Sittin' Here on Capitol Hill... Just Another Bill?
We are one week away from the Inauguration and rumors are on the rise. But will the Trump administration and the Republican-controlled House and Senate be as beneficial for the natural gas industry as some observers suggest? During his campaign, President-elect Trump promised to lift environmental regulations, open federal lands to oil and gas production, and ease permitting for pipelines. Some have taken that to mean a free-for-all will ensue, with many obstacles to permitting eliminated, and projects being built free of delay. You can't blame industry for being excited. Those in favor of greater development of natural gas pipeline infrastructure have expressed concerns for years about the length of time needed to obtain all permits necessary for pipeline construction. See
Herding Cats - FERC and Cooperating Agencies. Surely, a Republican Capitol Hill will seek to address industry's concerns, so the question that remains is: how? An examination of prior (failed) attempts is an instructive starting point. And a more precise diagnosis of the actual problem, based on an analysis of the data, is necessary to achieve a solution.
The issue of FERC permitting delays and the impact of cooperating agency permits and their growing timelines is not novel. Under the Energy Policy Act (EPAct), enacted during the George W. Bush administration, legislators granted FERC the authority to require final decisions from the various cooperating agencies no later than 90 days after FERC issues its final environmental document (i.e., an Environmental Assessment or Environmental Impact Statement), which is a date routinely referenced in Notice of Schedule documents. But EPAct does not grant FERC the ability to enforce this time requirement. The Office of Energy Projects is understaffed, so piling on responsibilities is unlikely to achieve the intended result.
Pipeline industry concerns about the increasing duration of permitting are already well documented, dating back to early 2012. In a study published that year, a DC-based trade association found, based primarily on a survey of select pipeline company personnel, that after the enactment of EPAct, there was a substantial increase in the number of projects which were taking longer than the 90 days established by FERC to receive the "applicable Federal authorizations." In February of 2013, the Government Accountability Office (GAO) issued a report of the GAO's selective review of projects in which applicants utilized the pre-filing process. The GAO found that the average processing time from pre-filing to certification ranged widely, from 370 to 886 days. Neither study provided detailed analysis of the underlying data regarding the length of time that projects spent in pre-filing, the environmental review phase, the Certificate review phase, or the construction phase. The study also stopped short of any discussion of the variables impacting each phase, including a sensitivities analysis.
In response to industry concerns and with these studies in hand, several members of Congress introduced bills to address the issue, but with limited success. For example, Congressman Mike Pompeo, who President-elect Trump recently nominated to head the Central Intelligence Agency, introduced HR 1900, the Natural Gas Pipeline Permitting Reform Act. This bill sought to cap the FERC review process at 12 months, and restated the EPAct's 90-day time limit for cooperating agencies. His bill passed the House on two separate occasions, but failed to gain enough momentum to make it through the Senate.
Senator Lisa Murkowski had better luck. Her bill passed the Senate and House and was undergoing review at the end of the 2016, but it became the victim of timing, with House Republicans refusing to deliberate further following the election of Donald Trump. Murkowski's bill provided that the FERC would establish deadlines for delegated cooperating agency permits, and provided that if a permit was late, the head of the relevant agency must then provide Congress and FERC with an implementation plan to ensure completion. But this doesn't necessarily give the FERC much in the way of teeth. The bill would have added yet another layer of bureaucracy by introducing the Congress into the corrective action. Representative Rodney Davis, who introduced the FAST Act, which was enacted in 2015, made a similar attempt at increasing transparency by requiring clear reporting of necessary permits on a federally maintained dashboard. However, the FAST Act does not directly address pipeline permitting timelines or gives the FERC much in the way of enforcement power.
These prior attempts at solving the pipeline permitting problem suggest that the Trump administration may continue to address the issue with one or a combination of prior legislative attempts. Before jumping into crafting legislation, we suggest that legislators, FERC, other agencies, and those who seek to influence the discourse take some time to better understand the problem. First off, where are the delays and what are the drivers? Relatedly, can all the blame be placed on state agencies and increasingly active protestors? Delays in permitting often arise when planned pipeline routes are altered or company suggested mitigation efforts are deemed incomplete. These circumstances cause agencies to revisit matters originally settled or presumed to be a non issue, resulting in delays to final decisions. With more informed planning and a data-driven debate, natural gas pipeline companies may be able to bring about meaningful change.
Project Duration (Certificate Application to Approval)
