Tuesday, December 13, 2016

Five People Could Block Trump’s Pipeline Promises

Industry pushes to quicken approvals now averaging 429 days; Democrats with 5-year terms keep control despite Trump’s win


By Catherine Traywick
Bloomberg
December 13, 2016

Donald Trump has said he’ll speed up approvals for energy infrastructure projects when he gets to the White House. Standing at least partly in the way: An obscure panel of technocrats he’ll have little sway over.

The Federal Energy Regulatory Commission, or FERC, is charged by law with approving new natural gas pipelines, an industry priority as gas unseats coal for power generation. While Trump can make some changes within the agency, his ability to quicken approvals is offset by the longstanding laws that drive the commission and its current makeup, with three Democrat-appointed members on a five-person board.

"Short of, literally, an act of Congress," making any big changes in how FERC operates is "wishful thinking," said Christi Tezak, managing director of ClearView Energy Partners, a Washington-based industry consultant, in a telephone interview.

Commissioners serve 5-year terms. The earliest any of the Democrats’ terms will end is seven months away. Beyond that, FERC operates under economic and environmental laws that carry specific approval guidelines that have been tough to overcome, even as pipeline opponents grow increasingly sophisticated in using them to their advantage.

Last year, a deeply-divided Senate didn’t even bother to take up a House-passed measure that would automatically approve pipeline applications still pending after a year. With an even slimmer majority post-election, Republicans may find it equally as difficult to pass similar legislation next year.

Aging Infrastructure

Builders say new natural gas pipelines are needed as locations of key energy sources change, and to replace aging infrastructure at a time when the shale boom has produced record levels of the fuel. A snail’s-pace approval process, however, is making project planning tougher, even as demand rises for use of natural gas as a cleaner, cheaper option for generating electricity.

Since the end of 2013, it’s taken almost 70 days longer on average to go from an initial FERC filing to notice of construction, according to a July report by Brandon Barnes, a Bloomberg Intelligence analyst. Overall, the average approval time was 429 days.



Trump has responded by vowing to expedite all energy projects.

With oil pipelines, overseen by a patchwork of federal agencies, he can make good on his promise. Trump is expected to approve the Keystone XL oil pipeline, rejecting a review of its cross-border siting by President Barack Obama’s State Department. And he has said he supports the Dakota Access project, delayed as the Army Corps of Engineers demands more study.

With natural gas, however, his authority is limited.

FERC’s independence within the Department of Energy was mandated when it was formed by the U.S. Congress in 1977, in the wake of the OPEC oil embargo.

Comment Mandates


Today, it licenses hydropower projects, regulates electricity markets and sites interstate gas pipelines as directed by the 1938 Natural Gas Act and the 1969 National Environmental Policy Act. Under the former, the agency is tasked with determining the market demand for a given proposal and dismissing those that aren’t seen as needed. Under the latter, FERC must weigh the ecological impact and reject projects found to be harmful. In each case, the laws mandate public comment and agency response.

While there isn’t much Trump can do to speed up this process, barring a change in law, there are things he can adjust.

In August, under President Barack Obama, the White House Council on Environmental Quality released guidance on the National Environmental Policy Act that urged federal agencies to consider the impact of regulatory actions on climate change. The guidance has been a matter of discord between FERC and the Environmental Protection Agency, which has adopted a more aggressive stance on FERC’s reviews since the guidance was issued.

Legal Challenges

While the guidance hasn’t significantly slowed the process, it lays the groundwork for legal challenges that could stymie proposals down the road, according to Marc Spitzer, a former FERC Chairman.

Trump could also name a new chairman for the panel, replacing Norman Bay. While Bay could continue as a commissioner until his term expires in June 2018, maintaining a Democratic voting majority, a Republican chairman would be able to dictate which initiatives FERC takes up pro-actively. Under Bay’s leadership, for example, FERC focused on integrating renewable energy technologies into electricity markets.

"Someone else could come along and say that’s not a priority," said FERC Commissioner Cheryl LaFleur, a former chairman.

A Trump-appointed chairman, for instance, could prioritize liquefied natural gas export terminals, a process less covered by existing law, giving commissioners more discretion. So far, FERC has only rejected one proposal for an export terminal, Veresen Inc.’s plan to build in Oregon.

‘Friendly’ To Ports

Under a Republican chairman, "FERC could move more in the direction of being friendly to those ports," said Ron Binz, an energy consultant and former Colorado regulator.

In some cases, though, a commissioner’s party affiliation doesn’t matter, according to Spitzer, who is a Republican. "There are some projects that should not be built," he said, referring to the decision to reject Veresen’s plans. "A Republican commission, I think, would do the same thing."

At the same time, analysts on both sides of the issue say the Trump administration could see even slower pipeline approvals than before as environmental groups, revved up by Trump’s pro-carbon campaign rhetoric, intensify their efforts to gum up FERC’s process.

U.S. laws allow public stakeholders to raise concerns about pipeline applications, which can create delays as FERC reviews the petitions or waits for companies to respond to the points raised. Among the latest permit delays are the Atlantic Sunrise pipeline, a 200-mile extension of Williams Partner’s Transco pipeline system, and the PennEast Pipeline Project, designed to transport natural gas from the Marcellus shale region to the Northeast.

Protests Rise


Protests have increased by at least threefold since 2008, driven by an increasingly sophisticated and science-based activist movement.

"The parties who are intervening have studied FERC, they have studied the laws, and they are raising points that have never been raised before," said Don Santa, president of the Interstate Natural Gas Association of America. "It’s putting an added burden on the commission, on the staff and on the applicants."

That’s not likely to change under Trump, according to ClearView Energy’s Tezak. "The quality of the challenges will continue to improve, requiring more time and money to address," she said.


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