September 2024, Vol. 251, No. 9
Editor's Notebook
‘Capricious’ You Say?
By Michael Reed, Editor-in-Chief
(P&GJ) — Is it just me or does the decision by the D.C. appeals court to throw out FERC’s approval of a Williams Cos. pipeline project due to the regulator’s “arbitrary and capricious” review process seem a bit more short-sighted than usual?
To use Circuit Judge J. Michelle Childs own word, the ruling seems, at least on one point, about as “capricious” as a court ruling can get.
How else could you explain the court’s interpretation of the commission’s review process as having failed to adequately review whether the state of New Jersey needs more pipeline capacity?
Childs pointed to two studies saying current capacity would suffice beyond 2030, while at the same time apparently forgetting that is only a little more than five years from now.
The project in question, the Regional Energy Access expansion project, has been partially online since late October. It already adds 450 MMcf/d of capacity along the Leidy Line in Pennsylvania and New Jersey. That would seem to indicate that the need is already there – and in a big way.
I would think a far better criteria, in this case, would have been to take a look at the affected market’s demand for natural gas. More to the point, questioning whether infrastructure that runs through five states and serves roughly 3 million customers lacks public value seems pretty farfetched in the first place.
In condemning the court’s decision, the American Gas Association pointed out that 73% of the capacity in question had already been pledged to local natural gas distribution companies, and that the pipeline is 100% subscribed under long-term contracts.
Still, the three-judge court panel held there was insufficient evidence that the pipeline held great enough value to region to outweigh the potential harm it might cause to the environment.
To be fair, the court’s decision was also based on other criteria. The judges considered the assertion that FERC should have better reviewed the risk of significant greenhouse gas emissions and had failed to “meaningfully weigh” the project’s potential harm against its benefits.
In its entirety, the project, an expansion of the existing Transco transmission system, will allow for an additional 829,400 Dth/d of firm transportation capacity from the Marcellus area to be delivered along the Leidy Line.
It consists of new pipelines, a new gas-fired turbine driven compressor station, addition of gas-fired turbine driven compressor units at existing compressor stations, modification of existing compressors, abandonment of existing gas-fired compressors and modifications to existing compressor stations.
It also involves modifications to existing pipeline tie-ins, addition of regulation controls at an existing valve setting and modifications to existing regulators.
In recent years, FERC has depended heavily on the existence of pipeline capacity contracts to determine if a project is needed. In this case, though, the judges said the commission did not explain how supply agreements with local gas utilities show there is a market need for the project, if the utilities can sell then re-sell the capacity.
Williams said shortly after the decision was made that, while it believes the court erred in rendering its conclusions, the company will address its concerns. The Tulsa, Oklahoma-based company also said the loss in court will not postpone the full implementation of the project, though that remains to be seen.
Interestingly, the court did not immediately send its decision to FERC, as is usually this type of case, most likely to allow time for an appeal to be sought before the full court.
My thinking is, in all probability, FERC will issue an emergency certificate so the project can remain operational, due to the upcoming winter heating season and the multiple scheduling delays among utility-scale renewable energy projects.
Hey, those delayed renewable projects seem like a convincing argument for the project’s necessity. Maybe it will be mentioned during the appeal.
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