A lot has been going on with the PennEast pipeline and other pipelines in the country, and it boils down to a bunch of good news for us – plus some bad.

Let’s take the good news first.

Delays and Denials

Pipelines and natural gas infrastructure in general are facing increasing headwinds from all sides.  These are pretty well known but worth repeating here:

• The Constitution Pipeline, which was proposed to go through PA and upstate New York, was denied a 401 Water Quality Certificate by the New York DEC in April 2016.  The pipeline company is planning on appealing this decision, but it looks pretty bleak for them at this point.  This is a huge win for those opposed to overbuilding of pipeline infrastructure that we are witnessing.
• Also in April 2016, the NED pipeline was shelved by its owners due to lack of demand and fierce opposition from the public.  This one was proposed to go through New England in Massachusetts and  New Hampshire.  This is particularly notable because New England has had energy issues for awhile now.  This signals that while there may be problems in supply energy to their region, multi billion dollar pipelines aren’t the answer.  There are better ways.
• The Jordan Cove LNG export terminal and associated pipeline were rejected by the FERC in early March 2016.  Yes, FERC rejected a pipeline.  As with NED, it was found that there was insufficient demand for the project.  But this one went even further – they actually had no customers at all, but filed with FERC anyway.  The Jordan Cove people appealed, and FERC has gone into “tolling-order” mode.  Which means FERC is delaying the appeal.  Hopefully indefinitely.
• Multiple pipeline projects in the FERC queue have been officially delayed.  The Atlantic Sunrise proposal from Williams-Transco has been delayed by 10 months by FERC.  And PennEast – yes, our PennEast – was originally hoping for a FERC final decision by August of this year.  Yep, three months from now!  FERC has now completely trashed that timeline, and indicated that a final EIS will not hit until December 2016, and their decision won’t happen until January-March 2017.
• FERC continues to hit PennEast with information requests, many of them repeats of past requests.  These are not small requests, they are asking for massive amounts of information.  The last drop from PennEast in answer to these requests contained gigabytes of information in hundreds or thousands of pages (I’ve been too exhausted to count exactly how many).  Without this information, FERC can’t complete the Draft Environmental Impact Statement, which is a critical document in the FERC & NEPA processes.

Taken together that’s a lot of headwinds for PennEast and other infrastructure to push against.  Delays are good.

The PSE&G Angle

PSE&G has been weighing in on PennEast in their latest earnings call:

http://seekingalpha.com/article/3969728-public-service-enterprises-peg-ceo-ralph-izzo-q1-2016-results-earnings-call-transcript?part=single

First, like the other companies they’ve indicated that the timeline has been pushed back.  From the call transcript, they’ve said “we are now forecasting late 2018” for an in-service date.  That 7 month delay from FERC is translating into at least a year on a final in-service date thanks to the interlocking set of regulations PennEast has to adhere to if they get to the construction phase.  New Jersey Resources indicated the same, being more specific and saying that the expected in-service was pushed back to “the last quarter of 2018”.

More interestingly, PSE&G was asked about their investment in PennEast, and indicated that not only are they pretty unhappy with it, but they were luke warm with it from the start and aren’t likely to do it again.  Here’s part of the conversation between Michael Weinstein of UBS and PSE&G President & CEO Ralph Izzo on that topic:

Michael Weinstein

Hey, recently we saw ConEd enter agreement to purchase gas storage and pipeline assets in Pennsylvania and New York and we’ve also seen other large utilities making large acquisitions of gas assets and utilities. And given the PennEast interest that you have already what is your view on the current market for gas related acquisitions and what’s your own interest in expanding further?

Ralph Izzo

Yes, I would say that our interest in expanding further is low to zero. In terms of our position in PennEast, high candidly every gas LDC in New Jersey has a position in that and we just thought that it was important to help participate…It’s a really different business, Michael.  But typically the corporate structure is different there, mostly MLPs, they have a fairly different financial proposition and they are not without their challenges nowadays as well…There is a graph of those citing challenges associated with this, we are experiencing that in PennEast. That was a major pipeline. And I am sure you are aware of in New York state obviously had an unpleasant surprise. 

In the full transcript Mr. Izzo also makes some noises about maybe the pipeline business is great, it’s just not their cup of tea.  But the point is that PSE&G is hardly a big champion of PennEast.  Instead, they literally are saying that all the other LDCs were doing it and they didn’t want to feel left out.  And now they are not happy campers.  Wow.

The HALT Suit

Recently Homeowners Against Land Taking: PennEast (HALT PennEast) filed a suit in NJ alleging PennEast had been perpetuating a pattern of trespass against many landowners in the state, and asking for relief from said trespass and return of any ill-gotten survey data.  Some links:

http://www.nj.com/mercer/index.ssf/2016/05/residents_claim_trespassing_by_penneast_in_new_law.html

NJ Environmentalists Slap Pipeline Company With Trespassing Lawsuit

The reporting on this has been somewhat mixed. The above two links were reporting on the filing of the suit.  A subsequent article came out after the first hearing on the matter:
http://www.nj.com/somerset/index.ssf/2016/05/residents_denied_survey_injunction_against_penneas.html

Many people I know have seen this article, and after reading it have stated that HALT has lost the suit already, or was filing a frivolous suit, or that PennEast somehow “won” something.

Let me give you my opinion.  I was at the hearing and I saw something very different from what was reported.

The article claims that “over two dozen” HALT PennEast and NJCF members and supporters were present.  That’s accurate but doesn’t paint the full picture.  The actual number was about 40 people in support of HALT packed the right side of the court room, all of whom were  attentive and respectful of the court environment.

On the PennEast side were PennEast’s lawyers, and three potential witnesses: A manager from Hatch Mott McDermott, Jeff England, the UGI project manager, and a third unidentified woman.  And that’s it.  40 opponents vs about 6 PennEast people, and no third parties in support of PennEast at all.

The witnesses weren’t called but were referred to in the arguments.  I can tell you that Mr. England looked very, very unhappy to be there.  I almost wish he had been called to testify, but he wasn’t.  Instead his affidavit and that of the Hatch Mott McDermot manager were all we had.

Contrary to what the article claims, what actually happened is that this was a routine and required hearing for a temporary injunction, with emphasis on “temporary”.  There was no expectation that HALT would get the temporary injunction, but they did have to go through the motions and sure enough they were denied a temporary injunction as expected.

Here’s why – to achieve a temporary injunction for a case like this there needs to be an immediate danger to the property owner that will cause irreparable harm.  When we say immediate and irreparable think extreme – think about a bulldozer pushing your house over the side of a cliff, and your house is about 3″ from going over the edge, and you’re running to the judge to get them to stop.  If you fail, your house will be smashed into 12 million bits and you’ll have no place to live.  That’s how immediate and irreparable it has to be.

Clearly the alleged surveys don’t meet that standard.  While the surveys are a long term threat to property owners, common sense says a temporary injunction wouldn’t make a difference.  But this doesn’t matter, the subsequent hearings down the road will be the meat of the case.

The article claims that the judge “ruled she found no evidence that PennEast conducted illegally surveys on homeowners’ property”.  This is incorrect, and the judge did not state this.  The point being made here was whether or not the facts were in dispute.  If the facts were not in dispute, than PennEast would simply be guilty.  What the judge said was that PennEast disputed HALT’s claims in their affidavits, and that therefore they’d need a hearing on that.

At the end of the day, what I saw there was PennEast’s lawyer going over the top in his presentation, making some outlandish claims, and along the way disclosing a great deal of information that did nothing to further PennEast’s cause, but did give opposition more ammunition.

Among other things, PennEast’s lawyer confirmed that they still lack survey permission for at least 70% of properties in NJ. So we are holding strong despite everything PennEast is throwing at us.

Also, their lawyer indicated that 30% survey access was just fine, and that they were confident that FERC would accept desktop surveys for everything else.  And went as far as t o say that PennEast felt they were under no pressure at all to get more surveys.

I wonder what FERC will make of that?

Another hearing is scheduled for June, and in that hearing we’ll likely see the evidence discussed at much greater length.  This law suit is just warming up.

— Full Disclosure: I am a member of the Board of Trustees of HALT.

The Draft Environmental Impact Statement

In the “bad news” category we have the Draft Environmental Impact Statement (DEIS) that FERC is working on.  The DEIS is a NEPA document that FERC are required by to create by law.  What this document is supposed to do is to show all of the potential damage the the project could cause, and all of the things that are proposed to mitigate those damages, and then indicate whether this is creating an unacceptable amount of damage to the human environment, or not.

This is the “draft” version, so this is FERC’s first cut.  After FERC puts this out, we have 45 days to comment on it.  Here’s how the timeline works:

• Sept 2015: Company files their application
• ??? 2016: FERC publishes their DEIS (could be anytime in the next 0-3 months)
• ??? 2016 + 45 days: End of DEIS comment period
• Dec 2016: FERC publishes their Final EIS (FEIS).
• Jan-Mar 2017: FERC publishes their final order approving or rejecting the schedule

Here’s the bad news part.  We don’t know exactly when the DEIS is going to hit.  Once it does, we only have 45 days to comment.  And the DEIS forms the legal record for objections to the project.

So here’s what everyone has to do: start considering what you want to say in objection to PennEast.  Get your list together.  Start talking to your friends and neighbors and family.  Get ready.  Think about your property, your neighborhood, your job, and all the potential impacts.  Think about the small country roads we travel.  School bus schedules.  Where your well and septic system are.  Tourism impacts, historical districts.  Runoff, endangered species.  Any potential impact needs to get documented, and we need as many people as possible doing it.

And meanwhile…you can’t file them yet.

It’s like the army – hurry up and wait.

But this is really important people.  FERC is required to answer every single objection to the DEIS that is filed on the docket.  And any law suits against PennEast or FERC have to be based on information in those docket comments.  So this is our one shot – these 45 days will be critical.

Keep an eye on social media for upcoming meetings about this, and when the DEIS drops for real be prepared to hit the ground running and getting those comments in.

WACAP Meeting

WACAP will be having a meeting at the West Amwell Muni building  on Wednesday May 25th at 7:30pm.  All are welcome to attend!  We’ll be discussing the DEIS and its importance and timing, HALT, and some other related topics regarding PennEast.