August 2021, Vol. 246, No. 8

Government

Court Adds to Democratic FERC Leverage on Pipeline Standards

By Stephen Barlas, Contributing Editor, Washington D.C.

A federal court decision stopping operation of the Spire STL pipeline in Missouri strengthens the hands of the Democratic leadership of the Federal Energy Regulatory Commission (FERC) as it considers pipeline-opposed changes to its 1999 pipeline approval policy standards.   

The U.S. Court of Appeals for the District of Columbia (D.C.), the second highest court in the United States, with authority over federal regulatory policy, on June 18 canceled FERC’s 2018 certification of the 66-mile (106 km) St. Louis-area pipeline, citing FERC’s failure to adequately determine if there were an actual need for additional capacity.   

FERC’s 1999 pipeline policy statement lays out some general – some would argue vague – guidelines for proving “need.” The pipeline is already in operation and serves about 650,000 people according to the company.  

Jason Merrill, a spokesman for Spire, said the pipeline is still operating. “We’re evaluating our next steps,” he added.   

Spire could petition the three-judge panel that issued the ruling for a rehearing within 45 days, which would put off the requirement to close down the pipeline. The panel might then reverse its decision to cancel the pipeline, based on the loss of service to customers if Spire couldn’t contract with another pipeline.   

One attorney in Washington familiar with the case called the court’s vacating a certificate a drastic remedy that the court does not often use in FERC pipeline cases.   

In a similar situation a few years ago, the D.C. court vacated the certificate for the Sabal Trail pipeline. But FERC, under a Republican-controlled commission, reissued the certificate so there was no stoppage in service. But FERC Chairman Richard Glick dissented when the Spire certificate was first approved, so he may not feel moved to reissue it.       

To establish “need,” Spire leaned on its contract with its subsidiary, Spire Missouri, for 87.5% of the pipeline’s capacity. Precedent agreements with subsidiaries and other connected partners are one of the aspects FERC will examine.   

In particular, the appeals court said that FERC’s decision to approve the Spire pipeline “seemed to count the single precedent agreement between corporate affiliates as conclusive proof of need. Nothing in the Certificate Policy Statement endorses this approach.”   

FERC Democratic Chairman Richard Glick said the appeals court’s decision “shows that when FERC cuts corners with its analysis, it puts its decisions – and the investments made in reliance on those decisions – at substantial risk.”   

He expressed his desire to revisit the Commission’s approach to assessing the need for an interstate natural gas pipeline in its currently pending notice of inquiry (PL18-1).  

The Environmental Defense Fund (EDF) initially asked FERC to take a second look at its decision to approve the pipeline. When the commission rejected the rehearing request in December 2019, EDF filed its legal case with the D.C. Court of Appeals, arguing FERC had not established need and that there had been self-dealing by Spire.   

A second petitioner who joined with EDF filed a second complaint –  FERC should have completed an environmental impact statement (EIS) instead of just an environmental assessment (EA). The court rejected this second argument because the petitioner, a woman who lived near the pipeline and complained about noise, emissions, eyesores, and other things, did not have “standing.”  

The D.C. Appeals Court did not rule on the plaintiff’s complaint that an EIS should have been done only because the court ruled the plaintiff did not have “standing.” But the standard for FERC to order a more searching, detailed EIS after an EA is performed is another issue FERC is considering as part of its work on a docket numbered PL18-1.   

The two Democratic commissioners (a third will be appointed later this summer when the term of the third Republican commissioner expires) have already signaled they want more impact statements. In fact, on May 18, 2021, at an open meeting, Chairman Richard Glick and Commissioner Allison Clements issued partial dissents for two pipeline incremental expansion projects on the grounds that FERC should have prepared an EIS to assess the risks related to climate change.   

Then, a little more than a week later, all five commissioners ordered EISs for somewhat small projects for which the staff had done EAs. The initiation of a follow-on EIS for each of the projects will add significant time to their FERC approval process. The affected projects’ EAs were published either in first quarter 2021 or during the second half of 2020.   

Emily Mallen, an attorney in Washington with Sidley Austin, said, “Whereas FERC typically would commit to issuing an order within 90 days of completing an EA, the pipeline operators subject to the new notices should not expect decisions on their pending applications before December 2021. However, each notice provides a project-specific timeline.” 

Democrats Lay Out Speculative  
Marker for Infrastructure 

The House passed the Invest in America Act (H.R. 3684) in June, which is the Democrats’ bid for the infrastructure piece that could be included in whatever bipartisan infrastructure bill Congress passes and President Biden signs.   

The Invest Act reauthorizes and funds at higher levels than in the past for both the Clean Water and Drinking Water State Revolving Funds (DWSRF), which support local projects. The bill passed on July 1 by a vote of 221–201 with only two Republicans supporting it.  

That the House bill has minimal Republican support means its contents, from highway to bridge to water infrastructure spending, may or may not survive in whatever Senate bipartisan bill emerges. It has not been written yet. And, even once written, it may not pass the Senate or House. Moreover, a bipartisan “water only” bill that passed in April has considerably smaller state revolving fund (SRF) funding numbers.  

But for the moment, we know House Democrats want to spend $117 billion on drinking water projects and $51.25 billion on sewer projects. Both sums will be over five fiscal years, from fiscal 2021, starting October 1, 2021, to fiscal year 2026. Of the first sum, $53 billion would be for DWSRF and $45 billion to fully replace lead service lines throughout the nation.  

Notable in the wastewater portion is $40 billion for the Clean Water State Revolving Fund and $2 billion for projects to capture, treat, or reuse sewer overflows or stormwater – helping keep pollution out of local rivers and lakes – and $2.5 billion for state water pollution control programs.  

To get a sense of how speculative the House funding numbers are, the Senate passed on April 29 a bill called the Drinking Water and Wastewater Infrastructure Act of 2021 by a vote of 89–2.   

It also reauthorizes both SRFs for five years, for a total of $14.7 billion each. Those annual allotments are way lower than what is in the House Invest Act, reflecting compromises Democrats in the Senate made to attract needed Republican support.  

It is clear the House Invest Act is not going to sell well among Republicans in the Senate. Rep. Sam Graves (R-Mo.), top Republican on the House Transportation and Infrastructure Committee, blasted the Invest Act.  

“This bill is nothing more than the Green New Deal with a little infrastructure sprinkled on top,” Graves said. “It’s completely unpaid for and it does nothing to fix the broken bureaucratic system that drags out major highway projects for years and eats up almost 30% of our transportation dollars.” 

 

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