How much public necessity goes into a Certificate of Public Convenience and Necessity authorizing the construction of a natural gas pipeline? Let’s take a look. The Federal Energy Regulatory Commission, in 2017, granted National Fuel Gas Supply Corp. a certificate of public convenience and necessity to build a new, 99-mile long, natural gas pipeline — the Northern Access Project — linking the company’s western Pennsylvania gas fields and existing gas distribution pipelines in the Buffalo, N.Y., area.
Since then, landowners and public officials in communities located along the pipeline’s route have charged that the Northern Access pipeline is neither a public convenience nor a public necessity.
Necessity for whom?
They ask, how can FERC declare this pipeline in America’s public interest when National Fuel has contracted to sell 72 percent of the gas passing through the pipeline to Canadian customers? Environmental, wildlife and property risks during construction of a 75-foot wide right-of-way from Pennsylvania to Buffalo, and burying a 24-inch pipeline, will be borne here at home while the gas will benefit foreign customers.
National Fuel, not the American public, desperately needs the added capacity of the Northern Access pipeline.
FERC’s response. “The project will provide benefits to all sectors of the natural gas market by providing producers access to multiple markets throughout the U.S. and Canada and increasing the diversity of supply to consumers in those markets... Our policy does not require that shippers be domestic end-use consumers of natural gas.”
Federal and state governments, according to the U.S. Constitution, may only condemn private property for public purposes, like building public schools and roads. FERC’s certificate, however, conveys to National Fuel the federal government’s eminent domain powers.
Landowners along the pipeline’s route claim giving the power to seize land to a private company for the purpose of profiting from the sale of American natural gas to foreign customers is not in the public’s interest.
In the late 1800s, when an urbanizing and industrializing America needed a steady supply of fossil fuels, it may have been in the public’s interest for federal and state governments to allow private oil and gas companies to use their public, eminent domain police powers to seize private land. It no longer makes sense to give oil and gas companies a blank check to force private property owners to surrender their land for the construction of an unnecessary pipeline that they believe endangers the well-being of Earth itself.
Pipeline operators look upon condemnation courts as trusted business partners. For too long they have taken for granted their right to use public, eminent domain powers for corporate purposes.
FERC’s response: “The Commission has jurisdiction to determine whether the construction and operation of proposed interstate pipeline facilities are required by the public convenience and necessity. If so the Commission issues a certificate. But it is Congress ... that authorized a certificate-holder to exercise eminent domain authority to acquire land or other property necessary to construct or operate the approved facilities if the certificate-holder cannot acquire such property by agreement with the owner.”
Step One. Upon receipt of a pipeline proposal, industry-related factors are looked at, including the demand for natural gas, the proposed pipeline’s effect on market competition and the danger of overbuilding pipeline networks.
Step Two. If, from an industry perspective, the proposed pipeline appears feasible, the next step is to look at public benefits, such as meeting unserved demand and lowering costs to consumers and public costs. The pipeline applicant, however, not FERC, is responsible for minimizing adverse effects of the pipeline on existing customers, landowners, the environment and communities located along the pipeline’s route.
Step Three. When the pro-industry factors outweigh negative impacts on existing customers, the environment and private property rights, FERC deems the proposed project to be in the public’s interest.
This skewed application of the term “public” appears to rest on this principle: What is good for the pipeline industry is, ipso facto, in the public’s interest.
In its haste to drill new gas wells, National Fuel created a Pennsylvania gas glut exceeding the capacity of existing pipelines to move the gas to market. The company turned to FERC to bail it out of a self-inflicted pipeline capacity shortage.
FERC, a pro-industry gatekeeper, has used its public-welfare smoke screen to approve yet another pipeline that will prolong America’s dependence on fossil fuels.
Once upon a time — but no more — what was good for the gas pipeline industry may have been good for the American public. With the fate of the Earth at stake, this is now a reckless, outdated public policy.