June 4, 2021. The NC. Senate voted yesterday to disapprove the nomination of Dionne Delli-Gatti as Secretary of the Department of Environmental Quality (DEQ). Republican Senators continued to tie the disapproval to dissatisfaction with Delli-Gatti’s earlier responses to questions about Cooper administration policy on natural gas in general and the Mountain Valley Pipeline Southgate project in particular. Senators cited recent disruption of gasoline supplies due to a cyber attack on Colonial Pipeline to highlight the risk to natural gas supplies similarly reliant on a single major pipeline. Senators leading the opposition to confirmation placed the responsibility for addressing the risk posed by lack of redundancy in pipeline infrastructure on Sec. Delli-Gatti and characterized her answers to questions about natural gas policy as “disqualifying”.
Some background on the natural gas issues raised by Senators in opposition to Secretary
Delli-Gatti —
DEQ and pipeline approvals. An energy company makes the initial decision to construct new infrastructure based on evaluation of demand and economic return. Private sector energy companies haven’t planned new projects around creating redundancy in major energy infrastructure. It also isn’t clear how easy it would be under existing state and federal energy laws to get approval of a project based solely on creating redundancy in the system. Those approvals now require justification based on additional demand, replacement of existing capacity, and compliance with environmental standards. The approvals also take consumer cost into consideration.
New natural gas pipelines require a certificate of convenience and necessity from the Federal Energy Regulatory Commission (FERC) to confirm a legitimate energy need for the project. FERC also regulates interstate pipeline projects for transportation safety purposes. As the lead federal agency, FERC takes responsibility for environmental review of the projects — including preparation of the Environmental Impact Statement (EIS) and coordination with other federal permitting agencies. Pipeline construction often requires a Clean Water Act Sec. 404 permit (for deposition of fill material in rivers, streams and other waters) from the U.S. Army Corps of Engineers.
DEQ has no role in planning new pipelines or in FERC decisions about the necessity of a proposed pipeline. DEQ’s ability to affect energy infrastructure projects largely comes from its authority to implement state laws protecting water quality and air quality. Unless other state permits are required, DEQ participates in environmental review of a pipeline project in two ways: 1. DEQ agencies comment on the draft federal EIS; and 2. the Division of Water Resources may be requested to issue a state water quality certification for the project. Under Sec. 401 of the Clean Water Act, an applicant for a Sec. 404 permit must provide a certification that the entire project as constructed and operated will meet state water quality standards. The state certification is not a permit, but the Clean Water Act prohibits the Corps of Engineers from issuing a Sec. 404 permit if the state has denied the water quality certification. Since pipeline projects often traverse multiple states, a pipeline project would require similar certifications from each state in the path of the pipeline.
DEQ has reviewed two pipeline projects in recent years; both had been proposed by electric utilities to supply natural gas to power plants. Duke Energy and Dominion Energy jointly proposed construction of the Atlantic Coast Pipeline (ACP) to transport natural gas from West Virginia into Virginia and Eastern North Carolina to supply Dominion and Duke Energy power plants.
Dominion Energy proposed the Mountain Valley Pipeline Southgate project to extend transmission pipeline from the proposed Mountain Valley Mainline in Virginia into Piedmont North Carolina. The Mountain Valley Mainline would be a major new pipeline (not yet constructed) to transport natural gas from shale formations in West Virginia and Pennsylvania to Virginia. The MVP Southgate project included 40 miles of pipeline through Rockingham County and Alamance County, ending southeast of Graham, North Carolina.
Cooper Administration Actions on the Atlantic Coast Pipeline and the MVP Southgate Project
DEQ’s Division of Water Resources issued a water quality certification for the ACP project on January 26, 2018. The same day, Governor Cooper announced a separate agreement between the state, Dominion Energy and Duke Energy to create a $57.6 million mitigation fund to be used at the Governor’s discretion to mitigate project impacts beyond the scope of those addressed by environmental permits. Under the agreement, the funds could also be used to assist Eastern North Carolina industries that could not otherwise afford to tap onto the pipeline. The mitigation fund, which was controversial (and redirected by the General Assembly to benefit schools in the counties affected by pipeline construction), never came into existence because of the later decision by Duke and Dominion to cancel the ACP project.
On August 11, 2020, DEQ’s Division of Water Resources denied the water quality certification and a Jordan Lake riparian buffer authorization for the MVP Southgate project because of uncertainty about the project’s viability. Mountain Valley Pipeline LLC had indicated an intent to begin construction of the MVP Southgate project before legal obstacles to the MVP Mainline had been resolved, creating the possibility of water quality impacts in North Carolina without assurance the pipeline would ever operate. The DEQ letter denying the water quality certification noted that:
…several federal permits necessary for the construction of the MVP Mainline project have been suspended or are pending, with some in litigation. In addition, the Federal Energy Regulatory Commission has issued a stop-work order on the currently incomplete MVP Mainline project. The uncertainty of the MVP Mainline project’s completion presents a critical risk to the achievability of the fundamental purpose of MVP Southgate.
Mountain Valley Pipeline LLC appealed denial of the water quality certification. The 4th Circuit Court of Appeals upheld DEQ’s authority to deny the certification based on uncertainty that the documented water quality impacts of construction would ever be justified by energy benefits. But the court directed the state to provide more explanation of the decision to deny certification rather than condition certification on approval of the MVP Mainline project. On April 29, 2021 (two days after Secretary Delli-Gatti’s confirmation hearing), the Division of Water Resources issued a letter further explaining the denial decision as required by the court.
The April 2021 letter quoted from the original DWR hearing officer’s report on the MVP Southgate project:
In the absence of the MVP Mainline pipeline’s completion in Virginia, the MVP Southgate project has no independent utility. In essence, it would be a pipeline from nowhere to nowhere incapable of carrying any natural gas, and certainly not able to fulfill its basic project purpose, while having no practical alternative. As such, prior to incurring any impacts to North Carolina natural resources, and to ensure that the maximum avoidance and minimization of impacts to North Carolina water and buffer resources occurs, a level of certainty regarding the completion of the MVP Mainline pipeline is required.
Outcomes. The Atlantic Coast Pipeline received necessary state and federal approvals, but Duke Energy and Dominion Energy announced the cancellation of the project in July 2020 due to cost increases, project delays, and increased uncertainty about the outcome of legal challenges to federal permits for the project. The companies pointed particularly to a federal court decision from another state calling into question the Corps of Engineers’ approach to permitting similar projects under Sec. 404 of the Clean Water Act.
As noted above, DEQ’s Division of Water Resources provided additional explanation for denying the water quality certification for the MVP Southgate project as required by the 4th Circuit Court of Appeals. Mountain Valley Pipeline LLC can reapply for a water quality certification if/when legal barriers to construction of the Mountain Valley Mainline project have been removed.
Open Questions. What is the Cooper administration policy on natural gas? Based on DEQ’s actions on the two pipeline projects reviewed since 2017, there is no policy against new natural gas infrastructure. Cooper’s DEQ approved the water quality certification for the Atlantic Coast Pipeline and denied the certification for the Mountain Valley Southgate project based on conditions peculiar to that project. Every indication is that DEQ has evaluated individual projects on their merits under existing state environmental laws and rules.
Two other issues arose in the confirmation debate: 1. The possible need for redundancy in energy infrastructure to reduce risk of system failure; and 2. The challenges of meeting near-term energy needs during a period of transition from nearly total dependance on fossil fuels to greater reliance on renewable energy sources.
Pipeline companies clearly need to reduce risk of service interruption. Creating redundant pipeline infrastructure , however, would be extremely expensive — costs that would be passed on to consumers — and likely unnecessary to reduce most types of risk. Avoiding loss of pipeline service due to a cyber attack is best addressed by better cyber security rather than creating more pipeline infrastructure served by the same unsecured computer system.
There is also a legitimate question about how to meet current energy demand during a transition from fossil fuels to more renewable resources. That will require a delicate dance of demand, supply and reliability; cooperation between public utilities and state/federal agencies; outreach to communities concerned about local impacts; and environmental organizations looking toward a different energy future. DEQ approved the Atlantic Coast Pipeline; community resistance and legal challenges by environmental organizations caused Duke Energy and Dominion Energy to abandon the project.
This appears to be a very complex set of issues, each of which would require collaborative efforts on all participants. From the looks of your post, that may not be possible.
When I was the SEPA coordinator, many years ago, North Carolina was a national model for Environmental Conservation…because there was effective collaboration with the Private Sector. However, State politics has served to diminish Water and Air Quality Programs because the folks who did all the work have long since moved on, resulting in a lack of experienced professionals that understand how to mediate these type of events.
From my chair, unless there’s some hard decisions made, the citizens of North Carolina will eventually be the ones to pay the price for this ineffective leadership.