Executive Summary
This report presents a study showing that the time to obtain required federal authorizations from agencies other than the Federal Energy Regulatory Commission (FERC or Commission) for interstate natural gas pipeline projects has actually increased since the passage of the Energy Policy Act of 2005 (EPAct 2005), a law with the stated intent to streamline and expedite federal authorizations for such projects.
The only provision in EPAct 2005 Section 313 that provides an applicant with recourse in the face of agency delay—a petition to the U.S. Court of Appeals for the D.C. Circuit—has rarely been used, allowing agencies to miss the required federal authorization deadline without consequence.
The undesirable effects of permitting delays range from increased project costs to missed in-service dates, along with a variety of associated adverse business, environmental, and other consequences. Using survey and interview data from the majority of large pipeline projects over the past 13 years, this report analyzes permitting timeframes and identifies possible improvements.
It should be noted that no causal link was identified between the passage of EPAct 2005 and the increase in time required to obtain all required federal authorizations for interstate pipeline projects. Rather, the causes for delay that were identified included agency inexperience and inadequate agency staff, interagency conflicts, applicant changes to the project requiring additional or revised environmental review, and site-access problems. Improving the Act may help to alleviate the delays that appear to have increased in recent years.
In order to streamline and expedite the federal authorizations required for interstate natural gas pipeline projects, EPAct 2005 authorized FERC to establish a schedule for such authorizations.
[1] To accomplish this, FERC implemented a 90-day deadline for other agencies to issue the federal authorizations required for a pipeline project after the issuance of FERC’s environmental analysis under the National Environmental Policy Act.
Five years after implementation of the Act, The INGAA Foundation, Inc. commissioned Holland & Hart LLP to conduct a study to determine whether the law had reduced the time to obtain federal authorizations for interstate natural gas pipeline projects as intended and, depending on the results of the study, to develop strategies for streamlining the issuance of such authorizations. The study focused on the EPAct 2005 provision regarding the federal authorization deadline, which applies to non-FERC authorizations. The study does not cover FERC processes or certification except in relation to the other federal authorizations.
To collect data for the study, Holland & Hart conducted a survey, with respondents representing 51 interstate natural gas pipeline projects from both before and after the effective date of EPAct 2005.
For post-EPAct 2005 projects, the survey data showed:
- an increase from 7.69% to 28.05% of federal authorizations that were delayed (see Table 2);
- an increase from 3.42% to 19.51% of federal authorizations that were delayed 90 days or longer beyond the FERC deadline (see Table 3); and
- an increase in the time federal agencies took to deem an application for a federal authorization “complete.”
In response to open-ended questions administered to the survey-respondents, the most common cause cited for federal authorization delays was conflict between two agencies. Other causes included inadequate or under-trained agency staff, applicant changes to the project requiring additional or revised environmental review, site-access problems, third-party protests, and agency review and determination of requirements to mitigate for environmental impacts.
Suggestions to reduce future delays included:
- providing consequences when agencies fail to meet the FERC deadline;
- planning for the project early and thoroughly; and
- establishing better applicant-agency relationships and lines of communication.
The survey was designed to quantify delays experienced in receiving federal authorizations and gather information on the causes of such delays. Based on the survey outcomes, Holland & Hart conducted qualitative interviews with representatives from four post-EPAct 2005 projects that experienced significant delays to explore further some of the causes for such delays.
[2]
The interviewees expressed a strong desire for the Commission to have the authority to impose consequences or take unilateral action when agencies failed to abide by the federal authorization deadline set by FERC. The interviews also revealed a general desire for more FERC involvement in the federal authorization process, especially to provide more education and training to the other federal agencies involved in the process.
A majority of the interviewees also indicated that state agencies with delegated federal permitting authority were a common source of delays, even though such delegated authorizations are subject to the EPAct 2005 provision establishing a federal timeline. Several of the interviewees offered that the time it took to satisfy U.S. Fish and Wildlife Service requirements under the Migratory Bird Treaty Act and to obtain permits from the Army Corps of Engineers under Section 404 of the Clean Water Act contributed to major delays for their projects. The interviewees also indicated that under-staffed agencies and increased public concern over natural gas production issues like hydraulic fracturing were sources of pipeline project delay. Finally, the interviewees noted that duplicative agency processes, FERC’s inability to enforce the federal-authorization deadline, and project changes by the applicant also contributed to delays.
Overall, the survey and interviews revealed increased permitting delays since the enactment of EPAct 2005 for the federal authorizations required to develop interstate natural gas pipeline projects. Thus, it appears that federal agencies have not complied with EPAct 2005’s requirements for streamlining and expediting federal authorizations.
In order to achieve the Act’s stated goal of streamlined permitting, there must be consequences for agencies that fail to meet deadlines. Additional process improvements, regulatory revisions, and/or legislative actions likely are needed. Based on analysis of the study data, potential options include:
- Amending the Natural Gas Act to provide effective tools to enforce the federal-authorization deadline, such as granting automatic approval if an agency does not respond by the deadline or allowing FERC to grant approval in the agency’s stead.
- Greater FERC involvement in permitting processes to educate and train other federal agencies, facilitate communications with those agencies, and move the permitting processes forward.
- Encouragement of other federal agencies to recruit staff with specific experience permitting linear projects.
- Revision of FERC’s policy that encourages cooperation with state and local agencies to recognize more definitively that state or local law that overlaps or conflicts with FERC’s authority over pipeline facilities is preempted by the Natural Gas Act.
- Recognition by federal agencies that, as the lead agency, FERC’s completion of National Historic Preservation Act Section 106 consultation and Endangered Species Act Section 7 consultation is sufficient for other federal authorizations that require such consultation for interstate natural gas pipeline projects.
- Explicit direction by the Council on Environmental Quality to require expedited review for pipeline projects under the National Environmental Policy Act.
- Statutory amendments to authorize interstate natural gas pipeline companies access to private property for required non-invasive project surveys and to authorize FERC to apply authorization deadlines to non-federal authorizations required from state and local agencies.
- Congressional or federal court action to address issues and associated delays resulting from the U.S. Fish and Wildlife Service requirements under the Migratory Bird Treaty Act, which currently prohibits the take of migratory birds that occurs incidental to otherwise lawful activities, such as interstate natural gas pipeline development.
[1] Federal authorizations include both authorizations issued by federal agencies and authorizations issued by state agencies acting under federal delegation.
[2] Further research would be needed to determine all of the reasons that the frequency and duration of delay increased after the Act.
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