December 2024 Vol. 79 No. 12
Washington Watch
FERC rejects effort to regulate Williams’ gathering line
By Stephen Barlas, Contributing Editor, Washington, D.C.
(UI) — The Federal Energy Regulatory Commission (FERC) just gave a big boost to interstate pipelines that are considering new connections between shale fields and customers. Its decision at the end of September was a victory for The Williams Companies, which had been targeted by Energy Transfer LP, in this instance a pipeline route competitor, who argued Williams’ Louisiana Energy Gateway (LEG) project was an interstate pipeline and had to be regulated by FERC. Williams argued the LEG was a gathering line and outside FERC’s jurisdiction.
The LEG System will bring shale gas production from the Haynesville Shale, Tuscaloosa Marine, Austin Chalk and surrounding production regions to downstream transmission systems and Gulf Coast markets. It will originate in east Texas and extend into Louisiana.
Energy Transfer argued the length and diameter of portions of the LEG system are longer and greater than what the commission typically considers to be gathering facilities. In its order denying the ET petition, FERC stated facilities that are as large as typical transmission lines may be found to be gathering when other primary function factors demonstrate characteristics consistent with gathering. That was the case with the LEG system, FERC decided.
ET owns and operates the Gulf Run pipeline system which Williams’ LEG system will directly compete with.
After the FERC ruling, Williams issued a statement saying, “With this ruling, Williams continues to prevail against Energy Transfer’s efforts to hinder the development of our project. Williams is investing significant resources in Louisiana to support growing demand for low-cost, reliable and clean natural gas and LNG, and we look forward to putting our LEG project into service by the second half of 2025.”
In a blog post, Van Ness Feldman LLP, which represented Williams at FERC, wrote: “Williams’ victory…provides a greater degree of certainty to industry as gathering companies contemplate new projects to gather gas from burgeoning shale formations. The Order indicates that FERC is likely to continue to apply its primary function test flexibly in future proceedings, recognizing the changes that are occurring in natural gas production and gathering as a result of the shale gas revolution. As such, the Order may reassure developers of other large, high-pressure systems that gather gas from shale formations that their facilities are non-jurisdictional.”
FERC has developed tests to determine which facilities are non-jurisdictional gathering facilities and which facilities are jurisdictional transmission facilities. The Commission relies on the “primary function test,” which considers the physical and geographical attributes of a facility. These include the length and diameter of the pipeline, the facilities’ geographical configuration, the extension of the facilities beyond the central point in the field, the location of compressors and processing plants, the location of the wells along all or part of the facility, and the operating pressures of the pipeline.
Energy Transfer argued the LEG flunked those tests because its Juniper South section will extend 110 miles and be 42 inches in diameter. Williams claimed that the significant size and output of production areas to be crossed by the LEG System support the need for large-diameter gathering facilities. Regarding the Juniper South segment, Williams asserts that its 110-mile, 42-inch-diameter pipeline is similarly dictated by the region’s large current and expected production, not only from the Haynesville Shale but also from the Austin Chalk and Tuscaloosa Marine Shale production areas.
Environmentalists Temporarily Stop Construction of Tennessee Pipeline (subhed)
Environmental opposition continues to bedevil proposed pipeline projects, both at the state and federal level. Kinder Morgan’s Tennessee Gas Pipeline Company LLC’s Cumberland Pipeline project is the latest poster child. It suffered a setback at the U.S. Court of Appeals for the Sixth Circuit (it sits in Cincinnati, Ohio) and a renewed challenge in front of the U.S. Court of Appeals for the District of Columbia.
The Appeals Court in Tennessee paused the Tennessee Department of Environment and Conservation’s order issuing a water quality certification and the construction permit from both Tennessee and the U.S. Army Corps of Engineers.
That court sounded less than certain that its concerns would be a long-term problem for the 32-mile Cumberland pipeline, which will bring natural gas to a Tennessee Valley Authority electric generating facility switching out of coal.
The Court wrote in its decision: “In granting these stay requests, we are mindful that further consideration by the Court may yield additional insights which cast doubt on our initial view. Accordingly, to provide sufficient time for this Court to consider the merits of these petitions, we grant Petitioners’ motions for stay pending review.”
“At the moment, the next steps are all legal,” stated Eric Hilt, spokesman at the Southern Environmental Law Center (SELC), which is one of the environmental groups opposed to the Cumberland project. “The Sixth Circuit will hear oral argument in the 401 and 404 cases in December. We’ve also challenged the FERC approval in the D.C. Circuit and briefing is underway.” Sections 401 and 404 are requirements in the Clean Water Act.
SELC Senior Attorney Jamie Whitlock said, “These water permits for the pipeline were rubberstamped and ignore the long-lasting harm construction of this pipeline will cause.”
“We do not agree with the court’s temporary stay and are evaluating our options to ensure this project can be constructed in a timely manner,” Kinder Morgan said after the Sixth Circuit’s decision. “TGP’s project is critical to support the retirement and conversion of coal-fired power generation in Tennessee to natural gas-fired power generation, which the Federal Energy Regulatory Commission concluded will result in a net reduction of greenhouse gas emissions at the state and national levels.”
The environmentalists’ case at the Washington Federal Appeals Court, filed in April 2024, has to do with allegations that FERC did not consider all allegedly negative climate-change issues when approving the project in January 2024. More specifically, the court continued its thread from recent past decisions refusing to tote up the impact of greenhouse gas emissions because it did not have an agreed-up method for doing so.
That refusal did not sit well with environmentalists, who have repeatedly challenged that contention in a number of recent projects both at the commission and the DC Appeals Court, with generally limited amounts of success, as was the case here.
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