FERC Chairman Seeks to Reduce Project Regulatory Lags
Federal Energy Regulatory Commission (FERC) Chairman Neil Chatterjee is looking to improve review timelines for natural gas- and hydropower-related projects, he said in a recent speech.
"One of the biggest complaints that I hear from stakeholders is that it takes too long to review applications for natural gas and hydropower projects," Chatterjee said on October 17 at the Energy Bar Association 2017 Mid-Year Energy Forum.
FERC lacked a quorum for much of this year, which put approval of several projects on hold. But with the Senate's confirmation of two new commissioners in August, FERC is back in business.
FERC's review of hydropower projects, from formal application submission until issuance of a FERC certificate, can take around 30 months on average, Chatterjee said, and a relicense of a hydro project can take more than four years on average. And even before FERC lost its quorum earlier this year, the period from formal application submission until issuance of a FERC certificate for new natural gas pipeline projects had been taking up to 18 months for significant projects, he added.
"That's not to say that the commission doesn't have success stories," Chatterjee continued. Since a quorum was reestablished on August 10, the commission has voted on about five billion cubic feet per day (Bcf/d) of new natural gas pipelines, he said, including the approvals earlier this month of the Atlantic Coast and Mountain Valley natural gas pipeline projects. For related information, see October 17, 2017, article - FERC Approves Two Major Mid-Atlantic Natural Gas Pipelines.
The Atlantic Coast and Mountain Valley pipeline projects have been subject to legal challenges by environmental groups and local landowners. Chatterjee and fellow board member Robert Powelson approved the projects, while Cheryl LaFleur dissented. LaFleur wrote that she was "not persuaded that both of these projects as proposed are in the public interest," adding, "I am particularly troubled by the approval of these projects because I believe that the records demonstrate that there may be alternative approaches that could provide significant environmental advantages over their construction as proposed."
The FERC review process is getting longer in large part because of increased participation by stakeholders, including numerous legal challenges, Chatterjee said, adding, "I anticipate that a flashpoint for many of those legal challenges will be the question of economic need for a new natural gas pipeline project."
Chatterjee told the Energy Bar Association last week that LaFleur's dissents in the Atlantic Coast and Mountain Valley decisions "suggested that FERC should depart from its longstanding policy of relying on precedent agreements with shippers to demonstrate economic need in favor of weighing a broad range of economic, social and aesthetic values. Although I respect my colleague's position on this question, I strongly disagree.
"The commission has historically prioritized precedent agreements in its analysis because those are clear, unequivocal statements of economic need by the market itself. The companies who are willing to enter into contracts to pay for transportation on the service on a pipeline have a much clearer understanding of the market need for the gas than we could develop through studies here in D.C."
Legal challenges and other factors contribute to delays in the regulatory review process, which in turn discourage investments and can harm the communities in areas surrounding a project, Chatterjee said.
And while FERC "is most definitely not the principal source of those delays," Chatterjee said, the commission has taken steps to achieve greater efficiencies in its review process.
The commission issued a new policy last week on establishing licensing terms for hydroelectric projects located at non-federal dams. Aimed at providing more certainty and efficiency for stakeholders, the new policy establishes a 40-year default license term for original and new licenses under the commission's jurisdiction. Licenses for less than 40 years will be granted under certain circumstances.
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