Tennessee Gas Pipeline, L.L.C., 111915 FERC, CP11-161-002

Docket Nº:CP11-161-002
Party Name:Tennessee Gas Pipeline, L.L.C. Project and Docket Number(s) Pre-filing Approval Application Filing, Notice of Application Issued Environmental Assessment Issued Commission Order Issued 1st Notice to Proceed with Construction Issued Commencement of Service Issued Hydrostatic Test Water Amounts Used by the Projects Project Water Amount Used (gallons)
Judge Panel:Before Commissioners: Norman C. Bay, Chairman; Cheryl A. LaFleur, Tony Clark, and Colette D. Honorable. Nathaniel J. Davis, Sr., Deputy Secretary.
Case Date:November 19, 2015
Court:Federal Energy Regulatory Commission
 
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153 FERC ¶ 61, 215

Tennessee Gas Pipeline, L.L.C.

No. CP11-161-002

United States of America, Federal Energy Regulatory Commission

November 19, 2015

Before Commissioners: Norman C. Bay, Chairman; Cheryl A. LaFleur, Tony Clark, and Colette D. Honorable.

ORDER ON REMAND

1. This case is before the Commission on remand from the United States Court of Appeals for the District of Columbia Circuit.1 In the underlying proceeding, the Commission authorized Tennessee Gas Pipeline, L.L.C. (Tennessee) under section 7 of the Natural Gas Act (NGA) to construct and operate expansion facilities on its 300 Line in Pennsylvania and New Jersey, referred to as the Northeast Upgrade Project.2 The Commission approved the project after finding it was required by the public convenience and necessity and would not have a significant impact on the environment. The court found that the Commission violated the National Environmental Policy Act (NEPA) by: (1) segmenting its environmental review of the Northeast Upgrade Project from that of three other Tennessee pipeline projects on the Eastern Leg of the 300 Line;3 and (2) failing to provide a meaningful analysis of the cumulative impacts of the four projects to show that the impacts would be insignificant. Based on the supplemental environmental analysis developed in response to the court's mandate, we conclude that, when considered additively, impacts from the Northeast Upgrade Project and Tennessee's three other projects are not significant. We also conclude that when the projects are considered cumulatively with the Northeast Upgrade Project, there are no significant cumulative impacts.

I. Background

2. On March 31, 2011, Tennessee filed its application in this proceeding requesting authorization to construct and operate the Northeast Upgrade Project, which consists of five pipeline loop segments totaling 40.3 miles of 30-inch-diameter pipeline, modifications and upgrades at four compressor stations, and one meter station. The pipeline loops are collocated with Tennessee's existing 24-inch-diameter 300 Line pipeline for 33.8 miles (84 percent) of the proposed project. The project added capacity necessary to provide 636, 000 dekatherms (Dth) per day of firm transportation service for two shippers, Chesapeake Energy Marketing, Inc. (Chesapeake) and Statoil Natural Gas LLC (Statoil).

3. The Northeast Upgrade Project is one of four projects proposed by Tennessee in separate applications between July 2009 and December 2011 involving construction on its 300 Line. The projects are, in chronological order of the date the applications were filed: (1) the 300 Line Project; (2) the Northeast Supply Diversification Project; (3) the Northeast Upgrade Project; and (4) the MPP Project. The Commission considered each application separately and made a finding of no significant environmental impact in each case after developing a project-specific Environmental Assessment (EA) that included a cumulative effects analysis. The Commission ultimately authorized each of the projects.

4. Several environmental groups, including the Delaware Riverkeeper Network (Riverkeeper), raised multiple challenges regarding the Commission's environmental analysis of the Northeast Upgrade Project. As relevant here, Riverkeeper asserted that the Commission had unlawfully segmented the environmental review of the Northeast Upgrade Project from its review of the three other Tennessee projects involving construction along the Eastern Leg of the 300 Line. Riverkeeper also claimed that the Commission's cumulative impact analysis of the Northeast Upgrade Project was deficient because it failed to adequately consider the cumulative impacts of the other three projects.

5. In the May 29, 2012 order certificating the Northeast Upgrade Project (Certificate Order), the Commission rejected claims that the Commission had improperly segmented its environmental review of the Northeast Upgrade Project from the previously authorized 300 Line Project, noting that each project is a stand-alone project designed to provide transportation for a contracted-for volume of gas within different time-frames to different customers.4 On rehearing, the Commission affirmed its ruling that it had not improperly segmented its environmental review of the Northeast Upgrade Project from that of the 300 Line Project. 5 The Commission also rejected Riverkeeper's argument that the Commission had improperly segmented its environmental review of the Northeast Upgrade Project from that of the two other projects proposed by Tennessee affecting the 300 Line, namely, the Northeast Supply Diversification Project and the MPP Project. The Commission rejected Riverkeeper's contention that the four projects impacting the 300 Line are functionally and economically interdependent, reiterating that each project has independent utility as each is designed to provide transportation for contracted-for volumes of gas to specific customers and can stand alone.6 The Commission concluded that the projects were not "connected" actions as that term is defined in section 1508.25(a)(1) of the Council on Environmental Quality's regulations implementing NEPA.7

6. The Commission also disagreed with Riverkeeper's assertion that the cumulative impacts analysis performed for the Northeast Upgrade Project was deficient for failing to consider impacts associated with the other three projects on the 300 Line. The Commission explained that it had examined impacts from the 300 Line Project on resources also affected by the Northeast Upgrade Project and found the cumulative impacts to be insignificant.8 The Commission further found that the impacts from the Northeast Supply Diversification Project were on resources too distant from the Northeast Upgrade Project (over 25 miles) to be included in the cumulative impacts analysis for that project.9 Finally, the Commission found that it was not required to consider impacts associated with the MPP Project because the potential impacts from that project were not known or reasonably foreseeable at the time the Commission conducted the environmental review of the Northeast Upgrade Project. The Commission in addition found that the MPP Project impacts were on resources too distant from the Northeast Upgrade Project (over 25 miles) to be included in the cumulative impact analysis for that project.10

7. Tennessee constructed the Northeast Upgrade Project and was authorized to place facilities into service between October and December 2013.

II. Court Opinion

8. In Delaware Riverkeeper, the court rejected the Commission's determination that the four Tennessee projects along its 300 Line were not "connected actions" as that term is defined by NEPA regulations. The court found that the Northeast Upgrade Project and the "three other connected, closely related, and interdependent Tennessee Gas upgrade projects on the 300 Line constituted a complete upgrade of almost 200 miles of continuous pipeline."11 The court found that there was a clear physical, functional, financial, and temporal nexus between the four projects, noting that: (1) the pipeline is linear and physically interdependent in that gas enters the system at one end and passes through each of the new pipe sections and improved compressor stations to reach the ultimate delivery point in New Jersey;12 (2) the projects were constructed in rapid succession with overlapping proceedings before the Commission;13 (3) the four projects were not divided based on rational end points as gas does not enter and exit the pipeline between the projects' segments;14 and (4) the first project allowed for subsequent projects to be constructed at a much lower cost.15

9. The court rejected the Commission's argument that the Northeast Upgrade Project had substantial independent utility separate from the other three projects because Tennessee had secured distinct contracts for service utilizing the incremental capacity to be created by the project.16 The court noted that the no-subsidy requirement of the Commission's Certificate Policy Statement17 required Tennessee to contract for increased capacity prior to upgrading the Eastern Leg of the pipeline and the contracts "do not show that the Northeast [Upgrade] Project was driven by independent financial considerations apart from the other projects."18 The court found that the four projects on the Eastern Leg are financially interdependent because the 300 Line Project made it possible to construct the Northeast Upgrade Project at a lower cost.

10. The court also found the Commission's rationalization "proves too much" and would allow for a project sponsor to have proposed "two-mile segments, or one-mile segments, or one-hundred-yard segments, " so long as it produced shipping contracts in anticipation of the increased capacity attributable to each of these new segments.19 The court dismissed the Commission's reliance on the shipper contracts as "paint[ing] a false picture, " finding instead that "[t]here are no 'Northeast [Upgrade] Project customers'" as "[g]as does not enter and exit the pipeline between segments on the Eastern Leg of the 300 Line" and "customers do not take gas from the Northeast [Upgrade] Project portion of the Eastern Leg."20

11. The close timing of the four projects was a significant factor in the court's determination.21 Specifically, the court found that when the Commission issued the certificate for the Northeast Upgrade Project, "it was clear that the entire Eastern Leg was included in a complete overhaul and upgrade . . . ."22 The court pointed out that the Commission's consideration of the Northeast Upgrade Project application overlapped with its consideration of the applications for the Northeast Supply Diversification and MPP projects. The court emphasized that regardless of whether...

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