FERC Pushes Back on Rover July In-Service
On Monday, the Ohio EPA announced that it was taking the unusual action of issuing a "unilateral" order to Rover requiring Rover to take a number of remediation actions with regard to past violations of Ohio's water quality standards. While Rover has indicated that it is continuing to work with the Ohio EPA, the Director of the Ohio EPA indicated that Rover was "stiff-arming" the Ohio EPA. And late today, the FERC issued a letter to Rover that specifies certain mitigation measures that FERC will require before allowing Rover to place any facilities into service. The mitigation measures that FERC is requiring appear to implement some of the requirements found in the Ohio EPA's unilateral order. The FERC letter creates a substantial risk that Rover will be unable to satisfy the conditions quickly enough to allow FERC to authorize Rover putting any portion of its pipeline into service by the end of July.
As we explained in our June 2 Special Report, Rover's July In-Service Date Further at Risk, following an unprecedented joint statement on June 1 by the two FERC commissioners, the in-service request by Rover could be held up until Rover convinced FERC that it has remediated the harm caused by the inadvertent releases at the Tuscarawas River. The letter issued today by FERC Staff is a clear indication that in the continuing dispute between Rover and the Ohio EPA, the FERC Staff is generally supporting the positions taken by the Ohio EPA.
The requirements set out today by FERC include two conditions that require physical activities to be completed, namely, the removal and disposal of all drilling mud and drill cuttings with the presence of petroleum hydrocarbons from the Oster Sand and Gravel Disposal Pit and the
Beach City Quarry; and the removal and disposal of all drilling mud and drill cuttings from the Tuscarawas Horizontal Directional Drill (HDD) site. The additional two conditions require FERC to develop plans and have them approved by FERC: a remediation and restoration plan for the Tuscarawas River wetland, and a water quality monitoring plan for water wells in the vicinity of the Tuscarawas River HDD site, the Oster Sand and Gravel Disposal Pit, and the Beach City Quarry.
It is unclear how quickly Rover will be able to complete both the physical activities and the proposed plans and have them approved by FERC. It is also reasonable to assume that FERC may feel the need to consult with the Ohio EPA regarding the adequacy of any of the plans submitted by Rover. If all of that work cannot be completed by the end of July, then Rover will likely not be allowed to put any of its facilities into service by that date.
It should also be noted that today's FERC letter makes it clear that the initiation of future HDD activities remains suspended. The letter explains that work has been progressing on the review undertaken by FERC's third party contractor and that FERC anticipates developing protocols to prevent future drilling mud contamination. To that end, FERC notes that it needs to gain at least a preliminary understanding of the underlying causes for the presence of petroleum hydrocarbons in the drilling fluid at the HDD of the Tuscarawas River. FERC expressed its concern regarding the progress of the third party review, noting that Rover's personnel are "delaying our [FERC's] ability to determine the relevant facts" related to the presence of hydrocarbons in the fluid.
In conclusion, FERC notes that once its contractor concludes its review, FERC will then request that Rover address the findings of the contractor's report in a written submission to FERC. The timing and the actual findings of that letter will be a good indicator as to whether the November 1 in-service date for Phase 2 of the project will also be put at risk.