PennEast Suffers Major Year-End Setbacks in Wake of New Comments From NJDEP and Second Delay by FERC

Posted January 13, 2017

Stockton, NJ (January 12, 2017) — It’s far from a happy new year for PennEast, according to ReThink Energy NJ. As 2016 drew to close, the PennEast pipeline suffered several major setbacks — a slew of new negative comments by the NJ Department of Environmental Protection (NJDEP); a second delay by the Federal Energy Regulatory Commission (FERC) in its schedule for reviewing the project; and the New Jersey Division of Rate Counsel’s reaffirmation of its finding that the proposed gas pipeline is not needed and does not benefit the public. Additionally, at least one major industry analyst—from top-rated independent institutional research boutique Washington Analysis, LLC — says “the project is unlikely to go forward due to significant organized opposition.”

On December 16th, 2016, Rob Rains of Washington Analysis LLC issued a research note on his outlook for natural gas pipelines, saying: “In our view this project is unlikely to go forward due to significant organized opposition.” He cites “Strong opposition in New Jersey” as part of his reasoning.

Mr. Rains also gives his views on the effect the incoming Trump Administration and its policies will have on pipeline permitting: “We retain a mixed outlook for natural gas pipelines, particularly northeastern projects, due to the persistent tension between state and federal regulators, which we do not expect to be alleviated by the incoming Trump administration.”

Most recently—in a letter to PennEast and FERC on December 20, 2016 — NJDEP commented on route modifications to the draft EIS, stating: “PennEast has completed less than 35 percent of the required full environmental assessment for the entire proposed pipeline route due to a lack of complete route access.” NJDEP emphasized that completed surveys and analysis for all regulated impacts are “required for DEP to accept many of the permit applications as complete and prior to DEP initiating a review of those permit applications.” NJDEP called for two years of surveys for rare plants, and raised concerns about stream crossings that would likely impact state-listed species and may result in permitting challenges.

Following notice of a new public comment period on 33 proposed route changes, and an extensive request for additional data to the company, FERC announced a second delay in its schedule for reviewing the proposed PennEast pipeline. The date for issuing the final environmental impact statement (EIS) was postponed to February 17, 2017 from December 16, 2016. The project was already a year behind PennEast’s original schedule.

On the heels of FERC’s action, the New Jersey Division of Rate Counsel — in a striking rebuke of PennEast’s claims—said that “while the faith demonstrated in ‘if you build it, they will come’ makes for a wonderful movie plot, it cannot be the basis for building an enormously expensive greenfield pipeline.” The full Rate Counsel letter is available hereAlso filed with FERC along with Rate Counsel’s letter is the Affidavit of David E. Dismukes, Ph.D.

The Rate Counsel had previously called the project’s requested rate of return “unfair to consumers” and like “winning the lottery.” Concerns also included self-dealing contracts between the owners of the pipeline and their shipper affiliates as not demonstrating true public need.

“These are onerous setbacks and FERC must address the very serious criticisms raised by the NJDEP, NJ Rate Counsel and other regulatory bodies,” said Tom Gilbert, campaign director, ReThink Energy NJ and New Jersey Conservation Foundation. “FERC cannot certify a project and confer eminent domain authority without substantial evidence of significant public need. Clearly, this project only selfishly serves members of the shell company, PennEast.”

Shaken by strong criticism from federal and state regulators — including the federal Environmental Protection Agency, U.S. Fish and Wildlife Service and National Park Service —and facing massive, growing opposition to the pipeline project, PennEast recently made numerous modifications to the pipeline route. PennEast claims such changes—filed after the initial period for public comment on FERC’s EIS ended—will reduce environmental impact.

“In fact, these hastily proposed and ill-conceived changes to the route show PennEast’s desperation to profit from this unnecessary new infrastructure,” Gilbert said. “They do little to nothing to reduce the damage that would be posed by the project.”


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