April 2019 Vol. 74 No. 4

Washington Watch

Appeals Courts Provide Good/Bad News for Pipelines

Stephen Barlas  |  Washington Editor

The top federal appeals court in charge of policing regulatory decisions gave a big victory to the Federal Energy Regulatory Commission (FERC), endorsing in February its approval of the Mountain Valley Pipeline, one of two controversial projects already underway in Virginia.

The U.S. Court of Appeals for the District of Columbia issued a decision dispatching complaints raised by environmental groups about the way FERC issued a certificate to Mountain Valley in 2017. The project would extend 300 miles from Wetzel County, W.V., into Pittsylvania County, Va. Petitioners raised 16 different challenges to FERC’s environmental assessment of the project and subsequent issuance of the certificate. The court wrote in its decision: “None of the challenges succeeds.”

Natalie Cox, spokeswoman for Equitrans Midstream Corporation, the lead sponsor of Mountain Valley, which was 70 percent complete by the end of 2018, said “We are pleased with the Court’s decision to uphold the FERC’s approval. The construction process includes very stringent monitoring by FERC officials, state and local agencies, and MVP personnel to ensure MVP is adhering to each of the permitted requirements.”

Cat McCue, communications director, Appalachian Voices, the environmental group that filed the lawsuit, declined to comment.

That decision by the U.S. Appeals Court for D.C. came about a week before the Fourth Circuit Court of Appeals affirmed its December 2018 decision saying FERC’s decision to approve the 600-mile Atlantic Coast pipeline, also in Virginia, was flawed. This was because its environmental impact statement was inadequate in considering U.S. Forest Service concerns about a crossing of the Appalachian Mountains.

Karl Neddenien, a spokesman for Dominion Energy, said, “Within the next 90 days, we will file an appeal to the Supreme Court of the United States regarding the Fourth Circuit Court’s invalidation of the Atlantic Coast Pipeline’s U.S. Forest Service Appalachian Trail crossing authorization. We are also pursuing legislative and administrative options, and we expect these issues to be resolved in the coming months, whereby we will recommence construction.”

But the Mountain Valley decision seemed to strengthen FERC’s hand on environmental reviews and on several other matters. Environmental groups led by Appalachian Voices had tried to tie the Forest Service concerns over the Atlantic Coast’s crossing of the Appalachian Mountains with FERC’s alleged failure to consider the same issue when it approved Mountain Valley. However, the court said that FERC’s issuance of the Mountain Valley certificate “did not hinge” on the granting of any rights-of-way through federal land.

The court also ruled in favor of FERC on two other issues that have become prominent objections used by environmental groups to contest FERC approval of new pipelines. A popular trending argument made to sway FERC environmental impact statements (EIS) is that the commission did not consider the impact of downstream greenhouse gas emissions which would be created by a project.

In the case of Mountain Valley, the petitioners argued FERC erred in concluding that such emissions are not reasonably foreseeable indirect effects of the project. The court set that objection aside saying, “We need not consider that argument, however, because even if petitioners are correct, FERC provided an estimate of the upper bound of emissions resulting from end-use combustion, and it gave several reasons why it believed petitioners’ preferred metric, the Social Cost of Carbon (SCC) tool, is not an appropriate measure of project-level climate change impacts and their significance.”

Environmental groups have increasingly cited the SCC in objecting to various infrastructure projects approved by different federal agencies.

There will be perhaps some clarity on how FERC should calculate and weigh greenhouse gas emissions given the DC Appeals Court is now hearing a lawsuit filed by a New York state environmental group. This lawsuit objected to FERC’s approval of Dominion Gas Transmission’s New Market Project based on the commission’s failure to consider the direct impacts of GHG emissions.

FERC concluded in 2016 when the project was first approved that its environmental review of the New Market Project—a limited undertaking “to construct and operate certain compression and related facilities” in New York—did not need to include an analysis of distant, causally attenuated greenhouse gas emissions “associated with the production, processing, distribution, or consumption of gas.”

Another frequent objection from environmental groups is that a particular pipeline is not needed. This argument was also made in the lawsuit against Mountain Valley. But the court said, “… FERC’s conclusion that there is a market need for the project was reasonable and supported by substantial evidence, in the form of long-term precedent agreements for 100 percent of the project’s capacity.”

FERC Chairman Lauds New “Framework” for Approving LNG Terminals

FERC’s weighing of greenhouse gas emissions also comes into play in its consideration of liquified natural gas (LNG) facilities. It was noteworthy that FERC Commissioner Cheryl LaFleur concurred with the two Republican commissioners in approving the first LNG project that the Trump administration has greenlighted: Venture Global’s Calcasieu Pass LNG export project in Cameron Parish, La. FERC vote on Feb. 21 was 3-1, with Democratic commissioner Richard Glick dissenting.

In announcing the decision, FERC Chairman Neil Chatterjee said, “I really appreciate the efforts of my colleagues to work together to come to an agreement on this facility. This is significant, as I anticipate we’ll be able to use the framework developed in this order to evaluate the other LNG certificates that the Commission is considering.”

It is not clear what new “framework” he was referring to. The order itself doesn’t clarify the issue, either. But the “compromise” put forward to break the deadlock—and which enabled LaFleur to vote for it—was, according to reports, to calculate the direct annual greenhouse gas emissions that the Venture Global terminal would emit as a percentage of total U.S. emissions. The direct operational emissions of the LNG terminal could potentially increase CO2e emissions based on the 2016 levels by 0.07 percent at the national level.

LaFleur wanted to weigh the Calcasieu Pass terminal’s emissions along with those from other LNG terminals in the area and make a decision based on that local or regional impact, not based on a national impact.

There are 12 pending LNG applications at FERC. LaFleur’s term is over in June. President Trump hasn’t indicated whether she will be re-nominated, nor has he announced a Republican nominee for the fifth commission seat which is vacant.


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