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How FERC Can Reduce Greenhouse Gas Emissions & Promote Renewable Energy

I’ve described the byzantine and significantly privatized federal and state regulatory framework for energy as the “Twilight Zone”.

The Christie State BPU is run by a former energy industry lobbyist, while the Federal Energy Regulatory Commission (FERC) is “captured” by the energy industry it regulates and promotes and serves the energy industry’s interests, not the public interest. Therefore, participation in the FERC review process is a joke and waste of time. That view is shared by many others:

we were unable to find a single FERC denial of an application for a Certificate of Public Convenience and Necessity for an interstate gas transmission line.

Just this morning, I came upon another example of the degree of FERC’s capture, as FERC reversed its historical policy and will now allow gas companies to pass through to consumers the costs of complying with EPA and other regulations – that’s right: they impose risk and pollute and profit, while we pay for protections, see:

• Cost Recovery Mechanisms for Modernization of Natural Gas Facilities

20. Accordingly, the Commission proposes to establish a policy outlining the analytical framework for evaluating proposed cost recovery mechanisms to recoup infrastructure modernization costs necessary for the efficient and safe operation of the pipeline’s system and compliance with new regulations. 

Given those fatally flawed federal regulatory conditions – and the proliferation of pipelines and other fossil fuel  energy infrastructure under FERC’s jurisdiction – in my view,  a State government strategy is required and a moratorium at the State level is justified until the non-prempted State safeguards are developed.

The only state regulatory tools I’ve found that are not preempted are delegated Clean Water Act and Coastal Zone Management Act powers.

Obviously, a State moratorium is a radical approach – which I think is completely justified given the climate emergency and the rate and sheer scale of the fossil energy industry’s expansion.

But, aside from the State strategy, if FERC were serious about climate change, even incremental federal regulatory reforms are feasible – if demanded by public pressure and political leadership – if FERC were serious about climate change.

Although there are huge project specific political battles and environmental campaigns going on in communities across the country, I see little evidence that people want to change the policies and rules of the game FERC operates under.

That is the typical failed environmental strategy: invest in single battles, while ignoring the regulatory framework that virtually guarantees you will lose that battle.

Very few activists or people are even aware of the rules, never mind how to change the rules of the game that dictate consistently losing outcomes.

The energy industry surely knows better, that’s why they invest tremendous resources in controlling the regulatory apparatus that guarantees their profits and assures that the public and the environment get screwed.

But, in a refreshing counter to the energy industry regulatory capture agenda, a recent Report from Berkeley Law School “How FERC Can Use Its Existing Legal Authority To Reduce Greenhouse Gas Emissions and Increase Clean Energy Use” lays out a FERC reform agenda.

FERC is NOT going to do any of this without enormous public pressure to change policies.

But I see no evidence of focused public pressure – and I see no public interest, climate, or environmental groups even working on this kind of federal regulatory policy reform (or the State moratorium/safeguards strategy either).

Since there is virtually zero chance of Congress acting on climate, energy, or the public interest – the Bernie Sanders “Leave it in the Ground” Senate bill was another political stunt, as was Obama’s big PR on killing Keystone XL – the only question in my mind is whether activists should pursue a radical State moratorium strategy or focus on incremental FERC (and EPA) regulatory reforms.

The system is badly broken – either take direct acton to shut it down, or fix it.

Time to choose.

Oil & Gas Pipelines Proliferating

Data show that Obama’s “all of the above” energy policy is maximizing US fossil fuel production

The run-up to the Paris climate conference is all show 

Data supporting this map may be found here – table format can be found here.  The energy industry consulting software is known as “MIDI”

The same day that climate activists were declaring victory and the main stream media was making such a big deal about the request by TransCanada to the Obama Administration for a time out in reviewing their Keystone XL pipeline from Canadian tar sands to Gulf of Mexico refineries, an energy consultant known as  RBG Energy LLC issued a Report about oil and gas infrastructure in the Gulf.

That report shows massive new imports of oil to Gulf refineries via huge expansions in pipeline capacity, including from the Canadian tar sands. The new pipeline delivery is so large it has displaced prior imports from shipping, and is driving a search for storage capacity for the glut of supply.

Here is the ugly truth printed in energy industry trade journals that is not reported by media or the climate activists:

Prior to 2012 the only U.S. produced crude delivered by pipeline to Houston area refineries came from offshore Gulf of Mexico or onshore Louisiana fields. The majority of supplies were imports delivered by waterborne tanker. But in just three short years between 2012 and 2015, roughly 2 MMb/d of crude pipeline capacity was built or repurposed to deliver surging light shale crude production and heavy crude from Canada into the Houston area. Refiners have adapted quickly to take advantage of new sources of supply. But with much of the newly minted infrastructure underutilized, midstream companies still need to improve pipeline connectivity and storage accessibility to overcome area logistical challenges. Today we review RBN’s latest Drill Down report on Houston crude infrastructure – released today — and announce RBN’s new infrastructure database and mapping system, called MIDI.

In 2011 average waterborne imports to Houston area ports were 1.7 MMb/d – enough to supply more than 70% of local refinery needs. Since April 2012 when Phase 1 of the Seaway pipeline reversal (150 Mb/d) came online to deliver crude from the Midwest Cushing, OK trading hub to Houston, that position has been largely reversed as multiple new pipelines have come online delivering domestic and Canadian crude to the Houston area – pushing out imports in the process. In July 2015 crude delivered by pipelines developed since 2012 accounted for about 55% of Houston supply and waterborne imports had dwindled to 0.8 MMb/d. Our latest Drill Down report – available exclusively to Backstage Pass subscribers provides detailed analysis of the changing crude supply/demand balance for 9 refineries and two condensate splitters in the Houston area that between them consume about 2.4 MMb/d.

The run-up to the Paris climate conference is all show –

The data show that Obama’s “all of the above” energy policy is maximizing US fossil fuel production.

Its the Fossil Fuel, Not The Pipeline

The above chart comes from an outstanding truth telling lecture by Kevin Anderson of the Tyndall Center (please watch the whole thing Delivering on 2 Degrees C – Evolution or Revolution?).

Anderson looks at carbon budgets and what kind of radical changes in energy and economic life would be required to meet the current consensus goal of keeping warming below 2 degrees Celsius.

He also critiques various studies and asks why they all share totally unrealistic assumptions and gloss over the hard reality and implications of the science.

Climate chaos is why I oppose pipelines – its the investment in fossil infrastructure that should be going into lowering energy demand and making a transition to the concept of “degrowth” – or planned economic recession.

(of course I oppose the landscape destruction, water and air pollution, and risks of pipelines, but the #1 issue is obviously and overwhelmingly climate).

This goes beyond the “leave it in the ground” approach, because renewable energy sources will not be available to scale up rapidly enough to meet energy demands of a growing economy – we must change the growth and consumption dominated economic model.

But no one wants to acknowledge that continued economic growth makes it impossible to avoid climate chaos and that deep emissions reductions will force revolutionary changes in current consumption rates and US lifestyles.

In fact, most of the pipeline and energy infrastructure debates in NJ completely ignore the climate imperative.

The climate and renewable energy debates follow many of the flawed assumptions and politicized thinking that Anderson critiques, such as a focus on long term goals (80% renewable energy by 2050) and magical thinking that these kinds of dramatic transitions will occur painlessly and with little or no sacrifice in lifestyles or radical change in the current concentrations of political and economic power.

I share Anderson’s perspective that in order to solve a problem, it’s full dimensions and implications must be acknowledged. While failure is likely, its better to fail honestly than to avoid the hard truths.

Plus, these kind of truths need not trigger despair – they could just as likely mobilize emergency action and radical change.

Either way, it looks like revolutionary change is coming soon – one way or another – via mitigation of emissions or via adaptation to the climate chaos that will ensue if we don’t (or maybe both).

What Am I Missing?

Connecticut Case Should Be An Example for a 50 State Campaign

Sometimes legal victories are so significant that they undergo a process that extends far beyond the courtroom and legal community to become a part of the fabric of daily life, public discourse and lay a groundwork for activism – think “Brown v. Board of Education“.

The US Supreme Court’s “Massachusetts“ decision that found that CO2 was a pollutant able to be regulated under the Clean Air Act is an example of that phenomenon with respect to climate change.

(fracktivists had similar victories in the Pennsylvania’s Supreme Court’s decision striking down pro fracking law called A13 and in NY Gov. Cuomo’s fracking moratorium.)

While not quite to those levels of profound legal and policy significance, I may have stumbled upon a similar case for the interstate gas pipeline battles – but curiously, I could find little of the process of assimilation into the broader pipeline debate or focus of anti-pipeline activism.

What am I missing? This is not ancient history. Check out these features and their relevance today:

I’ve written repeatedly about what I consider the most powerful tool to kill interstate gas pipelines: State denial of the water quality certification under Section 401 (and 404) of the federal Clean Water Act. (does anyone think these practices would “protect existing uses” and “maintain existing water quality” at 31 C1 stream crossings?)

The Connecticut case that relied on this State power killed a FERC regulated interstate pipeline known as Islander East.

The Connecticut DEP denied a Clean Water Act based water quality certification and that State permit denial killed the pipeline. State power was not preempted.

The Connecticut DEP Commissioner who denied the permit is now the Obama EPA Administrator, Gina McCarthy (during a raging national debate on the Keystone XL oil pipeline). Curiously, that bold action is not even listed in her Wiki bio.

The Connecticut State Attorney General who litigated the denial is now US Senator Richard Blumenthal. Curiously, that bold leadership also is not listed in his Wiki bio (although it is listed by the Sierra Club as one reason for their endorsement).

Why would such a huge achievement, so relevant to major public pipeline debates, be virtually a secret? What explains that? What am I missing? Am I exaggerating the significance of gas pipeline debate? Or misconstruing the legal issues in the case?

Does the power of the gas industry keep that history of an extremely rare environmental permit denial under the radar screen?

The Connecticut permit denial was upheld by the US Court of Appeals and the gas industry’s appeal was rejected by the US Supreme Court.

Gov. M. Jodi Rell and AG Richard Blumenthal are hailing the U.S. Supreme Court’s refusal to hear an appeal regarding the planned construction of the Islander East pipeline across Long Island Sound.

As such, they are declaring a complete victory in the long-running battle against the natural gas pipeline.

“First Broadwater. Now Islander East,” Rell said in a statement released by spokesman Rich Harris. “With today’s Supreme Court announcement, we have succeeded in turning back two ill-conceived energy projects that would have caused irreparable harm to Long Island Sound.”

She added, “Our state and this region do need reliable energy sources. However, we can – and must – find ways to meet our energy needs without sacrificing unique and precious natural resources like Long Island Sound. Neither Broadwater nor Islander East met that test, and we are all better off without them.”

Blumenthal declared that the Islander East is now “officially dead” after a battle that lasted nearly 10 years.

“This sweeping victory is the death knell for this hugely destructive project, dealing it the demise it so richly deserves,” Blumenthal said. “This immensely invasive, intrusive pipeline was the worst place and worst case for Long Island Sound and its fragile environment. The U.S. Supreme Court rightly let stand a powerful Court of Appeals decision citing the environmental destruction certain to result from dredging, drilling, plowing and backfilling to lay this pipeline.”

Very few cases have all these kind of high profile features – and enable such targeted activist campaigns and political accountability. (“We call on Gov. X to deny Clean Water Act permits….”)

And its not like 49 other Governors, Attorneys General, and State environmental agencies are all lined up and denying environmental permits that kill multibillion interstate gas infrastructure investments.

And federal regulation by FERC is a joke:

we were unable to find a single FERC denial of an application for a Certificate of Public Convenience and Necessity for an interstate gas transmission line.

So, with this kind of profile, the Connecticut case should be a big deal strategically, politically and legally, no?

So why is the case literally invisible?

Why are pipeline opponents investing so much time and resources in the failed FERC process when State Agencies can deny permits to kill pipelines?

Why do I get no engagement when I asked these questions to pipeline opponents?

Could this be why? A 2001 NY Times story:

• Conservationists Are Divided on Cross-Sound Gas Pipeline

A PROPOSAL to build a 40-mile-long natural gas pipeline across Long Island Sound has divided conservation groups in New York and Connecticut, not just along state lines but along philosophies. At the heart of the disagreement is whether the project will threaten the environment or improve it.

On the Connecticut side are the organizations that contend the pipeline will destroy oyster and lobster habitats and fish breeding areas and will endanger delicate wetlands. Many of the groups that oppose the gas pipeline also opposed the proposal for a cross-Sound electrical cable that was rejected by regulators in March, primarily because of environmental issues.

”It’s very unlikely they could put a gas pipeline across the Sound in a way that would be environmentally acceptable,” said Barbara C. Gordon, the executive director of the Connecticut Seafood Council, an industry group. ”There are alternatives for utility companies, and there is no need to damage the environment.”

On the other side of the Sound are some environmental advocates who say that growing electricity demands will require new power plants and that gas-fired generators will produce much less air pollution than coal- or oil-fired plants.

”From an energy point of view, we support it,” said Neal M. Lewis, the executive director of the Long Island Neighborhood Network, a grass-roots citizens’ group with an office in Massapequa. ”What we’re calling for in the short term is more gas to replace the oil-burning plants on Long Island.”

I really hope not – I thought we were all past the “bridge fuel” bullshit.

DEP Buries Federal Clean Water Act Power Under Preempted State ENSP Program

[Update below]

Some of my PennEast opponent friends are praising the latest DEP environmental review letter to FERC on the PennEast pipeline, so, unfortunately, I again must be the skunk at the Garden Party and clarify the situation (see prior post).

Federal law includes the doctrine of preemption of State and local laws (curious wonks can read the Wiki backgrounder).

The federal Natural Gas Act under which FERC reviews interstate pipelines like PennEast preempts most state and local laws, with very limited exceptions.

This Congressional Research Service Report explains:

One of the exceptions that is not preempted are “federal approvals” – and the key one for PennEast that is not preempted is the Water Quality Certification under Section 401 of the Clean Water Act.

Additional support:

Finally, and most significantly, state agencies that implement federally authorized programs, such as the Clean Water Act or Coastal Zone Management Act are not subject to preemption. These statutes “effect a federal-state partnership…so that state standards approved by the federal government become a federal standard for that state” and cannot be overridden by FERC.16**   However, sometimes states waive their rights under these federal statutes by failing to act within the required time frame for making a decision (for example, Section 401 of the Clean Water Act requires states to act on an application within one year of the date that it is filed or the need for the approval is deemed waived). ** Note the Connecticut case in FN 16 – Conn. denied a federal permit and killed pipeline – my note

What that all means is that opponents need to find a federal hook that DEP is delegated to enforce – like the Clean Water Act.

However, instead of asserting this federal law based DEP Section 401 WQ Certification power, virtually every issue DEP raises in the most recent FERC review letter is based on state laws, which are preempted.

Again, the one tool they do have under the Clean Water Act – the Section 401 Water Quality Certification – is not even mentioned in the DEP comments to FERC.

The prior DEP letter to FERC completely failed to mention the one federal hook under the Clean Water Act that could be used to build an argument for killing the project under the Clean Water Act, which was 31 Category One (C1) streams the pipeline will cross.

There is no way possible for PennEast to demonstrate that every one of those 31 stream crossings will not lower “existing water quality”, which includes the physical, chemical, and biological characteristics and existing uses of those waters.

But DEP ignored that, and even went one step further and went out of their way to bury their Clean Water Act power

This time around, with all the recent attention given to C1 stream during the legislative veto debate on DEP’s new Flood Hazard rules, DEP could no longer completely ignore the C1 issues.

So, this time around, DEP did MENTION “significant concerns” regarding C1 stream crossings – but on page 19. The concerns the DEP raised were with respect to STATE regulated resources under STATE ENSP law – which are preempted:

But, that’s not the only place where DEP neutered their own Clean Water Act power to kill the pipeline.

There is another federal hook where DEP implements a federally delegated Clean Water Act program that could be a vehicle for showing how the pipeline project would violate federal EPA approved water quality standards under the Clean Water Act.

With a little creative lawyering, if DEP wanted to kill the pipeline, DEP could connect these regulatory dots.

But instead DEP merely mentioned a storm water General Permit (GP) – that regulatory requirements could be used to attack the pipeline for failure to demonstrate compliance with the C1 “existing water quality” standard in the SWQS (NJAC 7:9B) as required by the storm water management rules (NJAC 7:8-5.5(h).

The GP (5G3) is issued pursuant to the NJPDES storm water rules (NJAC 7:14A). Those rules require compliance with the design and performance standards of the storm water management rules (NJAC 7:8) – dots are connected.

What this means is that DEP is just blowing smoke – posturing to make it look like they are being tough. This letter and all the technical issues it raises are largely irrelevant from the perspective of whether they can be used to kill the project.

Finally, I know that some might argue that the DEP’s technical requirements in the FERC letter will delay the project and create regulatory uncertainty.

A recent gas industry consultant’s “Strategic Report” – actually just a survey of the gas industry – found that delays and regulatory uncertainty were the biggest hurdles the industry felt it faced.

This consultant’s Report was not hacked by Anonymous or leaked by an industry whistleblower to Wikileaks.

Just use your head: Do you really think a gas industry consultant is going to write a public report that shows activists how to kill the gas industry?

Ironically, regulatory delays might actually BENEFIT the industry right now – they provide a legal defense from meeting contract commitments and allow industry to avoid making financing decisions until the gas markets improve – i.e higher prices and demand.

If the industry had to finance projects right now and make go/no go decisions, they would be cancelled, just like Shell did with Arctic drilling.

Those that delay gas projects, ironically, may be helping the gas industry through a period of low prices and slack demand.

[Update – I am getting a question about whether NJ wetlands laws could block the pipeline.

First of all, there are federally delegated wetlands and State wetlands issues. NJ Freshwater Wetlands law is preempted. Only federal requirements are relevant to the question.

Second, there are no water quality standards for federally regulated wetlands – or state delegated wetlands – upon which a denial could be based.

Third, wetlands laws set up an avoidance, minimization and mitigation scheme. This does not support a denial.

Fourth, throughout DEP’s entire letter, the concept of mitigation and compensation are stressed – this is not an approach that seeks to deny permits.

All DEP is seeking to do is the big shakedown: force PennEast to pony up mitigation and compensation money in exchange for approval – along with that required by State House Commission for state lands leases and diversion.

It reeks!

Finally, let me add that some are glomming on to the fact that DEP noted State land use permit requirements for a “demonstration of need”.

FERC requires a demonstration of need, so any parallel and inconsistent state requirements are preempted. BPU would be the entity to regulate this anyway. And they don’t, even for intrastate pipelines.

Second, the DEP demonstration of need requirements flow from State land use laws – they are preempted.

Last, energy infrastructure need are totally unrelated to DEP land use laws and environmental laws and DEP has no authority or expertise to weigh in on energy need demonstrations which are not related to wetlands issues. Final straw in preemption.

[End note – and to make matters worse, on top of the preemption issue, almost all of the State DEP permits and approvals merely require mitigation and compensation – that’s very different than a pert denial. DEP is very unlikely to deny any permit and they don’t appear to be even trying to do so, but we’re still in FERC EIS stage.]