Deadlines, Deadlines, Deadlines. Now Wait.

Originally published for customers June 22, 2022.

What’s the issue?

At Arbo, we help you understand both long-tail and short-tail risks that often cannot be tied to a specific future date, but there are also events that we can help you monitor.

Why does it matter?

Anticipating an event can allow you to not only monitor that event, but also act to take advantage of or mitigate against the market’s potential reaction.

What’s our view?

Once again MVP probably has the most going on in the coming quarter, but the shippers on Panhandle Eastern may also finally get a decision in its long-running rate case.

At Arbo, we help you understand both long-tail and short-tail risks that often cannot be tied to a specific future date, but there are also events that we can help you monitor.

Anticipating an event can allow you to not only monitor that event, but also act to take advantage of or mitigate against the market’s potential reaction.

Once again MVP probably has the most going on in the coming quarter, but the shippers on Panhandle Eastern may also finally get a decision in its long-running rate case.

Looking at the Third Quarter

Each quarter we provide our customers with a calendar they can use to monitor the activity in pending legal and regulatory matters with significance to the industry.

Bookmark Arbo’s Midstream Calendar: www.goarbo.com/midstream-calendar

MVP Still Most Active

Each quarter it seems like the MVP project has the most entries in our calendar, and once again it wins this quarter. But as anyone who has followed that case knows, FERC and the courts love to establish deadlines for everyone but themselves. So we know some deadlines, like the date for briefs in the challenges to MVP’s water quality certificates, but many of them are, at best, estimates, because the courts and FERC are rarely constrained by time limits on when they must act. The most significant open question for MVP this quarter is whether FERC will extend its construction window from October 13, 2022 to October 13, 2026. MVP has requested a decision by August 8 on that request, but FERC is under zero obligation to provide an answer by then or by any date, really.

There was good news last week on this issue, however. FERC issued a unanimous order that granted National Fuel Gas Supply a 35-month extension of the construction window for its Northern Access 2016 project. The encouraging part of that decision was some pretty stern language stating that FERC will not allow challenges to the original certificate order as part of a request for an extension. The order noted that those opposing the extension made “arguments attacking the Certificate Order itself, including that the Commission did not properly account for public safety, that the project will have detrimental impacts on streams and wetlands, and that there is no public need for the project. These are improper collateral attacks on that the (sic) Certificate Order and will not be considered further.”

However, there was some wobbly language that concerned Commissioner Danly enough for him to write a concurring opinion. As he noted in his separate opinion, the language in the order says that “the Commission generally will grant an extension of time if the movant files for an extension of time within a timeframe during which the environmental findings underlying the Commission’s authorization can be expected to remain valid.” In applying that standard, FERC’s order noted that those opposing the extension had made no “showing of significant new circumstances or information germane to environmental concerns and the proposed action or its impacts. Accordingly, we do not find it necessary to prepare a supplemental environmental analysis.”

Undoubtedly, those opposing MVP’s extension will focus on this standard and seek to prove that there have been changes, most notably failures in the measures used to reduce sedimentation near streams, that require a new assessment of the impacts. Also, whether to require a supplemental analysis is a decision that Chairman Glick can make without any input from the other commissioners by simply directing staff to undertake one, as he has done by requiring full environmental impact statements for projects that in the past would have required only an environmental assessment.

Also, the timing of the request and FERC’s order make it clear how optimistic MVP’s request for a decision by August 8 likely is. National Fuel’s request for an extension was filed on January 28, 2022 and the order approving the extension was not issued until June 29, 2022, a full five months later. As we noted above, FERC is under no obligation to rule quickly on MVP’s request.

Panhandle Eastern Rate Case

The other case that shows how little constraint there is on FERC’s obligation to rule is its decision in the rate case concerning Panhandle Eastern Pipe Line’s tariff rates. That proceeding dates back to January 16, 2019 when FERC launched an investigation under Section 5 of the Natural Gas Act to determine if Panhandle Eastern’s rates were unjust and unreasonable. Panhandle Eastern responded to that investigation by filing on August 30, 2019 its own Section 4 rate case seeking an increase in its rates.

As anyone who follows rate cases knows, the Administrative Law Judge (ALJ) establishes a very detailed schedule that even requires the ALJ to issue an initial decision by a date certain. The parties and the ALJ met those deadlines and the ALJ issued the initial decision on March 26, 2021. But FERC has not acted on that decision since then and in the meantime, Panhandle Eastern is collecting the higher rates it requested in its proceeding. That led to Senator Roy Blunt of Missouri filing a letter in April asking FERC to rule promptly as one municipal utility has seen its rates for transportation on Panhandle Eastern triple since before the filing of FERC’s rate investigation to lower those rates. Chairman Glick responded in April saying that FERC was “working expeditiously” to issue a final decision on this matter “as soon as possible.” Having seen no action by FERC, however, Senator Blunt followed up on his April letter on June 3, 2022 because FERC had still not acted.

So as you look at this quarter’s calendar, you will note that many of the dates are potential dates for actions by regulators or courts, who work at their own leisurely pace.