Government Shutdown Will Impact Projects at all Stages
As we discussed in FERC Enters the Polarized Vortex - Washington Policy and Court Updat e , FERC is not immune from the polarized atmosphere here in Washington. With the record-setting partial government shutdown continuing, the uncertainty keeps increasing and will impact projects at almost every stage. Although FERC remains open for business, many of the cooperating agencies it relies on to complete environmental reviews are not open for consultation. When those agencies do reopen, the backlog will likely add to the delay as reviews of FERC projects are unlikely to be a top priority.
Equally disconcerting is the uncertainty at FERC caused by the death of Commissioner McIntyre. While Commissioner LaFleur has discounted any partisan split on the Commission which would hold up otherwise viable projects, the outward signs point to a developing problem that may not be solved until President Trump can appoint a replacement for Commissioner McIntyre, and possibly Commissioner LaFleur, whose term expires on June 30.
Whether you are interested in the in-service dates for previously approved projects, those projects that have completed their environmental review and are awaiting FERC approval, or those projects which are still under environmental review, the impact of the shutdown and the FERC having only four commissioners bears careful watching.
Potential Impact Based on Project Status
As we describe in greater detail below, the impact from these two issues, the government shutdown and the four member FERC Commission, will likely vary depending on where a project might be in its life cycle. Below, we summarize the potential impact on each type of project, with red denoting a likely substantial impact, yellow representing a moderate impact and green indicating limited-to-no impact.
Is the Government Really Shut Down?
The extent to which the government is shut down is about as complex a question as there is here in Washington. First, only certain departments are even subject to the shutdown and within those departments, only certain functions are actually shut down. So-called “excepted employees,” whose work is deemed essential, remain on the job during the shutdown, but will be unpaid, at least during the duration of the shutdown. The chart below identifies some of the key agencies involved in FERC projects and provides a brief synopsis of their status.
While FERC and the USACE are both operating, the impact of the shutdown on projects will depend on the issues that are presented in each case and the procedural posture of the case. The appeals of FERC certificates are processed by FERC lawyers, but if the courts shut down at the end of next week, those cases would not progress. In general, this should not create any issues for a project unless it is subject to a stay issued prior to the shutdown of the courts. For challenges to most other federal permits, the Department of Justice attorney is supposed to request a deferral of the case for the duration of the shutdown, as was done in the appeal of the USFWS’s biological opinion and incidental take statement issued to Atlantic Coast Pipeline. Also, if the courts shut down, the backlog could grow substantially as the courts also need to reconfigure their calendars once the government reopens.
For projects undergoing FERC environmental review, FERC Staff can continue the review process but will generally not be able to consult with most of the other cooperating agencies, other than the USACE, during the shutdown. This will almost certainly lengthen the environmental review timeline for such projects. For projects that are in the pre-filing phase, FERC Staff will likely work through the pre-filing process uninterrupted and, by the time the projects enter the formal review process, the shutdown will probably have ended. Therefore, the direct impact on these projects will be the delays caused by the backlogs created by other projects in the queue ahead of them.
Four Commissioners is a Recipe for Gridlock
With the untimely death of Commissioner McIntyre, FERC finds itself without a full complement of commissioners. This is a situation that may continue until June 30, if the Democrats in the Senate try to pair up the replacement of Commissioner McIntyre with either the renomination of Commissioner LaFleur or the naming of her replacement.
Commissioner LaFleur has discounted published reports that there is a split between the two Democrats and the two Republicans currently on the Commission with regard to the approval of natural gas and LNG projects. However, there are a number of outward signs of such a split, and so there is growing uncertainty about the timing of approvals for all projects. First, at the December meeting, there were two project certificate cases, one LNG and one pipeline project, originally listed in the Sunshine Act notice that is issued one week prior to the meeting. Both projects were then omitted from the final agenda and Chairman Chatterjee expressed frustration after the meeting about not being able to approve both of those projects. The Sunshine Act notice issued last week for tomorrow’s meeting had spots for two certificate proceedings and four gas, presumably rate case, proceedings. Five of the six spots however, were listed simply as “Omitted.” It appears that, once again, Chairman Chatterjee was unable to gather enough votes for these five cases.
There are nine cases which have completed their environmental review and are awaiting a FERC certificate. As can be seen in the chart below, none of them are substantially overdue, given the date on which FERC completed its environmental review. The one that completed its environmental review first, Line 8000 Replacement Project, is the one on the agenda for tomorrow’s meeting, at least for now.
Insights Coming Soon
- Assessment of DJ basin market based rates
- Review of market share of Asset Management Agreements (AMAs)