Week Ending June 10, 2016

Parties of Every Stripe, including Attorney’s Generals, Line Up in Contests with Constitution Pipeline, Atlantic Bridge, ANE, Dominion’s New Market Project, and the Rover Pipelines

This Article Appears as Published in Foster Report No 3103
Parties of Every Stripe, including Attorney’s Generals, Line Up in Contests with Constitution Pipeline, Atlantic Bridge, ANE, Dominion’s New Market Project, and the Rover Pipelines

Constitution Pipeline.  In the matter of Constitution Pipeline Co. LLC (CP13-499), on 6/2/16 Constitution Pipeline filed an answer with FERC that blasted a recent complaint for civil enforcement, allegations and petition by the Office of The New York Attorney General (AG), challenging its now suspended northeast natural gas pipeline construction project, and stated that the complaint should be set for an evidentiary hearing before an Administrative Law Judge.  Constitution also requested that the Commission designate this matter for “fast track processing” in order to quickly resolve this matter and to “avoid doubt as to the rights of the landowners whose properties are subject to easement agreements.”  Constitution denied the complainant’s allegations of ongoing violations of law and questioned the basis of the AG’s indication it is conducting an ongoing investigation.

The complaint seeks to stay the FERC’s certificate order and alleges that enforcement action by the Commission against Constitution is appropriate because of alleged “clear-cutting” activities on the pipeline right of way in New York, undertaken “[o]n information and belief, …. by landowners who had granted Constitution easements, or by their agents, including area logging companies.”  Constitution suggests that this motive establishes that Constitution Pipeline itself has not been involved in these activities.

Constitution frames the complaint by the New York AG, lodged at FERC just after the New York Department of Environmental Conservation (NYSDEC) denied on April 22 Constitution’s request for a water quality certification under section 401 of the federal Clean Water Act (CWA), as part of a “pattern seeking to delay construction” of the Constitution Pipeline Project that was approved by FERC in December 2014.  The project, Constitution reminded the Commission, is designed to deliver clean-burning, low cost natural gas from the Marcellus Shale Region in Pennsylvania to markets in the northeastern US, and was expected to be in service by December 2016 (construction has not yet begun.)

It is Constitution’s position that NYSDEC’s “wrongful assertion” that the pending other permits are required is “designed to give NYSDEC later options to delay and stop Constitution’s interstate pipeline project.”  All the NYSDEC’s actions, the initiation of this complaint, and pattern of delay in processing the permits in New York, argues Constitution, “are in complete contravention of the express authorizations of the Commission, and the mandates of the Natural Gas Act,” to avoid subjecting project applicants to “death by a thousand cuts” via multiple, inconsistent approval review processes, and the Supremacy Clause of the U.S. Constitution.

According to Constitution, the complaint does not contain any evidence that “clear-cutting,” a defined term under New York’s environmental regulations governing freshwater wetlands permits, has occurred, “or, if it did occur, that it was performed or caused by Constitution.”  Instead, the complaint “merely contains vague allegations” that landowners or the landowners’ logging companies, against whom the AG seeks no enforcement action, conducted tree clearing, road building or other ground disturbing activity on the pipeline right of way in New York– “in ten locations which the Attorney General refuses to, and fails to, describe with any specificity sufficient to actually identify any of them.”

Other Actions Taken.  Constitution spells out in its answer two actions it has brought, purportedly in conformity with its rights under the Natural Gas Act (NGA), as a result of the denial of Constitution’s request for a water quality certification in New York State.  The New York AG represents the NYSDEC.

First, Constitution has filed an appeal with the U.S. Court of Appeals for the Second Circuit seeking expedited relief and asserting that NYSDEC’s denial letter is “both arbitrary and capricious and constitutes an abuse of discretion” because, among other things, the denial represents an improper collateral attack on FERC’s certificate order.  (Constitution Pipeline Co., LLC v. Seggos et al., Docket No. 16-1568, 2d Cir. 2016).

Second, Constitution has also initiated an action in the U.S. District Court for the Northern District of New York seeking declaratory relief in that court because, according to the project developer, NYSDEC not only denied the 401 water quality certification but also “improperly preserved for itself the ‘right’ to later act on various New York state permits that are preempted by Second Circuit law under the decision of National Fuel Gas Supply Corp. v. Public Service Comm’n of the State of New York (2d Cir. 1990), and exempted under the CWA.

In the recent answer filed this month at FERC, Constitution further counters that the AG’s complaint relies on a series of inaccurate legal contentions, including:

  • That the alleged activities on the right of way in New York violate portions of the Commission’s blanket certificate regulations that do not apply to Constitution’s initial construction of the pipeline under the authority granted in the certificate order.
  • That the Commission has jurisdiction over “all activities undertaken on the pipeline right of way”;
  • That the tree felling proposed by Constitution in a request for Partial Notice to Proceed in New York, upon which the Commission has taken no action, requires issuance of a 401 water quality certification;
  • That section 24 of the NGA, concerning jurisdiction over actions to enforce orders of the Commission, imposes a duty on, or grants authority to, Constitution to take action against landowners under the NGA;
  • That the easement agreements, and the easements granted to Constitution by the courts, prohibit landowners from clearing vegetation or harvesting timber on the pipeline right of way; and
  • That environmental harm can be implied from lawful landowner activities on property which contains a pipeline right of way.

Among numerous denials, Constitution denies that it conducted or caused “clear cutting” in its right of way in New York.  The tree felling activity described in its 1/8/16 request for partial Notice to Proceed is not regulated under the CWA and is not contingent upon NYSDEC granting a section 401 water quality certification, nor the Army Corps granting a section 404 permit.  Constitution explains that its request was to “hand fell” trees and brush at the above-ground level using non-mechanized equipment that would not rut soils or damage root systems.  The activity it had proposed would leave felled trees in place, and would not take place in watercourses or waterbodies.  No trees were to be felled in or adjacent to New York State jurisdictional wetlands as well as other designated areas.

Tree “clearing”, as opposed to tree “felling”, is defined and discussed in section 2.3.1 of the FEIS (final environmental impact statement) and involves the removal of trees, brush and other vegetation from the right of way area by mechanical means, Constitution states in its rebuttal.  Section 404 permits are required for the discharge of dredged or fill material into waters of the U.S.

Further, NYSDEC expressed no objection to Constitution’s proposed tree felling activity when contacted by Constitution on January 5, prior to the submission of the January 8 request for Partial Notice to Proceed, and filed no objection to the proposal in this docket.

Constitution admits that it holds easements on properties in New York, and that some of those properties have been subject to logging by their respective owners.  But Constitution also “understands” that the New York AG has been informed, by Constitution, the landowners, and via news stories, that landowners, and not Constitution, have undertaken or caused the logging and other activities described in the complaint.  “Constitution didn’t clear the trees.  They didn’t pay anyone else to clear the trees.  They didn’t ask that the trees be cleared.  The locals decided to make some of the money they can’t earn through leasing their land for fracking by selling some timber, and at the same time, hopefully speed up the pipeline construction process so they can make a few bucks that way as well.”

In fact, Constitution posits, “everyone outside of the AG’s office and environmental groups seems to realize that cutting the trees now on their own now makes the most sense.”  Besides, the easements are silent as to timbering by the landowner, and, therefore, the landowner has the right to timber, to the extent that the timbering does not interfere with Constitution’s rights under the relevant easement agreements.[1]

Constitution’s answer goes forward to claim that the company is without sufficient information to form a belief as to the truth of the averments that the “Attorney General’s investigation revealed significant clear-cutting, road building, work space clearing, heavy equipment use in wetland and in other sensitive environmental areas, and other construction-related activities at numerous location along the pipeline right of way in Broom, Delaware and Schoharie Counties, New York.”  That is because the exhibits attached to the complaint do not provide any specific addresses, locations, or other identifying information about the areas where the alleged activities took place, the areas are not quantified in any way, and with the exception of two or three pictures none of the photographs show any signage or other indication that they are photographs of the Constitution pipeline right of way.

In addition, Constitution denies that there are any acts or omissions of its own that require investigation by the Commission, much less enforcement action or civil penalties.  Constitution insists it is not conducting any activities within the right of way in New York other than the removal of stakes, flagging and signage since construction on the pipeline will not be commencing shortly.

Ultimately, claims Constitution, “Due to their breadth and prospective nature, the Attorney General’s allegations affect the planning and execution of the Project, and may impact the project’s construction timelines going forward.  At the very least, the Complaint gives rise to immediate uncertainty regarding the Project that is prejudicial to Constitution’s interests, and to the interests of the affected landowners.”

Massachusetts AG v Atlantic Bridge and ANE.  In fresh comments lodged pursuant to the National Environmental Policy Act (NEPA) for the Environmental Assessment (EA) of the Atlantic Bridge pipeline project, sponsored by Maritimes & Northeast Pipeline and Algonquin Gas Transmission LLC (CP16-9), issued by FERC on May 2, Massachusetts Attorney General Maura Healey[2] requested FERC to address “segmentation” concerns raised by stakeholders regarding expansion of the Weymouth Compressor Station proposed for Algonquin’s (PF16-1) Access Northeast (ANE) pipeline project.  NEPA prohibits agencies from unduly segmenting a single project into multiple projects when preparing an EA or EIS, the AG reminded the Commission.

The Weymouth Compressor Station Algonquin proposes to construct for the Atlantic Bridge project is also slated to be expanded by Algonquin to serve its proposed ANE project.  According to the AG, Algonquin’s build out of Weymouth Station for the ANE project would dramatically increase the station’s footprint and more than double its compression facilities.[3]  And, according to the AG, the ANE project cannot proceed without the Weymouth compressor station proposed to be constructed for the Atlantic Bridge project.

The AG claimed FERC’s EA for the Atlantic Bridge Project gives only a cursory discussion of cumulative impacts of Weymouth and the expansion of that station proposed to serve the ANE Project.  That discussion “does not satisfy NEPA’s requirements for a full and robust analysis of cumulative impacts, especially for projects sharing common facilities with overlapping timelines and geographic areas.”

Atlantic Bridge plans call for construction of four miles of 42-inch diameter pipeline to replace existing 26-inch pipeline in Westchester County, New York, and about two miles of 42-inch pipeline to replace existing 26-inch pipeline in Fairfield County, Connecticut.  The project includes construction of a new 7,700 horsepower (hp) compressor station in Weymouth, Massachusetts plus other pipeline facilities.

According to Healey, a more thorough Environmental Impact Statement (EIS) must include other “connected,” “cumulative,” and “similar” actions.   Under NEPA, an action is connected if it (1) automatically triggers other actions which may require environmental impact statements; (2) cannot or will not proceed unless other actions are taken previously or simultaneously; (3) is an interdependent part of a larger action and depends on the larger action for its justification.

Healey here argues that because the Algonquin’s ANE Project depends upon— and cannot proceed without— construction of the Weymouth Station proposed for Atlantic Bridge, many stakeholders have argued that station is “connected” to the ANE Project.  FERC must therefore review Algonquin’s proposal to construct the new compressor station during preparation of an EIS during the environmental review for the ANE Project.  Both the Atlantic Bridge and ANE projects’ reliance on a single piece of new infrastructure—the Weymouth Compressor Station—and their “overlapping timing” indicate to the AGO that “FERC may be obliged under NEPA to evaluate the Weymouth compressor station’s proposed construction, not just its expansion, in the ANE Project EIS.”

In scoping comments filed on May 31 in docket PF16-1 for the ANE Project, the AGO urged FERC to carefully review all project segmentation claims raised by stakeholders concerning the proposed build out of the Weymouth Station proposed for Atlantic Bridge to serve the ANE Project.  In particular, the AGO requested that FERC scrutinize and reject Algonquin’s claim that ANE is independent of Atlantic Bridge because Atlantic Bridge serves natural gas local distribution companies (LDC) customers, while ANE was separately designed to serve electric utilities.  ANE also was proposed after the Atlantic Bridge Project.

The Massachusetts enforcer cited Delaware Riverkeeper Network v. FERC, (D.C. Circuit, 2014)[4] and the conclusion made there by the federal D.C. Circuit Court of Appeals that rejected an “independent utility” test used by FERC to determine that 4 different upgrade projects phased over several years along an already existing Tennessee pipeline in the Northeast were not connected and thus could undergo separate environmental review.

Despite the fact that Tennessee had secured separate gas delivery precedent agreements for each of the phased projects, noted the AG, the court found that the 4 projects were financially interdependent because each phase made the other project phases less costly.  The court held that FERC impermissibly segmented the environmental review in violation of NEPA because there was a “clear physical, functional, and temporal nexus between [] projects.”

Next, according to the comments, the AGO shares with many stake holders the “serious public health and safety concerns” about the new compressor station proposed for Weymouth.  Thus, the AGO has already urged FERC to include a rigorous analysis of all these issues in the draft EIS and final EIS for the ANE Project.  But FERC also should condition any certificate for the Atlantic Bridge Project on Algonquin making publicly available all chemical constituents of transported gas.  Algonquin must ensure that those living within a mile of compressor stations will suffer no increased adverse health risk from blowdown or other emissions of criteria pollutant levels.

And any certificate for Atlantic Bridge must be conditioned on full compliance with all applicable requirements of federal Clean Air Act regulations recently issued by the Environmental Protection Agency (EPA) governing methane emissions from new, reconstructed, and modified oil and gas sector processes and equipment (Methane Rule).

New Market Project.  In yet another of a string of natural gas pipeline projects facing pushback from various assortments of parties, at the end of May Otsego 2000, an historic preservation and conservation organization and intervenor, petitioned FERC for rehearing of the Commission’s order (4/28/16)  issuing a certificate for the New Market Project authorizing the construction, expansion and operation of various compression and related facilities along Dominion Transmission Inc.’s (CP14-497) existing transmission pipeline that runs between Pennsylvania and Central New York.

Although the entity said it is generally opposed to the entire project, Otsego 2000 targeted its objections on Dominion’s build-out at the Brookman Corners Compressor Station, in the Town of Minden, Montgomery County, NY, which will add three units of compression totaling more than 11,000 hp at the Brookman Corners site, more than doubling the capacity rating of the current 7000 hp facility.  The protester emphasized this proposal amounts to considerably expanding the facilities’ footprint and increasing operations from once a week to more frequently.

Based on precedent agreements executed more than three years ago following the May 2013 close of open season, the New Market Project is fully subscribed and will supply 115,000 Dth/d firm transportation service for Brooklyn Union and Niagara Mohawk under the terms of 15-year precedent agreement.

Many of Otsego 2000’s members live in the Town of Minden, in close proximity to the Brookman Corners Compression Station.  The members claimed the Commission’s EA and its final order largely disregarded Ostego’s input.

Otsego dissed the characterization of the project by both Dominion and the Commission as “a mere upgrade.”  The group asserted that the Brookman Corners facilities expansion is more accurately described as “a new construction project” which will have “substantial and devastating impacts” on air emissions, health, noise and safety in the surrounding rural community that are equally or more significant than if Dominion had constructed a greenfield compressor station.

So, it follows in the view of Otsego that the adverse impacts of the Brookman Corners’ component should have been evaluated “with similar rigor in the environmental assessment (EA) to the greenfield compressor stations at other locations along the pipeline.”

In addition, given that the proposed build-out is “incompatible with Minden’s zoning laws” and Dominion has committed to comply with the zoning process, the Commission’s certificate should be conditioned on Dominion’s completion of the siting process and should incorporate any mitigation resulting from siting review as well as commitments made by Dominion as enforceable conditions of the certificate.

According to Otsego, given the above mentioned legal errors and omissions, along with the Commission’s “arbitrarily constrained cumulative impacts analysis, and utterly inadequate assessment of the health and safety impacts (particularly in light of the recent Spectra explosion in Pennsylvania earlier this month),” the Commission’s order is rendered arbitrary, capricious and unsupported by substantial error and accordingly warrant rescission, or at least substantial modification on rehearing.

Rover Pipelines.  Finally, among the current selection of opponents of ongoing gas pipeline proceedings in the eastern sector of the U.S., on 6/2/16 Emens & Wolper Law Firm Co., LPA (E&W), on behalf of more than 200 landowners it represents that are directly affected by Rover Pipeline, LLC’s (CP15-93) plans to develop more than 100 miles of pipeline in Ohio, lodged an answer disputing many prior claims of the pipeline in connection with FERC’s Draft Environmental Impact Statement (DEIS).  E&W specifically renewed a demand of the Commission to require Rover to acquire at least 90% of the necessary rights-of-way before giving Rover the right of eminent domain.

E&W’s landowners, according to the firm’s answer, own more than 20,000 acres of Ohio land that will be impacted by the Rover pipelines project; as more than 100 miles of pipelines will cross the properties of these Landowners.  “None of these Landowners want the pipelines on their properties,” declared E&W.  Moreover, “Rover’s continued approach to treat Ohio landowners with little or no regard and continual attempts to use its overwhelming financial muscle to intimidate and take advantage of Ohio landowners is insulting to landowners.”

FR_Rover-Budget-Comparison

                                                                                 Chart provided by E&W Law Firm

 

E&W is requesting that the Commission deny Rover issuance of a certificate or, in the alternative, issue a Final EIS and certificate “only if the conditions set forth in E&W’s requests are incorporated.”

E&W stated, “While the Rover answer uses the word ‘negotiate’ 8 times, ‘negotiations’ 13 times, ‘negotiation’ 8 times, ‘negotiating’ 5 times, ‘negotiated’ 7 times, and ‘good faith’ 6 times in conjunction with some form of ‘negotiate,’ Rover has been abundantly clear in its approach with landowners that they must ‘take the easement language and the dollars that Rover is offering or Rover will sue you and take your land by eminent domain.’”

E&W, in its most recent comments, renewed its growing concern over the financial viability of Rover and its affiliates.  Rover Pipeline LLC is indirectly owned 65% by ET Rover Pipeline LLC, an affiliate of Energy Transfer Partners, LP, 20% by AE-Midco Rover, LLC, and 15% by AE-Midco Rover II, LLC, both affiliates of American Energy Partners, LP.  Equity financing will be through contributions of 65% by Energy Transfer Partners, LP, and 35% by American Energy Partners, LP.

But according to E&W, the media (the Wall Street Journal, in particular) reported last month that American Energy Partners, the Oklahoma City oil and gas company founded by the late shale pioneer Aubrey McClendon, plans to shut itself down this summer.

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[1]  And, in the pipeline’s view, the state Supreme Court “improperly limited defendant’s access to the subject property.”

[2]   The filing makes a point of the fact that the AGO, through its Energy and Environment Bureau, acts to protect utility ratepayers and environment, including by working to reduce the threat of climate change for the people and families of the Commonwealth.  As the state’s Ratepayer Advocate, the Bureau’s “integration of energy and environmental advocacy ensures that our office speaks with one voice in addressing the intertwined ratepayer and environmental protection matters that impact the Commonwealth and our residents. “Attorney General Healey also stresses she “is seeking to protect ratepayers by ensuring that when the Commonwealth makes long-term decisions about additional gas capacity investments, it is done on the basis of facts that quantify future natural gas demand, and take into account all cost-effective sources that can be deployed to meet that demand, including energy efficiency, renewables, large scale hydropower, LNG, and natural gas.

[3]  In addition to the 7,700 hp, gas-fired compressor unit for the proposed for the Atlantic Bridge Project Weymouth Compressor Station, the ANE Project would add another 10,320 hp compressor unit to the proposed station, for a combined compression capability of 18,020 hp.

[4]   See also Myersville Citizens for a Rural Community., Inc. v. FERC, (D.C. Cir. 2015).

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Copyright © 2016 by Concentric Energy Publications, Inc.  All rights reserved.

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