The industry says “FERC, you move too slowly!”

I almost choked on my lunch when I read this research paper about a Congressional bill to speed up the FERC process:

While people and organizations impacted by pipeline infrastructure projects are saying “FERC, slow down!”, the energy industry is complaining bitterly that FERC approval takes too long, and they actually want to speed up the process dramatically.

The gist of the document is buried halfway through its summary:

The Natural Gas Pipeline Permitting Reform Act (H.R. 161) seeks to expedite the federal review of certificate applications by imposing deadlines on the agencies involved. H.R. 161 would impose an explicit 12-month deadline on FERC certificate reviews for projects using FERC’s pre-filing procedures and would codify the commission’s 90-day regulatory deadline for any certificate related agency decisions. Any agency decision not meeting the 90-day deadline would be approved by default.

Can you believe that? Making a hard-and-fast deadline of exactly one year for the entire pre-filing procedure? And then mandating a mere 90 days for related agency decisions?

And then the coup de grâce – any agency decision not meeting the 90-day deadline would be approved by default.

The Obama administration has rightly denounced these types of provisions for a host of reasons, from the paper:

In the 113th Congress, the Obama Administration opposed deadline and default approval provisions like those in H.R. 161 because they…

“could create conflicts with existing statutory and regulatory requirements and practices related to agencies’ programs, thereby causing confusion and increasing litigation risk. The … requirements could force agencies to make decisions based on incomplete information or information that may not be available within the stringent deadlines, and to deny applications that otherwise would have been approved, but for lack of sufficient review time. For these reasons, the bill may actually delay projects or lead to more project denials, undermining the intent of the legislation.”

The real reason pipeline companies want their projects expedited is because they are under a severe time and financial crunch. Much of the Marcellus Shale “Boom” has been financed through loans and bond issuances. It financial terms their debt-to-equity ratio is very high. You could compare this to someone trying to start a small business using credit card debt to finance it. In general this is frought with risk and means the longer you go without a positive cashflow, the more money you’re going to lose (or you might just go bankrupt).

This is the situation Marcellus drillers are in. Shale gas “fracking” costs enormous amounts of money. Fracked wells don’t last very long and drillers have to constantly keep drilling new wells to keep volumes up, which in turn costs yet more money.

So they basically want FERC approval to go as fast as possible. And by proposing these “default approval” provisions to legislation they show they don’t really care about the environment, or conservation, or other concerns of people in their way. If the EPA is having a hard time doing a study on a large complicated pipeline project and will need more than 90 days to complete it, the industry says “tough”. Take 91 days and the project is auto-approved.

Forms of this bill have been passed twice by the House of Representatives (most recently in January 2015) but has not passed the Senate. The bill is opposed by the Army Corps of Engineers, Environmental Protection Agency, Bureau of Land Management, and Fish and Wildlife Service, which are all agencies that would be impacted by this.

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Mike Spille

I'm a thinker, an analyzer, a synthesizer. Maybe not in that order. I live in West Amwell NJ with my wife Kristina, our two kids Day and Z, our two dogs Fern and Cinna, and three cats Ponce de Leon, Oliver, and Doolittle.

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