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Friday, April 15, 2016

Chapter comments on ET Rover pipeline

 Michigan Chapter

Kimberly D. Bose, Secretary
Federal Energy Regulatory Commission
888 First Street NE, Room 1A
Washington, DC 20426

Dear Ms. Bose,

The comments submitted below are pursuant to the proposed ET Rover Pipeline (Docket #CP15-93-000).  These comments are submitted on behalf of the Sierra Club Michigan Chapter, 109 E Grand River Avenue, Lansing, MI 48906.  The comments include two sections, one directed at FERC’s ultimate public convenience and necessity determination, and one directed specifically at the Draft Environmental Impact Statement (EIS).

Nancy Shiffler
Chair, Michigan Beyond Natural Gas and Oil Committee

April 11, 2016

Section I:  Evidence of Public Convenience And Necessity.
This section looks at the decision FERC must make in determining whether to issue a Certificate of Public Convenience and Necessity.   The recent FERC decision on Dockets CP 13-483-000 and CP 140492-000 (p. 12) summarizes the guidance stated in the Certificate Policy Statement: “The Certificate Policy Statement explains that in deciding whether to authorize the construction of major new pipeline facilities, the Commission balances the public benefits against the potential adverse consequences. The Commission’s goal is to give appropriate consideration to the enhancement of competitive transportation alternatives, the possibility of overbuilding, subsidization by existing customers, the applicant’s responsibility for unsubscribed capacity, the avoidance of unnecessary disruptions of the environment, and the unneeded exercise of eminent domain in evaluating new pipeline construction.”
Consequently, it is useful to consider the public convenience and necessity side of the balance to provide the context for reviewing the Draft EIS.
Market Pull is Limited
[The data presented here relate primarily to the pipeline market segments in Michigan and Canada].  The market for natural gas appears to be diminishing in Michigan. Michigan’s natural gas demand has decreased, with 2014-2015 natural gas usage below 1990s and 2000s levels.  DTE, the largest utility in Michigan, forecasts a decline in natural gas sales for all rate classes due to efficiencies (12/2015). (https://efile.mpsc.state.mi.us/efile/docs/17999/0015.pdf.) Consumers Energy also forecasts lower natural gas sales ( https://efile.mpsc.state.mi.us/efile/docs/17943/0001.pdf.)
 Electric demand in Michigan has declined for the past 4 years and is predicted to continue to do so.  Per a recent DTE rate case, electric “sales are expected to decrease from 47,291 GWh in 2014 to 46,371 GWh in 2026. This represents a 0.2% average annual decrease in sales from 2014.” “Industrial sales are expected to decrease 0.4% annually, on average, through 2026.”
 (http://efile.mpsc.state.mi.us/efile/docs/18014/0002.pdf, p. 34).
Consumers Energy also predicts declining electric sales (Exhibit A-10 (HWM-3)  (https://efile.mpsc.state.mi.us/efile/docs/17735/0003.pdf).
The price incentive for Rover to transport gas to the Dawn Hub has disappeared. Most, if not all, of Rover’s Market Segment capacity is destined for Dawn in order to take advantage of Dawn’s historical premium price. Today, the prices at Dawn and Henry Hub are virtually the same and the profit incentive has disappeared. Note the price convergence in this table: 

The Ontario Energy Board (OEB) just issued their 2015 Natural Gas Market Review (4/2016). In it they forecast that Dawn and Henry Hub prices will be virtually identical, with Dawn’s price being lower by about eight cents per MMBtu in 2021.  

In OEB reports, business organizations voiced their concerns that Rover (and Nexus) gas at Dawn will cause unnecessary and costly overbuild of the Dawn Parkway pipeline. They prefer less expensive transportation paths from Marcellus/Utica via the Niagara, Chippewa and Waddington, New York interconnect points. 

The landed cost of gas into the Enbridge EDA (Toronto) would be lower from Niagara ($4.90 $CAD/GJ) and Waddington ($5.30) than from Vector ($5.55), Rover ($5.73) or Nexus ($5.82). 

The prospects of large, long term LNG exports have been greatly diminished by:  Australia doubling their LNG export capacity; plans for a NG pipeline from Iran to Europe; discovery of gas off Egypt; worldwide trend towards using more renewable energy and energy efficiency; plus, 195 nations pledged at COP21 to cut CO2 and methane emissions.
Most US and Canadian LNG export plans are being questioned by the financial community.
Prospects of transporting gas to the Gulf have been diminished by the many pipeline reversals that already transport gas to that region directly from Marcellus and Utica.
We Are Overbuilding Pipelines.
The US Department of Energy (DOE), in a report from February 2015, stated that only 54% of current US pipeline capacity is being used, and better utilization could reduce the need for new pipelines.  Michigan has the largest gas storage in the U. S.; it would not need pipeline capacity beyond existing pipelines to prepare for proposed conversions of some coal plants to natural gas.  In January 2016, electric generation accounted for only 14% of total gas usage in Michigan (http://www.eia/gov/dnav/ng/ng_sum_lsum_dcu_SMI_m.htm).
A review of SNL pipeline statistics finds Michigan and Midwest gas pipelines are underutilized, even in January. US natural gas storage is at record levels and prices are very low – both caused by overproduction and not a lack of pipes.
There is increasing evidence and concern that we are reaching a state of overbuild in pipeline infrastructure (https://www.snl.com/InteractiveX/article.aspx?cdid=A-35872577-11048&Printable=1).  This is particularly apparent from the large number of pipelines from the Marcellus/Utica play proposed or being built, including the Nexus pipeline, which essentially duplicates the Rover route.  Pipeline overbuild has a major environmental impact because it unnecessarily damages or destroys thousands of acres of the environment and property.  Overbuilding is evidence of a lack of public need; if there is a lack of public need, then eminent domain is inappropriate.
Financial Stability of Producers is Questionable.
Rover is essentially a producer-driven project with little demonstrated market pull.  In many cases the producers are financially questionable and may not have the financial strength to comply with 20-year commitments.  Most Utica/Marcellus producers are in financial trouble with unsustainable debt loads. Many have declared Chapter 11. Plus, it appears that Ascent Resources and most Rover shippers/producers do not meet even Rover’s minimum creditworthiness criteria for long-term unsecured debt securities of at least BBB- by Standard & Poor’s and at least Baa3 by Moody’s. (http://elibrary.ferc.gov/idmws/common/OpenNat.asp?fileID=14013866.)

Section II:  Comments Regarding the Draft EIS

Given FERC’s role of balancing “public convenience and necessity” against potential adverse impacts, we have a number of concerns after reviewing the Draft EIS.

The Draft EIS Dismisses Viable Information for the No-Build Alternative. 
The Draft EIS is further flawed because of its failure to consider alternatives other than modes of fuel transport, such as a cleaner fuels and energy conservation alternative. This is exemplified in the dismissive tone in the section 3.1 discussion of the no-action alternative, which ends with this statement:
“Authorizations related to how individual regions of the United States will meet demands for electricity are not part of the application before the Commission, and their consideration is outside the scope of this EIS.  Therefore, because the purpose of the Rover Project is to transport natural gas, and generation of electricity from renewable energy sources or the gains realized from increased energy efficiency and conservation are not transportation alternatives, they cannot function as a substitute for the Rover Project and are not considered or evaluated further in this analysis.”
The Draft EIS does not adequately account for the role of energy conservation and efficiency and the use of renewable energy in reducing market demand.  With the trends in improved technology and reduced costs for renewables and efficiency, one would expect them to play a greater role in the near term and, thus, play an important role in consideration of alternatives.
FERC must, according to NEPA, demonstrate why “No Action” will not meet a demonstrated “Need.”  Consequently, the “No Action” alternative must be fully analyzed, and FERC’s refusal to do so needs a much better justification than is currently provided in the Draft EIS.  FERC must both describe the negative consequences of “No Action,” and demonstrate that this particular permit for this particular project is necessary to avoid these negatives.

FERC Is Providing Incomplete Information To Landowners Regarding Acquisition Of Easements.

FERC is providing implicit encouragement to landowners to settle with the company rather than going through eminent domain proceedings.  However, it neglects to tell them that FERC uses the proportion of negotiated right-of-way agreements as an indicator favoring approval of the project, putting a thumb on the scale that balances public need with adverse impacts.

We note this statement from Notice of Intent and echoed in your “What Do I Need to Know” handbook for landowners:

“If you are a landowner receiving this notice, a pipeline company representative may contact you about the acquisition of an easement to construct, operate, and maintain the planned pipeline facilities. The company would seek to negotiate a mutually acceptable agreement. However, if the Commission approves the Project, that approval conveys with it the right of eminent domain. Therefore, if easement negotiations fail to produce an agreement, a condemnation proceeding could be initiated where compensation would be determined in accordance with state law.”
We also note this statement from FERC’s Certificate Policy Statement (1999) [not provided directly to landowners]:
“[T]he Company might minimize the effect of the project on landowners by acquiring as much right-of-way as possible. In that case, the applicant may be called upon to present some evidence of market demand, but under this sliding scale approach the benefits needed to be shown would be less than in a case where no land rights had been previously acquired by negotiation.”
And this from Order Clarifying Statement of Policy (2000) [also not provided to landowners]:

“The Policy Statement encouraged project sponsors to acquire as much of the right-of-way as possible by negotiation with the landowners and explained how successfully doing so influences the Commission's assessment of public benefits and adverse consequences.”

FERC should provide landowners on the original route and on any alternative routes a clear explanation of the NEPA requirements and how FERC interprets landowner agreements in its decision process.  Having failed to do this for this specific project, FERC should not assume that completed agreements minimize the impact on landowners when weighed against supposed public benefits. 

Land Use Impacts, Both Short-Term and Long-Term, Are Adverse.

Impact on Soil.  FERC has received a number of comments from farmers expressing concerns about the impact on soil structure from construction of the pipelines.  The primary concern is the long-lasting impact on soil productivity, which farmers have already noticed from previous rights-of-way construction (see, for example, the comments of Darla Huddle from Napoleon, Ohio).  It has also been noted in other parts of the Midwest, for example in reports from testimony concerning a pipeline proposal in Iowa in 2015 (http://amestrib.com/news/bakken-pipeline-may-damage-soil-conditions-generations): “If fertility is reduced, whether it’s due to contaminated top soil, disruption of water movement within the soil, change in soil temperature due to the presence of the pipeline or any of the other possible issues that Fenton believes could come from the pipeline’s construction, it could mean significant damage to the local farmland, agricultural industry and yield farmers get from their crops.”  Multiplied by the many miles of the Rover pipeline traveling through farmlands (more than half of the affected pipeline acreage) and added to the cumulative impact of other proposed pipelines in Ohio and Michigan, the effect on agricultural production could be significant both locally and regionally.  
Given the potential long-term impacts on productivity, FERC’s recommendation of a 5-year productivity monitoring process is itself evidence of its significance. However, combined with some rather vague mitigation promises, five years is inadequate.  The draft EIS states that landowners are “encouraged” to negotiate with Rover for additional mitigation as needed.  What redress do they have if Rover refuses the request or has insufficient financing to complete it?  The landowner should not have to resort to litigation to seek redress for documented losses.  There is already evidence in comments from farmers that Rover has been difficult to negotiate with prior to construction (see for example comments submitted by Ben Polasek from Ohio); negotiations post-construction could be even more difficult.  Ultimately, the Draft EIS should be treating this soil productivity issue not as a short-term impact, but rather as a long-term or permanent impact.
Impact on Forested Lands.  FERC determined that the project would result in some adverse and significant impacts, which “would occur during both construction and operation of the Projects and occur on vegetation and wildlife.”  The impact from the clearing of forested areas would be particularly significant, representing some 32% of the project’s vegetation impacts.  Despite the proposals to minimize and mitigate, these impacts remain real -- in many cases permanent -- and should be considered carefully in the balance between “public need” and adverse impacts.
Special Use Areas.  In Michigan the pipeline route would pass through a section of Pinckney State Recreation Area, one of the most actively used public land areas in southeast Michigan, with trails and facilities used year round.   Approximately 23 acres would be affected by construction, and 9 by operation activities.  Whenever the construction work takes place, activities would be disrupted.   Any right of way through a forested area would have a permanent impact. We note in particular that the Losee Lake Trail is crossed three times – a major impact for a trail only three miles long. 
Wildlife.  We concur with the concerns expressed in the Department of the Interior’s comments submitted 4/1/2016 related to bat habitat:  “the combined effects of the project, even with the MBCP, could result in significant adverse effects to federally-listed bats and their habitat.”  We also concur with the emphasis on avoiding the clearing of bat and migratory habitat during the breeding and nesting season; lack of compliance by Rover would be evidence of a significant adverse impact.
 Water Crossings.  On page 4-78, FERC recommends the use of dry-ditch construction for sensitive water bodies or cold-water fisheries, except for those already designated for Horizontal Directional Drilling (HDD).  In order to provide additional protection for these sensitive water bodies and cold-water fisheries, including protection of their edges, we would advocate the use of HDD for all of them.  Further, for the 810 crossings proposed using the open-cut method, we would advocate for the use of dry-ditch methods to avoid excessive downstream siltation.
Mitigation Efforts Are Not Well-Defined.
FERC maintains that all of the described impacts could be sufficiently mitigated if FERC’s proposed 55 conditions are carried out.  However, many of the conditions involve the submission by Rover of additional information and plans, instructions to “coordinate with landowners regarding mitigation and compensation,” or instructions to develop long-term “monitoring” plans.  The question remains open whether these conditions will be satisfactorily carried out and whether the adverse conditions will be adequately identified, let alone mitigated. As noted in the complaint filed by the Delaware Riverkeeper Network in the U. S. District Court of the District of Columbia (Case No. 16-416), “The Commission has demonstrated a pervasive failure to enforce the terms and conditions of its Certificates on pipeline projects.”  The complaint further states, “the Commission has never issued a civil penalty for violations related to construction, maintenance, or operational misconduct for any pipeline project despite noncompliance events.”
The sheer number of conditions and the emphasis on monitoring, followed by some vague future mitigation if it does not work, do not breed confidence the adverse impacts can actually be mitigated or avoided.  FERC’s own enforcement performance casts additional doubt
Safety Requirements May Not Fully Account For The Potential Impact Radius
The Draft EIS sets conditions for additional safety protections for identified High Consequence Areas (HCA).  However, it is not completely clear in the Draft EIS which of two methods for identifying HCAs is being used.  The method based on classification areas uses the number of human-occupied buildings within 220 yards of the right-of-way center for the area for class location units.  Given that the potential impact radius for 36- or 42-inch pipelines is approximately 1000 feet or more, this method appears inadequate.  The second method would take radius of impact into account for areas with 20 or more buildings or structures occupied by 20 or more persons.  This appears to be a more inclusive approach, but is small comfort to those in areas with, for example, 10 buildings or 10 persons.  In any event, the Draft EIS identifies 59 HCAs, making up about 9% of the proposed route area.  Any enterprise of this sort is admittedly based on risk management rather than absolute avoidance of risk, but risk estimates are, again, small comfort to those living within an impact radius.  The various distance measures and numbers of homes appear to be arbitrary and do not adequately account for the radius of impact for pipelines of this diameter.  For this reason, we argue that the pipeline should be routed to avoid human-occupied buildings within the radius of impact.  We stress that the potential for adverse impacts in these situations far outweighs the very weak argument for public need for this project.
Green House Gases and Impacts on Climate Change Are Not Addressed Adequately.
In the discussion of climate change and green house gases in the Draft EIS, FERC included the following statement:
“Currently, there is no standard methodology to determine how the proposed Projects’ relatively small incremental contribution to GHGs would translate into physical effects of the global environment. The GHG emissions from the construction and operation of the Projects would be negligible compared to the global GHG emission inventory.”
Yet the EPA has consistently stated in its comments on EIS reviews that there is sufficient relationship and predictability of the GHG impacts to include them in environmental reviews.  While dismissing the impact of the Project on global emissions as unmeasurable and negligible, the FERC’s Draft EIS, in several places, shows no reluctance to note the lower CO2 emissions from burning natural gas compared to other fossil fuels as a benefit of the Project.  The logic here seems to be contradictory, slanting in favor of the project.
FERC should take notice of the recently released Harvard study (Turner, et al., Geophys. Res. Lett., 43, 2218–2224, doi:10.1002/2016GL067987), which reports satellite data showing a 30% increase in U.S. methane emissions from 2002-2014, with the trend being largest in the central part of the country, including Pennsylvania, West Virginia, Ohio and Michigan.  The study concludes that, “This large increase in U.S. methane emissions could account for 30–60% of the global growth of atmospheric methane seen in the past decade.”
 Although the Harvard study does not attribute the increase to a specific source, the trend coincides with the increase in natural gas production in those areas.  Recent studies have also indicated that methane emissions and leaks from gas production and transportation facilities have been underestimated.   Consequently, the impact of the Rover project on GHG’s should not be dismissed so easily, particularly when considered with the cumulative impact of several pipeline projects proposed for the same region. 
The Draft EIS fails to adequately analyze the impacts of the proposed project’s greenhouse gas emissions on climate change as required by NEPA.  “The impact of greenhouse gas emissions on climate change is precisely the kind of cumulative impacts analysis that NEPA requires agencies to conduct.” Center for Biological Diversity v. National Highway Traffic Safety Administration, 508 F.3d 508, 550 (9th Cir. 2007)); Mid States Coalition for Progress v. Surface Transportation Board, 345 F.3d 508 (9th Cir. 2008); Border Power Plant Working Group v. DOE, 260 F.Supp 2d 997 (S.D. Cal. 2003).  NEPA calls for a quantification of the “incremental impact[s] that [the proposed project’s] emissions will have on climate change … in light of other past, present, and reasonably foreseeable actions.” Ctr. for Biological Diversity v. Nat'l Highway Traffic Safety Admin., 538 F.3d 1172, 1216 (9th Cir. 2008). 
Accordingly, the Draft EIS must quantify and evaluate the cumulative and incremental effects of climate change resulting from the proposed project and connected actions in comparison to and in conjunction with the effects of emissions of other reasonable alternatives or actions – past, present and reasonably foreseeable.
Cumulative Impacts And The Need For A Programmatic EIS Should Be Considered.
FERC continues to take a limited view of cumulative impacts, both for the pipeline itself over its extended range and in concert with the many other projects in the region.  FERC focuses on localized effects rather than on the combined effects on broader areas such as watersheds and drainage systems.   Likewise, regional farm production or the health of species of concern should be considered cumulatively.  A valid cumulative impacts analysis should address upstream extraction in the Marcellus/Utica plays as well as downstream transportation and combustion.  
While acknowledging 10 planned, proposed, or existing FERC-related natural gas transmissions projects in the region, FERC limits consideration of cumulative impacts only to segments of projects within 10 miles of the Rover project.  FERC should instead be considering the broad impacts of the numerous projects that are emanating from the Marcellus shale region, many of them, including Nexus, duplicative.  It appears that the draft EIS is less reluctant to look at broader impacts when they favor construction.  On page 4-278 we find this statement:  “It is also possible that the Rover Project could contribute to cumulative improvements in regional air quality if a portion of the natural gas associated with the Project displaces the use of other fossil fuels that may contribute greater amounts of air pollutants of concern.”  FERC should be equally willing to look at cumulative adverse impacts such as the increase in green house gas emissions from methane leaks.
 We note that the December 2014 guidance document from the federal Council for Environmental Quality (CEQ) recommended the use of a programmatic EIS when “several energy development programs proposed in the same region of the country have similar proposed methods of implementation and similar best practices and mitigation measures that can be analyzed in the same document.”  
CEQ further states, “Programmatic NEPA reviews provide an opportunity for agencies to incorporate comprehensive mitigation planning, best management practices, and standard operating procedures, as well as monitoring strategies into the Federal policymaking process at a broad or strategic level. These analyses can promote sustainability and allow Federal agencies to advance the nation’s environmental policy as articulated in Section 101 of NEPA.”
Addressing cumulative impacts in a systematic way is crucial not only for avoiding and mitigating adverse impacts, but also for assessing the economic viability of a project.
Ultimately, this is a badly flawed proposal.  FERC’s issuance of a Certificate of Public Convenience and Necessity is supposedly based on a balancing of public benefits vs. possible adverse impacts.  The financial condition of Rover’s suppliers and the questionable level of market demand speak to the lack of public need, while the potential for adverse impacts is clear.   A company’s desire to build a pipeline does not constitute a need.  FERC, to date, has not thoroughly analyzed the need for this project, nor has it demonstrated that this is the only (or best) way to meet that need.  We should not be pitting the safety, economic value, and environmental health of property owners and communities against pipeline projects that are neither viable nor needed.