H.R. 161

Natural Gas Pipeline Permitting Reform Act

Date
January 21, 2015 (114th Congress, 1st Session)

Staff Contact
David Smentek

Floor Situation

On Wednesday, January 21, 2015, the House will consider H.R. 161, the Natural Gas Pipeline Permitting Reform Act, under a rule.  The bill was introduced on January 6, 2015 by Rep. Mike Pompeo (R-KS), and referred to the Committee on Energy and Commerce.

Bill Summary

H.R. 161 is substantively identical to H.R. 1900, the Natural Gas Pipeline Permitting Reform Act, legislation that passed in the 113th Congress by a vote of 252-165.  (See Roll Call #611)

H.R. 161 expedites the federal review process for applications for natural gas pipeline certificates by imposing deadlines on involved agencies.  Specifically, the bill amends the Natural Gas Act to require that the Federal Energy Regulatory Commission (FERC) approve or deny a pipeline certificate within twelve months of receiving the complete application.  The bill applies only to projects that participate in FERC’s pre-filing process.

H.R. 161 requires that any relevant agencies responsible for issuing a license, permit, or approval under federal law in connection with the project approve or deny the request within ninety days after FERC’s issuance of the final environmental document.  FERC may extend the ninety-day period by thirty days if the relevant agency demonstrates it cannot complete its review on time.

If the relevant agency does not approve or deny the request within the specified time (ninety days or one hundred twenty days, if extended by FERC), approval of the request will take effect.  There is an allowance for the relevant agency to submit conditions to be incorporated into the permit if they are consistent with the final environmental document.  H.R. 161 does not change the review process for natural gas pipeline certificate applications; it simply sets time limits on the existing process.

Background

Technological advances in horizontal dilling and hydraulic fracturing have significantly increased the ability of producers to extract natural gas from shale formations, resulting in a dramatically larger domestic natural gas supply.[1]  “The growth in domestic production has made the United States the top producer of natural gas and petroleum in the world.”[2]  Over 300,000 miles of interstate transmission pipeline have been developed to-date.[3]  Yet, increased domestic production also “has led to an increase in demand for natural gas across the country.  This increase has led to a critical need to build new infrastructure to move natural gas from areas where it is being produced to areas of high demand.”[4]

Under the Natural Gas Act of 1938, FERC is authorized to approve proposed interstate natural gas pipeline routes.[5]  Therefore, in order to construct new interstate natural gas pipelines, companies must first obtain a certificate of public convenience and necessity from FERC.  The certification process contains several key steps, although it varies somewhat, depending on whether a company opts into the pre-filing process before formally applying for a certificate.[6]

“FERC conducts the environmental review of each proposed natural gas pipeline project as required under the National Environmental Policy Act (NEPA).  Under the Energy Policy Act of 2005 (EPAct 2005), FERC is designated as the lead agency for coordinating and reviewing natural gas pipeline project applications under NEPA and ‘all applicable federal authorizations.’  As the lead agency, FERC often must coordinate with a variety of federal, state, and local agencies where the natural gas pipeline is to be constructed.”[7]  federal law often requires multiple permits to build and operate an interstate natural gas pipeline.[8]  “Under current FERC regulations, federal and state agencies participate in the development of the NEPA analysis for a pipeline project and then are required to complete their respective permit application reviews no later than 90 days after FERC issues its final environmental document, unless another schedule is established by federal law.”[9]

Although FERC’s authority increased under EPAct 2005,[10] “there is growing evidence that FERC lacks the ability to enforce agency decisional deadlines related to natural gas pipeline applications.”[11]  One study revealed that “delays of more than 90 days have risen 28 percent after EPAct 2005’s permitting reforms, while delays of 180 days or more have risen 20 percent.”[12]  A February 2013 GAO report revealed that “the average processing time from pre-filing to certification for interstate natural gas pipeline projects was 558 days.”[13]  A report conducted by the Interstate Natural Gas Association of America (INGAA) found that nearly 20% of FERC certifications were delayed 90 days or longer.[14]  There is concern that these delays are largely a result of FERC’s lack of enforcement mechanisms, as it cannot impose consequences on agencies that do not comply within the requisite time.[15]

H.R. 161 expedites the review process by imposing statutory deadlines on agencies involved in the review process of interstate natural gas pipelines.

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[1] Paul Parfomak, Interstate Natural Gas Pipelines: Process and Riming of FERC Permit Application Review, Congressional Research Service (Nov. 19, 2013) at 1.
[2] Committee Report 113-269 at 3.
[3] Interstate Natural Gas Pipelines: Process and Riming of FERC Permit Application Review at 1.
[4] Committee Report 113-269 at 3.
[5] Id.
[6] Interstate Natural Gas Pipelines: Process and Riming of FERC Permit Application Review at 1-2. “Prior to applying to FERC for a pipeline certificate, developers may file a request with FERC to use the commission’s pre-filing procedures . . . .  The commission established the pre-filing process to encourage the pipeline industry to engage in early project-development involvement with the relevant public and government agencies. Through this process a developer notifies all stakeholders—including state, local, and other federal agencies, and potentially affected property owners—about a proposed project so that the developer and commission staff can provide a forum to hear stakeholder concerns. The pipeline developer may then incorporate proposed environmental mitigation measures into the project design, taking into account stakeholder input. The expectation is that the pre-filing will improve a developer’s proposal and avoid problems during the review of a subsequent FERC certificate application.” Id. at 2.
[7] Committee Report 113-269 at 3-4.
[8] Id. at 4.  “This includes permits under the Clean Water Act, Endangered Species Act, and the Federal Land Policy and Management Act.”  Id.
[9] Id.
[10] “EPAct authorizes FERC to establish a schedule for all federal authorizations and provides for judicial petition ‘if a Federal or State administrative agency’ fails to comply with that schedule (§313(c)). Congress included these provisions in EPAct to address concerns that some interstate gas pipeline and other energy infrastructure approvals were being unduly delayed by a lack of coordination or insufficient action among agencies involved in the certification process. FERC has promulgated regulations under the EPAct authority requiring certificate-related final decisions from federal agencies or state agencies (acting pursuant to delegated federal authority) no later than 90 days after the commission issues its final environmental document, unless another schedule is established by federal law (18 C.F.R §157.22).”  Interstate Natural Gas Pipelines: Process and Riming of FERC Permit Application Review at 6.
[11] Committee Report 113-269 at 4.
[12] Id.
[13] GAO: Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting Processes Include Multiple Steps, and Time Frames Vary  (Feb. 2013) at 26.
[14] INGAA Foundation: Expedited Federal Authorization of Interstate Natural Gas Pipelines: Are Agencies Complying with EPAct? (Dec. 21, 2012) at ii.
[15] Id.

Cost

A CBO cost estimate for this legislation is currently unavailable.  However, a CBO cost estimate from the 113th Congress found that this legislation would not significantly affect discretionary or direct spending.[16]

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[16] http://www.cbo.gov/sites/default/files/cbofiles/attachments/hr1900.pdf

Additional Information

For questions or further information contact the GOP Conference at 5-5107.

Additional Views

STATEMENT OF ADMINISTRATION POLICY
H.R. 161 – Natural Gas Pipeline Permitting Reform Act
(Rep. Pompeo, R-Kansas, and 13 cosponsors)

The Administration recognizes the need for additional energy infrastructure and supports the timely consideration of project applications. The Administration, however, strongly opposes H.R. 161, which would allow the automatic approval of natural gas pipeline projects if the Federal Energy Regulatory Commission (FERC) or other federal agencies do not issue the required permit, license, or approval within rigid, unworkable timeframes.

H.R. 161 could create conflicts with existing statutory and regulatory requirements and practices related to agencies’ programs, and preclude opportunities for engaging the public and potentially impacted communities, thereby causing confusion and the risk of increased litigation. The bill’s requirements could force agencies to make decisions based on incomplete information or information that may not be available, including potential environmental and community impacts of the proposed pipelines, within the stringent deadlines, and to deny applications that otherwise would have been approved, but for lack of sufficient review time. For these reasons, the bill may actually delay projects or lead to more project denials, undermining the intent of the legislation.

FERC has reported that, since Fiscal Year 2009, it has completed action on 91 percent (512 out of 563) of all pipeline applications that it has received within one year of receipt. The small percent of decisions that have taken longer than one year involve complex proposals that merit additional review and consideration. Further, FERC already has an existing framework to set reasonable timetables for the other federal agencies with permit, review, or approval authority to act.

If the President were presented with H.R. 161, his senior advisors would recommend that he veto the bill.