FERC Tactics: To Pre-file or Not to Pre-file? That is the Question.
Despite over a decade passing since the introduction of the pre-filing process at the FERC, it is still a point of contention for developers -- and a topic currently being considered in the Commission's review of its Certificate Policy Statement. While those developers intending to construct LNG facilities are required to pre-file, those that intend to construct non-LNG facilities, i.e., the large majority of FERC-regulated applicants, do have the option to pre-file, which involves communicating with the FERC prior to the filing of the application for the Certificate of Public Convenience and Necessity. Although the process is intended to raise potential issues about a project early in the process, preventing roadblocks and expediting review, some developers hold that pre-filing, in fact, increases review time. Is that the case? Considering the wide breadth of potential project characteristics, it is hard say what kind of impact pre-filing may have with just a passing glance.
What Happens During Pre-filing?
During pre-filing, the applicant hosts open houses to provide the public with a forum to review and comment on the project's scope. In addition, the FERC holds scoping meetings and site visits in the proposed area and begins engaging with relevant federal and state agencies. Had the applicant not chosen to engage in pre-filing review, the FERC would hold these meetings after the submission of the Certificate application. And public comments would be solicited throughout the Certificate review process, following the issuance of an environmental report and the Certificate.
There are currently nine pre-filed projects, three of which are LNG projects. The final rule resulting from the FERC's 2005 rulemaking requires potential developers of new LNG terminals to initiate pre-filing procedures at least six months prior to filing a formal application with the Commission. However, the rule also establishes mandatory pre-filing procedures for all applicants seeking to site, construct and operate related facilities, such as pipelines that would transport the revaporized LNG to markets across the U.S. As a result, everything from expansions of existing terminals to the construction of pipelines is subject to pre-filing.
What's the Problem?
A few interconnected factors to consider include the geographic breadth of the project and its environmental review. Whether an environmental assessment (EA) or an environmental impact statement (EIS) is required is related to the scope of a project's impact on the environment. As a result, projects that are larger in scope and include many miles of pipeline and various facilities are more likely to be subject to a more extensive environmental review -- an EIS. Due to the complexities of these projects, developers with such proposals are encouraged to enter pre-filing review.
Perhaps not surprisingly, the applicants that choose to subject their projects to pre-filing review experience longer environmental review, measured as the time from the Certificate application to the issuance of the environmental report. After all, these projects are likely more involved. But, more interestingly, these projects are also subject to more revisions to the scheduled issuance of the environmental report than those that are not pre-filed.
During the course of environmental review, the FERC issues a Notice of Schedule for Environmental Review, which provides the date the FERC intends to issue the EA or EIS, indicating the completion of environmental review. These notices may be revised to reflect a change in the date. In recent years, the FERC has revised these notices more frequently. Revisions, or other delays in the issuance of the environmental report, suggest that analysis has been delayed due to a lack of clarity or unresolved issues, the very problem that pre-filing was intended to eliminate.
Environmental Review Time
Based on our analysis of data across projects, there is no statistically supported evidence that pre-filing leads to a reduction in Certificate review time. In fact, while the median review time is eight months, there is a significant variance. Does that mean project developers should not pre-file? Well, that depends on the kind of project a developer intends to construct. Perhaps only particular types of projects, or those within more contentious regions, or those with specific types or quantity of data requests, are subject to revisions. LawIQ is here to inform these types of questions so that you can move forward with the best plan in place.
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