STEPHEN BARLAS, Washington D.C. Editor
According to the Interstate Natural Gas Association of America (INGAA), 2023 saw the smallest increase in added interstate pipeline capacity on record in the U.S. Two recent federal appeals court decisions make it unlikely that 2024 and beyond will see an improvement in that statistic, even as interstate pipeline building becomes more important, given increased demand from electric generators, data centers and auto electrification.
The U.S. Court of Appeals for the Washington, D.C., district hears cases dealing with decisions made by federal agencies, such as the Federal Energy Regulatory Commission (FERC). In July, the court twice sided with parties that argued FERC had not done enough analysis of how new pipeline capacity might increase greenhouse gas emissions. In one of the cases, the court argued that FERC had not proven that the added capacity was even needed. In another case, the court took the rare step of terminating FERC’s approval of a Transco pipeline, in the northeast, which is already in operation.
That decision was New Jersey Conservation Foundation, et al. v. FERC issued on July 30, 2024. It is especially noteworthy because the court “vacated” – i.e., terminated – an FERC approval of the Transcontinental Gas Pipe Line Company (Transco)’s Regional Energy Access Expansion Project. The project is already in operation and covers 36.1 miles of new natural gas pipeline facilities running through New Jersey, New York, Delaware, Maryland and Pennsylvania.
A Williams Company spokesman (Transco is a Williams subsidiary) said, “We are in the process of taking the necessary regulatory and legal steps to maintain the vital service we provide.”
A Washington energy attorney, who did not want to be identified, said Williams has two options. It can file an appeal for a rehearing with the court – which had to be done in 45 days – and/or request a temporary certificate from FERC that would allow the pipeline to keep operating. FERC did issue a temporary certificate the last time the Appeals Court “vacated” one of FERC’s certificates – with the Spire Pipeline in St. Louis in December 2021. But the energy attorney added, “There is a real risk the pipeline may have to shut down, but I think it is a relatively low chance.
The Transco decision centered on whether FERC had adequately considered the greenhouse gas emissions from the project when determining if those emissions were “significant,” which is a requirement of the National Environmental Policy Act (NEPA). The issue of GHG emissions and whether FERC totaled them previously, as part of its environmental impact statement, has been a bedeviling issue for FERC in a number of recent cases that ended up in the DC appeals court.
In its Transco decision, the court alluded to a prior FERC approval of a Northern Natural Gas pipeline where FERC was able to make a case-specific significance determination, yet “provides no justification for why it cannot determine significance here.”
The Northern Natural Gas project involved a replacement project where it was easy for FERC to determine that the minimal new emissions were not significant. So, the comparison of Northern Natural to Transco is something of an apples-to-oranges comparison.
Two weeks earlier, the court had rapped FERC’s knuckles in its decision in Healthy Gulf, et al. v. FERC, where environmental groups argued FERC’s approval of the Commonwealth LNG LLC’s facilities in Louisiana was based on an inadequate environmental impact analysis. Here the court sent the certificate back to FERC on remand, meaning there is no immediate threat to the project, as FERC seeks additional information from Commonwealth. But, whether GHG emissions are “significant” and can be tabulated was at issue here, as well as in Transco.
The court focused on these main issues: FERC’s failure to determine the significance of GHG emissions was insufficient and required further explanation, and more detail on NO2 emissions on remand.
Both the Transco and Commonwealth court decisions leave a lot to the imagination for interstate pipelines in figuring GHG emissions as part of a section 3 application for new capacity. New final guidance on NEPA from the White House Council on Environmental Quality (CEQ) doesn’t really provide a bright line for FERC either.
In fact, the Biden CEQ eased the guidelines somewhat from its draft stage in favor of pipelines. The final guidance says FERC does not have to make a “significance” determination if “…the necessary quantification tools, methodologies and data inputs … are not available.”
But there is some room in the final guidance for agency interpretation. For example, even if a significance determination cannot be made because of the absence of “tools, etc.,” the agency should provide “a qualitative analysis and its rationale for determining that the quantitative analysis is not warranted.” The CEQ notes that “the determination of the potential significance of a proposed action remains subject to agency practice for the consideration of context and intensity.”
It would be nice if Congress clarified this mess. The Senate’s energy permitting bill, which has no chance of passing Congress but passed the Senate committee with a bipartisan majority, does not address this issue in the slightest, which it could have done.
Federal court rejects four new pipeline safety rules
Not only has the DC Federal Court of Appeals upended FERC decisions, it has now injected itself into Pipeline and Hazardous Materials Safety Administration (PHMSA) decisions. In mid-August, the court tossed out four pipeline safety standards that PHMSA published in 2022. There were numerous new safety standards in that final rule and INCAA challenged five in court, winning on four.
These were: the high-frequency-electric resistance welding (ERW) standard, the crack-MAOP standard, the dent-safety-factor standard, and the corrosive-constituent standard. The court vacated the four because of PHMSA’s inadequate final cost-benefit analyses. In some cases, the agency tightened the standard from its form in the proposed rule, but failed to redo its cost analysis on the final standard.
The final rule started its journey in 2011initiated by PHMSA in the wake of the tragic San Bruno, Calif., incident in September 2010 that took eight lives, injured more than 60 people, and damaged more than 100 homes. Some provisions of the 2022 final rule stayed in place.
PHMSA provided a statement saying it “is pleased that this important safety rule will largely remain intact.”
Ben Kochman, INGAA’s Director of Pipeline Safety Policy, stated, “INGAA is pleased with the outcome of this case. We look forward to working with PHMSA on continuing our efforts to improve pipeline safety, building upon the alternatives we proposed throughout the rulemaking process.”
One element of the final rule the INGAA challenged required operators to immediately repair any crack or crack-like anomaly when its predicted failure pressure is less than 1.25-times the MAOP. The earlier, 2016 proposed standard, required operators to immediately repair any anomaly when the predicted failure pressure was less than or equal to 1.1-times the MAOP. In other words, when the pipe was expected to fail if faced with a gas pressure of 110 percent or less of the MAOP.
PHMSA failed to estimate the added costs to companies of the 125-percent threshold in the final rule, which meant repairing more cracks. As with the other three standards, the court concluded the agency could not make “a reasoned determination that the benefits . . . justify [the] costs.”
Another of the other four vacated standards dealt with when to repair pipes with metal loss along longitudinal seams formed by low-frequency ERW. Even in 2011, the existing standard required immediate repair based on ASME/ANSI B31.8S. But that standard only references seams formed by low-frequency ERW. The 2016 proposed rule said the same thing, so no upgrade in the standard.
But by the time the final standard came out in 2022, it required immediate repair where there is metal loss along a seam created by either high-frequency or low-frequency ERW, if the pipe is expected to fail at a certain pressure. The inclusion of high-frequency ERW was new and added potential costs, which PHMSA did not calculate. Again, the court said the record failed to demonstrate “a reasoned determination.” UI
