Underground Construction - November 2017 - 8

WASHINGTONWATCH

By Stephen Barlas, Washington Editor

FERC Sets Precedent For Overriding State
Blockage Of New Pipelines

The Federal Energy Regulatory
Commission (FERC), under new
Chairman Neil Chatterjee, wasted
no time making clear that it would
use the exemption authority given
to it recently by a U.S. Court of
Appeals in the District of Columbia in order to approve pipeline
construction where states balk at
issuing decisions on Clean Water
Act permits. The Commission's decision in September may have wider implications, given a number of
other pipeline owners arguing that
construction is being delayed by
balking state agencies.
One of those is the Constitution Pipeline, which in August
got a boost from the U.S. Court
of Appeals for the Second Circuit
- following the DC Appeals Court
decision in June - confirming
FERC's authority to make exemption decisions. Constitution had
sought the Court's agreement
with the pipeline's contention that
the New York State Department
of Environmental Conservation
(NYDEC) was "arbitrary and capricious" in delaying a decision on
a water quality permit after FERC
approved construction in December 2014.The 125-mile Constitution pipeline would move Marcellus shale gas to various parts of
New York State.
National Fuel Gas Company has
already asked the FERC to exempt
its Northern Access Project from
needing water quality certification
from the NYDEC because of that
agency's failure to act within 12
months. The project is a planned
96-mile pipeline from the Marcellus region to New York State areas.
The failure of the NYDEC to act
on schedule was the nub of the
complaint made by Millennium
Pipeline Company LLC, about its
7.8-mile Valley Lateral Project in
Orange County, NY, which was
approved via a declaratory order
the Commission issued on Sept.
15, 2017. Millennium was one

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of two pipelines that had sought
confirmation of FERC's exemption
authority from the DC Appeals
Court. Millennium also argued the
NYDEC had failed to issue a timely
decision - either "for" or "against"
- on Millennium's application for
a water quality certification under
the Clean Water Act (CWA). The
CWA requires state action on a
401 water quality certification
within 12 months of receipt of
that application.
In issuing its declaratory order,
FERC backed Millennium's contention that its application for a CWA
water quality permit was received
by the NYDEC on Nov. 23, 2015,
when it was first submitted. The
NYDEC had argued that it received
the application on Aug. 31, 2016,
after Millennium had submitted
additional information in response
to NYDEC's second Notice of Incomplete Application, sent two
months earlier.
FERC said the 12-month clock
on water quality certification starts
at the point a state "receives" an
application. The need for pipeline
companies to obtain that certification is waived, according to
section 401 of the CWA, when the
certifying agency "fails or refuses
to act on a request for certification,
within a reasonable period of time
(which shall not exceed one year)
after receipt of such request."
NYDEC is reviewing FERC's
decision on Millennium and says
it "will consider all legal options
to protect public health and the
environment."
In June, the DC Appeals Court
told Millennium and Tennessee
Gas Pipeline, which was protesting
a locality's failure to issue a Clean
Air permit (where the timeline
extends to 18 months), to ask
FERC for an exemption from the
CWA requirement, which it said
FERC could issue, despite NYDEC
not acting. FERC had not, to that
point, ever issued such an exemp-

tion for pipeline construction. Its
decision to do so on Sept. 15 was
precedent setting.
Monique Watson, of counsel at
Steptoe & Johnson and a former
deputy director of the office of
energy market regulation, division
of pipeline regulation at FERC, expects the FERC Millennium order
to make it clearer to state agencies
when they have to determine
they have received a section 401
application. "FERC's order will incentivize both the agencies and the
applicants to work together more
quickly," she said.
It is not clear, however, whether
a state can stop a project by refusing to approve a 401 application
even on a timely basis. Watson
suggests in that instance, the pipeline company might have to work
to adjust the projected route of the
pipeline.
The failure of states and federal
agencies to participate in a timely
manner in the FERC completion
of an environmental impact statement and their ability to withhold
permits after FERC project approval, was the rationale for the
Promoting Interagency Coordination for Review of Natural Gas
Pipelines Act (H.R. 2910) passed
by the House on July 19, mostly
on a party line vote. FERC's decision in the Millennium complaint
apparently lit a fire under Sens.
James Inhofe (R-OK) and Angus S.
King Jr. (I-ME). Five days after the
FERC order was issued, they introduced a companion version of the
House bill called the Coordinating
Interagency Review of Natural Gas
Infrastructure Act of 2017.
Both bills make FERC the lead
agency for the purposes of conducting and completing a National
Environmental Policy Act (NEPA)
review, allowing it to set up a
schedule which state and federal
agencies must meet. This applies,
according to the House version,
"unless the agency notifies FERC in

writing that doing so would impair
the ability of the agency to conduct
needed analysis or otherwise carry
out the agency's obligations."

DOE Wants to Expedite
Small LNG Exports
The Department of Energy wants
to speed approval of exports of
relatively small volumes of liquid natural gas (LNG) to mostly
Latin American countries. These
would be countries with whom
the United States does not have
a free trade agreement (FTA).
DOE approvals of LNG exports to
countries the U.S. has an FTA with
are nearly automatic. But as LNG
exporting has become more prominent in the past decade, producers wanting to export to non-FTA
markets have run into political
headwinds from industrial manufacturers concerned that such exports increase the cost of domestic
natural gas, which they depend on
to run factories.
The DOE, cognizant of those
manufacturer concerns, would
limit its automatic approval to
non-FTA markets to exports in a
volume up to and including 0.14
billion cubic feet (Bcf) per day
(Bcf/d), and where the DOE's approval of the application does not
require an environmental impact
statement (EIS) or an environmental assessment (EA) under the
National Environmental Policy Act
of 1969 (NEPA).
The DOE says the new policy, if
finalized, would have only a minimal impact on the price of natural
gas in the U.S. To date, DOE has issued 28 final export authorizations
to non-FTA countries, bringing
the cumulative total of approved
non-FTA exports of LNG and
compressed natural gas (CNG) to
21.33 Bcf/d of natural gas, or 7.79
trillion cubic feet per year.
Underground Construction November 2017

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Underground Construction - November 2017

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