On January 19, 2018, FERC approved PennEast Pipeline Company, LLC’s (“PennEast”) proposal to construct its 116-mile pipeline project from Pennsylvania to New Jersey (“Project”).  FERC approved the Project despite protesters challenging the Project’s need given that affiliated shippers subscribed to most of the Project’s capacity, as well as FERC’s limited environmental impact analysis after PennEast could not complete certain surveys along the Project’s route due to landowners denying PennEast access to their property.  Commissioners Cheryl A. LaFleur and Neil Chatterjee issued separate concurrences, while Commissioner Richard Glick issued a separate dissent.

On September 24, 2015, PennEast filed its application to construct the Project, highlighted by a 116-mile natural gas pipeline from Luzerne County, Pennsylvania to Mercer County, New Jersey.  To support the Project, PennEast stated that it had executed precedent agreements with twelve shippers, including six affiliates, for approximately 90 percent of the Project’s 1,107,000 dekatherms per day firm capacity.  On April 14, 2017, FERC staff issued its final Environmental Impact Statement (“EIS”) of the Project, concluding that the environmental impacts of the Project would be insignificant if certain mitigation measures and environmental conditions were adopted.

Protesters voiced concerns related to, among other things, the need for the Project and the Project’s environmental impacts.  With respect to the need for the Project, protesters’ arguments included that (1) the fact that six affiliated shippers had subscribed to most of the capacity on the Project demonstrated that there was no market support and (2) natural gas demand in New Jersey and Pennsylvania is flat.  Regarding the environmental analysis, protesters made numerous arguments that the EIS did not sufficiently address potential environmental impacts.  Similarly, protesters argued that FERC could not have fully considered all environmental impacts because landowners refused to allow PennEast to complete field surveys along the Project route.

In its order approving the Project, FERC reiterated its precedent not to look beyond precedent agreements to make judgments about the needs of individual shippers when determining need for a project.  FERC continued that the mere fact that some of the shippers were affiliated with PennEast did not call into question the need for the project, and that FERC’s primary concern is whether the pipeline discriminated against non-affiliated shippers.  Regarding the lack of growth in demand in the region, FERC stated that protesters ignored other benefits of the Project, such as providing a reliable, flexible, and diverse supply of natural gas that could increase price stability and opportunities for shippers to expand natural gas service in the future.  With respect to environmental concerns, FERC stated that, despite PennEast’s inability to complete certain surveys due to lack of access to landowner property, there was enough information in the record to allow FERC to conclude that the Project is “environmentally acceptable” if constructed in accordance with certain environmental conditions, which include completing all necessary surveys.

Commissioners LaFleur and Chatterjee separately released concurrences of the Project’s approval, while Commissioner Glick separately dissented.  In their concurrences, Commissioners LaFleur and Chatterjee highlight their findings that PennEast demonstrated need for the Project through precedent agreements for 90 percent of the Project’s capacity, and that there was sufficient information in the record to support issuing PennEast a certificate.  In his dissent, Commissioner Glick argued that, while precedent agreements are evidence of need, precedent agreements with affiliates may be “less probative of that need because they are not necessarily the result of an arms-length negotiation.”  Commissioner Glick continued that he did not believe that Congress contemplated FERC issuing certificates so that pipeline certificate holders could use eminent domain authority—which pipeline companies obtain once they receive a Natural Gas Act section 7 certificate form FERC—to gather more information to determine whether a project is in the public interest.

A copy of FERC’s order is available here.  A copy of Commission LaFleur’s concurrence is attached here, and a copy of Commissioner Chatterjee’s concurrence is attached here.  A copy of Commissioner Glick’s dissent is attached here.