Pipeline Projects Facing Tests

January 2016, Vol. 243, No. 1

The Federal Energy Regulatory Commission issued its long-awaited decision clearing a Tennessee Gas Pipeline Co. project in Pennsylvania shale country after a federal court had forced the agency to revisit an environmental assessment FERC performed in 2012. The FERC order issued in November on the Delaware Riverkeeper case did a deeper dive into the environmental impact of the Northeast Upgrade Project when considered with the cumulative impact of three other Tennessee Gas projects in the same area. The order, issued Nov. 19, sets a precedent that both pipelines and their opponents are already citing, and for opposite reasons.

Richard Wheatley, director, corporate communications/public affairs, Kinder Morgan said the order is a plus for those engaged in regulatory review and for energy project applicants. “The issues have now been thoroughly addressed and applied in a truly practical sense, based on existing regulations from the Council on Environmental Quality.”

But Ryan Talbott, executive director, Allegheny Defense Project, wants FERC to use its newly stated “cumulative” environmental review policy on Tennessee Gas’s Orion Project, which is in the same area as the Northeast Project. The Project includes two pipeline loops of 8 and 4.5 miles in Wayne and Pike counties. FERC issued a notice Dec. 3 saying it would do an environmental assessment of the project. Talbott said Orion is connected to two other Tennessee proposed projects – Susquehanna West and Triad Expansion – which are all connected and cumulative and that FERC must review them in a single National Environmental Policy Act (NEPA) document.

“It is also important to point out that Tennessee is apparently engaging in the same segmentation activities that the D.C. court declared illegal in Delaware Riverkeeper Network v. FERC,” Talbott wrote to FERC in November. The Allegheny Defense Project is concerned authorization of Orion will likely induce additional shale gas development in the Marcellus and Utica shale formations in Pennsylvania.

“It appears the Commission is well aware of the likelihood that anti-pipeline opposition will continue to raise the segmentation issue; and we expect FERC to follow the process outlined in the remand order to address segmentation issues in future environmental analysis,” replied Wheatley.

The National Park Service has already laid out its view that FERC needs to do an expanded environmental assessment on the Orion Project. “The NPS has a number of concerns with the Orion Project,” said Frank Hayes, associate regional director of the NPS.

FERC approved the Northeast Upgrade in 2012 and it has been finished. It includes five new segments of 30-inch pipeline, totaling 40 miles, and modified existing compression and metering infrastructure. Taken together, the Northeast Project and the three other connected, closely related, and interdependent Tennessee Gas upgrade projects on the 300 Line constituted a complete upgrade of almost 200 miles of continuous pipeline. The 300 Line carries natural gas from western Pennsylvania to points of delivery east of Mahwah, NJ.

After the Northeast Project was approved, the Delaware Riverkeepers Network filed a lawsuit with the U.S. Court of Appeals for the District of Columbia. In that court’s June 2014 decision it ruled: “Given the self-evident interrelatedness of the projects as well as their temporal overlap, the Commission was obliged to consider the other three other Tennessee Gas pipeline projects when it conducted its NEPA review of the Northeast Project. Under applicable NEPA regulations, FERC is required to include ‘connected actions,’ ‘cumulative actions,’ and ‘similar actions’ in a project EA. Connected actions include actions that are ‘interdependent parts of a larger action and depend on the larger action for their justification.’ The four pipeline improvement projects are certainly ‘connected actions.’”

The court admitted FERC had looked at the cumulative impacts of the four related projects but found FERC’s analysis lacked “serious consideration,” given the close connection between the four projects.

In its Nov. 19 order on remand responding to the Appeals Court, FERC said it was again finding no significant environmental impacts of the Northeast Upgrade Project. Riverkeeper had been especially concerned about habitat fragmentation, edge effects and deforestation, as well as hydrology impacts related to wetlands and groundwater. FERC said those concerns were either unjustified or failed to rise to a level of significance.

Senate Fails to Reverse Construction Permitting Requirements

Senate Republicans fell just short of passing legislation that would eliminate a final rule from the Environmental Protection Agency (EPA) and Army Corps of Engineers expanding the bodies of water for which construction permits would be required. The shorthand for the rule finalized last May is “WOTUS,” standing for waters of the United States.

The bill, called the Federal Water Quality Protection Act (S. 1140), sponsored by Sen. John Barrasso (R-WY), would have forced the two agencies to re-propose the regulation based on thresholds established in the bill. The bill received a vote “in favor” by 57-41, but fell short of the 60 votes necessary if it were to become subject to a filibuster, which was a certainty, given Democratic opposition. The Senate then turned around and passed an essentially meaningless joint resolution by a vote of 53-44 that said Congress “disapproves” the WOTUS rule. Those resolutions are advisory.

Despite the failure of S. 1140 to pass the Senate, implementation of the WOTUS rule is being held in abeyance in some states because of court rulings. A federal judge in North Dakota issued an injunction on Aug. 27 blocking the rule in 13 states because the rulemaking record was, in the judge’s words, “inexplicable, arbitrary, and devoid of a reasoned process.”  The 6th Circuit Court of Appeals put a nationwide stay on the rule on Oct. 9. The challenge to WOTUS was made by 18 states. The Appeals Court seemed to agree with the states that the WOTUS rule violated some of the standards set by the Supreme Court in a case called Rapanos v. U.S., and that the final rule contained some provisions related to allowable distances from navigable waters that were not included in the proposed rule, so those provisions were not subject to public comments.

Senate Unlikely to Pass Pipeline Permitting Reform

There is little likelihood the pipeline approval reform amendment included in the House-passed energy bill will be passed by Congress. That is because the Senate energy bill that has wide, bi-partisan support does not include a provision allowing FERC to approve a pipeline construction application 90 days after completing a final environmental study of the project.

That provision is included in the North American Energy Security and Infrastructure Act of 2015 (H.R. 8), which the House approved on Dec. 3 by a vote of 249-174. Democrats on the House Energy & Commerce Committee, from where the bill originated, included a statement in the bill report denouncing the FERC 90-day approval provision.

Don Santa, president and CEO of the Interstate Natural Gas Association of America, said the FERC provision “takes modest steps to improve the pipeline permitting process.”

The House bill, like the Senate bill, which cleared the Senate Energy and Natural Resources Committee by a vote of 18-4, is overwhelmingly devoted to electric grid issues with some hydropower, energy efficiency and vehicle research concerns tossed in. FERC’s provision is the only one in the House bill devoted to pipelines. The Senate bill, called the Energy Policy Modernization Act of 2015, does not have a provision focused on pipelines. Democratic opposition to the FERC provision in the House does not bode well for the provision being included on the Senate floor when S. 2012 comes up for a vote.