The Recorder – Pipeline lawsuit called ‘aggressive,’ precedent-setting

Source: The Recorder – Pipeline lawsuit called ‘aggressive,’ precedent-setting

By RICHIE DAVIS Recorder Staff
Sunday, March 20, 2016
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With the state attorney general expected to weigh in on a pipeline lawsuit challenging the Massachusetts Constitution’s protection of conservation lands, area officials are calling for a vigorous defense of open space.

Pointing to Tennessee Gas. Pipeline Co.’s suit against the state over a proposed natural gas pipeline through state-protected forest in Sandisfield, state Rep. Stephen Kulik said Friday he plans to call for the Massachusetts House to file a “friend of the court” brief in the case. He said the constitutional provision, called Article 97, will also likely come into play in the controversial Northeast Energy Direct pipeline through eight Franklin County towns.

The pipeline company asserts that its Federal Energy Regulatory Commission approval for its Berkshire County route supercedes the state’s constitutional protection of conservation land there.

Kulik called TGP’s plans to override state constitutional protections of open space “probably the greatest overstepping of FERC’s bounds that I can imagine. I would be very pleased if our congressional delegation in its entirety would join with us aggressively weighing in.”

Kulik said Friday, “We have to assert our institutional and constitutional responsibility as a Legislature given to us by the citizens of Massachusetts. It’s a power people have given to the General Court. They certainly didn’t give it to FERC, to some unelected bureaucracy in Washington … I’m hoping for a really aggressive pushback by our attorney general.”
TGP had hoped the Legislature would grant a waiver from Article 97 to allow the 13.42-mile-long pipeline through Sandisfield, which was approved a week ago by FERC. The energy giant sued one day after a Massachusetts legislative committee put that Article 97 waiver request in a procedural graveyard.

Such a waiver requires a two-thirds vote by both legislative branches to re-designate protected public land for other use.

The TGP suit, filed in Berkshire County Superior Court, seeks eminent domain of 21.5 acres in Sandisfield, with easements in the affected part of Otis State Forest. The suit came even as Sandisfield residents formally appealed FERC’s approval for the project — pointing out that the state’s constitutional issue and federal water-quality permits had not yet been settled.

Kulik addressed a group Thursday night participating in a Sugar Shack Alliance protest walk against the pipeline, advising the group, trained in direct action to focus on the Sandisfield issue now, although he stopped short of calling for civil disobedience.

Although he said it’s probably good to have the question raised and resolved over the Sandisfield case rather than waiting for it to surface on the NED project, FERC is now reviewing the pipeline route through Plainfield, Ashfield, Conway, Shelburne, Montague, Deerfield, Erving, Montague, Northfield and Warwick.

Kulik said conservation land was established with money “raised by the people of Massachusetts. Everyone in the state who cares about natural resources protection needs to be concerned about this, especially because there is zero benefit from any energy or public policy perspective to the people of Massachusetts. That’s like really rubbing our noses in this.”

Senate President Stanley Rosenberg, D-Amherst, on Thursday called the lawsuit “the beginning of resolving the question” on federal preemption and the state constitutional provision. He, like other legislators, said he would expect the attorney general’s office to respond for the state and predicted the case “could go all the way to the U.S. Supreme Court.”

Asked about the AG’s plans in the case, a spokesman said the attorney general will be defending the state and the Department of Conservation and Recreation in this matter and plans to file an opposition prior to the hearing.

Kathryn Eiseman of Pipeline Awareness Network of Massachusetts said, “This is where the rubber hits the road with respect to Article 97 … Many people are just waking up to the importance of this land in Otis State Forest. Not only is a forest with some of the last remaining old-growth hemlock stands in Berkshire County directly threatened, the whole framework under which land is protected in our commonwealth, under our Constitution, is potentially threatened.”

Rather than trying to circumvent the protected Spectacle Pond property donated by the Massachusetts Audubon Society, she said, TGP appeared to have “purposely targeted it and are digging in their heels, with the hope to establish authority to run roughshod through our protected lands across the commonwealth.”

Although it’s unclear exactly whether FERC’s federal preemption conflicts with Massachusetts’ unique constitutional provision giving the Legislature sole authority over conservation land, Boston attorney Richard Kanoff, who represents Pipeline Awareness Network of the Northeast as well as Montague and other municipalities in cases involving the NED pipeline project, said “This is a really significant issue, and there are a lot of important questions involved. I would be surprise if the attorney general doesn’t file. It raises significant concern about whether Article 97 means anything, or whether a 401 water quality certificate means anything.”

A hearing on TGP’s case seeking to exercise eminent domain over the land in question is scheduled for March 30. There is a March 31 cutoff under the federal Endangered Species Act to protect migratory birds that use the trees for spring nesting, although the company has asked the U.S. Fish and Wildlife Service for that deadline to be extended until May 1. In its court filing, it seeks authority for condemnation by April 15.

You can reach Richie Davis at: rdavis@recorder.com
or 413-772-0261, ext. 269

Northeast Gas Association: NGA ISSUE BRIEF: Pipeline Expansion Projects

Northeast Gas Association: NGA ISSUE BRIEF: Pipeline Expansion Projects.

SUMMARY

  • Numerous projects are in development to expand the Northeast pipeline system, to transport supplies from the productive Marcellus shale gas basin in Appalachia
  • Projects rely upon customer commitments via contracts to proceed
  • Development must meet federal and state regulatory requirements.
  • NGA: pipeline infrastructure development is needed in the region to meet market demand.
Photo: Spectra Energy

The Northeast’s natural gas industry is striving to move forward with infrastructure projects designed to meet growing market demand. There is substantial growth in natural gas supplies within the Marcellus Shale basin on the border of the Northeast region (NY, NJ and New England). Even so, getting these new supplies to market requires further natural gas pipeline infrastructure investments, which requires incremental contract commitments.

Benefits of Adding Infrastructure

The Northeast natural gas pipeline system region remains constrained at several key points – particularly into the New York City area/Long Island and New England. New supplies and infrastructure will help to ease those constraints, and should help to improve the regional price situation.

The multiple projects all center around bringing Marcellus Shale supplies in Appalachia to market. These projects are designed to help further increase regional natural gas capacity, deliverability, flexibility and reliability, as well as provide economic and environmental benefits to the region. They also are planned to bring natural gas liquids, such as ethane, to market, a by-product of gas production.

In addition, there are planned system expansions on local utility systems to meet growing demand for natural gas – at the residential and commercial/industrial levels.

Importance of Contract Commitments to Project Advancement

The natural gas delivery system is designed to fulfill its contractual arrangements. Pipeline capacity is added to meet the needs of gas customers requesting primary firm service and who are willing to execute firm transportation contracts that pay for the required capital investment and operating costs. Without such commitments and arrangements, projects cannot proceed.

The Federal Energy Regulatory Commission (FERC) in a December 2003 report on New England’s natural gas infrastructure noted:“The adequacy of the natural gas infrastructure is based on its ability to fulfill its contractual commitments. Natural gas may be contracted on a firm or interruptible basis. Interruptible contracts are typically less expensive because capacity is only paid for if used, and the supplier or transporter may interrupt service. The natural gas infrastructure is considered adequate if firm commitments are met and terms of the interruptible contract are satisfied.”

The Interstate Natural Gas Association of America (INGAA) noted in fall 2011 that “between 2005 and 2010, pipeline expenditures [in the U.S.] averaged $8.8 billion per year in real 2010 dollars.”

However, natural gas pipeline companies do not design or build pipeline projects based on the assumption that there will be a future market for transportation. Capital investment by pipelines must be supported by revenue certainty through firm service agreements.

The U.S. Energy Information Administration (EIA) summarizes the various options for creating additional pipeline capacity as including:

  • Building an entirely new pipeline
  • Adding a parallel pipeline along a segment of pipeline, called looping
  • Installing a lateral or extension off the existing mainline
  • Upgrading and expanding facilities, such as compressor stations, along an existing route.

What are the Stages of Pipeline Project Development?

There are several stages of project development. The following is adapted from a U.S. EIA paper.

As shown in the chart above, pipeline capacity additions in the Northeast have been rising in recent years. The outlook for further growth in 2013 – shown in pale green – is especially robust.

Source: U.S. Energy Information Administration, March 25, 2013

Phase I: Market Assessment and “Open Season”
Market need and project viability assessed
Meet with stakeholders
Project proposal announced
“Open season” held to gauge level of market interest among potential customers
non-binding commitment to sign-up for a portion of the capacity rights available on the project

If enough interest is shown, sponsors arrive at preliminary design.

Phase 2: Development of final project design and obtaining of firm financial commitments from customers; meet with stakeholders

Phase 3: Filing with regulatory agencies – federal, state, etc.

Phase 4: Regulatory review and issuing of necessary certificates

Phase 5: Construction

Phase 6: Commissioning and testing

Photo: Yankee Gas Services Company

The process from initial development to commissioning can take from 3 to 5 years, and sometimes even longer.

Regulatory Review

The Federal Energy Regulatory Commission (FERC) is the lead permitting agency for interstate pipeline projects. FERC is an independent agency that regulates the interstate transmission of natural gas, electricity and oil.

In addition, projects require certain state (and sometimes local) permits, particularly in environmental matters.

The U.S. EIA observes: “A FERC review of an interstate pipeline project takes from 5-18 months, with an average time of 15 months. No data are available on the average time for obtaining approval from an individual State agency. Usually, approval by the regulating authority is conditional, but most often the conditions do not constitute a significant impediment. The project sponsor must then either accept or reject the conditions or reapply with an alternative plan.”

Opportunities for the Region

The Marcellus supply production and the related infrastructure development offer great opportunities to the economy and environment of the Northeast. This region remains one of the most highly-populated, highly-priced and yet most highly-constrained gas markets in the U.S. These supply and pipeline developments have the potential of transforming the traditional paths of supply sourcing into the region, creating a more diverse supply mix and a more varied delivery network. This bodes well for regional supply security and economic competitiveness.

For Further Information

NGA Summary of Proposed Northeast Pipeline Projects [pdf]

U.S. EIA Outline of Pipeline Development Process

U.S. FERC

Interstate Natural Gas Association of America (INGAA)