Natural Gas Pipelines

Technical Conference Sparks Debate Over FERC’s Legal Authority to Consider Greenhouse Gas Emissions in Pipeline Certification Review

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On November 19, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) convened a Staff-led technical conference to discuss methods natural gas companies may use to mitigate the effects of direct and indirect greenhouse gas (“GHG”) emissions resulting from pipeline construction and expansion projects that are subject to Natural Gas Act (“NGA”) sections 3 and 7 authorizations by FERC (the “Conference”). The Conference included three panel discussions:  1) The Level of Mitigation for a Proposed Project’s Reasonably Foreseeable Greenhouse Gas Emissions; 2) Types of Mitigation; and 3) Compliance and Cost Recovery of Mitigation.

One of the threshold questions posed by the Commissioners, and a recurring theme throughout the conference, was whether FERC has the legal authority to consider GHG emissions as part of its certification process. Chairman Richard Glick asserted that FERC has authority to mitigate GHG emissions and that doing so will provide greater certainty for the industry, and expressed concern regarding FERC’s handling of the issue to date, given the flurry of recent decisions

FERC Staff Recommends Natural Gas Infrastructure Winterization Measures in Light of 2021 Extreme Winter Weather Events

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The Federal Energy Regulatory Commission (“FERC”), in coordination with the North American Electric Reliability Corporation (“NERC”), presented its preliminary findings and recommendations at FERC’s Open Meeting on September 23 regarding its inquiry into the February 2021 Cold Weather Event in the Electric Reliability Council of Texas (“ERCOT”), Southwest Power Pool, Inc. (“SPP”), and Midcontinent Independent System Operator, Inc. (“MISO”).

The February 2021 Cold Weather Event occurred from February 8 through 20, 2021, during which large numbers of generating units experienced outages, derates, or failures to start, resulting in energy and transmission emergencies. The power outages affected millions of customers throughout the ERCOT, MISO, and SPP regions. On February 16, 2021, FERC and NERC announced a joint inquiry to examine the root causes of the event.

The preliminary findings indicate that a majority of the unplanned generating unit outages, derates, and failures to start were due to natural gas fuel supply issues. The major causes of the decline in natural gas

Government Races to Secure Critical Infrastructure in Wake of Colonial Pipeline Ransomware Attack

One of the nation’s largest pipelines, Colonial Pipeline, which carries 45 percent of the East Coast’s fuel supplies, was forced to shut down on May 7 after it was targeted by a ransomware attack. Ransomware is a type of malware where criminal groups encrypt data, effectively “holding it hostage,” until the victim pays a ransom.

Colonial Pipeline resumed operations on May 15. However, the cyberattack has sparked public panic and outcry as parts of the country experience fuel shortages and fuel prices rise to their highest levels in nearly seven years. The incident has also renewed efforts government-wide to strengthen security of U.S. pipelines and the power grid. On May 11, the U.S. House Committee on Energy and Commerce reintroduced bipartisan legislation aimed at bolstering the Department of Energy’s (“DOE”) ability to respond to cybersecurity threats to U.S. energy infrastructure. Among the several measures introduced were:

(1) The Pipeline and LNG Facility Cybersecurity Preparedness Act, which would require DOE to implement

State Climate Legislation Takes Aim at Natural Gas Industry

This is the second post in an ongoing series focused on how state and federal measures addressing climate and carbon reduction are affecting the natural gas industry. You can find the first post in this series here.

Nevada

In the latest effort to phase out or reduce the use of natural gas, a bill was introduced to the Nevada Legislature on March 23, 2021 (A.B. 380) that would set emissions reduction targets for buildings over the next 30 years to achieve a 95% decrease in emissions from buildings by 2050. The latest bill builds on Nevada’s 2019 climate strategy, which established a goal of economy-wide net-zero emissions by 2050.[1]

The bill would direct the Nevada Public Utilities Commission (“Nevada PUC”) to open an investigatory docket to examine how gas utilities can assist the state in achieving its 2050 emissions goal and how gas utilities can maintain safety standards

The Natural Gas Industry in a Climate-Focused Future: Regulators Take Action to Adapt

Introduction

Climate change policies at the state and federal levels will have significant impacts on natural gas companies and their customers.  On the one hand, there is pressure on companies to maintain safe and reliable service – on the other, the push for net-zero carbon emissions by 2050.  These competing objectives will have notable effects on how companies conduct their long-term planning to maintain system reliability while avoiding potential stranded costs and safeguarding ratepayers.  This post and subsequent updates will focus on how federal and some state regulators are addressing the issues.

Federal

The Biden Administration’s clean energy plan, which calls for a 100% clean energy economy by 2035 and net-zero emissions economy-wide by no later than 2050, has sparked an increased focus on achieving these goals. To reach net-zero by 2050, the Biden Administration plans to invest $1.7 trillion in federal funds in clean energy research and modernization, deploy zero emission vehicles across the government, and enforce

Update: First Circuit Revises Prior Decision to Vacate Air Permit in Light of Material Developments

As discussed previously in Pierce Atwood’s Energy Infrastructure Blog, on June 3, 2020, the U.S. Court of Appeals for the First Circuit vacated an air permit issued by the Massachusetts Department of Environmental Protection (DEP) for the construction of a new compressor station proposed by Algonquin Gas Transmission (Algonquin) as part of its Atlantic Bridge natural gas pipeline project and remanded the matter to the agency for further analysis.  Town of Weymouth v. Massachusetts Department of Environmental Protection, et al., No. 19-1794 (Jun. 3, 2020) (June 3 Opinion). Algonquin petitioned for panel rehearing as to the remedy only. On August 31, 2020, the Court granted Algonquin’s petition and revised its June 3 Opinion to remand without vacatur. Town of Weymouth v. Massachusetts Department of Environmental Protection, et al.No. 19-1794 (Aug. 31, 2020).

When deciding whether to vacate the agency’s decision or remand without vacating, the Court considered the “severity

Update: FERC Revises “Tolling” Order Language to Address Recent Court of Appeals Decision; Seeks Legislative Fix

As discussed previously in Pierce Atwood’s Energy Infrastructure Blog, on June 30, 2020, the U.S. Court of Appeals for the DC Circuit ruled that FERC lacks authority to issue tolling orders that postpone rehearing decisions on natural gas project orders solely to give the agency more time to consider rehearing requests and which delay opposing parties’ efforts to file appeals court challenges.  Allegheny Defense Project v. FERC, No. 17-1098 (D.C. Cir. June 30, 2020).  On July 1, 2020, the Federal Energy Regulatory Commission (“FERC”) issued its first order since the Allegheny Defense decision addressing a rehearing request that it did not act on within the 30-day statutory time period under the Natural Gas Act.

Incorporating suggestions from the court’s opinion, in Midcontinent Independent System Operator, Inc., 172 FERC ¶ 61,009 (2020), FERC issued a Notice of Denial of Rehearing by Operation of Law and Providing for Further Consideration.  That notice debuted

DC Circuit Rejects FERC’s Tolling Authority in Pipeline Certificate Proceedings

The Federal Energy Regulatory Commission (“FERC”) can no longer delay judicial review of its orders under the Natural Gas Act by issuing a tolling order that takes no action on a rehearing request other than granting itself more time to address the merits.  On June 30, 2020, the United States Court of Appeals for the District of Columbia Circuit issued an en banc opinion on rehearing denying motions to dismiss petitions for review filed with the court after FERC issued a “tolling” order extending the statutory 30-day time period for FERC to act on rehearing, but before FERC issued a rehearing order on the merits.  Allegheny Defense Project, et al. v. FERC, No. 17-1098 (D.C. Cir. Jun. 30, 2020).

Such tolling orders in pipeline certificate proceedings under Section 7(c) of the Natural Gas Act enable FERC to authorize pipeline developers to begin construction and seek to condemn construction rights-of-way by eminent domain if necessary before FERC issues a merits

FERC Declares Concurrent Jurisdiction with Bankruptcy Courts Over Rejections of Natural Gas Transportation Agreements

On June 22, 2020, the Federal Energy Regulatory Commission (“FERC”) issued an order in response to a Petition for Declaratory Order (“Petition”) filed by ETC Tiger Pipeline, LLC (“ETC Tiger”), finding that FERC has concurrent jurisdiction with United States Bankruptcy Courts to review and dispose of natural gas transportation agreements sought to be rejected through bankruptcy.[1]

The Petition, filed on May 19, 2020, requested that FERC find that it has concurrent jurisdiction with Bankruptcy Courts under sections 4 and 5 of the Natural Gas Act (“NGA”) with respect to natural gas transportation agreements between ETC Tiger and Chesapeake Energy Marketing, L.L.C. (“Chesapeake”) and that FERC approval of any abrogation or modification of the agreements is statutorily required.  Specifically, ETC Tiger requested three Commission declarations:

  1. The natural gas transportation agreements between ETC Tiger and Chesapeake are FERC-jurisdictional agreements reflecting filed rates approved by FERC pursuant to its exclusive jurisdiction under the NGA;
  2. If Chesapeake seeks rejection of the agreements

PHMSA Issues Gas Pipeline Regulatory Reform Notice of Proposed Rulemaking

On June 9, 2020, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued a Notice of Proposed Rulemaking (“NOPR”) to revise the Federal Pipeline Safety Regulations (“Regulations”) to reduce regulatory burdens associated with construction, operation, and maintenance of gas pipeline systems. The NOPR is in response to a series of executive orders (E.O. 13771, 13777, and 13783) calling on agencies to reduce or eliminate regulatory burdens. According to PHMSA, the value of the annualized cost savings associated with the proposed amendments is approximately $129 million (at a discount rate of 7 percent). The key reforms, which ease certain monitoring requirements, streamline reporting obligations, and reduce the burden on distribution pipelines associated with the Distribution Integrity Management Program (“DIMP”), are summarized below.

DIMP Requirements

PHMSA has proposed two revisions to DIMP requirements to ease the regulatory burden on gas distribution operators. The NOPR would provide operators of farm taps originating from regulated source pipelines the flexibility to choose between inspecting pressure regulators pursuant