Still No Clarity For Pipeline Permitting Process

January 3, 2018Articles Law360

Notwithstanding the efforts of the Trump administration to streamline the permitting process for large infrastructure projects, the path to final regulatory approval for natural gas pipeline projects remains uncertain. President Donald Trump signed Executive Order 13,807, “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure”[1] with the goal of establishing consistency, predictability and timeliness in the environmental review and permitting of pipeline and other major infrastructure projects and to complete all federal environmental reviews and authorization decisions for major infrastructure projects within two years. Former President Barack Obama signed into law the Fixing America’s Surface Transportation (FAST) Act in 2015[2] that was also intended to streamline and provide a level of certainty for permitting of large-scale infrastructure projects, but focused on transportation projects and did not cover natural gas pipelines. Notwithstanding the lofty goals of these presidential actions, recent court decisions make clear that the permitting process for major natural gas pipeline projects remains unpredictable.

The permitting process for the Transcontinental (Transco) Atlantic Sunrise Project pipeline that began nearly four years ago is a case in point. The Federal Energy Regulatory Commission issued a certificate order for the pipeline on Feb. 3, 2017, construction began shortly thereafter in March 2017 and ground was broken in Pennsylvania in September 2017[3]. The project is an expansion of an existing Transco natural gas pipeline that will connect Marcellus gas supplies with markets in the Mid-Atlantic and Southeastern U.S. and involves construction of new facilities or modifications to facilities in Pennsylvania, Maryland, Virginia, North Carolina and South Carolina. Pennsylvania environmental and public interest organizations have opposed the project and on Oct. 30, 2017, filed a petition for review of the FERC order and emergency motion for stay with the D.C. Circuit. At issue was whether the continued construction of the pipeline in Pennsylvania would cause irreparable harm to the environment and if the petitioners are likely to prevail on the merits of their underlying claim that the environmental impact statement (EIS) for the project was inadequate. With head-spinning alacrity, the court issued an administrative stay halting the project, an order clarifying the administrative stay and an order dissolving the administrative stay all in a matter of three days[4].

On Nov. 6, 2017, the court ordered an administrative stay pending further order of the court to “give the court sufficient opportunity to consider the emergency motion for stay.”[5] At the time the administrative stay order was issued, some of the project’s facilities were already completed and in service. The impact of the stay on the project was not clear, which led Transco to file a motion for clarification.[6] On Nov. 8, 2017, the court issued an order clarifying the administrative stay (the stay was limited to construction activities in Pennsylvania, did not preclude the operation of completed facilities already in service, or environmental controls or activities needed to safeguard the horizontal directional drill). The same day that the court clarified the scope of the administrative stay, the court issued an order dissolving the administrative stay. The court found that the petitioners did not satisfy the stringent requirements for stay pending court review.

The petitioner’s emergency motion for stay argued they were likely to succeed on the merits relying heavily on the court’s earlier decision in Sierra Club v. FERC[7]. In Sierra, a divided D.C. Circuit panel held that an EIS under the National Environmental Policy Act requires that an agency consider not only the direct effects, but also the indirect environmental effects of the project under consideration. At issue in Sierra was Southeast Market Pipelines Project that involved three new pipelines to transport natural gas to power plants in Florida. The Sierra court held that the EIS needed to include an analysis of the impact of the greenhouse gas emissions from the power plants that would consume the natural gas transported by the proposed pipeline. The court considered indirect effects to be those that are “caused by the [project] and are later in time or farther removed in distance, but are still reasonably foreseeable”.[8] In the emergency motion for stay of construction of the Atlantic Sunrise pipeline, the petitioners argued that an indirect effect of the pipeline would be both the greenhouse gas emissions created by consumption of the gas transported by the pipeline, and also increased fracking activity. Other challenges to proposed natural gas pipelines will likely identify additional indirect effects adding to the lack of consistency, predictability and timeliness in the environmental review and permitting of pipeline projects, exactly what the president’s executive order was designed to address. To add to the confusion, the court’s decision in Sierra appears to be at odds with its earlier decisions regarding FERC approval of upgrades to liquefied natural gas (LNG) export terminals[9]. In the cases involving LNG export terminals the court held that the EIS for those projects did not need to consider indirect environmental effects such as climate change, a point noted in the dissenting opinion by Judge Janice Rogers Brown in Sierra.

The continued need for additional natural gas pipeline capacity in Pennsylvania remains[10] and production of natural gas continues to climb[11]. In Pennsylvania and elsewhere the permitting process for natural gas pipelines will continue to be challenging and uncertain and we may see more requests for judicial relief in the form of issuance of emergency stays. On Nov. 13, 2017, the Sierra Club asked the D.C. Circuit to issue an emergency stay of the FERC certificate order granted for the Nexus gas pipeline that would transport natural gas from Ohio’s Appalachian basin to markets from northern Ohio to the general Detroit area. The Sierra Club once again argued that allowing the project to continue would cause its members irreparable environmental harm[12].

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