May 2021, Vol. 248, No. 5

Editor's Notebook

Beware of Pending FERC Shift

By Michael Reed, Editor-in-Chief

A recent vote of the Federal Energy Regulatory Commission (FERC) may have come out favorably for the Mountain Valley Pipeline (MVP), but 3-2 wins like this for midstream companies will likely become a much rarer commodity this summer.  

The split vote, which was along party lines, as is usually the case, upheld a decision to allow partial resumption of construction near the Jefferson National Forest in Appalachia, staving off efforts to overturn a December ruling. 

That the pivotal decision by FERC came when it did proved to be fortuitous for the developers of the 303-mile (488-km) pipeline from West Virginia to southern Virginia – almost as much as the outcome itself. 

I say this because, in June, Republican Commissioner Neil Chatterjee’s term comes to an end at FERC, and the Biden administration is poised to replace him with a Democrat, swinging the majority back the other direction. 

That new less-midstream friendly majority could prove to be significant in the coming year as approvals for oil and gas pipelines and other infrastructure come up. Additionally, potential changes to the minimum offer-price rule have increasingly broken along party lines recently. 

While it is unlikely the newly re-composed Commission will take any further actions concerning the MVP project, particularly with so much of the pipeline already in place and most of the permits secured, there is much speculation about whether FERC will re-examine some already approved projects. This especially would be likely where greenhouse gas emissions and property owner rights are involved. 

The MVP decision further highlighted the increasingly testy tone that has been demonstrated in arguments presented by FERC commissioners in recent months and provides even further cause for concern. 

In a dissent by two Democrats, Chairman Richard Glick, appointed to the position by President Biden in January, and Allison Clements, argued against the decision to allow the construction to go forward in a sharply worded joint statement. 

“The governing principle behind Environmental Condition 9 [of MVP’s FERC certificate] is to ensure that people’s land and the environment are not bulldozed to make way for a pipeline project that might not be completed or might have to be re-routed,” wrote Commissioners Glick and Clements. “That principle remains relevant throughout construction every bit as much as it did at the outset.” 

The remarks were in reference to an adverse court ruling, which in their minds meant the MVP project no longer satisfied stipulations that all necessary federal permits be in place to start construction.  

“Allowing MVP to proceed without having all of its federal authorizations is inconsistent with any reasonable reading of Environmental Condition 9 in MVP’s certificate,” Glick and Clements further wrote. 

That the 2-MMbtu/d MVP is currently seeking separate waterbody-crossing permitting needed to complete construction or that it had already started construction did not seen to be of interest to the dissenting commissioners. 

The majority of the Commission disagree – this time – which was good news for the companies involved in the venture: EQM Midstream Partners, Con Edison Transmission and WGL Midstream, among them. 

“Environmental Condition 9 applies to newly certificated and unconstructed facilities. It does not apply to a scenario where applicable federal authorizations are vacated after a company has obtained necessary federal authorizations and commenced construction,” the majority wrote. 

This, of course, was big victory for the pipeline companies – this time. Nonetheless, the midstream sector must remain wary. The release of the Glick and Clements dissent as a result of the order means it is now a matter of public record.  

As such, it will most likely be cited frequently as pipeline opposition forces gear up for battle. 

In the meantime, if all goes well, MVP hopes to achieve its new targeted startup in 2022. However, in late March, Virginia’s Department of Environmental Quality told federal officials that it will not be able to issue a new water quality permit for the project’s stream crossings before December.

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