Spire STL readies to seek FERC action after court deals blow to pipe certificate

Spire STL Pipeline is eyeing legal steps in the coming weeks to keep the pipeline operating following an adverse court ruling, even as affiliated utility Spire Missouri is warning of potentially dire consequences for natural gas customers in the winter should the pipeline have to shut.

The future of the 65-mile, 400,000 Dt/d pipeline was thrown into question by a June 22 decision by a panel of the US Court of Appeals for the District of Columbia Circuit to vacate the Federal Energy Regulatory Commission certificate authorizing the project. The court found that the regulator failed to seriously engage arguments challenging the weight of an affiliate precedent agreement in establishing the need for the project.

The ruling presents the uncommon possibility of a forced shutdown of an operating pipeline but does not immediately halt operations because the court withheld issuance of the mandate in the case for seven days after disposition of a petition for rehearing, should Spire challenge the findings.

In an interview with S&P Global Platts and S&P Market Intelligence July 13, Spire Missouri President Scott Carter said his strategy is to tell his story about "real and very dire consequences" for customers of the utility should the pipeline be forced to shut. Hundreds of thousands of Spire Missouri customers would be at risk of losing gas service during an extreme weather event, Carter said. He added that market and operational issues in the region would prevent him from securing contracts for adequate replacement capacity, while the Spire STL system helped minimize customer impacts during February's winter storms, for instance by enabling counter-seasonal storage injections.

Among challenges the company cited to ensuring adequate capacity without the pipeline, Spire Missouri retired a direct-injection propane system that provided 190,000 Dt/d and has also given up capacity previously contracted on Enable MRT.

Spire STL Pipeline General Counsel Sean Jamieson said July 13 his company is working with FERC to identify steps to allow the pipeline to continue to operate while FERC reviews the issues on remand from the DC Circuit. Spire expects in the next few weeks to ask FERC to take interim action to avoid immediate disruption on the eve of winter, he said. A second step would involve seeking authority for long-term and continued operation of the pipeline, he added.

Rehearing in court

Additional court filings and appeals could also help hold off a shutdown.

Spire expects to ask the court to reconsider the remedy of vacatur and seek rehearing on the merits of the decision, Jamieson added. A deadline for seeking rehearing is Aug. 5, he noted.

When Spire has an opportunity to show the impacts that residents and businesses of St. Louis could face as a result of this pipeline being taken out of service on the eve of winter, "we'll see that it was not possible that the [DC Circuit] panel considered the life-threatening consequences of vacatur, " Jamieson added.

As to the merits of the ruling, Jamieson continued to assert that FERC followed a longstanding precedent. "Even if the binding precedent agreement is with an affiliate, it is still consistent with policy and precedent that FERC can use it as a basis for demonstrating need," he said.

The panel ruling, on the other hand, found the law does not go so far as FERC and the pipeline suggested to stand for the broad proposition that FERC need not generally look behind precedent agreements and that affiliate contracts should be treated the same as unaffiliated contracts.

Jamieson separately emphasized that February events underscored assertions in the record at FERC that the pipeline would provide an opportunity to balance increasingly competitive supply from Texas and the Gulf Coast with gas from the Marcellus or the Rockies.

"In February of this year, what was prudently determined by the gas utility in St. Louis, Spire Missouri, in their planning about having risk associated with being primarily captive to one region for gas supplies — that actually came to fruition with Winter Storm Uri."

Some policy analysts have questioned whether FERC Chairman Richard Glick would support efforts to maintain authorization for the pipeline given his dissent related to approving the project (CP17-40). Glick's Nov. 21, 2019, dissent asserted there was nothing in the record to suggest the project was needed and highlighted assertions from Enable Mississippi River Transmission that its existing pipeline could have provided access to the same natural gas basins to diversify supply.