Dive Brief:

• The Federal Energy Regulatory Commission on Friday denied requests for rehearing on the Mountain Valley Pipeline in a 3-2 vote, allowing construction to continue on the 300-mile natural gas line running from West Virginia into Virginia.

• More than a dozen environmental groups petitioned FERC to review its October decision to approve the pipeline, arguing regulators should have given more weight to ecological impacts and not base its assessments of pipeline need solely on contracts signed with gas consumers. FERC refused, writing that its original pipeline certification is valid.

• Commissioners Cheryl LaFleur and Richard Glick both dissented, questioning FERC’s practice of relying on pipeline capacity contracts to determine project need, as well as the commission’s policy to not consider the climate impacts of new pipelines based on their impacts on gas production and consumption. The commission is currently reviewing its policies for pipeline approvals, which date to 1999.

   

Dive Insight:

FERC’s Friday decision upholding construction certificates for Mountain Valley is the latest in a series of split rulings on pipelines.

Since FERC regained its quorum last year, the two Democratic regulators have regularly dissented on major pipeline approvals over the commission’s assessment of climate impacts and its reliance precedent agreements — pipeline capacity contracts signed with offtakers — to determine if a pipeline is needed. The most recent dissents came this week on a rehearing order for a Tennessee project.

Friday’s order followed the same narrative. Both regulators argued FERC should also use other tools to determine if there is market demand for new pipeline capacity, particularly when precedent agreements are signed between affiliates of the same parent company.

"I am concerned that, where entities are part of the same corporate structure, precedent agreements among those entities will not necessarily be negotiated through an arms-length process and considerations other than market demand will bear on the negotiations underlying the agreement," Glick wrote.

"That is particularly so," he added, "where, as here, all of the precedent agreements are among affiliates of the Projects’ developer."

Glick was not yet on the commission when FERC approved Mountain Valley, but LaFleur issued the sole dissent in the 2-1 vote, arguing the agency should have considered whether the pipeline could have been combined with another controversial project — the Atlantic Coast Pipeline — to diminish ecological impacts.

LaFleur raised the issue again in her dissent, saying she believed viable alternatives existed to constructing both projects, which run along similar routes through Appalachia.

"In circumstances of multiple projects proposed in the same region, with similar timing, I believe we should, in the future, consider a regional review for the development of natural gas infrastructure to assess both the need for pipeline capacity in the region, and the environmental impacts of multiple proposed pipelines on the region," LaFleur wrote.

LaFleur also critiqued FERC’s information sharing on which companies had signed precedent agreements. Some environmental groups mistakenly chose the wrong FERC process when asking for this information, she wrote, meaning they could not comment on whether the project is necessary to meet demand. A Department of Energy Inspector General report issued last month similarly faulted FERC on pipeline information sharing.

"In my view, public statements by a pipeline applicant are insufficient to demonstrate need," LaFleur wrote. "If we are going to rely on precedent agreements to demonstrate need, the Commission must continue to evaluate the precedent agreements themselves, and ensure interested parties have the opportunity to review and comment on those agreements."

Both regulators also questioned FERC’s climate accounting. Last month, in another party line vote, the agency ruled it would only consider greenhouse gas emissions associated with a specific pipeline, rather than a broader approach that considers a project’s impact on production and consumption of natural gas. The GOP majority argues those measurements — like the Social Cost of Carbon developed during the Obama administration — are too imprecise, while LaFleur and Glick say FERC does not build an adequate record to assess them.

"A wholesale rejection of a Social Cost of Carbon analysis on the grounds that the Commission is "not aware of studies that assess the significance" of the impact amounts is arbitrary and capricious, given that the Commission relies on qualitative judgement elsewhere in the [environmental impact statement]," Glick wrote.

How FERC assesses climate impacts and market need for new pipeline capacity are likely to be central to the ongoing review of its 1999 approval process, announced by Chairman Kevin McIntyre in December. The chairman has been quiet about the parameters of the review, but last week told Senate lawmakers he wants to shorten permitting times.

"I have no interest in initiating a review of our gas certificate policy area for the purpose of slowing anything down," McIntyre said. "My interest is in streamlining and making more efficient the processes that we have."