October 2023 Vol. 78 No.10

Washington Watch

Biden administration wants to count downstream GHG emissions when FERC considers pipeline, power projects

Stephen Barlas | Washington, D.C. Editor 

(UI) — The President Biden administration announced its latest effort to throw a wrench in pipeline construction. The Biden Council on Environmental Quality (CEQ) wants to rollback Trump administration pro-pipeline changes to the National Environmental Policy Act (NEPA).

The NEPA changes sought by CEQ would negatively affect construction of electricity transmission lines and other power distribution projects, too. But in its recently proposed “Phase 2” reform proposal, CEQ said it wants to make it more likely that a federal agency performs an environmental impact statement (EIS) and cites the natural gas industry specifically. 

“For example, leases for oil and gas extraction or natural gas pipelines have local effects, but also have reasonably foreseeable global indirect and cumulative effects related to GHG emissions,” the CEQ said, arguing those emissions can be significant and have not been accounted for in the past nor triggered Environmental Impact Statement studies. 

The Federal Energy Regulatory Commission (FERC) does not consider global and cumulative GHG emissions when considering new project applications. 

Chad Teply, senior vice president-transmission and Gulf of Mexico, The Williams Companies, explained to the Senate Committee on Energy and Natural Resources on July 26 how New York State refused to issue a permit under section 401 of the Clean Water Act. This wore down the company’s will to build the 124-mile Constitution Pipeline, which FERC had approved. 

“Although, FERC later ruled that New York’s denial came too late and New York’s authority had been waived, the time spent litigating the denial ultimately doomed the project,” Teply said. NEPA often requires states to issue 401 permits when pipelines cross bodies of water. 

The Senate hearing was called by the committee chairman, Sen. Joe Manchin (D-W.V.), to explore potential energy permitting regulatory improvements beyond those Congress passed in the 2023 Fiscal Responsibility Act (FRA). That bill included mostly procedural changes to NEPA that Teply, echoing the Interstate Natural Gas Association of America’s (INGAA) position, called a first step. 

Manchin’s hearings were meant to generate bipartisan support for easing NEPA regulations beyond what was approved in the FRA. But as if it were rebuffing Manchin’s efforts, the Biden CEQ on July 31 – two days after the Senate hearings – said it was going in the opposite direction. It issued its proposed “Phase 2” NEPA rule, which followed its “Phase 1” rule in April 2022, when it reversed three specific provisions in the prior Trump-era 2020 rulemaking. 

“In stark contrast to the measures aimed at promoting efficiency, the proposed Phase 2 rule includes numerous features that are more about imposing substantive requirements in what is intended to be a procedural statute,” wrote the law firm Vinson & Elkins. 

Many of the changes are highly technical. One has to do with whether a proposed project is deemed “significant” or not. That decision by a federal agency, such as FERC, determines whether the agency does a limited “environmental assessment” or a full-blown EIS. An EIS can take years and serves as a moving target for environmental groups who often file lawsuits to delay a project. 

In its “Phase 2” proposal, CEQ wants to make it easier for an agency to come to a “significance” decision. It argues that the Trump changes here narrowed the potentially affected environment, by focusing significance on physical, ecological and socio-economic aspects of the environment, “usually” in the “local” area. CEQ throws the Trump narrowing of “significance” out the window calling it “overly limiting.” 

Instead, it says agencies must look at the “affected environment,” which can include the global, national, regional and local environment. It then cites the natural gas industry, where project GHG emissions should be measured and accounted for on a much broader scale than is currently the case. 

Teply told the Senate committee that permitting challenges must be decreased, not increased. He did not address the CEQ “Phase 2” proposal, which had not been issued yet. He did, however, say Williams –as is true for most, if not all, of the interstate pipeline industry – supported Sen John Barrasso’s (R-Wyo.) Spur Permitting of Underdeveloped Resources (SPUR) Act. Barrasso is the top Republican on the energy committee. 

To address state agency legal attempts to block pipelines like Constitution and Mountain Valley, the bill requires a reviewing court to remand any federal or state agency denial of a permit for an interstate pipeline project if the denial is not supported by clear and convincing evidence. 

Regarding refusals to approval section 401 Clean Water permits, the bill brings state reviews of interstate natural gas projects into the FERC-led NEPA environmental review process and removes them from the Section 401 process. Other intrastate activities that require federal permits and authorities remain subject to Section 401. 

Again, while the changes had not been announced when the Senate hearings took place, testimony at those hearings from representatives of the electric power and alternative energy industries seemed to downplay concern about permitting lawsuits. 

If opposition to the Biden NEPA changes is something less than energetic, that will leave the pipeline industry to carry water by itself. This will be a heavy political lift, especially given a unified environmental industry support for the Biden-proposed changes. 

Proposed PHMSA leak detection changes run into pipeline opposition 

While CEQ’s proposed NEPA changes would affect how all federal agencies review potential GHG emissions for various industry energy construction projects, the Pipeline and Hazardous Materials Safety Administration (PHMSA) wants to restrict methane emissions for already-installed pipelines, as well as new ones. PHMSA issued a proposed rule in July implementing a couple of key sections in the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020. 

A host of provisions in that proposed rule included strengthened performance standards for advanced leak detection programs, leak grading and repair criteria with mandatory repair timelines, and requirements for mitigation of emissions from blowdowns. 

PHMSA would give the industry six months to comply with the new control requirements. INGAA says the industry would need three years to assess numerous considerations prior to purchase or rental of temporary compression units, such as mechanical capability, infrastructure siting, air compressor or compressor power, and much more. 

INGAA estimates that the costs for gas transmission operators to comply with these new proposals will range between $228 to $516 million annually. It maintains these cost totals are a stark contrast to PHMSA’s assumption of $14.9 million per year. 

It comes as no great surprise that pipeline groups are now complaining the proposal went too far in numerous places, and environmentalists are arguing it did not go far enough in a couple of places. 

A key area of disagreement is how far PHMSA should be able to go beyond addressing public safety concerns, the agency’s traditional mandate, to trying to also address environmental concerns. The 2020 law gives PHMSA a bit of leeway here. 

Where PHMSA deploys this latitude is the part of the proposal that sets out how a pipeline operator should handle blowdowns or venting for scheduled repairs, construction, maintenance and operations tasks. Flaring is one option which PHMSA, with the support of environmental groups, is trying to limit as opposed to venting. 

The Environmental Defense Fund, for example, says while flaring is clearly preferable to venting gas, it should only be used as a last resort to reduce emissions, after other options to reduce gas releases during blowdowns and similar processes have all been fully utilized. 

It argues PHMSA should strengthen its proposal to clearly require that operators use as many of the non-flaring methods as are applicable in each situation to reduce the volume of gas released to the greatest extent possible, and then utilize flaring to reduce emissions from the residual gas release. 

PHMSA proposes six methods pipelines may use to reduce the release of gas to the environment: 

  • Isolate the smallest section of the pipeline needed to complete the task 
  • Route gas from the nearest isolation valve or control fitting to a flare as fuel gas 
  • Reduce the pressure by using in-line compression 
  • Reduce the pressure by using mobile compression 
  • Transfer the gas to a segment of a lower pressure pipeline system adjacent to the nearest isolation valve 
  • Employ an alternative method that will result in a release volume reduction of at least 50% compared to venting gas directly to the atmosphere 

INGAA responds that restricting flaring increases methane emissions. Flaring can reduce the effect of emissions on climate change by up to 25 times. If operators were to flare instead of venting, with 95-percent flare efficiency, the industry would reduce the global warming potential of the emissions by almost 91%.

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