Federal Energy Regulatory Commission FERC’s Natural Gas Pipeline Certification Program Interstate Pipeline Regulatory Committee October 9, 2003 Berne L. Mosley, Director Division of Pipeline Certificates

FERC Organizational Structure

OEP Organizational Structure

Office of Energy Projects - Functions OEP has the engineering and environmental expertise to: certificate new gas pipeline projects, authorize and monitor hydroelectric projects, and analyze energy infrastructure needs and policies. OEP focuses on: project siting and development, balancing environmental and other concerns, ensuring compliance, safeguarding the public, and providing infrastructure capacity information. Other FERC Offices OGC has corresponding hydro and pipeline legal responsibilities OMTR, OMOI, OED, and OEA also have input to our products

Gas Pipeline Program Evaluate applications for facilities to import, export transport, store or exchange natural gas Authorize the construction and operation of facilities for such services Approve abandonment of such facilities Conduct environmental reviews of proposals involving construction, modification, or abandonment Implement NEPA Pre-Filing Process Conduct inspections of LNG facilities and pipeline construction

Regulation of Interstate Construction Natural Gas Policy Act (NGPA) Natural Gas Act (NGA)

NGPA OR NGA? NGA Certificate Grants a Right of Federal Eminent Domain NGPA Does Not Confer Any Rights of Federal Eminent Domain; Pipeline May Seek State Eminent Domain

Section 3 Import/Export Natural Gas Act NATURAL GAS ACT Section 7(c) Interstate Section 3 Import/Export Case Specific Blanket Authority Case Specific Automatic Prior Notice

Natural Gas Act Blanket Certificate Automatic Authorization • Cost of facilities is less than $7.6 million • Facilities are “eligible” facilities • Prior Notice • Cost is between $7.6 and $21.2 million • 45-day notice period prior to construction • Facilities are “eligible” facilities

Natural Gas Act Case Specific Section 7(c) Certificate • Conduct a full review of proposal including engineering, rate, accounting, and market analysis • Conduct an environmental review by preparing an Environmental Assessment or an Environmental Impact Statement

Project Evaluation How Does FERC Evaluate All Of These Major Projects? What Are The Criteria Used in This Evaluation?

Balancing Interests

FERC’s Internal Review Process Initial review for completeness (10 days) Issue notice of application Assign review team Environmental Certificates Rates Attorney Markets

(Traditional Process) Environmental Review FERC Review Process Public Interest Review (Traditional Process) Notice of Intent Notice of Application Scoping Meetings & Site Visit Interventions Protests LNG Cryogenic Design & Safety Review Data Requests Analysis Agency Coordination Data Requests Analysis Tech Conference (Optional) Preliminary Determination (Optional) DEIS FEIS Authorization / Rejection 1

Traditional vs. NEPA Pre-Filing Process Develop Study Corridor File At FERC Announce Open Season Prepare Resource Reports Traditional - Applicant Conduct Scoping Issue Draft EIS Issue Final EIS Issue Order Traditional - FERC Announce Open Season Develop Study Corridor File At FERC Prepare Resource Reports NEPA Pre-Filing - Applicant Conduct Scoping Review Draft Resource Reports & Prepare DEIS Issue Draft EIS Issue Final EIS Issue Order NEPA Pre-Filing - FERC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (months)

Traditional vs. NEPA Pre-Filing Process Develop Study Corridor File At FERC Announce Open Season Prepare Resource Reports Traditional - Applicant Conduct Scoping Issue Draft EIS Issue Final EIS Issue Order Traditional - FERC NOT A SHORTCUT Announce Open Season Develop Study Corridor File At FERC Prepare Resource Reports NEPA Pre-Filing - Applicant Conduct Scoping Review Draft Resource Reports & Prepare DEIS Issue Draft EIS Issue Final EIS Issue Order NEPA Pre-Filing - FERC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (months)

How to “Expedite” the NEPA Pre-Filing Process Projects Can Be Expedited Only If The company follows the NEPA Pre-Filing guidelines; Public involvement is made an integral part of the project planning process; The company works in partnership with the agencies; and The project is READY to move forward.

NEPA Pre-Filing Process – Completed Projects Kern River Expansion 2002 (720 miles, looping) approved in 11 months Greenbrier Pipeline (280 miles, new pipe) approved in 9 months

NEPA Pre-Filing Process – Pending Projects FY03 Cheyenne Plains - CIG Picacho Pipeline - PacTex Grasslands Expansion - Williston Basin Weavers Cove LNG - Dominion Long Beach LNG Project - Sound Energy Solutions Ruby Project - CIG San Juan 2005 Expansion - Transwestern

Lessons Learned by FERC Project teams should be ready and able to make commitments necessary to move forward as partners in the process Participating agencies should be contacted as early as possible FERC has to work harder to bring agencies together Stakeholder involvement must proceed according to a well-defined plan supported by management

Lessons Learned by FERC Early in the process, projects are works in progress, routing and documentation will change Both the company and FERC need to hold focused meetings with stakeholders Project information must be readily available, easily accessible, and updated regularly. Changes in routing and mitigation should be tracked and reported frequently to stakeholders

New Directions for NEPA Pre-Filing Not just for Pipelines Currently being used for two LNG terminals Lots of LNG work on the horizon Expected to be large portion of future workload

New Directions for NEPA Pre-Filing Not just for EISs Process can work for major EAs No third-party contractor required, but may be requested by staff at a later date Currently have one project approved that will file an applicant prepared draft EA

Benefits of NEPA Pre-Filing More interactive NEPA process, no shortcuts Earlier, more direct involvement by FERC, other agencies, landowners Goal of “no surprises” Time savings realized only if we are working together with stakeholders FERC staff is an advocate of the Process, not the Project!

Contributing to Success Interagency Agreement May 2002 FERC as lead agency Public Outreach Efforts Last meeting - 10/02/03, Roanoke VA Other Cooperative Efforts DOT CATS Program NASFM Case Study BLM Training

Interagency Communication Interagency Agreement - August 2002 FERC, ACHP, BLM, BIA, BOR, CEQ, COE, DOT, EPA, Forest Service, FWS, MMS, NPS, and NOAA Fisheries Concurrent review Concurrent issuance of necessary approvals

Agencies Agree To… Coordinate early and often proactive, informal Develop a workable schedule with lead agency FERC, in most cases Support FERC’s NEPA Pre-Filing Option Share data

Implementation of the Agreement Establish Working Group Assist in developing draft guidance for each agency Evaluate the Agreement’s effectiveness

What This Means Signatory agencies stand ready to assist Consistent key agency contacts Increased need for consistent and timely information from project sponsors Good stakeholder communication is imperative, must be transparent Better project design, quicker decision process

Gas Outreach Efforts Ongoing 5th Workshop held on October 2 in Roanoke, VA Plan to have another meeting before end of the year Companies are taking stakeholder involvement seriously

LNG Supply Stream -- From Production to Distribution Natural Gas Pipelines Dock Dock Natural Gas Production Storage and Vaporization Facility Liquefaction and Storage Facility

Economic Oversight – Access to LNG Terminal FERC Economic Oversight – Access to LNG Terminal Liquid to Vapor Flow LNG Ship Dock Natural Gas Pipelines Storage and Vaporization Facility New FERC Policy – Hackberry Case NO oversight for access, rate or tariff for LNG terminals; vaporized LNG competes with unregulated domestic supply. 1 32 Office of Energy Projects

Benefits of the New LNG Policy Stimulates development of new LNG terminals Accommodates various business models Increases gas supplies to the U.S.

Alaskan Natural Gas Pipeline Long lead time and high cost for delivery to market Producers say that Alaskan project is uneconomic at this time Sensitivity in Canada, DC and Alaska U.S. Government has been monitoring and standing ready to help or act New legislation for Alaskan Gas Project is pending

Pending U. S. Energy Bill re Alaskan Gas Final outcome of bill is uncertain Most likely - Provisions to streamline regulatory and legal process Probably - Some limit or ban on the “Over-the-Top” route (above 68 degrees North) Possibly - Some type of financial assistance: loans or tax credits

Other Gas Initiatives Emergency Reconstruction Rule Regional Energy Infrastructure Conferences The “Last Mile” Other Outreach Efforts

Emergency Reconstruction Rule The Rule allows pipelines to begin work on restoration projects under the blanket certificate program Construction begins after notification to the Commission Landowner advance notice required No cost cap Rearrangements w/ Compression = OK

THE LAST MILE High Pressure Needed In/Near Cities Congestion/ In-Street Construction Environmental Justice State Involvement– CZMA? 401?

Other Outreach Efforts Southwestern Gas Storage Technical Conference, Docket No. AD03-11-000: Analysis of relevant market needs and regulatory options available to assure the appropriate development of southwestern natural gas storage facilities Gathering Conference, Docket No. AD03-13-000: Reexamination of our gathering policies, and whether our gathering policies provide sufficient incentives to develop offshore gas supplies needed to meet the country's demand for natural gas