Countering FERC, pipeline companies insist they are harmed by Algonquin order

Natural gas pipeline companies are challenging the Federal Energy Regulatory Commission's finding that they were not aggrieved by a hotly contested briefing order on an Algonquin Gas Transmission compressor station in Weymouth, Massachusetts. Rather, they contend uncertainty FERC created will drive up costs of refinancing existing infrastructure and make it more difficult to finance new projects.

At issue is one the most disputed natural gas orders since Democratic Richard Glick became chairman early this year — a Feb. 18 order that set a briefing to collect comments on whether to allow Algonguin's Weymouth Compressor Station to stay in service and whether to add mitigation measures. The action followed complaints about safety and air emissions impacts associated with the compressor, and Glick has highlighted environmental justice raised in the proceeding.

FERC's order calling for more briefing drew outcry from pipeline companies and other natural gas trade groups who sought rehearing, warning FERC was overstepping its authority by reopening the certificate and thereby chilling future investment. But by a 3-2 vote, FERC May 19 dismissed those rehearing requests by saying courts have long held parties are not aggrieved by an agency's interlocutory order that constitutes a procedural step. FERC found the pipeline companies and other trade groups lacked standing for rehearing because the briefing order does not aggrieve them.

The Interstate Natural Gas Association of America on June 15 sought rehearing again, contending its members are, in fact, harmed.

"The briefing order caused harm to existing and future projects by significantly increasing pipeline risk that the commission could revisit a final certificate," said INGAA General Counsel Joan Dreskin, in an email. "INGAA's rehearing request gives the commission an opportunity to fix its latest error and then address the important merits issues that its May 19 order ignored — i.e., whether the commission has authority to revisit final certificates under the Natural Gas Act."

Long-range planning

INGAA's rehearing request asserted FERC erred by failing to respond to INGAA's explanation as to why its members are aggrieved — except for pointing out that four new certificate applications were in fact filed after the briefing order was issued.

"By finding that the briefing order does not aggrieve INGAA's members, the May 19 order 'ignore[s] the reality of the long-range economic planning involved in the sound management of an enterprise,'" INGAA wrote. "As the commission is well aware, certificate applications are the culmination of years of planning," INGAA said, noting that two of the four projects mentioned began the pre-filing process at FERC about nine months before the applications were filed.

INGAA also pushed back on Glick's casting of some of the outcry surrounding the order as "hysteria." Countering the sense of alarm, Glick has insisted he has no intention of reopening the certificate. But he has said FERC has the ability to consider whether additional conditions or mitigation measures are necessary and appropriate pursuant to the certificate authorization.

"This is not 'hysteria' — it is genuine concern that the industry and public can no longer rely on the finality of any commission certificate," INGAA wrote in its rehearing request. While FERC may view its action as addressing the facility's operation, "determining that a certificated facility cannot 'remain in service' is the same thing as revoking a certificate," INGAA contended. When pipelines refinance debt, they are likely to find financial institutions view their operations as having "greater risk than ever before," driving up the cost of capital, INGAA wrote.

Algonquin rehearing

Algonquin also sought rehearing, saying FERC bypassed any question about whether it overstepped its authority when concluding Algonquin was not an aggrieved party.

"The commission apparently concluded, although there is no support for this conclusion in the order, that Algonquin — the principal beneficiary of the certificate order, and which had invested several hundred million dollars to construct and place into service the infrastructure in question — was not injured by the Feb. 18 Order or the effective reopening of the certificate order's finality," it wrote.

Algonquin argued that it is aggrieved because the Feb. 18 order upsets Algonquin's settled legal interests by reopening FERC's final certificate order and authorization order.

The compressor station, located in Weymouth, Massachusetts, is a final component of Algonquin and Maritimes & Northeast Pipeline's Atlantic Bridge Project, designed to increase Algonquin system capacity by 132,705 Dt/d from receipt points in New York and New Jersey to a delivery point north of Boston.

Beyond the challenges filed at FERC, INGAA also filed a petition June 16 in the DC Circuit Court of Appeals contesting FERC's recent actions in the case, including its order dismissing rehearing requests and the briefing order.