As Perry slams state pipeline decisions, lawyers say DOE has little authority to intervene
The Secretary of Energy has cast energy infrastructure as a national security issue, but his agency has little power over siting decisions.
Secretary of Energy Rick Perry on Tuesday reiterated his call for the U.S. to rethink the boundaries of state and federal jurisdiction when siting energy infrastructure, particularly interstate pipelines.
“Let’s say someone wants to build a new clean-burning natural gas power plant in Maine and they can’t get the gas to their location because they’ve got to go through a state that has a political, philosophical problem with building a pipeline across their state,” Perry said at a breakfast event for National Clean Energy Week. “How do we deal with that?”
Perry’s comments came the day after he revived his call for the Department of Energy to explore using its national security authorities to prevent another Polar Vortex — an episode in 2014 when a cold weather snap forced outages at gas and coal plants throughout the Midwest.
At the Tuesday event, Perry explicitly linked the Vortex with the interstate pipeline issue. Particularly in the Northeast, citizen opposition has pushed state governments to slow the development of gas pipelines — and Perry singled out New York for criticism in his Monday remarks.
“Is it a national security issue that if we have another Polar Vortex ... can a state or should a state have the right to say, ‘No, we don’t want you to cross our land and build a power plant here to serve your people?’” Perry said Tuesday. “The choice gets down to between, ‘Am I going to turn my lights on or am I going to keep my family warm?’ That is a discussion we need to have in this country.”
Perry said Monday that revisiting these issues could require a “statutory address” — alterations to underlying federal law or DOE authorities. Short of that, energy lawyers say Perry’s agency has little power itself to address state-federal jurisdiction while critics question his portrayal of the Polar Vortex.
Revisiting the Polar Vortex
Perry’s renewed focus on the Polar Vortex comes as part of a larger push in the Trump administration to preserve generation “diversity,” namely by keeping coal-fired generators online.
Earlier this year, EPA Administrator Scott Pruitt said the grid needs coal plants that can store “solid hydrocarbons onsite” — a reminder of the gas supply constraints faced during the Vortex. Acting FERC Chair Neil Chatterjee has repeatedly indicated his agency will act to support baseload generators if it feels reliability is threatened.
Some in the power sector say preserving coal generation would do little to solve the problems of the Vortex, however. In testimony before the House Energy and Commerce Committee on Tuesday, Arvin Ganesan, federal policy vice president at trade group Advanced Energy Economy, told lawmakers that demand response, wind energy and nuclear plants kept the lights on during the weather event.
Generation constraints were the result of “coal piles freezing, mechanical elements surrounding coal and natural gas [plants] freezing, and then the fact that there's natural gas that's diverted to heating,” Ganesan, a deputy EPA administrator under President Obama, told Utility Dive after the hearing. “It’s all of these factors that caused fossil fuel baseload … from not coming online.”
“Demand response ended up reducing the overall amount of electricity needed and then wind was not affected,” he said. “That's the story of the Polar Vortex, not that baseload generation saved the day.”
Polar Vortex analysis from the North American Electric Reliability Corporation (NERC) shows that while most forced outages affected gas generators, a substantial amount of coal generation also went offline.
In the aftermath of the event, grid operator PJM approved numerous reforms to enhance grid reliability, including new capacity performance standards and a push for firm gas supply contracts to generators. The grid operator is also working on an enhanced resiliency framework meant to help the grid recover from outages.
Ganesan said those reforms can help, but allowing more advanced energy technologies like energy storage could improve reliability further still.
“[PJM has] taken some reforms, but coal piles freezing, that's still an issue. Anything that has mechanical elements that can freeze, that is susceptible,” he said. “Cold weather is one type of weather that can cause problems. But as we see in Puerto Rico, Florida and Texas, there are other weather events that can cause problems as well.”
Limited authority for DOE
Details of the Vortex aside, energy lawyers say DOE has little authority to address state energy decisions on its own, particularly on pipelines.
While FERC is budgeted under DOE, it remains an independent agency, stressed Harvey Reiter, a partner at Stinson Leonard Street, a Washington law firm. It is the commission — not Perry’s agency — that has final say over interstate pipelines, and it already has the authority to overrule states.
“There are certain environmental reviews that have to be conducted to determine whether there's an environmental impact and that may require signoff from states,” Reiter told Utility Dive, “but states can't use a pretext — they can't cite a provision of law that's tied to environmental impact and use it because they don't like gas pipelines.”
FERC currently faces a backlog of more than 40 pipeline proposals that built up after former Chairman Norman Bay resigned in February, stripping the commission of a quorum until last month. While states like New York and North Carolina have delayed permitting for major pipelines in recent months, the newly-constituted commission has already shown an appetite to take them on.
Earlier this month, FERC overturned New York’s denial of a water quality permit for the Valley Lateral Pipeline, allowed the Rover Pipeline in West Virginia to continue construction and approved the 257-mile Nexus gas pipeline that would run from Ohio to Michigan.
The commission is expected to issue more approvals in the coming months, even as landowners and environmentalists step up opposition at FERC and in construction zones.
DOE could attempt to influence FERC by intervening in a proceeding or petitioning for a new rulemaking, but beyond that, Reiter said FERC already has the authority to act on the jurisdictional questions preoccupying Perry.
“I would think that there's already power in FERC to prevent a state from using its own authorities that are limited and mostly tied to environmental review and signoff before FERC can approve it,” he said.
Though Perry focused on gas pipelines in his public appearances this week, DOE’s assessment of its national security powers related to reliability is broader than that single issue, Deputy Secretary Dan Brouillette said.
“We’re just going through a normal and customary process for reviewing the authorities — all of the authorities, not just that one,” he told Utility Dive after Perry's Monday event.
In addition to gas infrastructure, DOE is also looking at its emergency authorities to preserve reliability. One option, Brouillette said, would be to deploy Section 202 (c) of the Federal Power Act to require generators to operate in times of emergencies. The DOE exercised that option in June, allowing a Dominion coal plant in Virginia to run before it could make emissions upgrades.
“It's very temporary, but those are the types of things,” Brouillette said. “You can’t build a transmission line in a day. You can't force a plant to run sometimes if it's uneconomic, so the secretary has the ability to step in and say, ‘OK, we're going to bypass, we're going to issue this order if you will and force that thing to run.’”
The ongoing conversation over state jurisdiction “needs to keep the emergency issue on a separate track from the non-emergency issue,” Georgetown Law Professor Scott Hempling told Utility Dive, so that emergency reliability justifications don’t end up setting long-term power sector policy.
“There's a distinction between emergencies, which 202 (c) talks about, and our ongoing 70-year conversation about what happens when states want things that the federal government doesn’t want and vice versa,” he said. “I wouldn’t want to see, and I'm not seeing, the Secretary of Energy confuse the two and try to make up emergencies to solve a problem that really is a statutory issue.”
The larger issue, Hempling added, is that “the federal-state relationship created by constitutional edict and the statutory relationship created in the 1930s by the Natural Gas Act and the Federal Power Act don’t fit well with 2017 markets and 2017 technology.”
That’s an issue that “runs through everything that goes on in the industry, from distributed energy to these large-scale oil pipeline things,” he said. As Perry alluded, changing that paradigm will likely “involve amendments to the Gas Act and the Power Act in order to solve.”
Changing the foundations of such longstanding laws is a stiff challenge in the best of political climates, but Hempling held out hope that Congress could act, even in today’s partisan climate.
“People say it's a polarized Congress, but this is stuff that people could work out and it's a shame that they haven’t,” he said. “That’s an extremely healthy debate to have and we should be having it in an adult way. We should have been having it for the last 30 years.”
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