Clouds are gathering over future pipeline construction as the Biden administration’s environmental focus begins to seep into Federal Energy Regulatory Commission (FERC) initiatives.
The commission, with Democratic Chairman Richard Glick doing the steering, took two significant steps in February, which would end up complicating future approval of pipeline building: 1) a notice of inquiry (NOI) reopening a dormant regulatory docket from three years ago, asking whether FERC should revise its 1999 policy statement regarding the certification of new interstate natural gas pipeline facilities, and 2) an unprecedented briefing paper responding to environmental complaints about a Massachusetts compressor station that FERC had previously approved and is now in operation.
The NOI covers four topics, three of which could result in a more rigorous approval process sensitive to environmental concerns. The fourth questions if the commission could make changes to improve the efficiency and effectiveness of its certificate process.
For each topic, FERC sets forth specific questions from which it seeks stakeholder feedback. In total, the Commission received over 3,000 comments in response to the April 2018 NOI. The February 2021 NOI expands on the previous four categories and adds a fifth dedicated to “the Commission’s identification and addressing of any disproportionately high and adverse human health or environmental effects of its programs, policies and activities on environmental justice communities and the mitigation of those adverse impacts and burdens.”
Some of the questions raise issues that are already being examined by federal courts and FERC in other dockets.
That “crossover” can be seen in the “briefing paper,” which looks at questions around air emissions from the previously approved and now-in-operation compressor station in Weymouth, Ma., and its impact on “environmental justice” communities.
The briefing paper may be even more ominous for pipelines because it raises the question, implicitly, of whether FERC can turn around and cancel or impose new restrictions on a project it previously approved. It is ominous in another regard, too. “It provides an opportunity for immediate action, where a complete vetting of FERC’s NGA [Natural Gas Act] certificate policy may take a bit longer through the NOI process,” explained Kirstin Gibbs, an energy lawyer and pipeline regulations expert at the law firm of Morgan, Lewis & Bockius LLP. “This is not to say, however, that FERC’s approval of the Weymouth compressor station will be reversed as result of the further briefing. But it is likely that the outcome in this docket will provide insight regarding the direction of FERC’s policy regarding future development of natural gas infrastructure, which likely will signal caution to potential investors.”
The significance of the briefing paper is underlined by the fact that major pipeline groups such as the Interstate Natural Gas Association of America (INGAA), the Natural Gas Supply Association, the American Gas Association and several interstate natural gas pipeline companies have said they will submit comments.
“It is somewhat unusual that individual pipeline companies would intervene in another pipeline’s certificate docket, which suggests that these stakeholders are concerned that what happens in this docket will have a significant impact on future policies impacting the development of natural gas pipeline infrastructure in the future,” states Gibbs.
The compressor station in question was built by Algonquin Gas Transmission as part of the Atlantic Bridge Project. Algonquin is a subsidiary of Enbridge. FERC authorized the project in 2017. It was subsequently challenged in court, but Algonquin won the case and the compressor was finally put into operation in September.
But during testing of equipment, a gasket failed, triggering the manual activation of its emergency shutdown system. A small amount of volatile organic chemicals (VOCs) was released as a result. After Algonquin satisfied the Pipeline and Hazardous Materials Safety Administration (PHMSA) that the problem was fixed, FERC gave Algonquin approval to operate the compressor station on January 25.
Local groups such as the Fore River Residents Against the Compressor Station (FFRACS) pressed FERC to open a rehearing on the compressor station, and the commission acceded with its briefing paper. Fore River is arguing that benzene emissions from the Weymouth compressor station pose “undue health risks for surrounding communities including EJ [environmental justice] communities.”
The Massachusetts Department of Environmental Protection vetted those issues when it approved the project, and FERC included a discussion of any EJ impact in its environmental assessment, based on its analysis of low-income and minority populations and environmental justice communities in Quincy, Md., using U.S. Census Bureau data from 2010 and 2013 and the EJ Screen tool recommended by the U.S. Environmental Protection Agency (EPA).
Algonquin’s response to the FFRACS’ charges, which led to FERC issuing the briefing paper, states: “Based on the information gathered, the EA concluded – and the U.S. Court of Appeals for the D.C. Circuit later affirmed – that the Atlantic Bridge Project will not result in any ‘disproportionately high or adverse environmental or human health impacts on minority or low-income communities.’”
Republican Commissioners James Danly and Mark C. Christie dissented from the briefing paper. Danly argued, “Regardless, there is no basis in law to re-examine final orders. Absent a violation of those conditions, once the certificate issues and becomes final, the Commission has never revisited a certificate order and has in fact always doubted its ability to do so.”
With regard to the NOI, which kicks off a long regulatory process that could lead to changes to pipeline certification possibly three or four years down the line, FERC addressed five categories of general issues: project need, eminent domain and landowner interests, environmental impacts, commission review process and environmental justice.
The environmental impact questions that the commission is asking for comments on have to do with some of the issues in the Weymouth compressor question, which is to say the commission’s consideration of greenhouse gas (GHG) emissions.
During the last year of the Trump administration, the Council on Environmental Quality (CEQ) issued new guidance on how federal agencies should apply the rules of the National Environmental Policy Act (NEPA), a law that requires FERC and other federal agencies to do an environmental impact statement and to adhere to certain requirements when completing that statement. The CEQ changes that were authorized by the Trump CEQ were “pro-pipeline” and “pro-construction” projects in general.
However, the Biden CEQ has withdrawn those guidelines and will rewrite them, posing another threat to pipeline construction, which will make it easier for a Democratic-led FERC to reject construction applications based on GHG and even VOC emissions.
The question of landowner rights and eminent domain in the new NOI also reverberate elsewhere, for example, in the Penn East federal court case. The Supreme Court will hear the case and decide whether New Jersey was within its rights to prohibit condemnation of its lands for the pipeline, which would take gas from Pennsylvania to New Jersey, after FERC approved the project.
Amy Andryszak, president and chief executive officer of INGAA, said, “The Court’s decision to hear this case is a positive step. As INGAA made clear in our amicus brief, if this case is left to stand it would upend 80 years of precedent and overturn congressional intent. We believe the arguments put forward by PennEast are sound and will prevail following oral arguments later this year.”
The FERC itself – in another – is in the midst of deciding whether to make changes to Order 871 announced in 2020, which deals with so-called “tolling orders,” allowing the commission to delay construction of a pipeline due to an upcoming rehearing of its prior approval decision.
Those orders are issued because of legal questions about the use of eminent domain. INGAA objected to Order 871, saying it “will have significant adverse effects on INGAA and its members, by imposing a blanket and potentially indefinite delay on notices to proceed with construction.”
INGAA requested a rehearing of that order after it was issued and went to federal court to force FERC’s hand. No court action has been taken. FERC issued Order 871A on January 26, 2021, which purportedly attempts to address some of INGAA’s issues.
The commission has said it would make changes two months after “reply briefs” were filed in March. INGAA has criticized 871A, too, objecting to it on a number of fronts and calling it “improper.”
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