Atlantic Coast Pipeline Necessity and the FERC – Bacon’s Rebellion

by James C. Sherlock

Peter Galuszka’s piece earlier today in this space made two claims the greens offer endlessly trying to achieve what I call truth by repeated assertion:

  1. The Federal Energy Regulatory Commission (FERC) either did not review or did not review properly (he inferred both) the wisdom and necessity for natural gas pipeline projects in general and the Atlantic Coast Pipeline (ACP) in particular.
  2. That if it had done so, the FERC would have discovered that there is no market for additional natural gas in the markets to which the pipelines would have brought it.

These claims appear from the usual sources every time any discussion of the ACP is had on this blog. They are both false. I hope this is the last time we will need to read about them.

Mr. Galuszka clearly did not understand the facts.

He wrote:

“So Dominion and its partners could make billions of dollars, some of it paid for by electricity ratepayers, for a project whose public need was always in doubt”

and

“Change the Federal Energy Regulatory Commission so it has to really look at whether a project before it has an economic purpose.”

Sorry to break the news, but Certificates of Public Convenience and Necessity are required from the FERC for all new pipeline routes. And all of the money spent was that of the investors. That is why Dominion pulled out. Both the timeline and the costs were unconstrained and thus incalculable.

I quote from 15 USC 717f: Construction, extension, or abandonment of facilities.

“(e) Granting of certificate of public convenience and necessity
Except in the cases governed by the provisos contained in subsection (c)(1) of this section, a certificate shall be issued to any qualified applicant therefor, authorizing the whole or any part of the operation, sale, service, construction, extension, or acquisition covered by the application, if it is found that the applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of this chapter and the requirements, rules, and regulations of the Commission thereunder, and that the proposed service, sale, operation, construction, extension, or acquisition, to the extent authorized by the certificate, is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied. The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.”

So, it can’t be existing law to which Mr. Galuszka objects.

Atlantic Coast Pipeline LLC applied to FERC on Sept. 18, 2015, to construct and operate the project. It filed an amended proposal six months later which proposed several route changes and additional compression capacity in Buckingham County.

The FERC approved a certificate of public convenience and necessity for the proposed Atlantic Coast interstate natural gas pipeline project on Oct 13, 2017 — 18 months after the receipt of the revised submission.

So, it can’t be a lack of consideration of necessity for the ACP to which Mr. Galuska objects.

In Mr. Galuszka’s Washington Post article which he referenced, he wrote:

“Greg Buppert, a lawyer with the Charlottesville-based Southern Environmental Law Center, which led the legal fight, notes that FERC does not consider whether an entity seeking its approval is in the public interest or has a real market for its products.”

Now Mr. Buppert can say whatever he wishes but that does not make it true. In this case, it is utterly false. If the Post had put an editor on this piece and fact checked it, that statement would not have been included.

FERC’s three commissioners acknowledged the need for more gas in Virginia and North Carolina. Even the dissenting Commissioner noted that more than 90% of the ACP’s capacity was subscribed by public utility customers in the two states.

So, all three acknowledged that there was a market for the gas.

Mr. Galuszka also wrote:

FERC has met few projects it didn’t like. It usually needs just proof of a contract. In the ACP case, that was a contract between ACP and its partners and their own subsidiaries. Does someone smell rotten eggs?

So, the contention is that the investors in a pipeline to bring additional supply to an area of need cannot include the very utilities who plan to sell that gas to their customers. Seriously? That is ridiculous.

Somewhere in this pile of words is the notion that gas utilities would spend $8 billion of their own money for a pipeline to bring additional gas to a region that didn’t need it and in which they thus couldn’t sell it. Equally ridiculous.

I seriously wish that opponents of natural gas would just say that they are opposed to the use of natural gas. That is a simple and true statement.

Saying the FERC regulatory process is either non-existent (see above) or rigged (ditto) — which is it? — because the author doesn’t like its outcome is demonstrably wrong. It is also irrelevant.

What none of the greens mention is that it is utter misuse of the original National Environmental Policy Act of 1970 (NEPA) that blocks not just energy projects like pipelines but any infrastructure project of any scale anywhere in the country with which the greens disagree.

Remember when President Obama reported discovering that there was no such thing as a “shovel ready” project? It was NEPA to which he was referring. His community organizer background did not prepare him for the realities of NEPA.

From Richard A. Epstein in the Wall Street Journal this morning:

“The endless rounds of NEPA reviews led to the abandonment of the Atlantic Coast Pipeline this month before construction could begin.”

“As drafted, NEPA was intended to invite all segments of the public to submit comments to improve decision making. But in 1971, in Calvert Cliffs’ Coordinating Committee v. U.S. Atomic Energy Commission, the U.S. Circuit Court of Appeals for the District of Columbia invited a flood of new litigation by holding that any disappointed party may challenge an agency approval in federal court. Even if the bulk of informed opinion supports a new project, an extreme outlier can sue to stop it. NEPA includes no provision establishing a private right of action, but the practice has become so ingrained that it can’t be undone by regulation.”

It will take a Congressional revision to NEPA to do that. And that is not going to happen in the near future.

So, I beg you greens, spare us the hand wringing and false claims about both the need for more natural gas and the processes of the FERC.

You simply don’t want customers to use natural gas. That is both straightforward and true — and entirely your prerogative in a free country.

Greens can be assured that a FERC approval will be rendered moot by NEPA lawsuits every time they put enough of their billionaires’ money on the line to pay lawyers.

Like in the case of the ACP.

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