Protestor Trends - An Indicator of Litigation Risk?
A perception bias that can affect decision-making is often referred to as “recency bias,” which is commonly thought of as a tendency to think events that have occurred in the recent past will keep happening. Any project developer who has survived the onslaught of environmental groups objecting to his or her projects can, therefore, be forgiven for assuming objections will be raised in every case. But what does the data actually show?
Today, we look at the data for the most active environmental groups over the last ten years -- which we define as those groups that filed at least 40 comments on projects during that time period. Some clear lessons can be gained by looking at this data. First, the number of comments reached its peak in 2015/2016 and has trended downward since then. Second, not all areas of the country are equally impacted. Third, multiple comments by these major groups may be an early indicator of litigation risk ahead.
Specifically, from the data we conclude that: (1) the onslaught seems to have ebbed; (2) projects outside of the Mid-Atlantic should expect a smoother path; and (3) PennEast may be in trouble, as we discussed in PennEast Progress Continues to be Bogged Down by the Garden State, but Williams’ Northeast Supply Enhancement may not. Finally, projects being filed in the near future may want to factor into their planning a shortening of the FERC timeline, given the reduction in comments and proceedings.
How the World Changed, 2013 to 2019
The chart below shows the total number of comments filed for each year since 2008 by the five most active environmental groups: Sierra Club and its affiliates, Riverkeeper and its affiliates, Appalachian Mountain Advocates, Allegheny Defense Project, and Appalachian Trail Conservancy.
Number of Comments By Year
As can be seen, the peak period for commenting on projects occurred in 2015 and 2016, and the wave started in 2013. Since 2016, the comments have been trending downward. And this year is on track to be the lowest comment year since 2013.
The pattern is almost identical for each individual environmental group.
Comment Trendlines By Groups
Geography Matters
As we indicated in Major Environmental Groups Oppose Every Project, or Do They?, the perception that every project is subject to substantial opposition is not true. Below is a map showing the number of comments filed by these five opposition groups against projects, by state. As depicted below, the opposition is generally focused on the Mid-Atlantic states.
Comments By State
Not All Projects Are the Same
A review of the projects on which these groups filed at least 10 comments combined shows that such activity could be an early indicator of future litigation risks. That list includes two projects, Oregon LNG and its related pipeline and Northwest Pipeline’s Washington Expansion, that were eventually withdrawn. It also includes EQM’s Mountain Valley Pipeline, Dominion’s Atlantic Coast Pipeline, Williams’ Atlantic Sunrise, and Enbridge’s Sabal Trail and Algonquin Incremental Markets, all of which were subject to substantial litigation following their approval by FERC. That is not good news for PennEast, which received 49 combined comments from these groups, or the Adelphia Gateway Project, with 10 combined comments. However, it could be a good omen for Williams’ Northeast Supply Enhancement Project, which received only one comment from these groups.
Northeast Supply Enhancement received its certificate earlier this month and is slated to have New York rule on its WQC later this month. The fact that New York did not take the opportunity to deny the WQC in connection with Earth Day in April, as New York has done with other projects in each of the last three years, could mean an approval is in its future. If so, we can expect that approval to come late this Friday to limit the amount of press coverage.
What Might This Mean for Timing of Projects Going Forward?
As we discussed in an analysis earlier this year for the Interstate Natural Gas Association of America, a key issue is trying to determine whether the lengthening of the FERC review timeline that occurred during the surge is the new normal, or, now that the number of projects and comments has ebbed, whether there will be a return to timelines like those during the pre-surge time frame.
If we assume the opposition that occurred was against projects filed during the year prior to the filing of the comments, a picture emerges as to what the average timeline might be, now that we have passed the surge in filings and comments. Set forth below is the time frame from application date to FERC approval date for approved pipeline projects, divided into three time periods, pre-2013 (before the surge), 2013-2016 (corresponding to the surge period), and post-2016 (after the surge).
Time To FERC Approval By Period
The data confirms that the continuation of a longer FERC timeline may not be a recency bias. There has not yet been any substantial reduction in the average time frame for review post-surge. Part of that issue could be the lack of a quorum that FERC experienced in the first part of 2017, when many of the post-surge projects should have been approved. We will continue to monitor the situation to see if the timeline for review returns to the pre-surge period or whether, even without substantial opposition, the new normal is that the median period for a project is now one year.
Insights Coming Soon
- Operating costs by company
- Update on oil and gas policy matters in Colorado and Texas