First Infrastructure Proposal Surfaces in Congress

While the Trump administration has punted on preparing an infrastructure development proposal, Rep. Bill Shuster (R-Pa.), chairman of the House Transportation and Infrastructure Committee, has not. Shuster produced a discussion draft of potential legislation on July 23.

The discussion draft includes a section on water resources with its main provisions affecting the Water Infrastructure Finance and Innovation Act (WIFIA) program which provides low-cost loans. Administered through the Environmental Protection Agency, the WIFIA program was established by Congress in 2014, but only awarded its first two loans this year. The draft addresses other federal water programs, too

Tommy Holmes, legislative director, American Water Works Association, says the association likes the water infrastructure section very much. “It would not only reauthorize WIFIA for five years at strong funding levels, but it would raise the level of support for a project from 49 percent to 80 percent,” he explained. “It would also provide some streamlining for the application process, such as requiring only one credit rating instead of two.”

However, Shuster is retiring in January, which weakens the chances of the draft morphing into a legitimate legislative proposal in 2019. Neither did the Shuster draft attract any Democratic support, which may or may not be a problem depending on the make-up of the next Congress.

FERC Pressed to Change Pipeline Approval Policies

Interstate pipeline companies are fending off efforts by environmental groups to pressure the Federal Energy Regulatory Commission (FERC) to make significant changes to its 1999 pipeline certificate policy. Groups such as the Chesapeake Bay Foundation, Delaware Riverkeepers, some members of Congress and others want FERC to make it hard to establish economic need for a project. If that initial barrier is crossed, look at an expanded menu of landowner and environmental concerns, both of which could lead to either slowing down approval for, or even cancellation of, a project where substantial demand exists.
The Notice of Inquiry published in April cites four areas for reconsideration:

  • The reliance on precedent agreements to demonstrate need for a proposed project
  • The potential exercise of eminent domain and landowner interests
  • The Commission’s evaluation of alternatives and environmental effects under NEPA and the NGA
  • The efficiency and effectiveness of the Commission’s certificate processes.

Pipeline and anti-pipeline forces are on opposite sides of all those issues. The Interstate Natural Gas Association of America (INGAA) thinks the 1999 policy remains sound but perhaps certain elements could use “a freshening up.” INGAA adds,

“Wholesale changes are unnecessary and likely would be counterproductive.”

On the other hand, the Delaware Riverkeeper Network, which has worked to oppose nearly two dozen FERC pipeline projects “has identified significant and fundamental failures in FERC’s review and approval of pipelines.”

FERC has made several pro-pipeline decisions this year that may indicate which way the wind is blowing at the commission. For example, in granting a certificate to DTE Midstream’s 14-mile Birdsboro pipeline in Berks County, Pa., in March 2018, FERC said it would clamp down on allowing “out-of-time intervenors,” (commenters who want to have their say after a comment deadline has passed). FERC had previously said out-of-time comments could be submitted for “good cause” but in Birdsboro the “good cause” caveat was eliminated, drawing dissenting comments from Commissioners Glick and LaFleur.

In its May 18, 2018 Order denying rehearing a certificate of public convenience and necessity issued to Dominion Transmission Inc., FERC, according to the Riverkeepers, “announced a sudden and unprompted departure from FERC’s practice of evaluating the environmental impact of downstream greenhouse gas emissions from natural gas infrastructure projects and announced a new policy of not evaluating upstream or downstream greenhouse gas emissions in the vast majority of cases.”

Dominion has been in the cross-hairs of many environmental groups because of its Atlantic Coast Pipeline (ACP) which runs through West Virginia, Virginia and into North Carolina. A federal appeals court has sided with the Sierra Club and others about potential damage to stream crossings in very small sections of the 600-mile pipeline. The same court has also cited problems with compliance of Nationwide Permit 12, issued by the Army Corps of Engineers, by the Mountain Valley Pipeline (built by EQT Midstream Partners) which also runs through Virginia along the same general route as the ACP.

Sens. Tim Kaine and Mark Warner, both Democrats from Virginia, argue the two projects should have had their economic and environmental reviews done concurrently, and they should have been co-located along the same right of way, easing the use of eminent domain by pipelines. This support for “regional analysis” of new pipeline applications is a popular demand. The New Jersey Department of Environmental Protection seems to go even further arguing for co-location of the majority of new pipeline and compressors in an existing right-of-way.

But it was by no means the only popular change supported by landowner and environmental groups who are pressing for greater weight being given to greenhouse gas emissions, both upstream and downstream.

Although INGAA, Dominion and other interstate pipeline companies are standing firm behind a “no significant change” position, they do open the door narrowly to small changes in the 1999 pipeline certificate policy. That includes more critical analysis of precedent agreements with affiliates. Boardwalk Partners says, “The Commission should place greater focus on ensuring that precedent agreements are the product of true arm’s-length negotiations. For projects that are supported largely by precedent agreements entered into by affiliates of the pipeline, the Commission should ensure that the agreements are the product of genuine competition rather than an attempt to bolster the bottom line of the pipeline and affiliate’s common parent.”

Boardwalk is a wholly owned subsidiary of Loews Inc. whose interstate natural gas subsidiary companies include Texas Gas Transmission LLC, Gulf South Pipeline Company LP, Gulf Crossing Pipeline Company LLC and Boardwalk Storage Company LLC.
Boardwalk’s position appears to put it at odds with INGAA which argues, “The Commission should not distinguish between precedent agreements with affiliates and non-affiliates when considering the need for a proposed project because both appropriately represent market need.”

It terms of showing demand for a project, INGAA urges FERC to consider the economic and national security benefits stemming from exports of natural gas via cross-border pipelines and as liquified natural gas (LNG) that are facilitated by natural gas pipeline infrastructure. That may have some resonance given the European Union’s commitment in late July to buy more U.S. LNG as the price of forestalling President Trump’s threat to impose import duties on European autos.

In terms of the “freshening up” what INGAA would support, that would include expanding FERC communication with landowners. It also advocates for allowing pipelines, following the issuance of a certificate, to conduct limited-scope work outside of approved work areas to accommodate landowners’ requests for non-pipeline related work. That work would be paid for by the pipelines, according to INGAA’s Cathy Landry.

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