Source: Natural Gas Week, December 21, 2020
Momentum appeared to build last week for two stalled Appalachian pipeline projects after an eleventh-hour push from the gas-friendly administration of President Donald Trump. But their paths to completion stand to get rockier once Democrat Joe Biden takes the reins Jan. 20.
Mountain Valley Pipeline (MVP) appeared to scale an important hurdle when the US Forest Service issued a supplemental environmental review of the project, without which developer Equitrans Midstream can not cross a 3.5-mile stretch of the Jefferson National Forest. Then on Thursday, the Federal Energy Regulatory Commission (FERC) lifted a stop work order for 17 miles of pipeline right of way that includes the forest, saying MVP had shown resuming work would not cause harm.
Meanwhile, the Department of Justice (DOJ) is preparing to weigh in on behalf of PennEast Pipeline in its legal imbroglio with the state of New Jersey.
But any action by the current administration at this late stage could come to naught, ClearView Energy Managing Director Christi Tezak told Energy Intelligence.
“We think it is possible, but not necessarily probable, that the incoming Biden administration could act to suspend these permits [for MVP] if they are issued in the waning hours of the outgoing Trump administration,” she said. “And we’d disagree that the outgoing administration can do much for PennEast.”
While this last major permit outstanding for the 92% complete MVP project is likely to be issued before Biden’s inauguration, Equitrans still has much to fear from the progressive wing of the Democratic Party, which will pressure the incoming administration to have it vacated, Tezak said.
However, “since the pipeline is largely complete, overt executive action may not be in the offing. The new administration may leave it up to the courts to decide the pipeline’s fate.”
Equitrans spokeswoman Natalie Cox told Energy Intelligence that “we do not believe there will be any substantial impacts to our business with a change in administration. The incoming administration has acknowledged that natural gas is needed as part of the transition to a lower-carbon economy and is also needed to span renewables.”
MVP, possibly the last major greenfield pipeline that will be built in the Northeast, is also vital if Appalachian E&Ps are to expand gas production as it would provide major egress to growing Southeast markets.
SCOTUS Case Looms
As for PennEast, the DOJ waited more than five months after the US Supreme Court requested the Solicitor General’s view on a September 2019 ruling by the US Court of Appeals for the Third Circuit. The lower court found that eminent domain authority under the Natural Gas Act does not apply on state lands, which would prevent PennEast from condemning New Jersey land along the pipeline’s right of way.
While Tezak expects the Supreme Court to hear the case, it will not be the “quick action” PennEast had sought when it originally urged the court to review the case before adjourning Jun. 30. Now the DOJ’s months-long delay in responding to the justices will likely result in a decision by next Jun. 30 instead — five months into Biden’s term.
“We expect the [Supreme] Court to hear the case, but the DOJ offered a jurisdictional argument [that] has the potential to prolong uncertainty versus a clear resolution,” Tezak said in a report earlier this month.
PennEast has already bowed to an inevitably long delay in clearing up the complicated legal battle, and MVP could follow suit, East Daley Director Matt Lewis told Energy Intelligence.
Last January, PennEast petitioned FERC to sever the 120-mile project into two phases (NGW Nov.16’20). Phase 1 would involve 68 miles within Pennsylvania, which would deliver around 650 million cubic feet of gas into the Columbia Gas system — more than half of PennEast’s planned 1 Bcf/d capacity.
Phase 1 still needs approval from the Delaware River Basin Commission, a quasi-federal regulatory body that governs the river systems in Delaware, New Jersey, Pennsylvania and New York.
As for MVP, Lewis noted — and Equitrans’ Cox confirmed — that the pipeline is likely to adopt a similar solution, concentrating on its route within West Virginia that could take half its planned 2 Bcf/d capacity to an interconnect with the Columbia Gas system near the West Virginia-Virginia border.
While few see any portion of MVP being canceled at this stage of development, greens have successfully challenged flawed permitting to an extent that Equitrans recently pushed back operations until the second half of 2021 (NGW Nov.9’20). Still, it’s hard to say just when it will fully open, Lewis said, especially if Virginia’s regulatory bodies become less malleable as the state trends blue.
ESA Rule Tweaked
In another administration action that would more generally ease gas pipeline permitting, the US Fish and Wildlife Service (FWS) is changing how it defines “critical habitat” as an area that currently or periodically has conditions that could host wildlife protected under the Endangered Species Act (ESA). But it eliminates areas in which a species is not yet present.
Requirements to protect the habitats of endangered or threatened species have dogged energy developers in recent years, such as sage grouse protection throughout its range in the gas-rich Rocky Mountain West. For pipelines, the FWS has to permit a project’s path with an eye on ESA requirements — a consideration at the heart of the supplemental environmental review the Forest Service issued for MVP.
ESA compliance will also be a major focus of legal challenges sure to come against the supplemental review. And it would take time for an incoming Biden administration to reverse the rule change, which the FWS initiated in 2018.
Potentially the most important change for pipelines under Biden — establishing a Democratic majority on the five-member FERC — will have to wait until one of the Republican commissioners’ term expires in late June. In the meantime, Biden can name one of the current Democratic commissioners, Allison Clements or Robert Glick, as FERC chair.
Glick is an outspoken proponent of FERC weighing indirect emissions — for example, the carbon dioxide released when the gas flowing through a proposed gas pipeline is consumed — and has consistently voted against pipeline approvals on those grounds. If he is named chairman, it will be a strong signal from the incoming administration about the direction FERC will take on this issue.
Biden said during his campaign that he would ensure every federal infrastructure decision considers lifecycle greenhouse gas emissions, but it’s unclear how high of a bar he would set on those grounds. Conceivably, it could mean more gas pipelines are rejected or not given the necessary permits.
On the other hand, the Biden administration may simply require pipeline projects to take stronger mitigation steps, such as using better leak control tools.