[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
H.R. 1900, THE NATURAL GAS PIPELINE PERMITTING REFORM ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JULY 9, 2013
__________
Serial No. 113-66
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
STEVE SCALISE, Louisiana BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
RALPH M. HALL, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois PAUL TONKO, New York
JOSEPH R. PITTS, Pennsylvania EDWARD J. MARKEY, Massachusetts
LEE TERRY, Nebraska ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas GENE GREEN, Texas
ROBERT E. LATTA, Ohio LOIS CAPPS, California
BILL CASSIDY, Louisiana MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia DORIS O. MATSUI, California
CORY GARDNER, Colorado DONNA M. CHRISTENSEN, Virgin
MIKE POMPEO, Kansas Islands
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)
C O N T E N T S
----------
Page
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Prepared statement........................................... 6
Hon. Jerry McNerney, a Representative in Congress from the State
of California, opening statement............................... 7
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 8
Prepared statement........................................... 9
Hon. Mike Pompeo, a Representative in Congress from the State of
Kansas, opening statement...................................... 9
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 10
Witnesses
Philip D. Moeller, Commissioner, Federal Energy Regulatory
Commission; Accompanied by Jeff C. Wright, Director, Office of
Energy Projects, Federal Energy Regulatory Commission.......... 12
Prepared statement........................................... 15
David Markarian, Vice President, Governmental Affairs, Nextera
Energy, Inc.................................................... 39
Prepared statement........................................... 41
Maya K. Van Rossum, The Delaware Riverkeeper, Delaware
Riverkeeper Network............................................ 47
Prepared statement........................................... 49
Rick Kessler, President, Board of Directors, Pipeline Safety
Trust.......................................................... 78
Prepared statement........................................... 81
Alex Paris, III, Distribution Contractors Association............ 87
Prepared statement........................................... 89
Donald F. Santa, Jr., President and CEO, INGAA................... 96
Prepared statement........................................... 98
Submitted Material
H.R. 1900........................................................ 2
Materials submitted by Mr. Pompeo
Letter of July 8, 2013, from the National Association of
Manufacturers to the Committee............................. 120
Letter of July 2, 2013, from the Chamber of Commerce to the
Committee.................................................. 122
Letter of July 1, 2013, from the Distribution Contractors
Association to the Committee............................... 124
Letter of June 28, 2013, from the Electric Power Supply
Association to the subcommittee............................ 125
Letter of June 26, 2013, from Edison Electric Institute to
the subcommittee........................................... 127
Letter of July 8, 2013, from the American Public Power
Association to the subcommittee............................ 129
Letter of July 8, 2013, from the Gas Processors Association
to the Committee........................................... 130
Technical analysis of H.R. 1900 by the Army Corps of Engineers,
submitted by Mr. Waxman........................................ 132
Technical analysis of H.R. 1900 by the U.S. Environmental
Protection Agency, submitted by Mr. Waxman..................... 133
H.R. 1900, THE NATURAL GAS PIPELINE PERMITTING REFORM ACT
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TUESDAY, JULY 9, 2013
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:05 a.m., in
room 2123, Rayburn House Office Building, Hon. Ed Whitfield
(chairman of the subcommittee) presiding.
Present: Representatives Whitman, Scalise, Hall, Pitts,
Terry, Latta, Cassidy, Olson, Gardner, Pompeo, Kinzinger,
Griffith, Barton, Upton (ex officio), McNerney, Tonko, Green,
Barrow, Matsui, Castor, Dingell, and Waxman (ex officio).
Also Present: Representative Murphy of Pennsylvania.
Staff Present: Nick Abraham, Legislative Clerk; Gary
Andres, Staff Director; Charlotte Baker, Press Secretary;
Allison Busbee, Policy Coordinator, Energy and Power; Patrick
Currier, Counsel, Energy and Power; Tom Hassenboehler, Chief
Counsel, Energy and Power; Jason Knox, Counsel, Energy and
Power; Ben Lieberman, Counsel, Energy and Power; Brandon
Mooney, Professional Staff Member; Jeff Baran, Minority Senior
Counsel; Phil Barnett, Minority Staff Director; Greg Dotson,
Minority Staff Director, Energy and Environment; Caitlin
Haberman, Minority Policy Analyst; and Bruce Ho, Minority
Counsel.
Mr. Whitfield. I would like to call the hearing to order
this morning.
Today we are going to be focusing on H.R. 1900, the Natural
Gas Pipeline Permitting Reform Act.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 86390.060
[GRAPHIC] [TIFF OMITTED] 86390.061
[GRAPHIC] [TIFF OMITTED] 86390.062
Mr. Whitfield. And while I would normally give my opening
statement first, I am going to be yielding to someone who is
not here yet. So I am going to call on the chairman of the full
committee to give his opening statement at this time.
Mr. Upton is recognized for 5 minutes.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you, Mr. Chairman.
You know, this subcommittee has held a number of hearings
addressing America's growing natural gas abundance, and two
clear messages have emerged: first, that plentiful and
affordable natural gas supplies offer many potential
advantages; and, second, there is bipartisan support for the
development and use of domestic natural gas.
Today we are going to discuss a critical step in turning
these pro-natural-gas words into action with H.R. 1900, the
Natural Gas Pipeline Permitting Reform Act.
In a number of locations across the country, the existing
natural gas pipeline infrastructure is indeed struggling to
keep pace with the expanding supplies while approvals for new
pipelines often get delayed by State and Federal red tape that
can last for years and years.
To put it bluntly, the permitting process has not kept up
with the times. This problem is especially exacerbated in areas
in the Northeast and the Midwest, as we learned in our natural-
gas-electric coordination hearings earlier in this Congress.
As more and more of our energy needs become tied to the
safe deliverability of natural gas, the need to build new
pipeline infrastructure to connect new supplies to existing and
new markets becomes more critical.
This is where the Natural Gas Pipeline Permitting Reform
Act comes in. This legislation helps to put the Federal
permitting process on a reasonable schedule with clear
deadlines so that every Federal and State agency can be held
accountable and know the rules of the road. I want to thank my
friend and colleague, Mike Pompeo, for spearheading this
commonsense bill.
New natural gas pipeline projects are going to benefit us
in many ways. First, the projects themselves will provide
significant numbers of good-paying jobs at a time of chronic
high unemployment. And with each completed project, more
natural gas can be transported to where it is needed. Countless
homeowners and small-business owners could benefit from lower
gas and electric bills. Natural-gas-dependent manufacturers
could obtain sufficient supplies to sustain an American
manufacturing renaissance. And a more robust pipeline
infrastructure would open up promising opportunities to export
natural gas supplies to our trading partners around the world.
The opportunities are great, but they could be stalled or
even lost for good unless the pipelines start getting built.
This legislation helps provide the certainty to ensure that
these critical infrastructure projects get in the ground
without unnecessary delay, while at the same time making sure
they are protective of safety and the environment.
And I will remind us all, the President signed the pipeline
safety bill last year, which upgraded 57 standards, new
standards, for every oil and gas new pipeline being
constructed. And I want to say that that bill passed without
dissent, not only in this committee but also on the House
floor. Maybe there was one person against it, but it was
overwhelming.
Natural gas is going to be a big part of our energy future
but only if we cut the red tape from the past. We are a Nation
of builders, not a Nation of bottlenecks. And I look forward to
this discussion of the Natural Gas Pipeline Permitting Reform
Act and advancing this important piece of energy and jobs
legislation.
And I yield the balance of my time back to the chairman.
Mr. Whitfield. Well, thank you, Mr. Upton.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
This subcommittee has held a number of hearings addressing
America's growing natural gas abundance, and two clear messages
have emerged--first, that plentiful and affordable domestic
natural gas supplies offer many potential advantages, and
second, that there is bipartisan support for the development
and use of domestic natural gas. Today, we will discuss a
critical step in turning these pro-natural gas words into
action with H.R. 1900, the ``Natural Gas Pipeline Permitting
Reform Act.''
In a number of locations across the country, the existing
natural gas pipeline infrastructure is struggling to keep pace
with the expanding supplies, while approvals for new pipelines
often get delayed by state and federal red tape that can last
for years. To put it bluntly, the permitting process has not
kept up with the times. This problem is especially exacerbated
in areas in the Northeast and Midwest as we learned in our
natural gas electric coordination hearings earlier this
Congress. As more and more of our energy needs become tied to
the safe deliverability of natural gas, the need to build new
pipeline infrastructure to connect new supplies to existing and
new markets becomes more critical.
This is where the ``Natural Gas Pipeline Permitting Reform
Act'' comes in. This legislation helps to put the federal
permitting process on a reasonable schedule with clear
deadlines so all federal and state agencies are held
accountable and know the rules of the road. I would like to
thank my friend and colleague Mike Pompeo for spearheading this
commonsense bill.
New natural gas pipeline projects will benefit us in many
ways. First, the projects themselves would provide significant
numbers of good-paying jobs at a time of chronic high
unemployment. And with each completed project, more natural gas
can be transported to where it is needed. Countless homeowners
and small business owners could benefit from lower gas and
electric bills. Natural gas-dependent manufacturers could
obtain sufficient supplies to sustain an American manufacturing
renaissance. And a more robust pipeline infrastructure would
open up promising opportunities to export natural gas supplies
to our trading partners around the world.
The opportunities are great, but they could be stalled or
even lost for good unless the pipelines start getting built.
This legislation helps provide the certainty to ensure these
critical infrastructure projects get in the ground without
unnecessary delay while at the same time making sure they are
protective of safety and the environment.
Natural gas is going to be a big part of our energy future,
but only if we cut the red tape from the past. We are a nation
of builders, not a nation of bottlenecks. I look forward to
this discussion of the ``Natural Gas Pipeline Permitting Reform
Act'' and advancing this important piece of energy and jobs
legislation.
# # #
Mr. Whitfield. At this time, I would like to recognize the
gentleman from California, Mr. McNerney, for 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. McNerney. Well, thank you, Mr. Chairman, for holding
this hearing on H.R. 1900, the Natural Gas Pipeline Permitting
Reform Act.
This subcommittee has held several hearings over the first
6 months of this year, many of which have focused on natural
gas and our goal to achieve national energy independence
through an approach that encompasses a variety of energy
resources.
Although there have been advantages of increasing natural
gas production here in the United States, we must produce
energy responsibly, in a way that doesn't harm our environment
or the public health. There are still reasonable concerns about
methane leakage and pollution regarding natural gas production.
However, I think we are taking some positive first steps.
For example, the EPA's final rule to reduce harmful emissions
of methane and other greenhouse gases from new natural gas
wells that use hydraulic fracturing will help our air quality
and climate in years ahead.
Under the Natural Gas Act, FERC reviews applications for
siting, construction, and operation of interstate natural gas
pipelines. A company must receive a certificate of public
convenience and necessity before building a pipeline. FERC also
works with other agencies, such as the U.S. Army Corps of
Engineers and the Fish and Wildlife Service, when reviewing
permit applications.
According to a 2013 GAO report, the average processing time
from the filing of an application to certification was 225
days. H.R. 1900 modifies the Natural Gas Act to require FERC to
improve or deny a certificate within 12 months of the notice of
application. The bill also imposes a 90-day deadline for other
agencies to decide on other permits, such as those under the
Clean Water Act and Clean Air Act. Lastly, the bill provides
that the licenses and permits will automatically go into effect
if the respective agency doesn't approve them on time.
I understand that the goal of these provisions is to speed
up the permitting process, but I don't believe that setting the
same firm deadlines for every natural gas pipeline project is
necessarily in the public's interest. These deadlines may be
achievable for a straightforward project or for a short
pipeline but impractical for a complex pipeline that would
travel hundreds of miles.
I would much rather see FERC and the experts from other
agencies have the appropriate time to thoroughly review an
application rather than be forced to rush and potentially make
a mistake during the process. Sound science and proper
environmental and technical review is essential. It isn't in
anyone's interest to cut these reviews short or to reduce
opportunities for public involvement.
There are just a couple of issues I hope we can answer
today before we start the subcommittee markup this afternoon.
We should fully understand the impacts of the changes made by
this legislation and make sure they are necessary.
I want to thank our witnesses today, and I am eager to hear
their testimony and input to H.R. 1900.
At this point, I would like to recognize my colleague from
Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman, and thank our ranking
member for allowing me to take some time.
First of all, coming from where I come from, we have
pipelines everywhere. People have said, I have never not lived
on a pipeline easement in the Houston area. So I am very
supportive of it.
I support knowing regulatory certainty so we will know that
these things can't be drug out. But I think the bill goes so
far in the deeming and approval, it may end up transferring it
from a regulatory agency, FERC, who has been doing a pretty
good job over the last 10 years--I know a few years ago I had
some problems with FERC, but--but, you know, it may end up just
transferring it to the courthouse, where we can't do anything
about it.
So I would hope we have looked at the language of the bill,
and particularly in section 3, and even looked at the testimony
from Commissioner Moeller, who talks about some of the good
things going on in FERC. And, typically, where I come from, if
it ain't broke, you don't fix it. FERC was broken a few years
ago, but it has been fixed. And I hate to create this new
legislation that will make it harder to get pipelines approved,
because pipelines are the safest way to move any product, as we
found out recently, although it was an oil train, instead of
anything else.
But, again, I thank my colleague for yielding to me, and I
look forward to the hearing.
Mr. McNerney. Thank you.
I yield back, Mr. Chairman.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. The gentleman yields back.
At this time, I will recognize myself for a 5-minute
opening statement.
Recently, the World Economic Forum was held in Davos,
Switzerland, and the reports coming out of that forum was that
a lot of attention was focused on the tremendous finds of
natural resources in America and how the Eagle Ford, the
Marcellus Shale, the Bakken field, and others in oil and gas
gave America the opportunity to really become energy-
independent. And people who attended that forum were struck by
how the Europeans, in particular, were really focused on that
issue.
Since then, we have had a lot of hearings, and it is quite
clear that we do have a capacity limit as it relates to
transmission of gas in pipelines. And it has become quite
clear, I think, to most people that FERC lacks the ability to
enforce agency decisional deadlines related to these natural
gas pipeline applications.
And with the potential growth in this market, we have had
hearings also about the problems in the Northeast, the lack of
a capacity to get the product there. And so I am delighted that
Mr. Pompeo has introduced H.R. 1900 to help us focus on this
issue. It gives us the opportunity to look at his legislation
and see if we could come up with a way to address this
significant issue in America.
So at this time, I would like to recognize the gentleman
from Kansas for purposes of an opening statement.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
Over the last 6 months of this Congress, the Energy and
Power Subcommittee has held multiple hearings that have touched
on issues related to the growing domestic production of natural
gas.
While we don't often agree on all of the issues before us,
it has been heartening to hear the near universal consensus
from the members of this subcommittee on the abundant growth in
natural gas supplies and its benefits, such as increased
manufacturing competitiveness along with growing support for
exports, both of which need to be encouraged for the betterment
of our economy and our energy security.
A common theme we have heard from our earlier hearings is
that the U.S. needs to greatly expand its pipeline
infrastructure because the new shale gas development has
largely altered the previously existing model of delivering gas
to capacity constrained centers that need it most like the
Northeast and Midwest.
Producers need pipeline infrastructure to move it from the
place of production to where it needs to be supplied most,
which is often hundreds if not thousands of miles away.
Utilities and manufacturers in the Northeast lack adequate
supplies due to a lack of pipeline infrastructure.
There are endless examples of why more natural gas
pipelines are needed but suffice it to say that it affects
Americans in the two places that matter most right now--in the
consumer's wallets and in the job market.
I want to thank Representative Pompeo for his work on H.R.
1900, the Natural Gas Pipeline Permitting Reform Act. It is a
commonsense and thoughtful approach to dealing with a critical
need-the ability to build infrastructure in a timely manner. I
also want to praise him for his openness to working with a wide
variety of members on this issue, regardless of party
affiliation. With that I will yield the balance of my time to
Mr. Pompeo.
# # #
OPENING STATEMENT OF HON. MIKE POMPEO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF KANSAS
Mr. Pompeo. Thank you, Chairman Whitfield. And thanks for
holding this hearing this morning on the H.R. 1900.
You know, we have natural gas production, as some have
said, at an all-time high domestically. It is becoming an
enormously important and prevalent fuel source for electricity
generation, especially in the Northeast, which is starved for
electrical power. Because of this combination of increased
production and demand for natural gas, it is absolutely vital
that the law for natural gas pipelines keep up with the
capacity to get this stuff out of the ground.
The Energy Policy Act of 2005 made a very early attempt at
improving the gas pipeline process, requiring FERC to act as
the lead agency for all interstate natural gas pipelines. I
think that absolutely made sense at the time. And in using this
authority under EPAct, FERC required that all permitting
agencies complete their reviews no later than 90 days after
FERC provided notice that the environmental review was
complete.
And despite those very, very good reforms, we are seeing a
growing need for natural gas pipeline infrastructure beyond
that which the authors of EPAct could possibly have
contemplated at the time it was being put into law. There was a
very recent report that found increasing delays of 90, 180
days, or even more in the construction of pipeline projects, in
part because we have permitting process that still remains very
complex. That is the language that the GAO used, called the
permitting process too complex.
That is why I, along with Congressmen Matheson and Olson
and Johnson and Gardner from this committee introduced H.R.
1900, the Natural Gas Pipeline Permitting Reform Act. We try to
do two things in the law. We make commonsense reforms allowing
the permitting process to create certainty for businesses. We
do not have to gut the whole environmental review process to do
that, and this bill doesn't.
The point on environmental review is very important.
Nothing in this legislation takes away any authority from any
permitting agency, and nothing in this legislation amends or
limits any existing environmental statute. It doesn't touch
NEPA, the Clean Air Act, the Clean Water Act, or any other
provision related to environmental review.
Look, in a perfect world, I would introduce legislation
that would be a complete overhaul of this system. But what I am
trying to do here is create business certainty. They can grant
the permit, they can deny the permit, they can grant the permit
with conditions, but the agencies are forced to complete their
task.
Mr. Chairman, I look forward to our hearing this morning
and our markup later this afternoon and tomorrow.
I would like to end by submitting letters for the record
from organizations supporting H.R. 1900, including the National
Association of Manufacturers, the U.S. Chamber of Commerce, the
Distribution Contractors Association, the Electric Power Supply
Association, Edison Electric Institute, the American Public
Power Association, and the Gas Processors Association.
Thank you, Mr. Chairman, and I yield back my time.
Mr. Whitfield. Well, without objection, those will be
entered into the record.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. And I yield back the balance of my time.
At this time, I recognize the gentleman from California,
Mr. Waxman, for a 5-minute opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman.
Today's hearing focuses on Congressman Pompeo's bill, which
addresses the permitting of interstate natural gas pipelines.
The U.S. Has more than 200,000 miles of interstate natural
gas pipelines, and more new pipelines are built every year.
Between 2009 and 2012, the Federal Energy Regulatory
Commission, or FERC, approved over 3,000 miles of new pipelines
in 30 States. On average, it took FERC only 9 \1/2\ months to
review and approve applications for pipeline projects.
Earlier this year, GAO examined FERC's permitting process
and found it to be predictable and consistent. This process is
getting pipelines permitted and built. That is what the
pipeline companies told the subcommittee in May, when they
testified that, ``the interstate natural gas pipeline sector
enjoys a favorable legal and regulatory framework for the
approval of new infrastructure.'' They testified that pipeline
development over the last decade shows that, ``the natural gas
model works.''
Unfortunately, the bill we are considering today proposes
to change a regulatory system that is working fine. The bill
would require FERC to approve or deny new pipeline certificates
within 12 months, regardless of their potential impacts or
complexity. It would require all other Federal and State
agencies to approve or deny required permits within 90 days
after FERC completes its environmental review.
According to FERC's staff, some projects, due to their
complexity, length, path, and the level of public concern, take
longer than 12 months to review to get right. Arbitrarily
limiting this time will deny FERC and the public the
opportunity to fully consider these projects.
And it will likely results in slower, rather than faster,
permitting. If FERC is unable to properly evaluate a project
within 12 months, the bill's rigid deadline could force FERC to
simply deny the permit. A project that currently could be
approved in 15 months after a full review might instead be
denied in 12 months under this bill.
The bill's limits on other agencies would create additional
problems. The Environmental Protection Agency says that the
bill's 90-day deadline could undermine protections under the
Clean Air Act and the Clean Water Act. The U.S. Army Corps of
Engineers came to the same conclusion, stating that the bill
would, ``allow certain activities to proceed despite potential
adverse and significant impacts.'' Other agencies and statutes
will also be affected. This bill threatens the Bureau of Land
Management's ability to manage rights of way across Federal
lands and Fish and Wildlife Service's ability to protect
endangered species.
If any agency does not approve or deny a permit within 90
days, the bill states that the permit automatically goes into
effect.
That could create new legal vulnerabilities for pipeline
permits by giving a pipeline company a permit without ensuring
that the environment and public health are protected.
Alternatively, agencies could be forced to simply deny the
permits when they are prohibited from taking the time needed
for reviews required by Federal law.
American families expect our laws to protect health,
safety, and the environment whenever pipelines are built. We
shouldn't put those protections at risk.
We should also remember that, when FERC approves a
pipeline, it grants the power of eminent domain, which allows a
pipeline company to take property from landowners who do not
want to sell. That is not something that should happen without
agencies taking the time they need for thorough analysis and
thoughtful decision-making. But, with this bill, we get rushed
decisions and probably more project denials. No one benefits
from that, not even the pipeline companies.
Mr. Chairman, this bill has not been well thought out. It
is good that we are having a hearing so that Members can better
understand the problems with this bill.
I yield back the balance of my time.
Mr. Whitfield. Thank you, Mr. Waxman.
That concludes the opening statements.
And so we have two panels of witnesses today. On the first
panel, there is only one witness, and that is Mr. Philip
Moeller, who is our Commissioner over at the Federal Energy
Regulatory Commission. And accompanying him is Mr. Jeff Wright,
who is the FERC Director of the Office of Energy Projects.
And I am sure that--I know sometimes in Congress Members
need to confer with their staff. I am sure that is not the case
in your situation, Mr. Moeller. But if you do, I understand Mr.
Wright is quite an expert, so we are delighted that he is here,
as well.
So, Mr. Moeller, thanks very much for being with us today.
We do appreciate your views on this important issue.
And, at this time, I would recognize myself for 5 minutes
of questions.
And I guess before I ask you questions, I should give you
an opportunity to make an opening statement, as well. So I will
recognize you for 5 minutes.
STATEMENT OF THE HONORABLE PHILIP D. MOELLER, COMMISSIONER,
FEDERAL ENERGY REGULATORY COMMISSION; ACCOMPANIED BY JEFF C.
WRIGHT, DIRECTOR, OFFICE OF ENERGY PROJECTS, FEDERAL ENERGY
REGULATORY COMMISSION
Mr. Moeller. Well, thank you, Mr. Chairman and members of
the committee. My name is Phil Moeller. I am the sitting
Commissioner at the Federal Energy Regulatory Commission. It is
an honor to be back before you again today. And the testimony
today related to H.R. 1900, the Natural Gas Pipeline Permitting
Reform Act. My testimony reflects only my views, but I can
elaborate on some of my colleagues' views, as well, if you
would like.
From the onset, I want to thank you for shining the light,
highlighting the issue of the need for additional energy
infrastructure in this country. Consumers, generally speaking,
enjoy abundant, reliable, and safe energy of many different
forms, but they generally don't like to look at the pipes and
wires that delivers it to them. And getting infrastructure
built is, frankly, getting more difficult in the country. So
the fact that you are focusing on this is a relevant topic.
Similarly, focusing on governmental agency action in a
timely manner is relevant, as well, and certainly specific to
this, and the natural gas industry is relevant and timely.
I think that FERC performs generally very well when it
comes to energy projects, including natural gas pipelines. And
I think that observation was largely supported by the report
that has been referenced a few times already, the 2013 GAO
report on pipeline permitting.
Our jurisdiction, under Section 7 of the Natural Gas Act,
relates to interstate pipelines, those that are proposed within
a State. Intrastate pipelines, that jurisdiction rests solely
with the States.
Now, specific to natural gas pipeline certificates, project
applications that we see at FERC have a wide range. They can be
relatively small, uncontested upgrades to existing facilities,
or they can range to a new pipeline that covers hundreds of
miles. And so, naturally, the smaller and less contested
projects can be reviewed by us in a shorter amount of time and
the complex applications take longer.
We did an internal review over the last few years since
Federal fiscal year 2009, and in that time we had a total of
548 applications submitted to the Commission. Projects in what
we call the ``Prior Notice/No Protests'' category average 75
days for a Commission decision. Those projects in the
``Protests, Policy Issues, or Major Construction'' category
averaged 375 days for a Commission decision.
We stress to project developers the importance of public
involvement when considering their projects, although some
developers are better at outreach than others. Generally, those
that employ aggressive public outreach tend to be rewarded with
less contentiousness and faster Commission decisions.
In my time at the Commission, I believe every new major
pipeline project has had some kind of a route change based on
public involvement. So hopefully we are seen as responsive to
the public that is concerned about these projects.
However, we are often dependent on other Federal agencies--
a long list of them is in my testimony--to review aspects of
the proposed projects. And sometimes, of course, State and
local governments are involved, as well.
Specific to H.R. 1900, I have been informed by our
Commission staff that the 12-month timeline for action is
achievable once the Commission determines that an application
is complete. That is a key point. And I would respectfully
suggest that clarifying that aspect might help the bill's
effectiveness, would it become law.
The timeline for resource agencies adds an admirable level
of accountability for these resource agencies involved. My only
caution is that, without high-level agency oversight directing
the agencies to prioritize these permits, a timeline could
result in agencies either denying certain permits or adding
burdensome conditions as a way to protect themselves from
accusations of insufficient review. Vigilant oversight of
resource agency actions will be necessary if these requirements
become law.
Apart from the bill itself, other actions would assist a
more timely consideration of proposed timelines. Three areas:
The first is the one I just reiterated. The management of
Federal resource agencies have to be following these projects
and these reviews to make sure that they are priorities to be
reviewed in a timely manner. And we have seen a wide range.
When agencies make this a priority, we get timely decisions. If
they don't, things can drag on, and usually consumers are the
ones who pay the price.
A second area is that we suggest that all natural gas
pipeline developers should take advantage of the Commission's
pre-filing process, but not all do so. This process allows a
lot of the issues to be resolved with the Commission staff and
various stakeholders before a formal application. Once the
formal application is in, the ex parte rules apply and all
communication needs to be in writing.
A third area, as noted in the GAO report, is that some
States have designated a one-stop resource agency to coordinate
State decisions on proposed pipelines. And for those States
that have done it, it has generally added to regulatory
certainty. For those States that haven't, it is typically a lot
more difficult to get the pipeline actually constructed or at
least considered. So I would respectfully suggest that those
States that don't have such a one-stop permitting resource
agency consider doing so.
Again, it is an honor to be here. I appreciate the chance
to talk about infrastructure, and I look forward to any
questions.
Mr. Whitfield. Well, Mr. Moeller, thanks so much, and we
appreciate your opening statement.
[The prepared statement of Mr. Moeller follows:]
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Mr. Whitfield. And now I will recognize myself for 5
minutes of questions.
First of all, in the opening statements up here, I think
you could detect that on one side of the aisle there was the
impression that there really was not that much of a problem out
there and on the other side of the aisle there was some
reference that there is a problem out there relating to the
approval of natural gas pipelines.
Since you are a Commissioner there at FERC and you deal
with this on a regular basis, what is your opinion? Is there a
need for assistance in speeding up these applications or not?
Mr. Moeller. Well, I think the trend is such that, because
of the abundant domestic resource that several of the Members
referenced earlier, we are probably going to see an increase in
pipelines. And I think the numbers show that we are getting an
increase in the number of applications. It is probably project
by project, as to whether there is a problem. Resource agencies
need to have--I think the accountability aspect of it is good.
So there is a growing--we are certainly trending in a way
where we are going to be a lot busier at FERC. And to the
extent that Federal agencies can stick to timelines, I think
the process would benefit.
Mr. Whitfield. And how many people are really involved in
the application process for a pipeline at FERC?
Mr. Moeller. Well, again, it depends on the project, but we
have internal engineers, particularly analysts--Mr. Wright can
probably elaborate more. We also have contractors that can
perform environmental reviews. But it depends on the extent of
the project. But----
Mr. Whitfield. Right.
Mr. Moeller. --from just a few to many, especially if it is
involving new pipe.
Mr. Whitfield. Yes. And, typically, what takes the most
time, I am assuming, is the environmental impact study. Is that
correct?
Mr. Moeller. Yes. Well, arguably, maybe the pre-filing
process, depending on the extent of the project. But once the
application is filed, yes, the environmental review, whether it
is an environmental impact statement or an environmental
assessment, would take the most amount of time in terms of the
process.
Mr. Whitfield. And under the Energy Power Act of 2005, you
all have the authority to conduct the environmental impact
study, correct?
Mr. Moeller. Yes.
Mr. Whitfield. OK. Now, you mentioned the pre-filing, of
course, in your opening statement, as well. Would you elaborate
a little bit on what is included in this pre-filing process?
Mr. Moeller. Well, typically, the developers will come to
the Commission with an idea of what they are proposing.
Sometimes there is an economic element of it, as well, in terms
of who is going to bear the burden of financing it, but mostly
it is going to be a focus on environmental aspects of the
project.
And the feeling is that if the developer can work with the
Commission staff and the stakeholders, a wide range of
stakeholders, they can eliminate a lot of misunderstandings
that could occur in terms of routing, mitigation. And those are
just much easier to work out before the formal ex parte rules
apply.
Mr. Whitfield. You know, I have heard some people refer to
it as sort of a Byzantine system, which--would that be a fair
characterization, or is that being a little bit--maybe it is
not that difficult. But you are dealing with State issues, you
are dealing with local issues. You are dealing with a lot of
other government agencies, as well.
Mr. Moeller. I am guessing that it becomes more Byzantine
the more agencies that are involved. If it is relatively
focused, where maybe only one or two Federal agencies are in
the loop, that is better. You start adding on to that, there
are just that many more decision points.
Mr. Whitfield. Right.
And have you had the opportunity to review H.R. 1900?
Mr. Moeller. I have, yes.
Mr. Whitfield. And, your personal view, do you think this
is a good piece of legislation? Do you support this?
Mr. Moeller. As I noted in the testimony, I think the key
in terms of the 12-month timeline is having an ability for the
Commission, perhaps through Mr. Wright, to designate once an
application is complete that the timeline kicks in then. A lot
of the problems we have had with developers are, you know, they
are missing something, and that delays the process. Once it is
deemed complete, we feel that the 12-month timeline is--we can
accomplish that.
Mr. Whitfield. OK. Well, thank you very much.
Mr. McNerney, you are recognized for 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman.
And thank you, Commissioner, for your thoughtful testimony.
I think it was very informative.
It seemed to me that you were saying that, if companies
participated in the pre-filing process and did sufficient
outreach, that their problems were likely to be less difficult
and they might meet faster timelines. Is that right? Did I----
Mr. Moeller. Correct.
Mr. McNerney. --understand that correctly?
Mr. Moeller. Yes.
Mr. McNerney. Thank you.
Commissioner Moeller, the FERC data shows that, from 2009
to 2012, the Commission approved 69 major natural gas pipeline
projects spanning 3,000 miles in 30 States. Does that sound
about right?
Mr. Moeller. Sounds about right.
Mr. McNerney. Well, when the CEO of Dominion Energy
testified on behalf of the Interstate Natural Gas Association
of America in May, he told this subcommittee that the industry
can add new pipeline capacity in a timely, market-responsive
manner and that the interstate natural gas pipeline sector
enjoys a favorable legal and regulatory framework for the
approval of new infrastructure.
His conclusion was that the natural gas model works, and I
was wondering if you thought that that situation had changed
since May.
Mr. Moeller. The only thing I would add is that we really
lack sufficient capacity in the Northeast. And the typical
financing model was long-term contracts for local gas
companies, and the new demand is electric generation that is
driving a lot. And that financing model doesn't work in the
Northeast, and we need more pipe in the Northeast. So that is
something we are struggling with.
Mr. McNerney. OK. Thank you.
Mr. Dingell. Would the gentleman yield?
Mr. McNerney. Yes.
Mr. Dingell. I don't believe that this bill addresses that
problem, does it?
Mr. Moeller. Congressman, no, this is not specific to that.
Correct.
Mr. Dingell. It does not address that problem. All right,
thank you.
Mr. Moeller. I didn't mean to imply that it did. I am
sorry.
Mr. McNerney. Thank you.
Well, the pipeline industry told us that the permitting
process works. They reiterated today that the process is
generally very good.
The GAO recently examined the issue, as well, and the GAO
found that the permitting process for interstate natural gas
pipeline is consistent. Do you agree with the GAO that FERC's
permitting process is consistent for pipelines?
Mr. Moeller. Yes.
Mr. McNerney. Well, it takes FERC an average of 9-1/2
months to decide on an application for pipeline certification,
but not all projects are clearly the same. The permitting
process applies to applications for a single compressor station
and to a short extension of existing pipeline. It also applies
to, say, a 500-mile pipeline with multiple compressors that
goes across many rivers.
As you pointed out in your testimony, the more complex
projects take longer to permit than the smaller projects. Is it
realistic to think that the permitting process for every
project, no matter how complex, can be completed within 12
months?
Mr. Moeller. Well, my impression is that we can do that if
the bill becomes law.
Mr. McNerney. Well, the bill doesn't start the clock until
the application is completed. It starts the clock when FERC
issues a notice that an application has been filed, even if it
isn't completed; is that right?
Mr. Moeller. Yes. I mean, referencing my earlier point,
clarifying that we can deem an application complete would be
very helpful.
Mr. McNerney. Do you think there is a risk that
applications will be denied for insufficient time?
Mr. Moeller. That is something we have to be vigilant
about.
Mr. McNerney. And do you think it is realistic to expect
other agencies to issue permits within 90 days or even 120 days
if the application filed with them are not complete?
Mr. Moeller. If it is not complete, no. If it is complete,
yes.
Mr. McNerney. OK, thank you, Mr. Chairman. I yield back.
Mr. Whitfield. At this time, I recognize the gentleman from
Texas, Mr. Barton, for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman.
It is always good when honesty breaks out here at the
subcommittee. I appreciate the Commissioner's admittance that,
if we pass the law, he would enforce it. That is a noble thing
in the Obama administration, so we are glad to know that.
You know, back in 2005, Mr. Dingell and Mr. Green, I think
Mr. Barrow maybe was on the committee, Mr. Whitfield, myself,
Mr. Pitts, Mr. Terry, we all passed this Energy Policy Act in
2005. And we gave the FERC additional authority, let the FERC
kind of coordinate and serve as the quarterback, but we didn't
give enforcement, we didn't put in penalties for noncompliance.
Because the assumption was, if we required this coordination,
that all the various agencies that had to coordinate and
cooperate in what is considered to be a complex and complicated
permitting process would comply. Well, that has apparently
turned out not to be.
Do you agree that the current law, as written, does not
give the FERC any meaningful enforcement authority when other
agencies fail to comply with the various deadlines and
requirements under the current law?
Mr. Moeller. I would concur.
Mr. Barton. OK.
Now, the solution that Mr. Pompeo has come up with is to
give a certain amount of time and, if they don't comply, then
it is just deemed or decided that their failure to act means
they approve it.
Would the FERC have a different enforcement mechanism than
that? Is there something that is not in the bill, that, instead
of saying, we will give you so much time with a possible
extension but after that period of time we are going to assume
that those agencies don't have a problem and move forward?
Would you prefer some different mechanism, or would FERC prefer
some different mechanism?
Mr. Moeller. We haven't discussed any alternative.
Mr. Barton. Then are you satisfied that the bill as written
is acceptable?
Mr. Moeller. I believe that if it became law, it would add
a level of accountability to the resource agencies. But we
would all have to be vigilant to make sure that they didn't
have the incentive to just deny permits or add burdensome
conditions as a way of essentially covering themselves.
Mr. Barton. Well, we have a good problem, in that the
United States is blessed with abundant supplies of natural gas,
and they are geographically well-situated, close to potential
markets. It is a clean-burning fuel, it is an environmentally
benign fuel.
So if we can come to some understanding of what an
acceptable permitting process is, give everybody that is a
stakeholder an opportunity to participate in the process, but
if projects appear to be mutually beneficial to both the
supplier and the consumer, that they should go forward, we are
going to have a great outcome for this country.
And this bill attempts to, I think, create a balance
between all the various competing interests so that these
projects can move forward unless there is really a problem. And
some on the more liberal side of the agenda just don't want
these projects to go forward under any circumstance. It is not
a gas pipeline, but you see it in the Keystone pipeline.
So I think the Pompeo bill is a good step forward. And I
hope, Mr. Chairman, that we mark it up expeditiously at the
subcommittee, full committee, on the floor, and send it on the
other body. This would serve as a good example to the American
people that the Congress can solve problems and do things that
are mutually beneficial for the entire country.
And, with that, I yield back.
Mr. Whitfield. Thank you, Mr. Barton.
At this time, I recognize the gentleman from California,
Mr. Waxman, for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
I just want to clarify for the record, people aren't
against pipelines per se, and my opposition to the XL pipeline
is not because it is a pipeline, but because of additional
greenhouse gases that would be expended just to get that dirty
tar sands oil ready to be put into a pipeline.
But that does raise the question of a legislation that was
adopted by the Congress, where there was an absolute deadline
for the President to approve it, and he said he couldn't do the
analysis in time so he disapproved it. And I think that is the
point that Mr. Moeller was just making, and others, that you
may get the opposite of what you hoped for.
Before an interstate natural gas pipeline can be built and
operated, it has to get a permit from FERC. And the Pompeo bill
amends the Natural Gas Act to establish a 12-month deadline for
FERC to act one way or the other.
Under these same rigid deadlines, we would have the same
situation apply to every project, whether it is a
straightforward 30-mile pipeline in the middle of nowhere that
crosses no rivers or a complex 500-mile pipeline that goes
through a major population center and crosses a dozen rivers.
Commissioner Moeller, I appreciate your testimony, but I
want to ask a question for Mr. Wright.
Mr. Wright, you are a senior member of FERC's nonpartisan
career staff, aren't you?
Mr. Wright. Yes.
Mr. Waxman. The FERC staff works on pipeline applications
every day. You work on the easy ones and the more difficult
ones. Do you believe that it is feasible for FERC to make a
decision within 1 year of the notice of application for every
complex pipeline project?
Mr. Wright. I believe 12 months is adequate when FERC
determines that it has a complete application before it.
Mr. Waxman. So sometimes FERC takes longer because you
don't have a complete application.
Mr. Wright. Correct.
Mr. Waxman. Which means the company didn't give you all the
information you need; is that right?
Mr. Moeller. Yes.
Mr. Waxman. Well, maybe they would just as soon run out the
clock and get an automatic approval.
The bill doesn't start the clock when the application is
complete. It starts the clock when FERC issues a notice that an
application has been filed even if it isn't complete; isn't
that right?
Mr. Wright. That is correct, sir.
Mr. Waxman. Before FERC can make a final decision on an
application, you not only have to do an environmental analysis
but engineering and rate reviews; isn't that right?
Mr. Wright. That is correct.
Mr. Waxman. These are important reviews to ensure that the
environment, public health, and safety are protected. They are
also necessary to make sure that rates are fair and reasonable.
Mr. Wright, if FERC could not complete the required
analysis and certificate work for a project within the 12-month
deadline established by this bill, what would happen? Would
FERC have to dismiss the application?
Mr. Wright. That would be a likely outcome if we are not
satisfied with the environmental review that we have come to at
that point in time and the review of the other matters that
would be before us.
Mr. Waxman. So this bill aimed at speeding up FERC
permitting could actually end up having the opposite effect. A
project that could have been approved in 15 months, let's say,
may just get denied if FERC is required to make a final
decision in 12 months before it is ready to issue a
certificate.
Mr. Wright, the bill also establishes a 90-day deadline for
all other agencies to approve or deny their permits once the
environmental review is complete. If they fail to do so, the
permits are automatically granted. Do you think other agencies
may end up denying permits that would otherwise have been
approved because of this deadline and automatic issuance
provision?
Mr. Wright. That is a possible outcome.
Mr. Waxman. If this bill became law, do you think it would
actually result in interstate natural gas pipelines being
permitted faster than they are today, or could it backfire and
create problems and permitting delays?
Mr. Wright. I don't believe it would effectively cause
pipelines to be permitted faster than they are now. And, quite
possibly, if we would have to deny an application, it could
take longer for certain projects,
Mr. Waxman. Well, I thank you for your answers to these
questions.
The current system is getting pipelines permitted. This is
what we want. This bill could result in slower permitting while
also threatening safety, health, and environmental protections.
That shouldn't be what we want.
This bill has not been thought through. It certainly is not
ready to go to the floor this month. The committee should take
the time to really understand the current permitting process
before making changes that will have serious consequences.
Thank you, Mr. Chairman. I yield back my time.
Mr. Whitfield. I would like to remind the Members that Mr.
Wright is not here as a witness today. He is here to lend
technical support to Commissioner Moeller.
And since Mr. Waxman addressed all of his questions to Mr.
Wright, Mr. Moeller, do you have any comment to any of his
questions that you would like to----
Mr. Waxman. Mr. Chairman, I would like to hear what Mr.
Moeller has to say, but Mr. Wright is there with the nitty-
gritty----
Mr. Whitfield. Mr. Wright is not here as a witness. He is
here to lend technical support.
Mr. Waxman. He was here at our request.
Mr. Whitfield. Well, look, you heard him, and now I am
going to give Mr. Moeller an opportunity to respond since he is
the witness.
Mr. Waxman. Well, that is fine. Let's hear from Mr.
Moeller.
Mr. Moeller. Let's see. The 12-month deadline, we think, as
I said earlier, as long as we feel that an application is
deemed complete, it is a deadline that we have been assured we
can work around. And to the extent that that adds certainty,
that is a good thing. The agencies, it seems to me that more
accountability toward them is a good thing.
We are trending toward needing more pipelines based on
domestic supply, and, frankly, we are burning a lot more gas to
make electricity. So, as trend lines go, I appreciate the
committee's focus on this.
Mr. Waxman. Do you think we should start the 12 months
after the application is complete?
Mr. Moeller. Yes.
Mr. Waxman. Thank you.
Mr. Whitfield. At this time, I would like to recognize the
gentleman from Ohio, Mr. Latta, for 5 minutes.
Mr. Latta. Well, thanks very much, Mr. Chairman.
And thanks very much to our witness for being here, and the
technical witness.
You know, the questioning has been very interesting this
morning. It is also kind of interesting, this morning there was
an article in the Akron Beacon Journal, which is on the other
side of the State from me. I am from northwest Ohio. And the
article was kind of interesting. The headline is ``Shale Boom
Creating Shortage of Affordable Housing in Eastern Ohio.'' And
reading through the story, it is talking about the reason for
that is because of all of the drilling company workers that are
coming in. And a lot of places around the State of Ohio would
very much like to be in a situation to say that they have a
problem out there because there is just not enough housing.
And so, you know, as we look at what is happening in Ohio
and especially with our Utica Shale and what is happening
across our State, I think one of the questions that the
chairman had started off with a little bit earlier was a
question, he had mentioned and asked, you know, was there a
need to speed up the process? And I believe that, if I
understood it right, you said that you are probably looking at
there is going to be a need for more pipelines across the
country.
And have you done any type of analysis of how much, you
know, let's just say looking down the road in that crystal ball
5 years or 10 years, of what we are looking at and what we are
going to need in more pipeline across the country?
Mr. Moeller. I don't think FERC has done that specifically,
but I know you will be hearing from some industry witnesses
later. And I know there are a number of studies that
particularly the pipeline association has undertaken looking at
those projected numbers.
Mr. Latta. But any kind of an idea off the top of your head
of what those numbers might be?
Mr. Moeller. I have seen their numbers, but I wouldn't want
to misquote them. But, as you noted, with this supply coming in
places that we didn't expect even a few years ago, there will
be a great opportunity to expand pipelines for consumers'
benefit.
Mr. Latta. OK.
And just also, the chairman had also asked about on the
pre-filing process of projects, I am just curious on that. In
your testimony, you said that all natural gas pipeline
developers should take advantage of the Commission's pre-filing
process but not all do so.
Any idea of how many, you know, percentage-wise, take
advantage of the pre-filing?
Mr. Moeller. Mr. Wright tells me 70 percent in the last
year.
Mr. Latta. Seventy percent? And could I ask, just following
up on that, how much more time does that add to the overall
process? Does it lengthenit? Does it help shorten? What are we
looking at?
Mr. Moeller. Oh, it helps shorten the process, because,
again, a lot of the issues and perhaps some misunderstandings
between the developer, the Commission staff, and the
stakeholders have an opportunity to be resolved before the
formal written-only communication requirements kick in.
Mr. Latta. OK.
And just also kind of out of curiosity, are these large
pipelines or developers? Are they small? Or is there kind of a
mix of everybody that might be out there?
Mr. Moeller. Related to pre-filing?
Mr. Latta. Right.
Mr. Moeller. Well, I think every project developer should
take advantage of it, and the larger ones especially. But I
think most of the larger ones do. It is, I think, to their
detriment if they don't.
Mr. Latta. I mean, when you are talking about ``to their
detriment,'' not to dwell on one area, but I am just kind of
curious, does it reduce the cost quite a bit? Or what happens
in that pre-filing? When you look at, you know, trying to get
the timeline down and make sure the paperwork that would be
involved is there, is there a cost reduction to the developer
in the end? Or what would you say on that?
Mr. Moeller. I think almost universally, because, again, if
you have a misunderstanding that has to be resolved in writing,
it is so much less efficient than doing it in another manner
ahead of the formal application filing. So I think it saves--
and I think the industry would testify to the fact that it
saves a lot of money and time if they take advantage of it.
Mr. Latta. Thank you very much, Mr. Chairman. I yield back
the balance of my time.
Mr. Whitfield. The gentleman yields back the balance of his
time.
At this time, I recognize the gentleman from Michigan, Mr.
Dingell, for 5 minutes.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
These questions to Mr. Moeller.
The new subsection 1 created by this bill would require
that FERC approve or deny certificates of public convenience
and necessity within 12 months.
Can you tell me approximately what percentages of these
certificate requests currently take longer than 12 months?
Mr. Moeller. Approximately 10 percent.
Mr. Dingell. OK. Why?
Mr. Moeller. Their complexity, usually. Sometimes----
Mr. Dingell. What does this do about those complex
questions? Does it give the Commission more authority, more
money, or anything to help them achieve a quicker solution to
those difficult and complex requests?
The answer is ``no,'' isn't it.
Mr. Moeller. I think with the addition of the certainty of
an application being deemed complete, that 12-month deadline
would----
Mr. Dingell. But if it is not----
Mr. Moeller. --provide some certainty.
Mr. Dingell. But if it is not, that is going to cause
considerable delay, is it not?
Mr. Moeller. We think that would improve the bill.
Mr. Dingell. Would improve the bill. Thank you.
Now, Commissioner, the new subsection (j)(2) allows
agencies to request that FERC grant a 30-day extension if the
agency needs more than 90 days to approve permits required by
such laws as the Clean Water Act and the Endangered Species
Act.
Do you believe that FERC has the technical expertise and
understanding to determine if a Federal or State agency issuing
permits required by these and other acts do or don't need
additional time, yes or no?
Mr. Moeller. Yes.
Mr. Dingell. Now, you do have a problem here, however, with
the fact that a lot of authorities are delegated by the Federal
Government to the States, such as clean air, clean water, and
others, where the States are permitted to take action under a
coordinated program of Federal-State cooperation; isn't that
right?
Mr. Moeller. Yes.
Mr. Dingell. What is this bill going to do to those
matters?
Mr. Moeller. Well, it would apply the deadlines to those
agencies, as well.
Mr. Dingell. Even if the State deadline might be different
and even if the problem that the State confronts is more
difficult and complex?
Mr. Moeller. That is how I read the bill.
Mr. Dingell. Now, as you know, more utilities are planning
on building new natural-gas-fired plants. In order to do so,
they will need more pipeline infrastructure to support these
plants.
Do you believe that the FERC has funding, staff, and
expertise to consider future applications in a timely manner,
yes or no?
Mr. Moeller. For now, yes.
Mr. Dingell. But in the future probably not, right?
Mr. Moeller. I think the way things are trending--and Mr.
Wright could elaborate more--I would be happy to have the
problem of more applications----
Mr. Dingell. OK.
Mr. Moeller. --than the need for more----
Mr. Dingell. So in the future you are looking at a problem.
Thank you.
Now, the chair has said that I can't ask questions of Mr.
Wright, so I am going to ask these questions of you.
Are all applications submitted to FERC for pipeline
projects the same, yes or no?
Mr. Moeller. No.
Mr. Dingell. That is, they are not, then, all the same
length? They deal with different links in the pipeline,
different kinds of terrain, different problems, such as being
under the ocean or under bodies of water and so forth? And that
is correct, is it not?
Mr. Moeller. That is correct.
Mr. Dingell. Does FERC receive incomplete applications
requiring additional information from the applicant, yes or no?
Mr. Moeller. Yes.
Mr. Dingell. Is there a deadline for which applicants need
to submit complete application information?
Mr. Moeller. Yes, in the data requests.
Mr. Dingell. Is that an absolute complete submission that
you can require, or does that still leave you holes in the
information that you need?
Mr. Moeller. Well, if there are holes, we won't grant the--
we won't make----
Mr. Dingell. So that means delay. It means you will reject
the application, because you had no choice under the
legislation.
Now, if FERC were not able to complete its due diligence
review within 12 months, as required under the proposed
legislation, do you believe that more applications would be
denied?
Mr. Moeller. No.
Mr. Dingell. But there would be denials because of this,
would there not? You have already indicated that.
Mr. Moeller. I think it would depend on each application.
Mr. Dingell. Now, we have some other problems. I am about
running out of time here. But I thank you for your assistance
to the committee.
Mr. Chairman, I thank you for your courtesy.
Mr. Whitfield. Thank you, Mr. Dingell.
At this time I recognize the gentleman from Kansas, Mr.
Pompeo, for 5 minutes.
Mr. Pompeo. Thank you, Mr. Chairman.
Thank you, Mr. Moeller, for your testimony today. I take to
heart your concern about the application being completed,
deemed full and complete. I just want to make sure that I
understand the pre-filing process. This is an extensive process
when it is used, lots of back and forth, including
environmental concerns. Lots of issues are resolved in that
pre-filing time period in a way that----
Mr. Moeller. Correct.
Mr. Pompeo. And stakeholders are also notified during the
pre-filing process, so we bring all the relevant folks that are
concerned about a particular pipeline and have an interest in
that pipeline, have a chance to engage during that pre-filing
process when a company chooses to engage in the pre-filing?
Mr. Moeller. Yes.
Mr. Pompeo. How long does that take typically?
Mr. Moeller. Well, it varies widely depending on the
complexity of the project. I would imagine it has ranged from
maybe 6 to 12 months generally.
Mr. Pompeo. So this is not a shotgun deal. This is a long,
thoughtful, lots of engagement process when done properly----
Mr. Moeller. Correct.
Mr. Pompeo. --where all stakeholders get an opportunity----
Mr. Moeller. Right.
Mr. Pompeo. --to state their case and make their arguments,
and improve the process and improve the pipeline pathway and
make sure we are doing all the things, including protecting the
environment, complying with all the relevant statutes?
Mr. Moeller. Precisely.
Mr. Pompeo. Why do you think some companies choose not do
that?
Mr. Moeller. They may not be aware of it.
Mr. Pompeo. So these are typically smaller, the folks who
choose not to, is it fair to say they are typically smaller
pipelines, less sophisticated businesses perhaps? I mean, to
not be aware of a pre-filing opportunity.
Mr. Moeller. Yes. I think typically that is right. Some
have chosen not to, but I think they have missed an
opportunity.
Mr. Pompeo. Yes.
Mr. Moeller. Oh. Those that have--that are perhaps newer to
the development----
Mr. Pompeo. Sure. Sure. Yes.
Mr. Moeller.--don't realize the advantages of it.
Mr. Pompeo. I mention all this, because I think it is
important in the context of these deadlines, which to someone
who didn't--was unaware of this, this extended process might
think 90 days or 12 months was too short a time period. It has
been fascinating to listen to some folks here today who
normally object to things be concerned about denial of permits
and think this piece of legislation is a bad piece of
legislation because it might delay a permit. I am thrilled to
hear now that some folks on the other side are concerned about
delaying of the permitting process. It may be the first time in
my 30 months at Congress that I have heard that.
I wrote this in a way that I thought it would be
bipartisan. All I was trying to do was get deadlines
established and, as you talked about, accountability inside the
other agencies; really not as much about FERC, but about the
other agencies that require permits.
I want to come back to something Mr. Barton asked. So in
the alternative of setting a deadline--and 90 days, I will
concede we could make it 91 or 89, I will concede that 90 is in
some sense arbitrary, but I think it is important to have that
deadline.
In the alternative, what are the other mechanisms to tell
these agencies to just do their job?
Mr. Moeller. Essentially people could bring an action
against them in some----
Mr. Pompeo. You mean go to litigation?
Mr. Moeller. Yes.
Mr. Pompeo. Yes. That is why I think this is absolutely
important. And to your point, I think directing these agencies
to be accountable and prioritize this permitting process needs
to be done and needs to set these deadlines in a way that is
meaningful. And I am happy if we need to talk about the
trigger, the start point, I am happy to consider that.
The last thing, and this is a bit of a tangent, I just want
to talk about reporting and data. In 2013, GAO stated that it
had these public records to get at the actual length of the
time that permitting process took for projects and to be
approved by FERC. Do you think that in order to provide a
better understanding of the time it takes to get the real good
data that it would be appropriate to begin actual tracking
inside of FERC of how long these processes take and maybe
inside of each of the agencies as well?
Mr. Moeller. We have--I think we have hopefully done a good
job of adding some transparency by tracking information on our
Web site.
Mr. Pompeo. Right. I appreciate that.
Mr. Moeller. But generally, yes.
Mr. Pompeo. Thank you. Mr. Chairman, I yield back.
Mr. Whitfield. The gentleman yields back. At this time I
would like to recognize the gentleman from Texas, Mr. Green,
for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
And I know my earlier statement, I appreciate being able to
have part of the opening statement, but Mr. Moeller, in a
question from our--from Chairman Dingell, you have a 90 percent
approval rate of applications once they are deemed within the
year already?
Mr. Moeller. A decision on 90 percent within 12 months.
Mr. Green. Within 12 months. I wish we had other Federal
agencies that had that kind of record. And I know FERC's
problems. And like I said earlier, you heard I had problems
with FERC many years ago, but the problems I had were fixed, I
mean, early part of 2001, 2002. Of course, in Texas, we had to
live with Enron and part of the problems that deal with that,
but I knew you were doing a good job, because I wasn't getting
complaints from any of my companies, but 90 percent approval
rate is amazing.
One of the concerns I have, and I know the Corps of
Engineers and EPA has provided technical comments on the bill.
They raised concerns that automatic permitting would lead to
permits that are inconsistent with requirements with the Clean
Water and Clean Air Act. This committee doesn't control
resources to the Army Corps of Engineers and EPA; our
appropriations process does that. And if either FERC doesn't
have the appropriations or those agencies don't have it, you
know, by setting arbitrary time limits means that it could
possibly just be denied. Is that correct?
Mr. Moeller. That is a potential, yes.
Mr. Green. So that is an option. If you don't make the year
and the information is not available, you end up denying it
because some agency--and that is not just Federal agencies. For
example, I know one of my questions I want to get to is that
some States have one-stop agency designations, and I assume
those are much quicker in responding, but what if a State
doesn't respond, and, of course, Congress doesn't control those
States and we don't want to, so we are--there is a lot of
moving targets in this issue, but let me ask some particular
questions.
You and your staff interact with other agency and State
permitting every day. And let's say that the agency couldn't
finish preparing a permit before the 90-day deadline, and that
would mean the unwritten permit would automatically take effect
or would it be denied?
Mr. Moeller. I believe the bill has another 30-day
potential extension.
Mr. Green. OK.
Mr. Moeller. And then under the bill, as I read it, it
would be deemed approved.
Mr. Green. Even if there was no control by FERC or on a
State agency not responding or another Federal agency?
Mr. Moeller. That is how I read the legislation.
Mr. Green. My other concern, I said earlier, is increased
litigation. If something is approved and there is something
left out, it is deemed approved, you know, we just move it from
an agency that is a regulatory agency to a courtroom. And if
you think you have regulatory delay, go to even a State court
system, but a Federal court system, it will be delayed even
more.
One part of the bill that I don't have a huge interest--or
issue with is it codified the 90-day deadline. And that said,
there is some of the concern. I would hope that before this
bill gets out, and we are going to have a markup this
afternoon, we would at least make sure that that application is
deemed complete before the time frames run, and simply because,
again, I look at this that a solution in search of a problem is
you have a 90 percent approval rating, but----
Mr. Dingell. That could be a problem.
Mr. Green. Yes. But if we are going to do something, let's
don't mess up a system that is working 90 percent of the time.
And, Mr. Chairman, I will be glad to yield back my time.
Mr. Whitfield. The gentleman yields back. At this time I
would like to recognize the gentleman from Virginia, Mr.
Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman. So here is the
question I would have. If we are going to define and if we
decided we wanted to change that the time starts when the
application is complete, when is the application complete? And
let me preface that by saying that I have had some experience
with a different agency or different agencies where my
constituents think they have got everything complete, and then
a new request comes in from the agency and then we get that
complete, and then another request comes in from the agency. So
I just want to make sure that if we go down that path we are
not setting ourselves up for failure. So when would the
application be complete under your projections or thoughts?
Mr. Moeller. Well, I think Mr. Wright could probably come
up with some very specific examples, but I know that we have
had applications come in and perhaps part of the environmental
review is somewhat deficient, and in that sense if we enter the
pre---if we enter the application period, as I referenced
earlier, it is just a lot more inefficient to get that resolved
in writing. So it will depend on each different project, but it
is going to be, I think, largely environmental-related studies
or--yes. There are potential rate-making issues that could be
hanging out there. Most of those get resolved, at least
discussed, ahead of time in terms of making sure there isn't
subsidization of an expansion by existing customers of
relatively detailed but important matters.
Mr. Griffith. Yes. And I guess my one concern with
deviating from the bill as it is currently written is that I
wouldn't want to get into a situation where there were just a
series of new requests, and would maybe want to see some
limitation----
Mr. Moeller. Understood.
Mr. Griffith. --placed on that. That being said, I do
appreciate that, you know, folks can talk these things out
before the official process starts. That always is very
helpful.
With that, Mr. Chairman, I yield back.
Mr. Whitfield. The gentleman yields back. At this time I
recognize the gentleman from New York, Mr. Tonko, for 5
minutes.
Mr. Tonko. Thank you, Mr. Chair.
Mr. Moeller, in your testimony, you indicate there were
some 548 applications submitted since 2009. How many fell into
the Prior Notice/No Protests category?
Mr. Moeller. A total of 75 over those years.
Mr. Tonko. OK. Thank you. And would the replacement of an
existing pipeline go through the same project approval as a new
pipeline?
Mr. Moeller. Yes.
Mr. Tonko. What proportion of applications is for the
replacement of existing pipelines versus entirely new lines,
would you suggest?
Mr. Moeller. We can get you those numbers. In terms of an
actual replacement?
Mr. Tonko. Yes.
Mr. Moeller. Relatively few. In terms of additions to
existing pipes, such as updated compressors or--there are many
more of those.
Mr. Tonko. Do replacement pipeline projects in general take
the same amount of time to approve as new pipelines?
Mr. Moeller. I think it depends on their environmental
impacts in terms of where they are going and how much land they
disturb.
Mr. Tonko. And in your experience, would you say that
pipeline projects in areas of higher population density are
more likely to fall into your second category----
Mr. Moeller. Oh, yes.
Mr. Tonko. --that being protests and policy issues and
major construction?
Mr. Moeller. Yes. Absolutely.
Mr. Tonko. OK. It appears the areas that are deficient in
pipeline infrastructure currently are areas with higher
density, for example, areas like the Northeast, because of the
increased gas development in the Marcellus Shale and a strong
demand for gas in that region. Is that the case?
Mr. Moeller. Well, that is part of it, but as I referenced
earlier, part of the challenge in the Northeast is that the new
growing use of electricity there is--of natural gas is to make
electricity, and the financing model traditionally for
pipelines has been that the local distribution company enters
into long-term contracts to get the pipe built.
The new demand in New England is generators who may or may
not be called on a daily basis, so they can't be expected to go
into long-term contracts. So we have that kind of conundrum of
needing more pipe in the Northeast, but the traditional
financing model really doesn't apply to the new demand.
Mr. Tonko. OK. Well, if we have different categories of
pipeline projects with differing circumstances, it seems to me
that this one-size-fits-all policy for project consideration is
likely to shortchange those projects that are the most complex
to the highest density areas or are perhaps controversial.
I am very concerned about pipeline safety. I had
represented when I was in the State legislature in New York
areas that were impacted by serious pipeline failures that cost
people their lives. It seems to me that an average approval
time of a little over a year for a pipeline that will operate
for some, what, 4 to 5 decades, perhaps, is simply not
unreasonable.
Your comments to that statement.
Mr. Moeller. I think it will highlight the need for the
pre-filing process and that to be thorough, extensive and
aggressive public outreach for any such projects. Those issues
will be highlighted under a 12-month timeline.
Mr. Tonko. But even in light of, as was earlier discussed,
some of the track record, that track record at the agency, are
we sacrificing at the expense of pipeline failure?
Mr. Moeller. Well, I don't think so. I think we have had a
pretty good record in terms of how we deal with applications;
as I noted, the 90 percent. The trend is that we are getting
more of them, though, so that is something to keep in mind.
Mr. Tonko. OK. With that, Mr. Chair, I will yield back.
Mr. Whitfield. The gentleman yields back. At this time I
recognize the gentleman from Nebraska, Mr. Terry, for 5
minutes.
Mr. Terry. Thank you for being here. I always appreciate
your efforts to keep us updated. I am just curious, when we
talk about the protest and no protest, out of an--in let's say
a year's time, how many of the projects will be protested?
Mr. Moeller. Well, I have a total here of in fiscal year--
well, for the last 5 years, basically the ones that haven't
been protested average right about 75.
Mr. Terry. Yes. I know. Those are the number of days. I am
asking for the number of--you take the total number of
applications, how many of the applications are actually
protested?
Mr. Moeller. We will get you that number, but I think it is
more and more, generally.
Mr. Terry. Yes. I would not be surprised that it is more
and more, and then that begs the question of who is filing
these complaints or protests.
Mr. Moeller. Well, on major projects, they are going to be
economic and, you know, market issues that are worthy of
shippers and perhaps other entities being involved. In terms of
smaller projects, we have seen more sophisticated public
outreach in terms of social media being concerned about, say, a
compressor station. So it can range from major corporations to
individuals.
Mr. Terry. So is there an effort, do you see, by Sierra
Club or the NRDC to file protests on each one of these
projects?
Mr. Moeller. You know, we can get you that. I think,
generally speaking, everybody is more interested in
infrastructure, perhaps, than they used to be.
Mr. Terry. That is kind. Genteel.
Then another area, now for something completely different
than who is protesting and why, but I just received an email as
I have been sitting here from Sapp Bros, which is a small chain
of truck stops along Interstate 80 in the Midwest headquartered
in my district inviting me to one of their high volume CNG
pumps that they are putting in at their stations.
You have mentioned the additional need for natural gas
pipelines to electric generators and with the new rules and
regulations coming down from the EPA, from the White House,
there will be even more pressure on natural gas. So my question
is, has FERC started looking ahead at way--towards ahead to the
future pipeline, gas pipeline needs in this country as natural
gas will be used more for transportation and electrical
generation?
Mr. Moeller. Well, specifically we haven't done any
projections, but industry entities have. As I think you know,
one of my major concerns has been the fact that we are
transitioning so quickly to using more natural gas. And there
are reliability issues there, they are not insurmountable, but
it is a very different paradigm going from, frankly, a pile of
coal to a just-in-time fuel delivery on a pipeline.
Mr. Terry. Well, and that is part of my concern, is as the
economy starts naturally moving to natural gas in
transportation and then artificially from rules and
regulations, the demand will be there and the infrastructure
will be needed, so how do we get your agency to look forward?
Is that something that we need to do legislatively in addition
to the Pompeo bill?
Mr. Moeller. I think that we can look to the industry
projections for pipeline capacity. Your continued oversight of
how we do our job is appropriate. I think we have done a good
job, but as I referenced earlier, the trend is that we are
getting more of these, and we need to stay on top of that, and
so I welcome your oversight.
Mr. Terry. All right. Thank you. Yield back.
Mr. Whitfield. The gentleman yields back. At this time I
would like to recognize the gentlelady from Florida, Ms.
Castor, for 5 minutes.
Ms. Castor. Thank you, Mr. Chairman.
Thank you very much for being here. I want to focus on the
part of the bill that says that permits automatically go into
effect if agencies do not approve or deny the permits within 90
days, because this kind of stuck out for me. Especially when
you consider the complex projects, this provision appears to be
very problematic, because I understand these permits are not
simply yes or no, green light or red light. For example, a
water discharge permit typically involves some limits, a clean
air permit includes specific requirements such as emission
limitations based on control technology or methods of
operation. These permits can be very detailed documents,
especially with the complex projects that need to be written by
the agencies.
And let's say we go to that scenario of complex project,
the agencies could not complete their review and conditions
within the 90-day deadline. Would that mean under this bill an
unwritten permit would automatically go into effect?
Mr. Moeller. I believe as the legislation is drafted, there
is another 30-day option, and then, yes, as I read the bill,
the permits would go into effect.
Ms. Castor. Well, I think that is a major deficiency in the
bill. I understand the need to boost efficient agency review in
the drafting of the conditions, but I think that goes back to
the point that was made earlier that this could potentially
cause greater delays, especially for those complex projects.
The Army Corps of Engineers and EPA provided technical
comments on the bill. They raise concerns that automatic
permitting could lead to permits that are inconsistent with the
requirements of the Clean Water Act and Clean Air Act. This
could lead to a violation of Federal statutes. Doesn't it
make--does it make sense for a permit to be granted that could
be in violation of Federal statutes? Don't you think that could
be problematic?
Mr. Moeller. That would be problematic.
Ms. Castor. I would think so. We empower these agencies to
assess the impacts of a project, set appropriate terms and
conditions to protect the public interest and public health.
And I think what has been established in the hearing today is
that from 2009 to 2012, FERC has approved 69 major natural gas
pipeline projects spanning over 3,000 miles and 30 States with
a capacity of nearly 30 billion cubic feet per day. 90 percent
of the permits are granted within a 12-month period.
Commissioner, you testified there are a wide range of
projects, that you would encourage companies to take greater
advantage of pre-filing. Maybe we should be focused on how we
encourage that to happen. We have testimony in the record now
that this bill could result in greater delays due to the fact
that denials are mandated, so I think on balance we have work
to do here.
There is a very important balance between making sure
infrastructure is permitted and improved in the most efficient
way, but it has got to be balanced against the health and
safety standards, and I think this draft legislation just has
not risen to the occasion. I think based on the evidence in the
record, it could create greater problems. And I know that is
not the intent of the author. I thank----
Mr. Dingell. Would the gentlelady yield for a question?
Ms. Castor. I would be happy to yield.
Mr. Dingell. You just raised a very good point. So let's
take a situation where my State or the gentlewoman's State has
not complied with the requirements delegated to them by the
Clean Air Act or the Clean Water Act, so they can't issue a
necessary permit. FERC may then step in and issue the permit
whether the State has acted on this matter or not and whether
or not the Federal Clean Water or Clean Air Act has been
implemented and approved in the State? Isn't that right?
Mr. Moeller. Well, we wouldn't issue the permit in place of
the State.
Mr. Dingell. What makes you so sure?
Mr. Moeller. Well, we have been in that situation before
where a State has delayed a Clean Water Act permit for a
pipeline, and we have deemed the application complete subject
to that being resolved.
Mr. Dingell. I want to thank you. To the gentlewoman, I say
thank you for your courtesy.
Ms. Castor. Thank you. And, Mr. Dingell, I think this also
highlights a concern that it could lead to much greater
litigation and this might be a great new employment act for
environmental litigators out there.
Thank you. And I yield back.
Mr. Whitfield. The gentlelady's time has expired. At this
time I recognize the gentleman from Texas, Mr. Olson, for 5
minutes.
Mr. Olson. I thank the chair. And Commissioner Moeller, it
is good to see you again. Welcome.
Mr. Moeller. Thank you.
Mr. Olson. I hope you celebrated the Fourth of July with
your family.
Mr. Moeller. I did.
Mr. Olson. Great. And speaking of celebration, America has
a lot to celebrate in 2013, because we are at a turning point
in our country's history. For the first time in my 50 years on
this planet, we can actually become energy independent. We are
finding new oil and new gas places all over America that 10
years ago would have never been called energy States. North
Dakota, the Bakken Shale play is the best example of that. Back
home in Texas, shale plays seem to be doubling in size with
each passing year. It is truly remarkable.
And the benefits extend beyond the oil patch. I have seen
it firsthand along the Rio Grande River in the Eagle Ford Shale
play. Local school districts there do not have revenue to
compete--did not have revenue to compete for admission to
America's best universities, but now with the revenue school
districts are getting with all the oil and gas development from
the Eagle Ford Shale play, instead of floppy disks, these kids
have laptops, they have iPads, they have a future, but all that
development, that progress will stop if we allow those
resources to stay stranded at the wellhead.
Bureaucrats dither, and professional plaintiffs in the
environmental community are looking to crank up lawsuits and
take care--get involved with reviews of safe, important
projects and grind them to a halt. That needs to stop, and that
is why I am so thankful that we have this conversation today.
Now, I have a handful of questions for you on pipeline
infrastructure and permitting in the United States. And in the
tradition of Chairman Dingell, I will ask you to answer a few
questions with either yes or no answers.
First question. Do you agree that we are relying on natural
gas more today than ever before in our modern energy history?
Mr. Moeller. I agree, yes.
Mr. Olson. Yes, sir. Do you agree that increasing shale gas
supply and increased use of natural gas for power generation
are causing a need for new pipeline infrastructure?
Mr. Moeller. Yes.
Mr. Olson. Do you agree that infrastructure bottlenecks can
contribute to or even cause a reliability crisis?
Mr. Moeller. Yes.
Mr. Olson. Does that fact make time and consideration of
new or expanded pipelines for regulators even more important?
Mr. Moeller. Yes.
Mr. Olson. OK. No more yes or no questions, but as yet I
heard complaints even at church this past Sunday from an
employee of one of our oil companies, our power generators
about the timeliness of reviews with regulation--some
regulators. FERC has heard from groups with names like Stop the
Pipeline and No Gas Pipelines dedicated to flooding your agency
with sometimes trivial comments on individual pipelines.
Knowing that, do you agree that some members of the
environmental community have made it their mission to slow your
good work?
Mr. Moeller. Well, I don't know if it is their mission.
There is a big debate going on out there, but as I said
earlier, you need the infrastructure, the pipes and wires to
get the energy to people for them to enjoy it, contribute to
their quality of life.
Mr. Olson. One more question, Commissioner. When FERC is
considering a pipeline application, I know that you do all the
lengthy reviews to ensure you meet all of your statutory
requirements under the Natural Gas Act, however, I would like
to know how you work with pipeline operators and project
developers on their needs. Specifically if a project has to be
completed in a certain time frame to guarantee reliability or
meet some contractual deadline, does FERC have a way to take
that into account?
Mr. Moeller. Everyone would like their project done as soon
as possible, so we have to balance the complexity of the
project with the economic issues and try and do the best we can
to get a thorough analysis of the application.
Mr. Olson. Is there a way that we could involve the
contractors, given these considerations, involved in the
process without impacting the quality of your reviews?
Mr. Moeller. I think emphasizing the pre-filing process
that we talked about earlier.
Mr. Olson. OK. I had some question on that, but I
understand you hammered that, so I yield back the balance of my
time. Thank you.
Mr. Whitfield. The gentleman yields back the balance of his
time. And I believe that concludes the questions for this first
panel. I think Mr. Murphy is here to introduce someone on the
second panel.
So Chairman Moeller--I mean, Mr. Moeller, thank you for
being with us today. And, Mr. Wright, we appreciate your being
with us as well. We do value your comments and answers to our
questions and we look forward to working with you as we move
forward. So thank you all for joining us this morning.
Mr. Moeller. Thank you for letting us.
Mr. Whitfield. And you are dismissed at this time.
Now I would like to call up the second panel of witnesses.
I am going to introduce all of them except the gentleman that
Mr. Murphy is going to introduce.
First we have Mr. David Markarian, who is Vice President of
Government Affairs for NextEra Energy. We have Ms. Maya van
Rossum, who is the Delaware Riverkeeper, Delaware Riverkeeper
Network. We have Mr. Rick Kessler, who is the President of
Pipeline Safety Trust. And we have Mr. Donald Santa, who is
President and CEO of INGAA.
And at this time I would like to recognize Mr. Murphy for
the purposes of an introduction.
Mr. Murphy of Pennsylvania. Thank you, Mr. Chairman, and
members of the subcommittee. I want to introduce Mr. Alex
Paris. He is a good friend and a constituent of mine from
Avella, Pennsylvania. Mr. Paris is a southwestern Pennsylvania
success story. His company, founded by his grandfather I think
in 1928, has its roots in coal mining and road building. Today
it is a full service heavy construction firm employing hundreds
of workers and laying thousands of miles of pipelines and
helping to promote the safe development and secure transmission
of natural gas from the Marcellus Shale, which is now the
country's most productive shale play.
My district is experiencing an economic revival because of
the Marcellus Shale, which sits almost exclusively on privately
held lands, but regulatory and permitting pipeline barriers are
restricting job growth, especially in gas poor regions of the
country that stand to benefit from access to Pennsylvania's
natural gas. Those regions need gas to power their factories,
provide the feed stock for important chemicals, heat their
homes, and basically keep the lights on. As Mr. Parish will
explain, the passage of a the Natural Gas Pipeline Permitting
Reform Act could help to address this challenge and spur
billions in new economic activity.
So thank you for the opportunity to speak, Mr. Chairman,
and I now turn it back to you. Thank you.
Mr. Whitfield. Well, thank you very much.
And I want to welcome all of the members of this second
panel. We do look forward to your testimony, and each one of
you will be given 5 minutes for an opening statement. And, Mr.
Markarian, we will begin with you, so you are recognized for 5
minutes for your opening statement.
STATEMENTS OF DAVID MARKARIAN, VICE PRESIDENT, GOVERNMENTAL
AFFAIRS, NEXTERA ENERGY, INC.; RICK KESSLER, PRESIDENT, BOARD
OF DIRECTORS, PIPELINE SAFETY TRUST; DONALD F. SANTA, JR.,
PRESIDENT AND CEO, INGAA; MAYA K. VAN ROSSUM, THE DELAWARE
RIVERKEEPER, DELAWARE RIVERKEEPER NETWORK; AND E. ALEX PARIS
III, DISTRIBUTION CONTRACTORS ASSOCIATION
STATEMENT OF DAVID MARKARIAN
Mr. Markarian. Thank you, Mr. Chairman, Ranking Member
Rush, members of the subcommittee. Dave Markarian, Vice
President of Governmental Affairs for NextEra Energy, Inc.,
also known as Florida Power & Light for many years here in
town. And I appreciate the opportunity to appear here today and
testify in favor of this bill.
NextEra is one of America's leading energy companies:
15,000 employees; we operate one of the most diverse fleets in
the U.S., natural gas, solar, wind, nuclear, coal and other
fuels to generate electricity every day for millions of
Americans. We are engaged in hydraulic fracturing in many of
the shales across the U.S. We build pipeline, we build long-
distance, high voltage transmission lines. We operate the
fourth largest nuclear fleet in the U.S., with commercial
nuclear facilities in Florida, New Hampshire, Iowa and
Wisconsin.
Now, to the point, in the last 5 years alone, NextEra
Energy has invested $27 billion in American infrastructure for
this industry. That puts us in the top 10 of folks that have
come forward and put their money on--bet on this American
economy. These projects have created thousands and thousands of
jobs and improved our ability to take advantage of domestic
sources of fuels to generate electricity here at home. These
are key ingredients, not just for supplying electricity, but
for economic growth. One of the things that we have done the
most of is to invest in natural gas.
Now, we are probably better known as the largest wind
energy company in the U.S., the second largest in the world, or
the largest in solar, but the fact that we are sitting here
today--we heard Chairman Upton talk about this bill having
bipartisan support. This reflects--our presence here reflects
that the support for this bill goes across fuel sources. So for
a company like ours that uses everything, we are actually proud
to sit here today and say that use of natural gas is saving
customers across America billions of dollars. But just our
company alone by investing in natural gas over the last so many
years, we have reduced our import and use of foreign oil by 98
percent, our customer bills are 25 percent below the national
average, our Florida utility, which is about half of our
business, serves about half of our State, about 9 million
folks, and this is the key thing, delivers lower electricity
prices, which does a few things: one, it encourages businesses
to locate, grow or move to our areas where we serve; it gives
people more money in their pocket so they can do more with it;
it spurs economic growth, it spurs spending, it spurs saving
and investment.
If you have flown in and out of Fort Lauderdale, over the
airport, we have got that classic smokestack configuration.
Tuesday morning, 6:45 a.m., we blow those babies up and we
build a brand-new facility that will burn natural gas. A
billion dollars of our money will save our customers $400
million just in the life of the plant. So we believe that it is
really important to look ahead and get this fuel from where it
is harnessed to where it is needed.
And I have heard the comments today. And I think the point,
NextEra's support of this bill isn't so much for today, it is
for the future, it is for the next 20 and 30 years. Our
industry plans to 20, 25, 30 years out. And I wasn't alive
during the Eisenhower administration, but they built a highway
system, but I was alive for Gemini and Apollo. And if this
industry doesn't rise to the level of national priority yet,
and I think it will, and so we have to get ready for it. We
have to keep pace with this renaissance that we know is on the
way.
And I think what this bill does is it sets expectations. It
requires that people and agencies think about staffing, that
folks in Washington think about funding for staffing, and that
everybody has an expectation of review that is certain.
Now, I said in my testimony that sometimes a definite no is
better than an interminable maybe, and I think that that is
true. If you are going to do what we do for a living, sometimes
it is good to know that you are not going to get it done and
you move in a different direction. So there is four reasons
why, in summary, we support this: one, this is a great
opportunity for us; two, we think it is going to spur the
economy; three, it is helping to save customers money; and,
four, it helps us move things from where they are harnessed to
where we need it.
I also want to point out that the EEI, the Edison Electric
Institute, which we are a member of, also supports this bill
and there is wide industry support for the bill, and they have
filed a letter in support.
Thank you, sir.
Mr. Whitfield. Thank you, Mr. Markarian.
[The prepared statement of Mr. Markarian follows:]
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Mr. Whitfield. And Ms. van Rossum, you are recognized for 5
minutes.
STATEMENT OF MAYA K. VAN ROSSUM
Ms. van Rossum. Thank you. Good morning. My name's Maya
van--is this on? Yes.
Mr. Whitfield. Yes. Push the button to make sure it is on.
Ms. van Rossum. Sorry. Good morning. My name is Maya van
Rossum. I am the Delaware Riverkeeper, and my organization is
the Delaware Riverkeeper Network. And I really appreciate the
time to speak with you this morning about H.R. 1900. And I am
actually here to ask you to please rethink the proposal, to
rethink H.R. 1900 and not send it to the floor. H.R. 1900 will
diminish critical protections for our communities and our
environment and it will have unintended consequences.
Ensuring full and fair environmental reviews and permitting
of pipelines is critical, because of the enormity of the
potential environmental impact from these projects. For
example, just one portion of one recent pipeline as it passes
through the Delaware River watershed will impact 450 acres of
land, cross 90 water bodies and 136 wetlands and cut through
two State preserve forests.
By imposing an inflexible reduction in the time allowed for
Clean Water Act 401 and 404 permitting or decision-making, H.R.
1900 could compel the States and the Army Corps to deny more
applications rather than work with applicants to remedy
deficiencies and improve their projects, or alternatively, they
could overlook deficiencies and issue legally dubious
approvals.
Our experience is that currently States will work with
pipeline applicants to cure application deficiencies so as to
ensure a fully informed 401 review. The time limitations in
H.R. 1900 would inhibit such cooperation.
The H.R. 1900 timeline will also diminish the time
available for States to develop conditions necessary to support
401 certification, resulting in either further denials or the
issuance of certifications unsuited to protecting our water
quality. More 401 denials necessarily results in more denials
of 404 permits.
To avoid the administrative stress of H.R. 1900, some
States may opt to simply waive their 401 authority altogether,
depriving them of a critical opportunity to prevent degradation
of their waters. Given that 401 certification may be the only
way that a State can assure its water quality standards are met
with regards to pipeline projects, H.R. 1900's interference
with the exercise of this authority is an interference with the
rights of States to protect their communities.
H.R. 1900 may even encourage deficient applications in the
hopes that its timing restrictions prevent full and careful
review by the agencies. And if FERC is unable to obtain the
detailed surveys, expert reports and data analysis necessary to
comply with NEPA and H.R. 1900's 1-year time frame, FERC could
be forced to choose between deficient NEPA reviews or denying
the certificate of public convenience and necessity.
By truncating the time for allowed for environmental
reviews, H.R. 1900 incentivizes the illegal practice of project
segmentation. Segmentation prevents the understanding of the
full impacts of a pipeline project and the need for specific
protections. Segmentation is already common practice for
pipeline projects. H.R. 1900 diminishes the ability of agencies
to identify and stop the practice.
And a look at the pipeline map that we have provided for
you with our testimony, if you look at the top where the arrow
is, the red and the yellow line towards the top is two approved
projects. One was authorized in May of 2010, the other was
authorized in May of 2012. And it is very clear by even casual
observation and the timing of these reviews that these two
proposals are, in fact, one project that should have been
reviewed and decided upon as a single project, not two. So that
demonstrates, you know, how segmentation plays out.
H.R. 1900 reduces environmental protection by reducing
environmental reviews and the time allowed for creating
appropriate conditions. As such, if this piece of legislation
is to move forward, it must be balanced by legislation that
ensures the use of best construction practices and planning in
order to ensure avoidance of environmental harm. Examples of
enhanced practices: reduced right-of-way widths to more
historic proportions that are mandatory; a mandate that public
lands protected with community resources are avoided; use of
construction strategies that avoid and reverse soil compaction.
Compaction at pipeline construction sites can be as high as 98
percent. Urban dams are generally only compacted to 95 percent.
The increased runoff, pollution, potential flooding and failed
restoration that result could be avoided by better construction
practices, such as using excavated soils and wood chips from
felled trees to create the construction bed for operating heavy
equipment.
And FERC should have a duty to ensure coordinated location
of pipeline projects as part of its review, similar as its
obligation with respect to hydroelectric dams.
Coordinated planning for pipeline projects would better
serve the public interest and help avoid redundant and
unnecessary projects.
So I would like to thank the committee for the opportunity
to testify here today on behalf of the Delaware Riverkeeper
Network, and I respectfully ask that you not move forward with
this proposed piece of legislation, but if you do, I ask that
you balance its effect with necessary legislative upgrades
regarding pipeline planning, reviews and construction.
Mr. Whitfield. Thank you very much.
[The prepared statement of Ms. van Rossum follows:]
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Mr. Whitfield. Mr. Kessler, you are recognized for 5
minutes.
Mr. Kessler. Thank you, Mr. Chairman.
Mr. Dingell. Mr. Chairman, could I just be recognized for
about 30 seconds?
Mr. Whitfield. Yes, sir.
Mr. Dingell. I thank you for your courtesy. I want to
commend Ms. van Rossum for her very fine statement and I would
like to welcome to the committee Mr. Rick Kessler, who is a
personal friend, former staff member, wrote much of the energy
legislation written by this committee during my chairmanship,
served with distinction in writing pipeline safety legislation
and other matters. So we welcome an old friend back. Pleasure
to see you, Mr. Kessler.
STATEMENT OF RICK KESSLER
Mr. Kessler. Thank you, Mr. Dingell. And thank you, Mr.
Chairman, Mr. McNerney, and also you, Mr. Pompeo. I appreciate
the opportunity to testify today.
My name is Rick Kessler and I am here in my voluntary,
uncompensated role as President of the Pipeline Safety Trust,
which, as you know, is the only national independent non-profit
solely focused on pipeline safety.
I am here to let you know of the trust's concerns and
opposition to H.R. 1900 in its current form. The bill would add
two new subsections loosely based on current regulation to
Section 7 of the Natural Gas Act in an effort to expedite
FERC's certification process, which, as we have heard from
FERC, is pretty fast to begin with.
There are many reasons, though, why a FERC certificate may
not be complete within a year time frame. These include the
complexities involved with studying the impact of a pipeline on
environmentally sensitive areas or on dense urban areas
requiring substantial public involvement, or the mere lack of
funds available to an agency to adequately staff FERC's NEPA
review process. This latter reason will no doubt grow as
sequestration takes greater hold on our budget.
Frankly, we see no policy rationale for the bill's one-
size-fits-all, 1-year limit that would treat a 10-mile pipeline
across the barren desert the same as a 1,400-mile pipeline that
runs through multiple ecosystems in dense urban areas. In fact,
this new limitation seems to run counter to the recent GAO
report that studied the natural gas permitting process and
found that the average time for those projects that began at
the application phase was 225 days.
But to be clear, our opposition to H.R. 1900 relates
primarily to the new subsection that would deem approve any
licenses, permits or, quote unquote, approvals related to an
application for certificate of public convenience and necessity
if the agency considering the application doesn't act within
the 90 to 120-day time frame of FERC's issuance of its final
environmental document. It would do this regardless of when the
agency receives the permit or the license application.
We note that the bill contains no requirement that such
applications be complete and contain the necessary information
for the reviewing agency. Even the recent INGAA Foundation
report found that many of the causes for delays are due to
issues wholly within the control of the applicants, not the
permitting agencies. In those cases, it would be impossible for
an agency to complete its review of a complex route dependent
permit within the allotted time frame, making permit issuance
under H.R. 1900 a potential fait accompli and effectively
gutting the important role these agencies play in protecting
public health, safety and the environment.
We also note that current regulation, while setting a 90-
day deadline also, includes an exemption for timelines set by
other Federal law, yet no such exemption exists in H.R. 1900.
We would additionally point out that almost no company has
pursued the remedy provided to industry under current law, yet
now the industry is arguing for the significant change to EPAct
2005 without even availing itself of the avenues it currently
has to address the problem. And as others have pointed out,
ironically it is possible that this could slow progress on
approval of pipeline projects by leaving agencies no choice but
to deny permits, particularly at the State level, which are
often even more strapped for money than the feds.
Perhaps most significantly, Section 7 of the Natural Gas
Act is unique in that it provides for the granting of Federal
eminent domain authority to natural gas pipeline companies.
Subsection 7(h) of current law allows these companies in
certain circumstances to take private land to build an
interstate natural gas pipeline upon the grant of a certificate
of public convenience and necessity. The trust believes that
the taking of private land by corporations or any other entity
is an extremely serious matter and shouldn't be taken lightly
in law or in practice. In our view, no process or part of the
process should be curtailed or deemed approved when takings are
involved. Unfortunately this legislation would do just that.
Ultimately the trust failed to see any compelling case for
this legislation. Natural gas pipeline construction has grown
and will only continue to grow as a result of the increased
development of unconventional shale gas around the country. Any
perceived strain on FERC and related agency consideration is
due to the success, not the failure, of the growth of natural
gas pipeline transmission.
Absent new financial resources, in fact, the increase in
new pipeline plants will likely put a strain on the ability of
agencies at the Federal and State level to review these
pipeline plans as quickly as companies and their investors
want; however, that shouldn't be an excuse to cut corners,
shortchange landowners and put at risk the public and our
environment.
Thank you for your attention to our concerns. As you know,
the trust does not oppose the construction of new pipelines in
general; rather, we advocate to ensure that new and existing
pipelines are as safe as they can be for the sake of property
owners, the environment and the public welfare.
You have heard from us before about the inadequacy of the
Federal pipeline safety program. We believe that this
legislation, by short-circuiting the review and permitting
process on numerous levels, would deal a major blow to pre-
construction review of new lines, increasing future risks to
the public and the environment. We urge the committee to take
the time necessary to fully review the situation before
scheduling the bill for a full committee markup.
Thank you, Mr. Chairman.
Mr. Whitfield. Mr. Kessler, thanks.
[The prepared statement of Mr. Kessler follows:]
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Mr. Whitfield. Mr. Paris, you are recognized for 5 minutes.
STATEMENT OF E. ALEX PARIS III
Mr. Paris. Chairman Whitfield and members of the
subcommittee, my name is Alex Paris. I am President of Alex
Paris Contracting. Our offices are located in Atlasburg,
Pennsylvania, which is about 2 miles from the first Marcellus
well.
We provide a variety of construction services throughout
the mid-atlantic region, including natural gas pipeline
construction. Last year we installed about 350,000 feet of
pipe, mainly in the Marcellus and Utica Shale plays in
Pennsylvania, West Virginia and Iowa. Because of development of
these shale plays, we have had to increase our employee base
dramatically as well as purchase a substantial amount of
equipment. While we perform a significant amount of midstream
work, we also work on gas distribution pipeline systems.
I am here today on behalf of the Distribution Contractors
Association, which represents contractors who work primarily in
the gas industry. I am pleased to speak to you this morning
about the natural gas pipeline permitting process, which
unfortunately often results in considerable delays in getting
important projects off the ground.
The Natural Gas Pipeline Permitting Act would effectively
address this problem by authorizing FERC to enforce approval
deadlines subject to other Federal agencies involved in the
permitting process.
It is evident that we have enough natural gas to meet
America's growing energy needs for generations to come, which
is a blessing; however, many parts of the country do not have
the necessary pipeline infrastructure to meet the rise in
demand. Many more pipeline projects will be needed to achieve
that capacity.
Gas pipeline projects create high paying jobs and generate
significant economic activity. On top of that, tax revenue
generated by natural gas production comes at a time when States
and local communities need it most. In 2011, the Pennsylvania
Department of Revenue reported that companies engaged in
natural gas drilling activities paid more than $1.1 billion in
State taxes since 2006. Last year nationwide production and
transportation of gas added $62 billion to Federal and State
government revenues, and it could elevate to $111 billion by
2020.
I have seen these economic impacts up close over the past
few years in my home State of Pennsylvania. In 2008, I employed
about 250 people. I currently employ about 450, about a 20
percent increase per year. We are constantly hiring and
training new employees to meet our project needs. In fact, on a
recent project, we had to add about 60 more people to the job
because the schedule compressed due to permitting issues.
Economic benefits that accompany natural gas pipeline
projects aren't limited to hiring workers. Last year my company
purchased an additional $16 million worth of trucks and
equipment, and I can honestly attribute all of this to the
recent boom in natural gas production and transportation.
I have had an opportunity to see firsthand both the
economic and social impact of natural gas development. We have
also witnessed many problems that occur when permits are
delayed. This includes layoffs, equipment being idled and
negative impacts to property owners.
I would like to point out that our company is an
opportunity to work in a vast variety of industries with many
different--and with many different government entities. I have
never seen an industry like the gas industry. Its commitment to
the environment and to doing projects the right way is
unparalleled. They spend the money and dedicate the resources
necessary to address environmental concerns and build safe
pipeline systems that meet the latest and highest standards. I
have had an opportunity to be part of this, and I am very proud
of it.
Unfortunately, important pipeline projects are often
stalled because of extended reviews while they acquire Federal
and State permits. Permit delays are a big problem. We live
this almost every day, often resulting in missed in-service
dates and increased project costs. My company is currently
experiencing permit delays on several projects, one of which we
were not able to obtain a permit for the last 8,000 feet of a
project. That project ended up being delayed and in all
likelihood will be rebid.
A recent study conducted in Pennsylvania determined that
permit delays are averaging 150 days and most of them are for
minor wetland and stream crossings. The bottom line is that
delays in acquiring pipeline permits regularly cause downstream
delays, which in the end impacts the consumer.
Understanding the significant job creation and the economic
activity that result from gas pipeline projects, DCA strongly
supports legislation to streamline the permitting process.
I appreciate the opportunity to appear before you this
morning and look forward to answering any questions you may
have.
Mr. Whitfield. Thanks very much, Mr. Paris.
[The prepared statement of Mr. Paris follows:]
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Mr. Whitfield. And, Mr. Santa, you are recognized for 5
minutes.
STATEMENT OF DONALD F. SANTA, JR.
Mr. Santa. Thank you. Good morning, Chairman Whitfield, Mr.
McNerney, and members of the Subcommittee on Energy and Power.
My name is Donald Santa and I am the President and CEO of the
Interstate Natural Gas Association of America, or INGAA. INGAA
represents interstate natural gas transmission pipeline
operators in the U.S. and Canada.
Thank you for the opportunity to share INGAA's views on
H.R. 1900, the Natural Gas Pipeline Permitting Reform Act.
INGAA supports H.R. 1900. If enacted, this bill would perfect
the provisions of the Energy Policy Act of 2005 that were
intended to provide the Federal Energy Regulatory Commission
with the ability to coordinate the actions of other Federal and
State agencies that have authority under Federal law to issue
permits required for the construction of natural gas pipelines.
As part of this coordination, EPAct 2005 authorized FERC to
establish deadlines for action by other Federal and State
agencies that must issue permits in connection with a FERC-
approved pipeline. EPAct 2005, however, did not provide FERC
with any authority to enforce such deadlines. Further, the
remedy provided in that law, a lawsuit against the offending
agency brought in a Federal appellate court by the pipeline
applicant, has proven to be ineffective.
H.R. 1900 would remedy this problem by requiring that the
Federal or State permitting agency must act within 90 days
after FERC issues its environmental impact statement or
environmental assessment pursuant to NEPA. 90 days is the
period prescribed by the regulations adopted by FERC to
implement EPAct 2005. Should the permitting agency fail to act
within the 90 days, H.R. 1900 would have the license, permit or
approval go into effect by operation of law.
This change in the law is needed because, notwithstanding
the intent of EPAct 2005, it now takes longer than before for
an applicant to receive the permits and approvals required to
commence constructing a FERC-approved pipeline.
In particular, a report prepared by Holland & Knight and
sponsored by the INGAA Foundation examined a sample of 51
pipeline projects from both before and after EPAct 2005. The
report found more than a threefold increase in the permits that
were delayed more than 90 days after the issuance of the FERC
NEPA document and a more than fivefold increase in the permits
that were delayed for yet another 90 days beyond the initial
90-day period. The report found that reasons for the delays
varied and could be addressed partly by process improvements on
the part of both the permitting agencies and the applicants.
Still, the top recommendation from the report was schedule
enforceability.
INGAA's goal in supporting H.R. 1900 is to encourage
permitting agencies to make timely decisions by providing a
real enforcement mechanism. With this enforcement, as contained
in H.R. 1900, INGAA believes that permitting agencies will be
strongly motivated to make timely decisions.
Why should Congress care about the timely permitting for
natural gas pipelines? Congress should care because pipelines
are critical to enabling U.S. consumers to take advantage of
the substantial new domestic natural gas supplies.
The central role of natural gas in our Nation's energy
future was noted by President Obama in his June 25th speech at
Georgetown University. The President said, in part, quote,
``Sometimes there are disputes about natural gas, but let me
say this. We should strengthen our position as the top natural
gas producer, because in the medium term, at least, it not only
can provide safe, cheap energy but it can also reduce our
carbon emissions,'' close quote. The President went on to say,
quote, ``The bottom line is natural gas is producing jobs. It
is lowering many families' heat and power bills,'' close quote.
Without pipelines, natural gas supplies remain in the
ground, and consumers in capacity-constrained markets
experience greater price volatility and higher-than-average
natural gas prices.
Mr. Chairman, members of INGAA thank Representative Pompeo
and the cosponsors of H.R. 1900 for introducing this
legislation and the subcommittee for inviting testimony on the
bill. If enacted, this bill will make an incremental but
important change that will increase the likelihood that the
U.S. fully realizes the benefits of abundant domestic natural
gas.
Mr. Whitfield. Well, Mr. Santa, thank you.
[The prepared statement of Mr. Santa follows:]
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Mr. Whitfield. And thank all of you for your testimony. As
I said in the beginning, we appreciate your being here to give
us your views on H.R. 1900.
I think it goes without saying that this is a particularly
important piece of legislation, and I know all of us will have
questions. And I recognize myself for 5 minutes of questions.
We have all talked about the abundant natural resources
that we have in America with these recent discoveries. And we
do know that there is going to be an increase in application
numbers for gas line pipelines. And it appears that, on this
panel, two of you are probably opposed to this--are opposed to
this legislation, and three of you, I am assuming, support this
legislation.
And one of the key issues here is this schedule
enforceability. And, Mr. Santa, in your testimony, you gave an
example of the Corps of Engineers and the Natural Resources
Conservation Service on a water permit. You gave a good example
of a permit that was delayed an unreasonable length of time, in
my view. And I want you to comment on it, because that is the
kind of real-life situation that we deal with.
Now, 90 percent of these permits are either approved or
disapproved within the time constraints of existing law. But
there are real consequences, certainly on both sides of the
issue, when a permit is delayed. And in the example you gave,
it increased the cost of this project by 6 percent, I believe.
Would you elaborate just a little bit on that project and
the delay caused by the Corps of Engineers and the Natural
Resources Conservation Service?
Mr. Santa. It was a relatively short project, 20 miles of
pipeline. I believe it was relatively small-diameter pipe. But
nonetheless, notwithstanding the FERC process having worked
very well, dealing with the Corps and the other agency added
quite a bit of delay. That added cost for the applicant, likely
cost for those who were the customers of the pipeline. To the
extent the pipeline was going to provide additional gas
supplies to that community, it delayed the benefit of that.
I think it is, as you said, Mr. Chairman, an example of the
type of a delay that this bill would provide a powerful
incentive for the agencies to act in a timely manner so that
these facilities could be built.
Mr. Whitfield. Now, can any of you think of a better way to
encourage these agencies that have these 90 days to either
approve or deny a permit, can you think of a better enforcement
mechanism than what Mr. Pompeo sets out in his legislation? Is
there some other way that it could be done to encourage timely
action?
Ms. van Rossum. Good morning. This is Maya van Rossum.
With all due respect, there already is an opportunity. In
the 2005 Energy Protection Act, there is the opportunity to go
to the courts and seek a remedy through the courts. The fact
that even in INGAA's own report they document that the pipeline
companies have chosen not to avail themselves of this remedy
does not mean that it is not a fair, adequate, full, complete,
and available remedy for them.
And, in fact, going to the courts is also the remedy that
is available to environmental organizations and community
organizations and citizens and residents who feel that they
have been disenfranchised by the process, perhaps for different
reasons.
So just with all due respect, I would say that there is a
remedy available to the pipeline companies. They simply have
chosen not to avail themselves to take advantage of it.
And I would say, if they were to pursue these legal actions
through the decisions that come out of each of these court
cases, precedent would be set. And it would be the precedent
that would mandate quicker or shorter, more thoughtful or less
thoughtful decision-making by the agencies.
But that is really the path forward, we believe, rather
than legislation that takes away the rights of the agencies and
the community to fully participate.
Mr. Whitfield. Has your agency ever filed a lawsuit to stop
a project?
Ms. van Rossum. We have filed--we are engaged in legal
action, because we are actually concerned about the deficiency
of the reviews and permitting that have been undertaken by FERC
and by the State of Pennsylvania for the Northeast Upgrade
Project pursued by the Tennessee Gas Pipeline Company.
So it is not a legal action about stopping a project. It is
a legal action about making sure that the law has been complied
with and that the project only moves forward in a safe manner
for the environment and----
Mr. Whitfield. So you have a lawsuit against FERC today?
Ms. van Rossum. Yes, we do.
Mr. Whitfield. OK.
Ms. van Rossum. We have a legal action in the courts today.
Mr. Whitfield. My time has----
Mr. Santa. Could----
Mr. Whitfield. Oh, yes, Mr. Santa?
Mr. Santa. Could I respond on the point about the
effectiveness of the legal remedy provided under the law today?
As we note in the testimony, it is somewhat self-defeating
for a pipeline to go and sue the agency from which it is
seeking to get a favorable permit.
But probably more importantly, the one instance in which a
pipeline company availed itself of the appellate rights
provided under EPAct 2005 I think illustrates that. With the
Islander East project, it sought review of the denial of a
clean water permit by the State of Connecticut, so not inaction
by the State but nonetheless denial of a permit.
It took Islander East 1 year and 3 months to get review
from the Second Circuit Court of Appeals, to get a decision
remanding the case to the Connecticut DEP. It took Islander
East a total of 2 years and 10 months and two more trips back
to the U.S. Court of Appeals for the Second Circuit to get the
final word, which ultimately was upholding the State on denying
the permit.
So I think with that as the track record of utilizing the
appellate process under EPAct 2005, you can see why pipelines
have not been eager to do this.
Mr. Whitfield. Thank you, Mr. Santa.
Mr. McNerney, you are recognized for 5 minutes.
Mr. McNerney. Well, thank you, Mr. Chairman.
This has been a pretty beneficial hearing. I think it has
brought out that there are legitimate concerns on both sides of
this piece of legislation. So I appreciate the testimony.
In my mind, the bottom line is this: Are firm deadlines
going to be beneficial overall, or are firm deadlines going to
be detrimental, taking into account public safety and the
possible denial of what would be legitimate projects?
So I would like to just acknowledge that this is not an
easy question to answer ``yes'' or ``no.'' I think we should
take time and look at this in a more deliberate manner than
just bringing it up for markup this afternoon. That is my
opinion, Mr. Chairman.
Mr. Paris, you have mentioned what you referred to as
permit delays. Has your business participated in the pre-
permitting process at FERC, and has that been beneficial?
Mr. Paris. No. As a contractor, we typically wouldn't be
involved in that. The pipeline company would be.
Mr. McNerney. So----
Mr. Paris. The permit delays are generally within the
pipeline company that we are working for the constructing--that
we are constructing the line for.
Mr. McNerney. Well, I would just recommend that that
approach be taken. It might ease that, sort of, burden that you
are facing.
But this bill does set a 12-month deadline on FERC to
decide applications for gas pipeline certificates. There is no
flexibility, there are no exceptions. FERC has to decide every
application within 1 year. During that year, the entire
environmental review required by NEPA would have to be
completed.
Ms. Rossum, do you think that 12 months is enough time to
complete those kinds of permits on complex projects?
Ms. van Rossum. In terms of NEPA, where the 12 months in
H.R. 1900 would apply, I absolutely feel that there are
numerous projects where 12 months would not be appropriate,
especially if you are not assuring that the clock begins at the
time when there is an administratively complete application
before the agency.
In terms of the State agencies and the Federal agencies,
the 90-, potentially 120-day time frame, again, the volume of
information and analysis that has to be undertaken to review a
project, to put in place the conditions, to collect the data
and the research of geological resources and water bodies that
will be impacted and what kind of ENS control, it is a very
time-intensive process, and I do not believe those time frames
are enough.
Mr. McNerney. Thank you.
Well, I mean, it is clear that we must remember that doing
a good job reviewing a proposed natural gas pipeline could have
serious impacts. And we are not only talking about
environmental impacts, but I don't live too far from the San
Bruno explosion that happened a few years ago in the San
Francisco Peninsula. There are very serious consequences with
engineering review deficiencies, as well.
And I would like to see if any of you, Mr. Markarian in
particular, have concerns about possible consequences of bad
engineering and environmental reviews if there is an imposed
deadline that doesn't permit the agencies to do sufficient
work.
Mr. Markarian. Well, I think it is critically important
that we do the things we need to do correctly and we not
squander this great opportunity to advance our Nation forward
on the back of natural gas.
However, I do think that a year's time is enough if we--I
think we all worry about what government does well and
efficiently. And I think we have to raise the bar and set
expectations that things need to be done according to a
schedule. And if they can't, a rejection, a ``no,'' is
certainly understandable. This will produce certain noes, and I
think that is favorable to an interminable ``maybe.''
Mr. McNerney. Well, I guess I don't disagree. But, I mean,
I think the question is, imposing these strict deadlines, is
that going to be beneficial or not? It is not clear to me that
we can answer that question in one hearing. It is not clear to
me that we should move forward with a markup today until we get
some better answers on these questions.
With that, I will yield back.
Mr. Whitfield. Thank you, Mr. McNerney.
Mr. Pompeo, you are recognized for 5 minutes.
Mr. Pompeo. Thank you, Mr. Chairman.
And I thank all the witnesses for coming out and testifying
today.
I want to just keep going in the direction you were headed,
Mr. Markarian. You talked about the risk of ``no.'' We have
heard from Members today that there is this risk that the
agencies will just say ``no'' because they ran the clock out.
We have heard from Ms. van Rossum and Mr. Kessler of that risk.
But all the folks who have to go out and raise capital and
operate in this environment seem to think that that risk is
worth taking, because it creates certainty for them so they can
deliver a high-quality product at a low cost and good value to
their customers.
So you all got to the place that INGAA, that says, hey,
that risk, which I think is low but, nonetheless, out there--
how did you get there? How did you get comfortable that that is
better off for you and for your customer service area than this
risk of just being hung out for an indefinite period of time?
Mr. Markarian. Because planning is critical, and meeting
the expectations of a plan is critical. And let's not forget,
we have done great things as Americans. And when we work
together, we--what your bill does is it ups our game. It says,
everybody, whether we are concerned about the environment or
safety or getting things done, everybody ups their game and
commits to a time schedule. And you actually have a little bit
of wiggle room, too, in the bill, that if it can't be done in a
year, you have some extra time.
So I think what we are focused on--we have been through
some tough times, and we are focused on a gift that we can take
advantage of, work together, up our game, make a commitment to
each other that we are going to do it within a time limit, and
then stick to it.
And you know what? If we have to work a little harder, we
have to work weekends, we have to work nights, we have to work
a 20-hour day, if that is what it takes, that is what we need
to do. Because I really do believe the promise of this resource
is that great.
Mr. Pompeo. And, Mr. Markarian, you have another
obligation, you have a service area obligation to provide
reliable--you have agencies that are requiring you to meet a
certain level of reliability and capacity and are constantly
chasing you on rate issues, as well.
I assume you think that H.R. 1900 would improve your
capability to meet those other various commitments that your
company has, as well.
Mr. Markarian. We do.
Mr. Pompeo. Mr. Santa, does this risk of ``no'' due to
timeline--Ms. van Rossum was talking about short-circuiting--I
am not sure what the language was, but her concern was that the
agencies would just say ``yes'' when they hadn't really
completed the task. Do you think that is the likely
administrative response to H.R. 1900?
Mr. Santa. I think they have the potential, as has been
noted, to say ``no.'' And I also think that when we are talking
about the timelines here, while there is a focus on the 90 days
and the 30-day extension, let's remember there is all that
period before FERC issues the NEPA document.
In that GAO report, they noted that for the projects that
go through the pre-filing--those are the more complex, longer
projects--typically, it is 558 days between initiation of pre-
filing and the FERC certificate order. That is over a year and
a half. Even if you back out and assume FERC takes 90 days
between the EIS and the certificate order, that is still a year
and 3 months of dialogue and engagement that is going on
between the applicant, stakeholders, the resource agencies. So,
number one, I think there is the time to make those decisions.
And, also, I think, quite frankly, if those agencies are
true to their statutory mandates and, you know, what Congress
has asked them to do, if they need to say ``no,'' they will say
``no.'' And as you noted, as Mr. Markarian noted, that is a
risk that I think the industry is going to take. It is greater
accountability on the part of the agencies, but also, quite
frankly, it requires greater accountability on the part of the
pipeline industry to file good applications.
Mr. Pompeo. Right. And my expectation would be that if that
were to be the case, that we started to get these noes, I think
industry would respond to that in an appropriate way. They
would be more complete, they would be more careful, they would
get these things done in a more timely fashion. They are not
going to sit there and allow administrative noes to be made
simply because of a failure on the part of the applicant.
Mr. Santa. I don't think their shareholders would tolerate
that.
Mr. Pompeo. I think that is probably right, as well.
Thank you very much, Mr. Chairman. I yield back the little
bit of time left.
Mr. Whitfield. The gentleman yields back.
At this time, I recognize the gentleman from New York, Mr.
Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
Mr. Kessler, you indicate in your testimony that, in spite
of your organization's work, we continue to experience major
pipeline failures.
In response to my question earlier to Mr. Moeller, he
indicated that projects going through densely populated areas
are more complex than those through more open areas. In an
abbreviated process, are we likely to put more people at risk,
given those situations?
Mr. Kessler. Absolutely.
Mr. Tonko. And what role do safety considerations play now
in pipeline sitings?
Mr. Kessler. Not enough, from our perspective. But, you
know, when you are making decisions about routing, whether it
is through urban areas or high hazard areas like earthquake
zones, flood zones, things like that, it is clearly a
consideration.
I also think it is interesting that the industry which has
been very reluctant, in fact resistant, to mandatory deadlines
for safety inspections, who has argued against one-size-fits-
all for safety inspections, suddenly wants a one-size-fits-all
mandatory deadline for permitting. So it comes across a little
strange to me.
Mr. Tonko. Yes.
To what extent are concerns about safety involved in public
opposition to pipeline projects? You know, you talk about this
one-size-fits-all for inspection. Is the public aware of that?
And what concerns--again, are safety involved with public
opposition to proposals?
Mr. Kessler. You know, public opposition occurs for a
number of reasons, ranging from true safety or environmental
concerns to just a lack of familiarity with pipeline and energy
production. As we get more energy production in New York,
Maryland, where I live, and other nontraditional production
States, you are going to have a level of resistance to projects
based upon a lack of familiarity.
But you also have them based upon safety and environmental
concerns, depth of coverage for burial of pipelines through
streams, running through earthquake zones, running through
densely populated areas, and routing matters when you do these
things.
Mr. Tonko. Thank you.
Ms. van Rossum, we have heard the environmental review
process response mentioned several times as the source of
delays in approval of pipeline projects. Are communities'
drinking water resources, agricultural and fishery resources
part of the environmental review process? Are we only talking
about habitats and areas of low public use?
Ms. van Rossum. Yes, when we are talking about the National
Environmental Policy Act, we are not looking just at the
ecological environment, we are looking at the human
environment. So we are, in fact, looking at drinking water
supplies, the quality of the air, the level of noise pollution
that perhaps a compressor creates next to residential
communities, to a wide variety of issues.
So we are concerned about the critters in the forests, but
we are very much looking at the implications of what happens to
the critters, to the forests, to the water, for what it means
to the health, the safety, and the tremendous level of jobs
that benefit people as a result of them.
Mr. Tonko. OK. Thank you.
And is an expedited process likely to increase or reduce
public confidence and/or support for pipeline projects, in your
opinion?
Ms. van Rossum. I think it will absolutely decrease it. I
think there are already concerns about the integrity of the
process, because there is so much chumminess, frankly, between
the regulators and the regulated when it comes to pipeline
projects. And that already has raised a level of concern.
And I think if we start imposing artificial deadlines and
reducing the opportunity for the public to participate, which a
90-day review period absolutely does, we will absolutely be
diminishing public confidence as well as the process as a
whole.
Mr. Tonko. OK. Thank you very much.
Mr. Chair, I yield back.
Mr. Whitfield. I think Mr. Kessler wanted to say something.
Mr. Tonko. Oh, I am sorry. Mr. Kessler?
Mr. Kessler. I just wanted to add to my answer before, that
one of the reasons for the protest could involve the potential
taking of private lands. And those landowners should have a
right to process and to be able to argue against a particular
route that would affect them.
Mr. Tonko. OK. I thank you for that added information.
And, with that, Mr. Chair, I yield back.
Mr. Whitfield. At this time, I recognize the gentleman from
Texas, Mr. Olson, for 5 minutes.
Mr. Olson. I thank the chair.
And good afternoon and welcome to the witnesses.
And before I get started with my questions, I want to share
with you all a real-world story that happened about 48 hours
ago about the importance of a thorough and expeditious
permitting process to build new pipelines.
As I said, 48 hours ago I was at my church having a glass
of water. I was approached by one of my fellow church members
about the need to grow the pipeline infrastructure from the
Eagle Ford Shale play in south-central Texas to the refineries
along the Texas Gulf Coast. He works downstream for a power
generator, natural gas power generator. And his legitimate
concern was that our current pipeline infrastructure would hurt
his business. He thought the natural gas price would increase
because of artificially limited supply because of a lack of
pipelines. I think that is a very legitimate concern.
So my first question is for you, Mr. Markarian. As you
mentioned in your testimony, NextEra has an extremely clean and
diverse fleet. You have gas, nuclear, coal, and wind. And I am
very happy to have you operating in Texas. On behalf of the
people of Texas 22, I encourage you to build new plants in the
Lone Star State.
But, of course, one key element of your fleet is your gas-
fired plants, which not only provide reliable power themselves
but also help back up the highly variable wind. And when I say
wind and power, I want to remind my colleagues that Texas is
the number-one producer of wind in America--number one.
We discussed in this committee how reliability and access
to fuel is different for coal plants or nuclear plants, and as
it is for natural gas plants. So can you discuss the
differences between coal, nuclear, and natural gas plants for
reliability?
And is it fair to say that an efficient regulatory process
for pipeline approvals like H.R. 1900 is key to keeping the
lights on in many parts of our country?
Mr. Markarian. It is key.
We actually have two giant gas plants, Forney and Lamar, in
Texas, in Mr. Hensarling's district.
We believe we need all of these fuels. We are the Saudi
Arabia of coal. We have a gift now of natural gas, by the way,
made possible by the support of this Congress for policy that
invested in new technologies that ultimately yielded the
ability to harness this.
All forms of power need backup. And so we believe at
NextEra we need all forms of energy and should encourage the
development of all of it.
And, as far as Texas, it is a great place to do business.
Mr. Olson. Yes, sir. You like that State income tax rate,
right? Pretty close to zero.
Mr. Markarian. Right.
Mr. Olson. You got it. Yes, sir.
How would you describe the overall current regulation?
Would you say it is efficient?
Mr. Markarian. I do. Again, as I said, you know, there are
rules that apply to every one of us in this room and outside
this room in this town. And if we follow the rules that are set
up and work together to try to do things according to the
timelines set forth, I think we all win. And, on the contrary,
if we don't work together, we all lose. We don't harness the
electricity we can from natural gas, we don't sell it, we don't
pull it up, we don't benefit the economy from it. So I think it
behooves us to all work together.
Mr. Olson. Yes, sir. And my State faces a power crisis.
Supposed to bring new power plants on line sometime next year,
too. If we have another heat wave like we had August of 2011,
lights will go out all over the State.
My final questions are for you, Mr. Santa. I mean, as you
mentioned in your testimony, pipelines are multibillion-dollar
investments. And once these projects are undertaken, the timing
becomes very important, because investors have expectations as
capital is tied up, like Mr. Pompeo alluded to. The shippers
who produce gas and the end-users who consume it need certainty
for when that supply and demand can meet up.
Can you discuss some of the ways in which delays to
pipeline projects can hurt everyone up and down the pipe chain,
from the getting it out of the ground to the refinery, the
whole supply chain? It is just like my fellow church member,
worried about downstream, a power generating plant worried
about a pipeline from the Eagle Ford Shale play.
Mr. Santa. Yes, Mr. Olson. I think this is illustrated of
what happens in the market when you have capacity constraints.
This past winter in Boston, prices at one point got to $34 per
MMBTU, while they were averaging a little above $4 in the rest
of the country. That was largely due to pipeline constraints.
So customers in that market were paying more because of
pipeline constraints that were not relieved.
Similarly, upstream, if there are constraints that hinder a
producer in getting their gas to the market, they will be
forced to accept a lower price for that gas. That reduces their
incentive to drill and to produce gas.
So the capacity constraints on the pipelines, the ability
to relieve them in an efficient market-responsive manner, it
not only affects the pipeline companies, it affects gas
consumers across the board.
Mr. Olson. Thank you.
I am out of time. I yield back.
Mr. Whitfield. The gentleman's time has expired.
At this time, I recognize the gentleman from California,
Mr. Waxman, for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
The arbitrary deadlines established by this bill raise
serious concerns, but the worst provision may be the one that
automatically grants environmental permits for a pipeline. The
project could be approved if an agency does not make a decision
on the permit within 90 days of the issuance of FERC's
environmental analysis.
The automatic permitting provision broadly applies to the
Clean Air Act, the Clean Water Act, the Endangered Species Act,
Coastal Zone Management Act, and the rights of way through
Federal lands.
Under this bill, if an agency cannot complete its review of
a permit application by the arbitrary 90-day deadline, then no
one checks to make sure that the project won't have an adverse
impact on the environment or public health; the permit is just
magically issued.
These permits are detailed documents. They can include
emission limits, technology or operating requirements,
conditions to ensure that the environment is protected.
Agencies need to figure out all of these details and then
actually draft the permits.
Ms. van Rossum, what would it mean for a permit that might
not even be written to automatically take effect if a deadline
is missed? How would that work?
Ms. van Rossum. To be honest with you, I am not sure how it
would work. I don't know what is the permit or the approval
that would go into effect. Perhaps it is just the application
the way the applicant submitted it, no matter how deficient the
application material. So there is no clarity on that, frankly,
the way the law is written.
But one thing I will say is that it is probably assured
that we won't have the limitations in the document necessary to
ensure that water protection laws, air protection laws, coastal
zone management laws are met. And, as a result, those permits
are eminently challengeable in the court. So it is going to
draw us all into the courtroom.
Mr. Waxman. Let me give you a concrete permitting example
to understand the impacts of this provision. What is involved
with an Army Corps of Engineers review of a wetlands permit
under Section 404 of the Clean Water Act, and why is this
review important?
Ms. van Rossum. Yes, so the Army Corps is working to
protect the health and the quality of the wetlands. Wetlands
are vitally important for protecting water quality, including
the quality of drinking water supplies, for soaking up waters
that would prevent flooding and flood damages, for protecting
ecological systems that are important for supporting wonderful
ecotourism jobs and recreational opportunities. So the work
that the Army Corps does is beneficial to the wetlands, but it
is beneficial to our community as a whole.
In order to undertake that review, they need to look
carefully at the materials that have been submitted by the
applicant to make sure that they are accurate. They need to go
out in the field and do jurisdictional determinations. They
need to collect information and data on the construction
practices that are going to be used----
Mr. Waxman. What if they are just taking too long? We have
a 90-day period, and they just haven't figured out to do all
this in that period of time. What happens under this bill?
Ms. van Rossum. That is what is not clear to us, frankly.
We don't know what happens. We don't know what is the document
that goes into force and effect. Perhaps it is simply the
application materials that the permittee has put in, whatever
quality and information that may or may not have. It is really
not clear what it means----
Mr. Waxman. Yes.
Ms. van Rossum. --to approve a nonexistent document.
Mr. Waxman. Mr. Kessler, what do you think? Is the Pipeline
Safety Trust concerned about the safety implications of a host
of permits automatically going into effect without any agency
analysis or conditions?
Mr. Kessler. Oh, absolutely, Mr. Waxman.
Look, we certainly would love to see the certification
process be more efficient. We have no objection to that. But we
don't think that a deemed approval or an undue denial of a
permit is good public policy in any way, shape, or form. This
is why we have agencies to actually look into these things.
I would note that this committee after 9/11, you will
recall and Chairman Whitfield will recall, did extensive work,
bipartisan, on nuclear safety. And we found that there was a 2-
year backlog in FBI review of security----
Mr. Waxman. Well, what would be the----
Mr. Kessler. --permits. And I don't think anyone argued
that----
Mr. Waxman. Because you know what this committee is like
and----
Mr. Kessler. Yes.
Mr. Waxman. --the Member only has a limited amount of time,
what if we have this automatic permit and then it results in
damage to the environment and public health? What is this going
to do to the public acceptance of interstate natural gas
pipelines going through their community?
Mr. Kessler. Oh, it is going to hurt them greatly, I think.
And, as I said, no one would have argued for a deemed
approval of a security permit after 9/11 if it took longer than
6 months or a year. So, same thing with immigration. Even the
most ardent supporter of open immigration wouldn't, I think,
argue for a deemed approval of a green card.
Mr. Waxman. Thank you. My time has----
Mr. Whitfield. The gentleman's time----
Mr. Waxman. Oh, Mr. Chairman, I would like to ask unanimous
consent that the technical analysis provided to us from the
U.S. Army Corps of Engineers' perspective be put into the
record, as well as the technical analysis by the Environmental
Protection Agency.
Mr. Whitfield. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Waxman. Thank you.
Mr. Whitfield. At this time, I would like to recognize the
gentleman from Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman. I appreciate that.
I am intrigued. Ms. van Rossum, in answering one of
Chairman Emeritus Waxman's questions, you were getting excited,
as is a good thing to do when you are discussing the public
events, and you indicated that one of the provisions of this
bill would just draw us all into the courtroom, as if that were
a negative thing.
And yet, earlier in the testimony, you indicated that that
was the remedy for folks who had a problem with what was going
on, that they could go into the courtroom and that that was a
good thing, and they didn't need this bill and this remedy
because they had the courts available to them.
And I am wondering if you could rectify the two. Is it good
or is it bad to be pulled into the courtroom?
Ms. van Rossum. Well, it is always important to have the
courts as an opportunity to remedy a real problem that exists.
And so, if we find ourselves in a situation where the law is
automatically approving documents that are nonexistent or are
eminently deficient because the agencies did not have the
opportunity to complete them, then, absolutely, the remedy is
to go into courts.
But that is going to be a much more frequently required
remedy than what we have in the current situation. We have had
many, many----
Mr. Griffith. Yes, ma'am, and I----
Ms. van Rossum. --testimony about how many applicants are
approved----
Mr. Griffith. --appreciate that. I don't think--I think the
distinction, personally, is that it depends on whose ox is
being gored. The courts are good when it is somebody else's ox,
are bad when the courts are goring your ox. But when it is
somebody else's ox, that is a great place to go.
Ms. van Rossum. No. It is about----
Mr. Griffith. Let me----
Ms. van Rossum. --intentionally creating----
Mr. Griffith. I don't have but so much time or I would love
to get into a further discussion with you.
But I would ask you, Mr. Santa, earlier, in the previous
panel, there was a lot of discussion about, well, we can make
this happen if we only start the 12 months when there is a
completed application. And I raised the concern that, yes, but
when is an application completed, because can't that be a
moving target?
Do you have those same concerns, Mr. Santa?
Mr. Santa. I think there is some risk of that, Mr.
Griffith, but I also think that it is something that if, you
know, the committee is looking at ways to respond to
Commissioner Moeller's concern, certainly is worth further
discussion.
Mr. Griffith. But it shouldn't just be a blanket statement.
There maybe ought to be some guidelines as to when there is a
finished application----
Mr. Santa. Oh, very much so. I think, in the interests of
all concerned, there needs to be clarity as to what constitutes
a complete application so that it can't be used as a way to
game the system.
Mr. Griffith. And it always work better when Congress
dictates what that is, as opposed to leaving it to the
administrative branch of government. Isn't that true, yes or
no?
I will tell you it is ``yes.''
Mr. Santa. OK.
Mr. Griffith. Mr. Paris, do you want to make some comments
on that point?
Mr. Paris. Yes, I am from Pennsylvania, and I see the
completed application process many times. Because we permits
ourself, and we work for pipeline transportation companies that
submit permits for--a lot of times, you will send the permit in
for a review and ask if it is complete. They will send you a
letter, ``No, it is not complete. We are going to hold it. Here
are the three things that aren't complete.'' You send those
three things, and 2 months later here comes another letter
saying, ``Well, we also looked at it again, and this isn't
complete.'' So you can get into basically a rat race on deeming
what is a completed application.
So whatever is done here with this bill, that needs to be
clearly defined, because the regulatory agencies can turn that
into a nightmare. And I have been through that. I have seen
that happen before.
Mr. Griffith. And, Mr. Paris, I have to say that I have
only been in office in Congress for 30 months, and I have had
any number of complaints from my constituents about that very
same problem.
Mr. Markarian, do you want to weigh in on that subject, as
well?
Mr. Markarian. It is important to build safely,
environmentally sensitively, and get the job done all at the
same time. But what we take comfort in, in terms of this bill,
is it doesn't shortcut any reviews that are guaranteed to
ensure any of those things.
Now, this process will produce yeses and noes, but it
doesn't affect the substantive standards of environmental
protection that are designed to protect Americans. It just
means we have to get it done by a time certain. And that is why
we are comfortable with it.
Mr. Griffith. And I appreciate that. I also appreciate that
your company is one of those that truly exercises all of the
above when looking at production of energy in this country. And
I do appreciate that.
With that, Mr. Chairman, I will yield back.
Mr. Whitfield. The gentleman yields back.
At this time, I recognize the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
I assume the whole panel was here during the FERC
testimony?
Mr. Santa. Yes, sir.
Mr. Green. Just answer ``yes'' or ``no'': The testimony was
that there is a 90 percent approval rating within the time
frame that is the FERC rules right now? Is that correct?
Mr. Markarian. That is what I heard.
Mr. Green. OK. Is that your experience, though, in filing
for applications?
Mr. Markarian. I wouldn't have any evidence to counter what
we heard here today. My only point is we have to plan for the
next 20, 25, and 30 years, when, I think it has been conceded,
pipeline development is going to be ramped up significantly
because the ability to harness gas is going to go in that same
direction.
Mr. Green. Well, and I agree. But if it is 90 percent now--
and, you know, there may be some unintended consequences of the
legislation I am concerned of, including saying, well, we don't
have the time, we just have to deny the permit.
And believe me, I understand, where I come from, the need
for expansion of natural gas. Some of you may have heard. I
have gone through Eagle Ford at night, and there is so much
flaring there. One, environmentally bad, but also I know
everyone who is drilling those wells would like to have a
market for that gas. And so we need to expand it. I am not so
sure, the way that it is drafted, this legislation will do it.
But the other experiences--Mr. Santa, do you agree, or
INGAA, that 90 percent is what FERC is doing now?
Mr. Santa. I have no reason to dispute it. We think that
the FERC Office of Energy Projects does a good job.
However, the one point I would make in addition is that
FERC's admirable record doesn't address the delays and the need
to get all of the other permits from Federal and State agencies
that are required before a pipeline can commence construction.
And so the FERC record only answers part of the issues raised
by Mr. Pompeo's bill.
Mr. Green. And I agree that that--but, you know, with this
legislation, I don't know if FERC is going to be able to tell
the Corps of Engineers or even EPA or even a State agency
that--like I said, if a State has a unified application
process, instead of having different States--in fact, I will
probably get that from FERC, on how many States have that. I
would assume Texas and Louisiana have some type of one-stop
shopping for pipeline permits, just because we do them a lot.
And maybe the States that are not--and I know somebody said
something about, we are going to have pipelines in upper New
York. You know, most of my drillers say, first, we need to get
a permit to worry about a pipeline. And so we haven't had a
permit in upstate New York on some of the success in the
Marcellus Shale.
Mr. Santa, I appreciate you being here and worked for INGAA
for years. And I recognize the need for additional capacity,
particularly in my State and around the country. Namely, my
concern, though, is the unintended consequences, namely the
potential for agencies to deny permits simply on the grounds it
lacks sufficient times for inadequate and legally defensible
review or any other scenario if it deemed approved.
I would like to remind my colleagues and the majority, we
did this once before and then last year when we required the
President to approve a pipeline within 60 days, or deemed it
approved, and he denied it. I would worry that some of our
pipelines that are so far down the road, because there may be a
problem with getting a report back from some agency, would just
say we will deny it and then starting over again. So that is my
worry.
Mr. Santa, are you worried about the potential denials? And
I know earlier in a question you said, if it is a ``no,'' it is
a ``no.'' But what happens when they deny it? Filing a lawsuit
virtually guarantees additional delay.
Mr. Santa. Well, I think that, you know, as Mr. Markarian
said, sometimes a definite ``no'' is better than an indefinite
``maybe'' in terms of businesses and their planning.
I also think that, you know, as I have noted, this bill
establishes a two-way street. I mean, it will hold the
permitting agencies more accountable, but, quite frankly, the
pipeline industry is going to be more accountable for filing
complete, timely applications so as to not put the agency in
that bind and produce that undesirable result.
Mr. Green. And I know that hopefully there will be an
amendment that would talk about a completed application before
the time starts running so you have that. And I don't think the
bill actually says that now.
And I understand you would rather have a ``yes'' or ``no''
than a ``maybe'' if a ``maybe'' would delay, would get you
further down the road. But that ought to be the completed
application process. That ought to be decided up front when you
get that completed application.
Commissioner Moeller also warned that a 90-day deadline may
force agencies to add burdensome conditions as a way to protect
themselves from accusations of insufficient review. Is INGAA or
any of you on the panel concerned about that?
I know, obviously, I am interested in building pipelines to
handle both the natural gas but also, you know, to get it to a
market, whether it be an export market that I support or
either, you know, power generation.
Mr. Santa. I mean, agencies frequently condition permits
today. So I think the notion of receiving conditions in
connection with an environmental permit is not something new.
And if it leads the agencies to do that to ensure that all, you
know, bases are covered, I think that is one of the
consequences.
Mr. Green. OK.
Mr. Markarian. And I think if an agency acts capriciously
or in a way that it shouldn't, that brings heat of its own on
the agency. So I think we can count on the agencies to act in
good faith to--if it is a denial, a denial in good faith.
Mr. Green. Yes. Well, and some of you know, I have been
around long enough that I know that I had problems with FERC,
and I know Mr. Kessler does. And you may have been on the staff
when we had some battles at FERC over the years.
But in the last few years, having dealt with them, and,
like I said, a lot of your members I have worked with literally
every day almost in the Houston area haven't had a problem with
FERC. Because if there was, believe me, I would be there
saying, what are we doing with it?
Mr. Santa, I have read where permitting time frames are
even longer now than they were before we streamlined the
process in the 2005 energy bill. Why is it longer, the time
frames longer than we did the--as Joe Barton and I brag about
all the time.
Mr. Santa. Mr. Green, I am not sure there is any causal
connection between the EPAct 2005 provisions and what has
happened.
The INGAA Foundation report that we reference in our
testimony had a survey and then more in-depth interviews with a
subset of those pipeline companies. There were a variety of
reasons identified, including inexperience on the part of the
agencies in dealing with linear projects like this, other
priorities at the agencies, interagency disputes, and also, in
some instances, quite frankly, deficiencies on the part of the
pipeline applicants.
But, as the report noted, probably the main recommendation
coming out of there was providing some teeth, some
enforceability to the EPAct 2005 provisions to prompt the
incentive to address all of that.
Mr. Whitfield. The gentleman's time has expired.
Mr. Green. Thank you, Mr. Chairman, for your courtesy.
Mr. Whitfield. That concludes today's hearing on H.R. 1900.
I want to thank those of us you who joined us today. We, as I
said, appreciate your insights, your suggestions, your
thoughts. And we have all looked at your opening statements,
and we look forward to working with you as we move forward to
address these many complicated energy issues. So thank you.
And that concludes today's hearing.
The record will remain open for 10 days.
Mr. Whitfield. Thank you.
[Whereupon, at 12:50 p.m., the subcommittee was adjourned.]
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