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July 03, 2013

FERC Guidance Doesn't Clarify Role of State Approvals

FERC’s recently released environmental guidance leaves the door open for states to claim that applicants for natural gas projects under FERC’s jurisdiction must obtain state-based permits.  FERC regulates these projects under the Natural Gas Act, and although courts have held that applicants for such projects are not required to obtain state-issued permits, some applicants have traditionally applied for state permits as an avenue of coordination and cooperation with states under encouragement by FERC.  The agency, however, has not clarified at what point delays in the state process warrant the assertion of federal preemption by an applicant. FERC’s recent guidance does little to clarify this point.  On May 31, 2013, FERC released the Upland Erosion Control, Revegetation, and Maintenance Plan and Wetland and Waterbody Construction and Mitigation Procedures, which establish the agency’s baseline mitigation measures.  The guidance also contains confusing language carried over from the agency’s 2003 guidance, which states that applicants must “[a]pply for state-issued waterbody crossing permits and obtain . . . 401 water quality certification.”  The guidance also requires applications for discharge and water withdrawal permits.  This language suggests that applicants should continue the traditional process of applying for state permits but technically must only complete the process for certain federally-delegated permits (401 water quality certification). The guidance, which embodies the old approach for applicant-state coordination, may be outdated as the approvals process grows increasingly contentious.  Many opponents of these projects have no particular, addressable concerns, but instead have a sole purpose to delay and kill any project even tangentially related to natural gas extraction, particularly hydraulic fracturing.  Applicants subject to additional attacks at the state level are left at risk of being in the unenviable position of determining when the risk of asserting federal preemption outweighs continuing delays.  Although state involvement continues to be an important part of the federal process in order to ensure that particular local concerns are addressed, applicants currently are caught between efforts to coordinate with state agencies and the potential for unreasonable delays at the state level without a clear direction from FERC.

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