Federal pipeline decision-making gets mixed reviews at hearing

May 22, 2017
The federal oil and gas permitting processes for interstate pipelines drew mixed reviews on May 3 as witnesses and members of the House Energy and Commerce Committee’s Energy Subcommittee discussed whether they need to be reformed or are operating as intended.

The federal oil and gas permitting processes for interstate pipelines drew mixed reviews on May 3 as witnesses and members of the House Energy and Commerce Committee’s Energy Subcommittee discussed whether they need to be reformed or are operating as intended. The US Federal Energy Regulatory Commission, which is the designated lead agency under the 1938 Natural Gas Act, consults with other federal agencies and state regulators before it issues permits for such projects.

Committee Republicans called for reforms. “I suspect that many of these witnesses will tell us what we already know: Getting these projects done is an incredibly difficult process. They need to be reviewed, and they need to be safe,” said Pete Olson (Tex.), subcommittee vice-chairman.

Ranking Minority Member Bobby Rush (D-Ill.) disagreed. “The legislation before us streamlining natural gas pipeline permits appears to offer us a solution in search of a problem,” he said. “An examination shows that between 2009 and 2015, over 100 projects were approved spanning over 3,700 miles in 35 states with a total capacity of more than 35 bcfd. An overwhelming 91% of applications were decided within 12 months.”

FERC’s staff uses a systematic, efficient, and collaborative process to review proposed interstate gas projects, said Terry L. Turpin, who directs the commission’s Energy Projects Office.

Language in a legislation discussion draft before the subcommittee would require early outreach to other permitting agencies to identify and address issues, Turpin said. “This also would allow those agencies to have input into the development of the project and identification of potential of project issues, when their advice is most valuable,” he said.

“However, some of the proposed [Natural Gas Act] modifications would alter the commission’s role from one of collaboration with its fellow agencies to an oversight role, monitoring other agency execution of their congressionally mandated duties,” Turpin said. “I am concerned that this will require the use of [FERC] resources that could be better spent analyzing the proposed projects and could lead to unproductive tension between the agencies involved in the review process.”

Problems have grown

But other witnesses said delays in getting federal pipeline permits have grown worse. “Federal permitting agencies are taking longer, and, in some cases, are electing not to initiate reviews until FERC has completed its review of a proposed pipeline project. These disjointed, sequential reviews cause delays and, in some cases, create the need for supplemental environment analysis,” Interstate Natural Gas Association of America Pres. Donald F. Santa testified.

Santa said INGAA supports designating which agencies are participants in the National Environmental Policy Act process, providing a clear demarcation between the NEPA process and concurrent reviews, making clear to agencies when a permit is ready to be processed, and making agencies accountable when they miss deadlines.

The association also backs the discussion draft’s provision that allows agencies to consider remote surveys’ data. “Many permitting agencies require submission of extensive ground survey data before an application can be reviewed. However, access to all potential rights of way often cannot be obtained to conduct such surveys,” Santa said. “For example, landowners may refuse to grant such access. Project developers can find themselves in a dilemma because they cannot collect the data needed to submit a permit application.”

Congress should update a federal pipeline project review structure that has become archaic, urged Jeffrey Soth, the International Union of Operating Engineer’s legislative and political director. “The Energy Equipment and Infrastructure Alliance has identified 33 major pipeline projects that have either been announced or are under construction. These projects represent an estimated investment of $60 billion and are expected to require 9,300 miles of large-diameter pipeline,” he said. “An IHS Global study finds that $8 billion/year could be invested in just gathering pipelines, not including distribution and transmission, for both the oil and gas industry.”

The discussion draft’s provision, which established concurrent reviews by participant agencies under NEPA, has occurred already for transportation and water infrastructure, Soth said. “The legislation requires agencies to submit regular updates to FERC identifying their progress in reviewing an application. And importantly, the legislation demands that state and federal agencies responsibly identify issues of concern that may delay a decision or prevent [FERC] from issuing a timely authorization,” he said.

Undermines states’ authority

But another witness said that the discussion draft would inappropriately expand FERC’s NGA authority and undermine states’ rights and the important role that other federal and state agencies play in protecting natural resources when pipeline projects are proposed.

“We heard testimony earlier this morning from FERC itself that its employees are not well-versed in environmental requirements. Agencies responsible for implementing federal clean air and clean water requirements need to report to FERC,” said Jennifer Danis, a senior staff attorney at the Eastern Environmental Law Center in Newark, NJ.

She said that giving state agencies the option to consider remote surveys’ data interferes with their environmental determinations, which are part of complex regulatory schemes and their implementing protocols. “Since aerial surveys generate little, if any, legitimate scientific evidence upon which an agency may make a decision, there is no sound reason to create an alternative permitting regime in which an agency may simply guess as to the actual environmental impacts and perform its analysis once on-site surveys and sampling occurs,” Danis said.

Other witnesses and committee members discussed a second discussion draft, which would give FERC authority to issue permits for cross-border pipelines, replacing the process requiring presidential approval following a US Department of State review. “Coming from Texas, I know we’re trying to sell as much gas as possible to northern Mexico, and border-crossing issues have arisen,” said Gene Green (D-Tex.), one of its sponsors.

“With no obligations under federal law to reach a timely decision, limit the scope of the review to border crossing, or avoid wasteful reviews of projects with little to no environmental impact, the current process is ripe for abuse by future administrations,” Association of Oil Pipe Lines Pres. Andrew J. Black warned. “The current administration has returned to the original intent of the presidential permit program. Without reform, a future administration could return to the abuses of the past.”

He said that petroleum liquids pipeline operators support the discussion draft’s provisions that provide a statutory time limit for permit review after any applicable environmental reviews are complete, presume approval reflecting the benefit of reducing dependence on unstable overseas suppliers, limit the border crossing permit scope of review to the segment that actually crosses the border, and exempts modifications which have no impact on the environment at the border crossing.

Danis said the proposed changes would remove the national interest determination in which the Defense, Homeland Security, and State departments now participate. By limiting FERC’s review to the border crossing segment, the new regime would eliminate consideration of possible environmental impacts from leaks along the rest of the pipeline’s route, she noted.

Contact Nick Snow at [email protected].

About the Author

Nick Snow

NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.