The Natural Gas Act does not exist in a bubble

For quite some time people involved in the fight against PennEast have despaired that FERC seems to possess nearly omnipotent power when it comes to natural gas pipelines.  They seem to hold all the cards, and are prone to sticking their fingers in their ears and going “la la la la la la la la” when residents impacted by pipeline proposals make objections.

It is well known that their Final Environmental Impact Statements are more-or-less copied and pasted from one decision to the another, and that they kick the can down the road by issuing “conditions” on their recommendations.

In fact, as much as we whine about how horrible FERC is, a big part of the problem is something called the Natural Gas Act of 1938.  That act (along with some amendments over the years), gives FERC incredibly broad authority when dealing with natural gas pipelines.  Here’s what the law says on FERC using a Certificate of Public Convenience and Necessity:

… a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extension, or acquisition covered by the application, if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied.

The key words are basically that FERC can give a certificate to anybody who appears to be qualified, who adheres to some extraordinarily simple rules in the Natural Gas Act itself, and which satisfies FERC’s regulations.

This means that FERC is (almost) the sole arbiter of whether or not you get a Certificate from them, under rules that FERC writes itself.

Ouch.

It gets worse though.  The Act continues with this statement:

The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.

This means that FERC is allowed to attach arbitrary conditions to a Certificate (so long as they are “reasonable”, which is a rather broad standard).  This allows FERC to basically shirk it’s duty and grant eminent domain power to companies who barely have any idea about the project they are proposing (e.g. like PennEast).  They do this by simply saying “please figure out the details before construction starts”.

Double ouch.


Those Conditions Have Teeth

However, there is a reason for those conditions to be there, and that is where companies like PennEast are vulnerable.  You see, the Natural Gas Act does not live in a  bubble.  FERC does not have exclusive jurisdiction over natural gas companies, nor does FERC’s word have ascendency over other agencies or laws.  They lead the permitting process, but other agencies don’t have to listen to them or agree.

In PennEast’s case, the Final EIS contains about 60 recommended conditions before implementation is allowed.  Some of them are a rather minor, but others are biggies.  For example, they must get Clean Water Act 401 permits from PA and NJ.  They must get a Clean Water Act 404 permit from the Army Corps of Engineers in PA, and from NJDEP in NJ.  They must adhere to SHPO for historical impacts, the Endangered Species Act, and a laundry list of other acts and agencies.

And this is where PennEast is running into trouble.

Clean Water Act Permits

The CWA is very interesting, in that it is a Federal Law that is nominally owned by the EPA.  But, in fact, the administration of the Clean Water Act is mostly delegated to the States.  So this is a rare area where State Governments and agencies have federal powers equal to that of the Federal Government and its agencies themselves.

Clean Water Act Permits in PA

For the CWA 401 and 404 permits in PA, PennEast applied jointly to both the PADEP and the US Army Corps of Engineers (USACE) for the CWA permits.  PADEP approved the 401 portion several months ago.  But this week, the USACE issued a letter to FERC & PennEast stating that the application lacked sufficient information for the Corps to do anything with it, and they were refusing to do anything more (or even put together a timeline) until such time as PennEast gets the information USACE needs.

And let me tell you, that USACE letter was much worse for PennEast than it may seem. The Corps’ letter was extraordinarily harsh and remonstrative to PennEast.  They are sending a clear signal to PennEast that the Corps’ does not look favorably on this project at all.

Keep in mind that the Corps’ official motto is “Essayons”, which is French for “Let Us Try”.  They are a gung-ho, can-do group who prides themselves in doing impossible engineering feats.  These are the guys that go out and build bridges under enemy fire.  They are brave, resourceful, courageous and incredibly inventive.

And they just told PennEast to stop bothering them.

Ouch on PennEast.

Clean Water Act Permits in NJ

In NJ, PennEast needs to apply to NJDEP for both the 401 and 404 CWA permits (NJ is one of the very few states to do 404 permitting; USACE does it in nearly every other case).  PennEast did so the day before the FEIS was issued by FERC.

It is mystifying why PennEast made such an application.  During the DEIS comment period, NJDEP repeatedly stated that PennEast lacked sufficient on-the-ground surveying data, that their application would almost certainly be incomplete and rejected, and to basically not bother to do anything until they actually had the data.

But PennEast went ahead and applied anyway.

This week, NJDEP did exactly what they said they would do.  They issued a notice to PennEast stating that their application was incomplete, they were missing huge amounts of required data.  And, most critically, NJDEP ruled that PennEast’s application was made without having the legal authority to actually enter all of the impacted properties on the permit.  PennEast “crossed out” the compliance section for legal authority to access and wrote in their own B.S. justification.

NJDEP called them out on this (sorry PennEast, you cannot make up your own regulations), and said they have 30 days to fix it.

NJDEP also said that even if they did acquire legal authority (which would be eminent domain authority via a FERC certificate), NJDEP would still require voluntary sign off from all impacted landowners before they would consider the application.

And, as with the USACE letter, the NJDEP’s response was not a mild bureaucratic objection to some minor items missing here or there.  This letter is a warning shot directly across PennEast’s bow.

Let’s explore what that means.  NJDEP says they have 30 days to both obtain “legal authority” to survey the entire route in NJ; and PennEast has 30 days to get signatures from everyone along the route – including many abutters who have wetlands or other features (like my property!).

If PennEast does not give NJDEP this information, NJDEP will deem the application to be officially dead.  PennEast would have to re-apply at some future data when they had all of this information.

Here are the obvious problems for PennEast here:

  1. PennEast can’t get legal authority without eminent domain.
  2. PennEast can only get eminent domain from a FERC Certificate Order
  3. FERC can’t  issue a Certificate Order because it lacks a quorum
  4. There is no nominations to FERC in site from the Trump Administration
  5. THERE IS NO WAY IN HELL PENNEAST WILL GET MY SIGNATURE, OR THOSE OF THE REST OF THE 65%+ OF IMPACTED LANDOWNERS WHO HAVE REFUSED ACCESS.

Implications

So there you have it.  On PennEast’s side, they have a favorable Final EIS from FERC.  And they have a permit from PADEP.

On the negative side, you have USACE saying the joint PA permit is severely lacking (which puts PADEP in a very awkward situation I might point out).

You have NJDEP saying that not only is their application missing a ton of data, but that the application is invalid on its face because PennEast lacks authority to do what they are asking to do.

Assuming the FERC quorum isn’t going to happen anytime soon, and assuming that FERC is piling up a huge backlog of decisions, this puts PennEast into a really, really bad spot.  Right now they are STILL claiming they will be in-service by 2018.  But for that to happen, they need to get a FERC certificate, and then satisfy all 60+ conditions (including NJDEP and USACE permits) before they can clear cut trees.

And they need to clear cut those trees by March, 2018 to meet their deadlines.

In my mind, this is pretty simple.  PennEast is totally stuck until FERC gets a quorum and issues a certificate.  One that happens (when? In two months? 6 months?  9 months or more!?), they need to then go to the courts to demand survey access to properties.  They need to go into condemnation proceedings.  And they need to do all the on-the-ground surveys that USACE and NJDEP needs (so full surveys for the entire line, not just in NJ).  They need to then reapply to NJDEP with all that info (plus all our signatures!), and submit all the PA data to USACE.

THEN USACE and NJDEP start their reviews – after all of that happens.

And I seriously – very seriously – doubt that there is any way for that to happen.

Oh, and One More Thing….

Meanwhile, while all this is going on, we have a Gubernatorial election in NJ.  And all of the likely candidates firmly believe PennEast is a bad idea.

The next governor will help shape NJDEP policy.  And the new governor is also  one of the 5 members of the DRBC board of commissioners – who also have a permitting say against PennEast.  Right now the DRBC board is 3 members pro-pipelines (PA, NJ, and USACE) 2 members anti (DE, NY).  The likely new governor will swing that to three anti-pipeline states.

The question in my mind now is “when will stockowners in the PennEast member companies stand up and demand that stop throwing good money after bad and withdraw from PennEast just as PSEG had?”.

Seriously – if you own stock in New Jersey Resources, or South Jersey Industries, or The Southern Company, or UGI, or Enbridge, when do figure these companies are throwing your money away chasing and impossible PennEast dream?

 

Published by

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 two cats Ponce de Leon and Xavier.

3 thoughts on “The Natural Gas Act does not exist in a bubble

  1. Mike,
    I think I can guess why the stock holders of New Jersey Resources, or South Jersey Industries are not worried. Most of the conditions you mention were the similar for the recent start of construction for the Garden State Expansion Project.
    1. Transco couldn’t get a Notice to Proceed without eminent domain from Bordentown Township.
    2. It seemed Transco could get eminent domain from a judge
    3. FERC did issue a Notice to Proceed even though it lacks a quorum
    4. NJDEP could’t have cared less that AECOM was denied access to survey the route of the SRL
    It might be my paranoia, but I keep thinking Williams, et.al., are willing to make a deal. If the GSE Station 203, along with The Northeast Supply Enhancement Station 206 and the pipelines they feed are allowed to go through, the PennEast will be taken off the table. I keep feeling that because so many of NJ’s wealthiest landowners, and members and contributors to environmental groups and NGO’s, live along the PennEast route they rest of NJ are going to be sacrificed. They don’t need PennEast to supply the SRL or the NSE so good for you people along PennEast, the rest of NJ wishes you well as we drown in Marchellus Methane.

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    1. Agnes, I have a few comments on what you’re saying. I don’t quite believe in a deal involving Williams and PennEast, for the simple reason that Williams is not involved in PennEast at all. Who would such a deal be made with exactly? I don’t see where the quid pro quo is there. The PennEast owners now are Spectra Energy, New Jersey Resources, South Jersey Industries, UGI, Southern Company.

      On some of your other points:

      On eminent domain and GSE, can you elaborate on what you mean there? I haven’t looked at the GSE details recently, but the GSE is a FERC-level federal project. It was approved by FERC and given a Certificate of Public Convenience and Necessity last year:
      https://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=14233359
      Such a certificate gives it eminent domain power under the Natural Gas Act. I’m not sure where Bordentown Township eminent domain would figure in.
      If they needed to condemn any land, it is up to Transco if they want to pursue that in Federal courts or State court, the Natural Gas Act allows them to choose. In either case, the issue would not be whether or not eminent domain existed or not (it already does, via the Natural Gas Act and the FERC certificate), the only question is on the compensation and wording of the permanent easement and/or purchase.

      If there’s something I’m not aware of there please let me know!

      On FERC Notice to Proceed – the quorum is required only for major decisions that require the commissioners to make key decisions. A quorum is only required for major actions such as the Certificate Order. For good or ill a Notice to Proceed is considered routine and can be issued by FERC staff. The same is true of actions such as the issuance of the Final EIS on PennEast.

      On NJDEP, I think there have been inconsistencies in how they have applied their standards, and we need to continue to pressure them to do the right thing in all pipeline filings before them. I think one of the challenges, though, is that NJDEP does look at “breadth” in projects, and compressor station projects are a challenge to oppose. From the NJDEP perspective on water quality, the water impacts tend to be geographically very limited (Clean Air Act challenges are a different matter entirely that needs to be addressed at the Federal level). By comparison, green field pipeline projects like PennEast are causing impacts across dozens or hundreds of miles, and crossing hundreds of waterways and wetlands. The tactics for fighting a compressor station have to be different given the highly localized natural of it.

      On the Southern Reliability Link – my own opinion is that the politics around that really stunk, and the same is true of the BL England plant plans and associated pipeline. These are not FERC level, these are strictly intrastate pipelines (or at least FERC allows them to get away with calling them that). The nonsense with the Pinelands Commission is well documented, and I frankly think the Christie Administration meddled heavily in favor of NJR and SJI there. I think with the Federal projects they are less inclined to muck about, particularly with so many other agencies involved. Look at the example of PennEast and the PA DEP. PA DEP is now on record approving the water quality permit for PennEast. But meanwhile, USACE looking at the same app (but on the wetlands side of the equation) blasted PennEast for extreme lack of survey information and has put that application into limbo. And NJDEP is in the process of doing the same here in NJ. This puts PA DEP in a really, really bad position legally. NJ DEP does not want to be in that same sort of position with federal pipelines so is treading more cautiously.

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  2. Wonderful job, as usual, mike. And the commenter above, Agnes Marsala was enlightening and frightening . I am interested in hearing your response to her line of observations/reasonings.

    Like

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