The Last Quarter of 2022 Could Be Pivotal for Pipeline Industry

Some regulatory and litigation events occur without warning, but it is possible to keep a calendar of scheduled events. Each quarter, we update a calendar of midstream events we will be watching in the coming quarter. This quarter we are adding to the calendar the dates on which FERC has an open meeting as well as the dates on which it releases the notice for the matters to be considered at those meetings.

The last half of this year is shaping up to be one that is quite active for rate cases pending before FERC. Of course, there are also developments expected for the Mountain Valley Pipeline and the future of Chairman Glick. In addition to arming you with the timing for these known events, we are also here to help you understand the significance of expected and unexpected events so that you can act on them when they occur.

The Year for Rate Cases

Back in February, in Significant Gas Pipeline Rate Cases Are Filed, Settled and on the Horizon, we noted that since the passage of the Tax Cuts and Jobs Act of 2017, almost half of the entire natural gas pipeline industry had filed rate cases. But, despite that fact, we expected 2022 to continue to be an active one for such cases and the last quarter and the coming quarter have not disappointed.

During the third quarter, Natural Gas Pipeline Company of America, Texas Eastern Transmission, Northwest Pipeline and Iroquois Gas Transmission all filed settlements of either pending cases or as a way to avoid the filing of a rate case. Those four pipelines alone represent about 13% of the total industry’s revenues. In addition, however, El Paso Natural Gas and Guardian Pipeline indicated that they both were close to settling the Section 5 investigations that FERC had launched against them in the second quarter of this year.

But the backlog of cases also continued to grow as FERC filed two more Section 5 cases against Stagecoach Pipeline & Storage and MountainWest Overthrust Pipeline, that we just discussed last week in FERC Launches Two Gas Pipeline Rate Cases – Are More on the Way? But in addition to those Section 5 cases, three pipelines, Transwestern Pipeline, Northern Natural Gas and Tuscarora Gas Transmission, filed Section 4 cases in the third quarter. That means we currently have pending five Section 4 rate cases and four Section 5 rate cases, which again, together, represent about 13% of the industry’s total revenue. So in the last half of this year over one quarter of the industry’s total revenues will have been subjected to a rate case.

Calendar

Our calendar includes key dates for these proceedings for the coming quarter. But, El Paso earlier this week asked FERC to extend some of its dates to allow for settlement talks to continue. Also the date for a decision in Panhandle Eastern’s rate case is basically a placeholder. That case is a holdover from the third quarter. When we issued that version of the calendar we noted that Senator Roy Blunt of Missouri had filed a letter in April asking FERC to rule promptly, as one municipal utility had seen its rates for transportation on Panhandle Eastern triple. Chairman Glick responded in April saying that FERC was “working expeditiously” to issue a final decision on this matter “as soon as possible.” And yet we wait.

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

MVP Faces a Critical Quarter

Finally, the Mountain Valley Pipeline could be in the most critical quarter for that project, which is saying a lot, given how long it has been pending. There will likely be two oral arguments before the Fourth Circuit about the water quality certificates that the project received from the states of Virginia and West Virginia. Also, we expect that the U.S. Fish and Wildlife Service should reissue its Biological Opinion and Incidental Take Statement by the end of the quarter and that the U.S. Forest Service could issue a revised permit for the project to cross the Jefferson National Forest. But perhaps, the most consequential event, not on our calendar, will be whether Senator Manchin is able to attach his permitting reform measure, that we discussed in Manchin Reveals Permitting Reform Act – Help May Be on the Way for MVP, to an appropriations bill during the lame-duck session of Congress following the midterm elections.

Chairman Glick’s Future Will Be Decided As Well

Also up in the air, likely along with the fate of MVP, is the fate of Chairman Glick’s continuing tenure at FERC. As we discussed in Chairman Glick’s Renomination and What it May Mean for the Gas Industry and MVP, Senator Manchin’s leverage to get MVP and his permitting reform bill passed is maximized by delaying consideration of Chairman Glick’s nomination. As we expected back in May, when President Biden nominated him, Senator Manchin hasn’t found the time to hold a hearing on his nomination. Chairman Glick can serve until this Congress adjourns at the end of the year. But, if he is not confirmed by then, he would have to step down and be renominated in 2023. His fate likely hangs in the balance with MVP, and we will not likely know whether there will be a hearing on his nomination until we know the fate of Senator Manchin’s permitting reform bill.