United States: FERC Issues NGA Section 7(C) Certificate To Rockies Express For The East-To-West Expansion Project

On February 25, 2016, FERC granted Rockies Express Pipeline LLC's ("Rockies Express") request for a certificate to construct and operate natural gas compression and ancillary facilities in Ohio and Indiana ("East-to-West Expansion Project") pursuant to section 7(c) of the Natural Gas Act ("NGA"). Rockies Express stated that the proposed East-to-West Expansion Project will enable it to provide an additional 800,000 dekatherms per day ("Dth/d") of east-to-west transportation service within Zone 3 of the Rockies Express system.

Rockies Express's mainline extends from northwestern Colorado and southern Wyoming to the Clarington Hub near Clarington, Monroe County, Ohio. The mainline was originally designed to provide transportation of natural gas from west to east. In February 2015, FERC granted Rockies Express's application for certificate authority to make modifications at its existing compressor stations and interconnections to enable Rockies Express to provide firm east-to-west transportation service within Zone 3 of the mainline. On March 31, 2015, Rockies Express filed its certificate application for the East-to-West Expansion Project, requesting authority to construct and operate (1) one new compressor station in Pickaway County, Ohio, including gas cooling facilities and a power and control building ("Columbus Compressor Station"); (2) one new compressor station in Fayette County, Ohio, including gas cooling facilities and a power and control building; (3) one new compressor station in Decatur County, Indiana, including gas cooling facilities and a power and control building; (4) additional horsepower of compression, gas cooling facilities, and a new power distribution building at the existing Chandlersville Compressor Station in Muskingum County, Ohio; and (5) gas cooling facilities and a new power distribution building at the existing Hamilton Compressor Station in Warren County, Ohio. In the application, Rockies Express stated that the East-to-West Expansion Project will increase Zone 3's east-to-west firm transportation capability by 800,000 Dth/d for receipts at the Clarington Hub to corresponding deliveries of 520,000 Dth/d at Lebanon, Ohio and 280,000 Dth/d at Moultrie County, Illinois.

On August 31, 2015, FERC Staff issued an Environmental Assessment ("EA") for the project. In addition to protestors, the U.S. Environmental Protection Agency ("EPA") filed comments on the EA, including (1) stating that it was unclear whether the Hamilton Compressor Station was located within the Miami Valley Buried Aquifer boundary; (2) recommending that Rockies Express identify whether chemical additives would be introduced into hydrostatic test water, suggesting that the final environmental document identify the potential sources Rockies Express may use for hydrostatic test water and disclose whether or not each source is capable of providing the estimated volume required, and recommending that the final environmental document identify the facilities for disposal and treatment of the after-test waters; (3) recommending that the EA's estimated compressor station noise levels be updated to include noise level information for the existing Hamilton Compressor Station and requesting that the final environmental document provide an estimate of the number and duration of anticipated blowdown events and identify noise abatement measures to address those events; (4) recommending that the final environmental document include a more detailed analysis of the non-jurisdictional power lines needed to operate certain new compressor stations; (5) recommending that the final environmental document identify the potable water supply source for the Columbus Compressor Station, assess the secondary impacts associated with potable water line tie-ins, and describe applicable mitigation measures; (6) recommending that the final environmental document commit to implementation of reasonable mitigation measures to reduce or eliminate project-related greenhouse gas ("GHG") emissions, describe any such measures, and estimate the GHG reductions associated with each measure; and (7) recommending that the final environmental document describe best management practices to reduce leakage of methane associated with project operation.

In its order issuing certificate, FERC found that the proposed project satisfies the Certificate Policy Statement's requirement that Rockies Express could financially support the expansion without subsidization from existing shippers. FERC also found that the East-to-West Expansion Project will not adversely impact other existing pipelines or their captive customers. In addition, FERC found that Rockies Express will adequately minimize impacts on landowners and surrounding communities by acquiring the necessary property rights for the project through negotiations with landowners. Thus, FERC found that the East-to-West Expansion Project is in the public interest. Furthermore, FERC approved Rockies Express's request to use its existing system reservation charge and commodity charge as the initial recourse rates for services using the new capacity. Because Rockies Express's application did not specifically address the rate for interruptible service, FERC directed Rockies Express to provide all interruptible mainline service under its existing Rate Schedule ITS. FERC also required Rockies Express to file either its negotiated rate agreements or tariff records setting forth the essential terms of the agreements associated with the project. Although FERC stated that there will be a presumption of rolled-in rate treatment for the costs and revenues associated with the project in a future NGA section 4 rate case, FERC directed Rockies Express to keep separate books and accounting of costs attributable to the project.

With respect to its environmental analysis, FERC rejected arguments that it segmented its review of Rockies Express's East-to-West Project, East-to-West Expansion Project, and the Seneca Lateral Projects by failing to consider the three projects as connected, cumulative, and similar actions. First, FERC found that the projects were not "connected," concluding that none of Rockies Express's projects depend on any other projects for their justification. Second, FERC disagreed that the three projects are "cumulative actions" and "have cumulatively significant impacts," instead finding, as the EA had concluded, that the East-to-West Expansion's limited region of influence confined cumulative impacts to air quality. The EA analyzed the projects' potential cumulative impacts on air quality, and FERC agreed with the EA's conclusion that, based on the distance between the Seneca Lateral Compressor Station and any of Rockies Express's existing or proposed compression facilities, cumulative impacts on air quality would not be significant. Third, FERC disagreed with arguments that the three projects are "similar actions," instead finding that each project is distinct and separate that has been or is being addressed in individual FERC proceedings. In addition to the segmentation analysis, FERC found that potential environmental effects associated with natural gas production are neither sufficiently causally related to the proposed project nor reasonably foreseeable impacts. FERC further found that any impacts of the East-to-West Expansion Project will not be incremental cumulative environmental impacts of Marcellus and Utica shale gas production.

Regarding EPA's comments on the EA, FERC concurred with the EA's conclusion that any potential impacts on groundwater will be minimized by Rockies Express's mitigation measures and that the project will have no adverse impacts on the Miami Valley Buried Aquifer. FERC also stated that the EA indicated that no surface waters would be used and that Rockies Express's use of a state approved disposal facility is sufficient to ensure adequate handling and treatment of the test water. Furthermore, FERC noted that the findings of the EA remain unchanged and that noise attributable to the modified Hamilton Compressor Station will not increase at any noise sensitive areas as a result of the project, and that Environmental Condition 12 requires Rockies Express to file a noise survey after placing the compressor station in service. FERC also concluded that additional noise abatement measures for unit blowdowns are not warranted. With respect to the EPA's comments relating to non-jurisdictional power lines, FERC concurred with the EA's conclusions that the power lines would not result in a significant environmental impact and noted that FERC does not have the authority to impose mitigation measures on non-jurisdictional facilities. In addition, FERC agreed with the EA's conclusion that Rockies Express's potable water line would not result in significant environmental impacts and stated that FERC has no authority to require mitigation measures on water lines for private landowners. FERC further concluded that, based on the EA's determination that the project would not result in significant environmental impacts relating to GHG emissions, no mitigation measures for the reduction of GHG emissions were necessary. Finally, FERC found that imposition of additional measures to address methane leakage was not warranted. Accordingly, FERC concluded that approval of the East-to-West Expansion Project would not constitute a major federal action.

A copy of the order is available here.

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