Construction – Nary A Day Without Novel Project Curveballs

Natural Gas Projects
March 15, 2017

Natural gas pipeline developers contracted to bring 53 natural gas pipeline expansion or new construction projects in-service between the fourth quarter of 2015 and the end of the first quarter of 2017, a total of 4491.8 miles of pipeline. However, due to a series of novel issues arising throughout the past year, many of the largest projects are seeing regulatory delays and, as a result, delays in construction and, potentially, revisions to company estimated in-service dates. Many of these novel issues, especially those presented in the eleventh hour, can raise doubts. The Rover Pipeline Project proves to be a timely example, having received it’s notice to proceed with construction this morning when a motion to intervene out of time was introduced by a religious organization yesterday.

As these projects complete consultations, collect permits and receive the FERC’s notice to proceed with construction, we are left wondering ‘what could possibly go wrong now?’ In order to receive this notice from the FERC, a project developer must have received all relevant permits, suggesting that there is little opportunity left for issues to arise. Despite the additional difficulty some developers have seen receiving state delegated permits, few have fallen into the same predicament as the Constitution Pipeline Project. Construction should be straightforward! 

Natural gas pipeline companies seeking to develop new infrastructure typically enter into contracts with terms establishing expected timelines with contractors, much like they do with shippers. With project delays in mind, an immediate concern should be whether or not the necessary labor force will be available when the notice to proceed is received. If so, then labor must attempt to complete construction on a consolidated timeline despite environmental restrictions, like tree clearing windows. But what else is there to worry about beyond logistics?

Most simply, this is the time when litigation can become the biggest threat because there is a decision, the FERC’s order issuing the Certificate of Public Convenience and Necessity, which may be appealed: first as a petition for hearing and then to federal court. There have been plenty of environmental appeals attempted in the past that are by no means novel, but recent trends make project developers weary. For example, in select states, the appeal of certain Clean Water Act permits, allows for a stay of construction.  

Two Native American tribes, the Standing Rock Sioux and the Cheyenne River Sioux, organized a much publicized protest of the construction of the Dakota Access Pipeline. The Sioux executed a successful media campaign, which brought thousands of sympathizers from around the country to the site of construction in North Dakota. This has inspired similar actions from other Native American tribes who, until now, may not have had confidence in their ability to gain traction among the general public. Interestingly, as part of their legal challenge to the construction of the Dakota Access Pipeline, the Sioux recently alleged that the pipeline would render the water that they use in their religious ceremonies spiritually “impure.” The Sioux asked a federal judge to halt construction of the pipeline, asserting that the lack of spiritually pure water would illegally burden their exercise of religion. And while the success of the argument is debatable, it is a reminder of the variety of arguments available to those opposing the construction of a pipeline. 

Did the Sioux inspire Krishna Consciousness, who yesterday in the Rover Pipeline filed a Motion to Intervene Out of Time in the Rover proceeding with the FERC and Petition for Rehearing of the Certificate Order? Krishna Consciousness, like the Sioux, referred to the Religious Freedom Restoration Act, which provides that the government may not “substantially burden a person’s exercise of religion” unless there is “a compelling state interest.” So why attempt to become an intervenor after the Project was approved? Intervenor status would give Krishna Consciousness standing to dispute the FERC’s decision and is a procedural hurdle that is necessary to pursue litigation. This could prove to be yet another novel hurdle for Rover. And it may not be the only one. Sierra Club also recently filed comments with the FERC, spotting potential inconsistencies in the Certificate Order, suggesting that it has possible grounds for a rehearing. The FERC’s responses to these organizations’ concerns, or perhaps unresponsiveness, may prove to be an interesting indicator of things to come for Rover. 

Intervention & Request for Rehearing Distribution