For decades, the natural gas industry has had federal energy regulators in their back pocket. Now they have their sights set on stamping out any resistance at the state level to ensure the development of new pipelines can run as smoothly as possible.
Clean energy advocates and property owners discovered long ago that they operate within a system that is tilted extremely in favor of corporate interests. This week, a major court ruling and the ratcheting up of a campaign among congressional Republicans against state involvement in pipeline reviews offered even more evidence of what activists see as a rigged system in favor of the fossil fuel industry.
A U.S. Court of Appeals for the District of Columbia Circuit on Tuesday declined to revive a lawsuit by environmental group Delaware Riverkeeper accusing the Federal Energy Regulatory Commission (FERC) of bias in favor of natural gas pipeline companies who pay user fees.
The environmental group sued FERC in 2016 arguing that the agency is incapable of making objective decisions regarding pipeline projects because its funding, set by Congress, is recovered by fees imposed on the industries it regulates, including pipeline companies. Delaware Riverkeeper Network asserted that “the commission is insulated from Congressional budgetary oversight,” and therefore deprives individuals opposed to new pipelines of their 5th Amendment right to due process.
The D.C. Circuit ruled that funding FERC entirely by the industry it regulates is an acceptable way to run the agency. Delaware Riverkeeper believes the case was wrongly decided, arguing the bias at FERC is self-evident.
“We firmly believe that such a funding structure leads to bias on part of agency in its decision-making,” Aaron Stemplewicz, senior attorney at Delaware Riverkeeper Network, said Tuesday in a statement. “Despite the fact that FERC has a near 100 percent approval rate for the pipeline projects that provide the basis for its funding, the Court nevertheless did not find sufficient evidence of bias.”
In its lawsuit, Delaware Riverkeeper Network also noted that FERC issues decisions called “tolling orders.” These allow companies to construct pipelines even though individuals and groups have appealed the agency’s decisions. Tolling orders place challengers in “legal limbo” for indefinite period of time, thereby obstructing timely judicial review, the group said.
We will continue to put pressure on FERC, despite recent news. Here are three ways to help get FERC reform:
1) Call for Congressional hearings on FERC's abuses:https://t.co/XRR94gwAE7
2) Sign our petitionhttps://t.co/izjdXLLILU
— Delaware Riverkeeper (@DelRiverkeeper) July 12, 2018
The D.C. Circuit did not agree with the environmental group, explaining that the Natural Gas Act allows FERC to issue so-called tolling orders.
Along with the courts, congressional Republicans are growing concerned by states putting up roadblocks to the construction of new natural gas pipelines.
At a Senate hearing on Thursday on natural gas and electric power transmission infrastructure, industry officials and a former federal energy regulator agreed that more needs to be done to prevent states from impeding the construction of pipelines and transmission lines. Greater regulatory certainty is crucial, they contend, for sending clear signals to investors, who may become gun-shy with their investments if projects continue to get blocked at the state level.
Environmental groups and landowners, however, believe policymakers should be pushing alternatives to fossil fuels and should be respecting the rights of landowners who do not want companies building pipelines through their property without their permission.
In 2016, the New York State Department of Environmental Conservation denied water quality certification to Constitution Pipeline, blocking the natural gas pipeline from being built within the state. Also that year, a Massachusetts state court ruled against the financing plan for the $3 billion Access Northeast gas pipeline project. The court decision barred Eversource and other Massachusetts utilities from charging electricity customers to pay for construction of the expanded pipeline. The pipeline project has since been placed on hold.
One of the speakers at Thursday’s Senate Energy and Natural Resources Committee hearing, James Murchie, president and CEO of energy investment advisory firm Energy Income Partners LLC, argued that if Congress is going to pursue passage of a national energy policy, it should prioritize educating citizens about the importance of fossil fuel infrastructure. It should also explain why the confiscation of their property through eminent domain is necessary for the transportation of fossil fuels, he said.
Regulators face the challenge of “getting people to understand that, while their land is being taken, it’s being taken for a greater good, just like it is with a highway,” Murchie told the senators.
Joseph Kelliher, a Republican chairman of FERC in the 2000s, agreed with Republican members of the Senate Energy and Natural Resources Committee that pipeline siting “has become highly litigious” and that states have been aggressive in using their authority under the Clean Water Act “to effectively veto projects.”
FERC has come under attack for serving as a “rubber stamp” of natural gas pipelines. The agency has rejected only two out of approximately 400 pipeline applications received since 1999, when it last updated its natural gas pipeline review process, DeSmogBlog reported last December.
Earlier this year, FERC launched an inquiry into whether its policies, unchanged since 1999, dealing with its oversight of pipelines ought to be updated.
At the Senate hearing, Sen. Lisa Murkowski (R-AK), chairwoman of the committee, said “the denial of necessary state approvals for projects on political grounds, or the failure of other federal agencies to meet FERC-established schedules, are problems that must be addressed.”
Last month at the World Gas Conference in Washington, D.C., Energy Secretary Rick Perry warned leaders of Northeast states who are trying to block natural gas pipelines that they will face a “real reckoning” of higher energy costs and vulnerabilities in their power grid.
FERC also has a new outspoken chief of staff, Anthony Pugliese, who agrees with Perry’s policy stances. Pugliese told Breitbart News Sunday last week that state governments controlled by Democrats are blocking natural gas pipelines supported by the Trump Administration “for the sole reason of politics.”
In the case of New York, however, Gov. Andrew Cuomo (D) denied the water quality permits for Constitution Pipeline in April 2016, long before Trump was elected president.
Pugliese, who had no experience in energy policy, was hired by interim FERC Chairman Neil Chatterjee in 2017 prior to Trump’s choice for chairman, Kevin McIntyre, joined the agency.
“Historically, the chief of staff is someone who has deep experience in the sector, in what FERC does, in the regulatory process, in the structure of utility law, of administrative law procedures and of the agency itself,” Nora Brownell, a Republican who served as a commissioner at FERC in the 2000s, told E&E News.
The hiring of Pugliese indicates that FERC — with a Republican majority — is willing to shed its political independence in the age of Trump. In the interview with Breitbart, Pugliese also defended Perry’s proposal, which FERC rejected in January, that would have offered subsidies to the coal and nuclear industries.