November 2020 Vol. 75 No. 11

Washington Watch

FERC Wants One-Year Limit on State Consideration of Water Quality Permits

The Federal Energy Regulatory Commission (FERC) plans to apply to transmission pipelines the new Federal Clean Water Act requirement limiting state challenges to construction projects in and around wetlands. 

In September, FERC proposed a rule affecting pipelines, per a general Environmental Protection Agency (EPA) rule finalized in June 2020. That rule gives states and localities one year to decide on a company’s water certification application for a construction project. If the state agency does not act one way or the other in one year, the federal permitting agency – whether the Army Corps, FERC, Coast Guard or any other – is able to move forward on the project. 

The Clean Water Act’s section 401 gives states broad authority to ensure that large, federally approved projects will meet local water quality standards, pollution limits and other requirements. Through these certifications, states have required that federal dams preserve stream flows necessary for fish and aquatic life; that roads and other projects avoid, minimize and mitigate destruction of marshes and wetlands; and that industrial pollution sources, and oil and gas pipelines control runoff and other harmful water pollution. 

Several environmental groups filed lawsuits against the EPA rule, which theoretically went into effect on Sept. 11, 2020. One filed by the Southern Environmental Law Center included as plaintiffs, the National Resources Defense Council (NRDC). A former NRDC staffer was recently nominated to fill one of two open commissioner’s slots at FERC. Mark Drajem, a spokesman for the NRDC, said the group is “taking a look at” FERC’s proposed rule. 

A second lawsuit was filed by Earthjustice on behalf of a number of American Indian nations. In its protest, Earthjustice complained the EPA relied heavily on FERC actionswrongly, Earthjustice alleged in arguing the positive merits of diminishing state and local authority over construction approval in wetland areas.  

Writing to the EPA in the wake of publication of its Section 401 proposed rule, Earthjustice commented, “Indeed, for gas pipelines under the jurisdiction of the Federal Energy Regulatory Commissionwhich constitute three of the four case studies EPA cites in support of the proposed ruleCongress recently and explicitly affirmed the primacy of state and tribal Clean Water Act authority over these projects.” 

The EPA’s grant of prominence to FERC in its rationale for the Section 401 final rule makes it likely that opponentsincluding Earthjustice and the NRDCwill now transfer that opposition to FERC’s proposed rule.  

Being a federal permitting agency, FERC requires state water quality certifications. Prior to the EPA final rule, FERC rules declared a state has “a reasonable period of time” to issue a water quality certification. The Commission’s regulations establish for hydroelectric projects a categorical “reasonable period of time” of one year, which was also considered applicable for pipeline projects. However, it was never a legal requirement. That is what FERC wants to change in defining one year “as a reasonable period of time” for gas transmission projects.  

New York State’s refusal to issue a water quality certification for Williams’ proposed Constitution pipeline, first approved by FERC in 2014, was a high-visibility example of a state starting the one-year timetable, then stopping and restarting it again, when asking Williams for more environmental information.  

Cancelled in February 2020, the Williams pipeline would have bought fracked gas from the Marcellus shale area to New York City.  

“Defeating the Constitution Pipeline is an enormous victory for advocates who have been fighting for eight years to protect New York State and its waterways,” said Earthjustice staff attorney Moneen Nasmith in a statement. 

Interstates Worry About Having to Inspect Farm Taps (subhed) 

Will transmission pipelines now have to worry about complying with distribution pipeline regulations in addition to their own? That is the concern with one of the key provisions in a proposed rule from the Pipeline and Hazardous Materials Safety Administration (PHMSA).  

The proposal includes a number of very technical changes to rules aimed at, according to the agency, easing “regulatory burdens on the construction, operation and maintenance of gas transmission, distribution and gathering pipeline systems.” 

Concerning interstate pipelines is the provision involving “farm taps,” individual service lines directly connected to transmission or regulated gathering lines.  

In 2017, PHMSA eliminated farm tap inspection from the Distribution Integrity Management Program (DIMP) and essentially added it to a new rule called “Pressure regulating, limiting and overpressure protectionIndividual service lines directly connected to production, gathering, or transmission pipelines.”  

Within this rule was a new amendment applying to plastic pipe which, according to TC Energy, caused lines that had historically been considered “transmission” to be reclassified as “service,” or distribution, lines. 

The new, proposed rule attempts to better define where farm taps begin, ostensibly to respond to distribution pipelines’ requests for regulatory relief on farm taps for a number of years. But in doing so, PHMSA creates new regulatory responsibilities through language about where the farm tap begins, according to who is the “operator of the pressure regulating/pressure limiting/overpressure protection equipment.” 

As a result, the operator will be the transmission pipeline in some instances, meaning while it will not have to develop a DIMP plan for those sections, it will have to comply with DIMP requirements. TC Energy, in comments submitted to PHMSA, suggested that rather than defining where the “service line” starts for farm taps, PHMSA should describe them as “pipelines” instead of “service lines.” The company added,  

“Not only would these changes resolve the difficult problem of identifying a universally acceptable starting point for a service line,” the company added, “it would eliminate concerns regarding interstate transmission operators having to comply with requirements pertaining to distribution lines, and allow continued classification of pipelines under current definitions.” 

Additional comments submitted by industry groups, including INGAA, claimed, “It is impracticable and unrealistic for PHMSA to prescribe that distribution service line piping begins at the exact same point for every farm tap.”  

Among the potential unintended consequences of the provision, the commenters pointed out that the transmission operator would be required to odorize the small amount of piping between the first regulator and the custody transfer point. 

“Where farm tap piping is already being odorized downstream, installing upstream odorization adds no safety benefits and creates practical challenges associated with installing the new equipment and ensuring the correct level of odorant,” they wrote. 

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