June 2021, Vol. 248, No. 6


FERC to Set Up New Office to Fund Pipeline Opponents

By Stephen Barlas, Contributing Editor, Washington D.C.

The Federal Energy Regulatory Commission (FERC) is in the process of setting up a new office responsible for helping pipeline opponents challenge new construction and even applications for variances once a project is approved.  

Congress has told the FERC to have a new office of public participation (OPP) up and running starting with the new fiscal year, which begins Oct. 1, 2021.   

The commission has been holding listening sessions around the country, and it held a workshop in April at which pipeline critics gave full-throated support to FERC’s plans to fund landowners, poor communities and Native American groups that challenge applications for action under Section 7 of the Natural Gas Act.  

In comments to the FERC signed by its Washington attorneys, Energy Transfer stated, “This proceeding is a significant undertaking and a wide variety of major policy changes have been proposed, including an unprecedented proposal that would allow FERC staff to direct fee shifting in contested cases.”  

The attorneys did not respond to a request for additional comment.  

At the workshop on April 16, Jacqueline Patterson, director of the National Association for the Advancement of Colored People (NAACP) Environmental and Climate Justice Program, argued that the people benefitting from pipeline infrastructure are “executive level employees and investors in what is now a six trillion dollar, going on seven trillion dollar, energy sector and CEOs of fossil fuel industry that average $14.7 million in compensation.”  

Those “bearing the costs,” she continued, are “indigenous women who have been sexually assaulted along the oil and gas pipelines… and Black, Indigenous, and People of Color communities who are in the frontlines of the health, social, economic and political impacts of toxic exposure…”  

Actually, Section 319 of the Federal Power Act of 1978 directs the Commission to establish the OPP, but FERC never created the office. Congress, in December 2020, mandated the commission rectify that long-standing omission and provided a couple of deadlines for final action.   

This new OPP would pre-emptively contact landowners, tribal groups and others, such as “environmental justice communities,” a constituency the Biden administration is eager to reach more broadly, and ostensibly listen more closely to their concerns and lay out their options for challenging pipeline applications, legally and otherwise.  

That 1978 law provides that the Commission may provide compensation, under rules promulgated by it, for reasonable attorney’s fees, expert witness fees and other costs of intervening or participating in any proceeding before the Commission to any person whose intervention or participation substantially contributed to the approval, in whole or in part, of a position advocated by such person.   

At the workshop, Megan Gibson, a senior staff attorney with the Niskanen Center, representing landowners affected by pipelines, stated, “Landowners face something uniquely horrible in FERC pipeline proceedings: the permanent taking of their land, home or livelihood. Despite these high stakes, landowners meet overwhelming obstacles at every step of the process – often with no resources, guidance, or legal assistance.”  

Reflecting congressional concern about landowner’s rights, a House civil rights subcommittee held a hearing on May 5 concerning complaints from landowners in Oklahoma about the way Cheniere Energy disturbed farmland and failed to repair that damage when building its 200-mile Midship pipeline.  

Ostensibly, an OPP would help landowners avoid those types of problems by providing legal help of one sort or another to unhappy individuals or groups. There were a number of state representatives at the workshop who made presentations about their existing community outreach programs with regard to energy rate proceedings and other actions.   

Michelle Cook, assistant chief administrative law judge, California Public Utilities Commission, explained her state spends as much as $10 million a year helping citizens challenge pipeline filings in rate cases. Those funds come from the utilities who are assessed fees to pay for the outreach program.  

Interestingly, a bill introduced by Senate Democrats, called the Landowner Fairness Act (S. 641), requires FERC to go far beyond the 1978 law but does not dictate paying attorney fees for pipeline protesters.   

At the FERC workshop in April, the Interstate Natural Gas Association of America (INGAA) was represented by Kyle Stephens, vice president, regulatory affairs, Boardwalk Pipelines. He was vastly outnumbered by speakers urging the commission to elevate the voices of those allegedly hurt by pipeline construction.   

Stephens envisions a limited role for FERC staff in assisting those individuals potentially affected by pipeline construction. This staff could assist stakeholders by answering questions about the FERC certification process and how to participate in the process, if desired.  

With regard to the notification, pipelines are now required to send to potentially affected landowners, Stephens suggested what seem like minor improvements, such as including an acronym guide and glossary in the applicant’s initial Affected Landowner and Stakeholder notice. He also endorsed eliminating language in the notice on the rights the landowner has at the Commission and in proceedings under the eminent domain rules of the relevant state because that verbiage sometimes is read as threatening. He also suggested the FERC help pipelines identify “environmental justice” communities and reach Tribal communities.  

In its separate comments, INGAA opposed the funding of pipeline opponents, questioning interpretations by some speakers and others that the language of the 1978 mandates the FERC to fund protests of Section 7 actions.   

INGAA stated, “This expansion is seemingly founded in the misnomer that the federal government has an obligation to fund, advise and advocate for anyone wishing to intervene and protest in a Commission proceeding and that broad policy issues could or should be analyzed in an individual pipeline certificate and potentially other proceedings conducted by the Commission. These views should be rejected.”   

INGAA’s position is that the OPP should be a neutral observer and not take substantive positions, provide legal opinions or draft pleadings in pending certificate matters.   

But the prospect of a FERC OPP raises all sorts of complicated questions that are likely to be answered in the next year. The language of the statute setting the tripwire for FERC involvement in a Section 7 action contains wording that is open to interpretation, such as when a project is “significant” and when an individual affected by pipeline construction suffers from “significant financial hardship” and should be compensated for getting involved in a Section 7 construction application.  

The American Gas Association (AGA) argues the language creating the OPP uses the past tense, indicating “that compensation would be granted after the conclusion of a proceeding and only after eligibility and a substantial contribution has been shown.” But some of the groups back a much broader interpretation of when compensation should be paid.   

With regard to the OPP’s budget, Friends of the Earth explains that the statutes that created the OPP set an initial budget of $2.4 million, which translates to approximately $7.25 million today. The amount equates to roughly 36 full-time employees at an average cost of $200,000 per year for salary and benefits.   

Some want the OPP to get involved even after the FERC approves a Section 7 construction application. For example, the Environmental Integrity Project wants the OPP to get involved post-approval, when a pipeline applies for a variance. There are generally three levels of variance, with the first two not really major.   

But with regard to Level 3 variances, which pertain to large-scale or project-wide changes, like alterations to mitigation measures, areas beyond the previously surveyed work corridor, and the location of permanent structures, the Energy Infrastructure Council (EIC) argues FERC often approves those without asking for public comment.  

“Some variance requests are approved within a matter of days, depriving the public of the opportunity to present meaningful, well-informed comments,” the EIC complained.   

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