This afternoon, the Senate is expected to vote on President Trump’s nominee, Scott Pruitt, to head the Environmental Protection Agency. And despite an evening of debate on Capitol Hill, two Democrats, from the energy friendly states of North Dakota and West Virginia, Senators Manchin and Heitkamp, broke the attempt to hold up a vote. After a lot of bluster, it has become clear that politicians in support of Pruitt responded to opponents with one common position: Pruitt believes in states’ rights to enforce environmental statutes, such as the Clean Water Act (CWA) and Clean Air Act (CAA). While obtaining state delegated approval of CWA Section 401 permits can be a chore, state delegated CAA permits are becoming more irksome for developers and producers. So how will the new Administration handle the tension when state action or inaction is at odds with oil and gas infrastructure development?
One of the many permits required for the construction and operation of a natural gas pipeline, but perhaps lesser known than the CWA and CAA, is the U.S. Environmental Protection Agency’s (EPA) National Ambient Air Quality Standards (NAAQS) stationary source operating permit. Much like other delegated federal permits and consultations, such as the Section 401 CWA Water Quality Certificate, the stationary source operating permit is issued by a state government. But is this CAA delegated permit as much trouble as the CWA Section 401 Water Quality Certificate?
Well, generally speaking, until recently it was not. Title V of the CAA requires state agencies to issue state implementation plans, permitting programs for construction of any stationary source of air pollutant to assure compliance with the EPA NAAQS. And stationary sources include compressor stations, the critical facilities that keep gas flowing. That means that if a project includes several compressor stations and each falls within a different jurisdiction, several stationary source permits could be required. And the more agencies involved, the greater the risk of delay to project construction — as we’ve seen with Section 401 Water Quality Certificates for projects such as Williams’ Constitution Pipeline Project and Millennium’s Valley Lateral.
Kinder Goes to Court
The delegated environmental permit not only serves as a potential source of delay due to the involvement of various agencies, but also because it serves as grounds for potential litigation. The Constitution Pipeline Project has suffered at the hands of such litigation. And the CAA has proven to be no better for natural gas pipeline companies. Kinder Morgan’s Tennessee Gas Pipeline’s Broad Run Expansion Project was approved by the Federal Energy Regulatory Commission (FERC) in September 2016, but has yet to receive a notice to proceed with construction putting it well beyond the 75th percentile of construction timing among similar projects. The Project has failed to obtain its operating permit from the State of Tennessee’s Title V operating permit program for Davidson County, as administered by the Metropolitan Government of Nashville and Davidson County.
In response to the state’s failure to deliver the permit, Tennessee Gas Pipeline filed suit, initially in the U.S. District Court for the Middle District of Tennessee. Tennessee Gas advanced several arguments, including a couple that seem like old hat at this point for industry. For example, Tennessee Gas highlights that the Tennessee agency not only disregarded the FERC’s 90-day window, but also the CAA requirement providing that an agency must grant or deny a completed permit application within eighteen months of receiving the application. “The Department notified Tennessee Gas that it received its Permit Application on February 2, 2015, and thus was required to act on the Permit Application by August 2, 2016.” And Tennessee Gas argues that the Court should direct the Tennessee agency to grant the permit post haste. But as of this week, the case is being heard at the United States Court of Appeals for the District of Columbia Circuit, suggesting that things won’t be moving as fast as Tennessee Gas would have liked.
Late Stage Landowner Actions
Even if a pipeline company manages to avoid delays and litigation, it may still find itself subject to the pressure of local landowners, as well as easement constraints and existing rights of way. Dominion Transmission is currently facing similar issues on the New Market Project docket. Dominion submitted a variance request to reconfigure the layouts of its West Schenectady Metering and Regulating Station and four compressor stations. All the changes will reduce the operational footprints of the facilities, often by as much as 50%. Although the changes do not require new or different stationary source operating permits, some of the modifications will not only result in disturbances within the 50 feet buffer zone around streams and wetlands, but also increased stormwater run off.
The request has elicited over 50 comments since it was filed in late January. Protesters, mostly New York residents, object to the changes at Brookman Corners Station and Borgers Compressor Station, claiming that Dominion’s revised Stormwater Pollution Prevention Plan is inadequate. In addition, four local environmental organizations cosigned a letter claiming that Dominion’s proposal to add two new gas coolers to the Borger Compressor Station will increase emission levels and noise pollution significantly without appropriate federal oversight.
Although Dominion requested that the FERC approve its variance by February 7th, the FERC staff has not responded to the request. What’s the moral of the story? Scott Pruitt and the Administration will have to find creative solutions in order to battle the tension between states rights issues and more efficient pipeline development.