FERC faces heightened scrutiny as gas projects proliferate

The Federal Energy Regulatory Commission these days is drawing a crowd of companies promoting projects linked to the U.S. natural gas boom and protesters who say the agency blithely greenlights too many pipelines, export terminals and other gas infrastructure.

Foes of a FERC-approved export terminal at Cove Point, Md., recently rallied at FERC's Washington, D.C., headquarters, wearing matching shirts and waving signs mocking the panel's handling of gas projects. Activists are staging similar protests this week at the agency's headquarters.

Other FERC critics have taken to Facebook and Twitter or created their own websites to skewer the agency. Women calling themselves the "FERC-etts" sing a spoof of the Beatles' "Yellow Submarine": "We all know FERC's a rubber-stamp machine."

And Jeff Tittel, director of New Jersey's Sierra Club, tells his FERC joke: "They're the Will Rogers of regulatory agencies. They never met a pipeline they didn't like."

But do FERC foes have more than a punch line?


Since 2006, the agency has approved 451, or 56 percent, of 803 applications for pipelines, compressor stations, storage and liquefied natural gas export facilities. Of projects that failed to advance, 94 are pending and applications for 258 either were denied or were withdrawn by companies. FERC could not provide a more granular breakdown.

And not all 451 approved projects have moved forward, FERC spokeswoman Tamara Young-Allen said. Some failed to meet construction timelines or safety rules, she said.

But some say it's more than just a numbers game.

An industry source, who asked to remain anonymous for fear of jeopardizing his business before the commission, said FERC is required by Section 7 of the 1938 Natural Gas Act to allow developers to build and operate gas pipelines if they comply with the law and agency regulations and stipulations.

"People may not like this, but it's just not a regulatory regime set up for FERC to reject applications," the source said. "It's really set up for FERC to approve applications that comply with conditions."

FERC officials counter that the agency follows a well-established process -- which includes public comment -- when it considers new natural gas projects.

And FERC Commissioner Philip Moeller said in an email that the agency's environmental reviews force permit applicants to make a host of changes. "To the credit of the process, I'm not aware of any major pipeline proposal that didn't have at least some changes to the initially proposed route," he wrote.

Mike McKenna, a Republican energy lobbyist and strategist, said industry has learned over decades of getting local pushback and undergoing federal environmental reviews to proceed only with projects that have a high chance of success at FERC. "It's not just a question of [whether] FERC [is] approving them all," he said, "it's whether the work [is] being done in a smarter way on the other end."

Even so, sources say what appear to be two prongs of pushback -- a national philosophical movement tied to climate concerns and more regional landowner issues -- are affecting the pace of new pipeline construction. And a court ruling last summer has given environmentalists some hope amid a sea of adverse rulings.

"It's harder to build a pipeline today than it was 10 years ago," an industry source said. "No doubt, it takes more time and it's more expensive."

Opposition on 2 fronts

The best-coordinated opposition to FERC's handling of gas projects is from activists calling on FERC to take an expanded look at environmental and climate implications in project reviews required by the National Environmental Policy Act of 1970.

NEPA requires agencies to weigh environmental concerns in their planning and decisionmaking by preparing detailed assessments of project impacts and alternatives. FERC has refused to take that larger look under NEPA at gas production and argues that there's no current formula for measuring cumulative greenhouse gas emissions (Greenwire, Oct. 20).

Landowners near proposed energy projects form a second front.

Michael Braunstein, a lawyer from Columbus, Ohio, said his firm, Goldman & Braunstein LLP, is handling more cases involving eminent domain negotiations between landowners and private companies building new gas projects.

Most clients opt not to fight projects outright because they have to "attack the basic need or necessity" for a pipeline or compressor station, Braunstein said in an interview. That's an enormously expensive proposition, especially because pipeline developers usually have customers lined up for their product, he added.

"By the time we explain what's involved in that, we find no one's willing to do it because it's so expensive and time-consuming, and you have to advise people the risks of success are 50-50 or perhaps less," Braunstein said. "It's hard to stop a natural gas pipeline in an environment where it's cleaner than coal and you have policy in favor of gas."

Gas is also favored for national security and economic reasons because it's produced in the United States, he added. And pipeline companies can attempt to obtain state approval should FERC reject their proposal, he said.

Although landowners share the interests of activists pointing a finger at climate change and pipeline explosions, Braunstein said coordination between the two camps is often lacking.

"They have the same interest, although they are not natural allies," he said. "Frequently, with the exception of the Keystone XL pipeline ... that sort of organization and coalescence has not occurred."

'Light-handed' reviews?

Attorneys hoping to challenge FERC's review have found mixed results in the courts.

Carolyn Elefant, a D.C.-based attorney, has represented people directly affected by gas projects for the past five years and has found it difficult to win such cases.

"It's difficult to get a foot in the door," Elefant said in an interview. "Basically, FERC's review is very light-handed. The case are very difficult to handle and to make affordable because the process is very complex, the information isn't readily available and the nature of the proceedings are so protracted."

Many of her clients would be open to having a gas project near their home and understand the need for gas is growing amid a shale revolution, she said. They just want to be compensated fairly and have some control, yet FERC isn't willing to exercise control over the companies, she said.

Elefant last spring represented Minisink, N.Y., residents challenging a FERC-approved natural gas compressor station in their town.

Arguing before a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit last May, she maintained that FERC was predisposed to sign off on projects under the Natural Gas Act. Regulators failed to consider the environmental impact of Millennium Pipeline Co.'s facility and dismissed an alternative plan supported by people in the southeastern New York town (Greenwire, May 1).

The Minisink group lost. Four months later, the court expressed sympathy for the residents but found that FERC had met its obligations under NEPA (Greenwire, Aug. 18).

"Given the choice, almost no one would want natural gas infrastructure built on their block. 'Build it elsewhere,' most would say. The sentiment is understandable," Judge Robert Wilkins wrote in a 33-page opinion. "Though we respect the concerns they raise, we conclude that, as a legal matter, the Commission's decisions were both reasonable and reasonably explained."

Elefant said the landowners and residents she represented painstakingly looked for an alternative location for the compressor station and tried to work within the FERC process, but even those attempts were shrugged off as not-in-my-backyard (NIMBY) desperation.

"That was their argument, and it was somehow morphed into this NIMBYism approach," she said.

Court faults FERC review

But while the courts have repeatedly backed FERC's project reviews under NEPA, the agency isn't bulletproof.

In fact, one case has industry watchers wondering what comes next.

In June, the D.C. Circuit sided with environmental groups -- the Sierra Club and Delaware Riverkeeper Network -- in finding that FERC's environmental review of a major Northeast natural gas pipeline was deficient because it did not take into account how it fit into a larger upgrade for the eastern leg of the "300 Line," which carries gas from western Pennsylvania to eastern New Jersey (Greenwire, June 6).

The courts agreed with green groups that FERC should have considered the projects together and weighed their cumulative impacts.

The agency in 2011 found the project would have no significant impact on the environment and later approved the project.

Environmentalists argued that the Northeast Project alone required clearing 265 acres of forest and affected 50 acres of wetlands. In particular, they were concerned about habitat fragmentation and hydrology impacts on wetlands and groundwater.

"FERC doesn't want to get slapped down again," the industry source said. "FERC is looking at projects that are potentially linked with greater scrutiny."

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