November 2022, Vol. 249, No. 11

Guest Commentary

Agencies with Power to Approve Pipelines Need Reality Check

By Suzanne Mattei, Energy Policy Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA)  

(P&GJ) — Federal regulators with the power to approve natural gas pipelines need to make judgment calls on everything from how pipelines will affect farmland to how much methane will leak.

In the absence of hard data, regulators often turn to theoretical models or the applicant’s projections to help inform their decisions. When real-world data come in that contradicts the predictions, regulators ought to reevaluate their decisions in the light of new facts.  

This has led farmers to challenge the Federal Energy Regulatory Commission (FERC) for its failure to consider the actual effects from the 65-mile (105-km) Spire STL pipeline on their land as it evaluates whether to allow the pipeline to continue to operate.  

Six landowners represented by the Niskanen Center are objecting to FERC conclusions about land and agricultural impacts that are based on the project’s preconstruction predictions – not the actual, observable issues that have occurred.   

In their appeal, they describe severe erosion, ranging from 28 inches to 5 feet (0.7 to 1.5 meters) in certain areas, as well as harmful mixing of topsoil with subsoil. The farmers also report crushed and clogged drain tiles, which are causing serious drainage issues. They assert crop and livestock production have suffered.  

The Illinois Department of Agriculture (IDOA) and the Illinois Farm Bureau back their concerns. The IDOA informed FERC that the Spire STL pipeline has caused “long term impacts to land use,” resulting in crop yield disparities and other issues.  

The Illinois Farm Bureau complains, “The DSEIS [Draft Supplemental Environmental Impact Statement] reads as if pipeline construction has yet to occur and fails to consider any impacts on the farmland caused by construction of the pipeline.”  

FERC approved the certificate for construction of the Spire STL pipeline in 2018. The pipeline was built at a reported cost of $287 million and began operating in late 2019. In 2021, however, the U.S. Court of Appeals for the D.C. Circuit revoked FERC’s certificate, based on a lawsuit by the Environmental Defense Fund.   

The appeals court had criticized FERC’s reliance on a single precedent agreement between corporate affiliates as conclusive proof of need and held that FERC’s “cursory balancing of public benefits and adverse impacts was arbitrary and capricious.”  

The agency must now complete a more comprehensive evaluation of the Spire STL pipeline and decide whether to grant it a new certificate to operate. FERC’s draft supplemental EIS, issued in June, concludes that continued pipeline operation would have “less than significant” environmental impacts in most respects.   

Its conclusion relied on the preconstruction predictions in the original 2017 Environmental Impact Statement (EIS), based largely on the applicant’s promises. FERC did not examine the changed circumstances – the effects on the land.  

The Spire STL case was not the first time a federal agency has based a factual assessment in an EIS for a pipeline solely on an estimate or prediction without considering actual data. The proposed Mountain Valley Pipeline is in the news again. FERC granted a second extension of the construction deadline for the project in August.  

The construction costs for the proposed 42-inch, 303-mile (488-km) pipeline to move roughly 2 Bcm/d (57 MMcm/d) of natural gas from West Virginia to Virginia have reportedly ballooned from an original estimate of $3.7 billion to $6.6 billion. Yet, in its 2022 renewal, FERC explicitly refused to update and revisit information on the question of whether the pipeline is needed.  

Permits are issued with construction deadlines precisely because of the issue of changing conditions. The analysis gets stale. A proposal that made sense five years ago might not make sense today. Continued issuance of construction deadline extensions without an updated analysis undermines the very purpose of construction deadlines.  

IEEFA documented in a 2021 report that gas demand had plummeted since the 2017 approval of the Mountain Valley Pipeline. FERC had failed to scrutinize the need for the project before it granted its approval in October 2017, and the commission failed to conduct a robust reassessment in 2020 when it granted an extension of time for construction.  

FERC and other agencies that evaluate natural gas pipeline projects must develop a more rigorous protocol for assessing a project’s benefits and impacts that considers the large gap between U.S. Environmental Protection Agency (EPA) modeling estimates and real-world measurements.   

As science and technology increase in scope and precision, they can tell us more about how to evaluate threats to health and safety. The longer government delays in incorporating such new information to correct outdated assumptions, the more likely agencies will make wrong decisions. 

Author: Suzanne Mattei is an attorney with more than 30 years of experience in public interest law and policy, who has analyzed FERC policies related to interstate pipeline approval.

Editor’s note: This content represents a shortened version originating from the Institute for Energy Economics and Financial Analysis (IEEFA), Aug. 31. 

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