PennEast, Way Behind Schedule, Asks for Two More Years to Build Pipeline

Jon Hurdle | January 6, 2020 | Energy & Environment
Critics of controversial pipeline say, given legal and regulatory challenges, company is unlikely to meet its desired new deadline of January 2022
Credit: Twenty20
The PennEast Pipeline Co. says it has been the victim of “unforeseeable circumstances” that have delayed construction.

The PennEast Pipeline Company is asking federal regulators for two more years to build its controversial natural gas pipeline through New Jersey and Pennsylvania, saying it has been the victim of “unforeseeable circumstances” that have delayed construction some two years beyond its original start date.

The company wrote to the Federal Energy Regulatory Commission on Dec. 30, saying it has used its “best efforts” to meet a FERC certificate that required putting the proposed pipeline into service by this month but now needs the extra time.

The commission, which approves nearly all interstate pipeline projects that come before it, is expected to agree to the extension.

The company did not specify the circumstances that have set back its plans but said it can show “good cause” for making the request.

Arguably the biggest setback was an appeals court ruling in September, holding that the company was not entitled to build the pipeline on 49 parcels of protected land in which the State of New Jersey has an interest.

The company says it will appeal the ruling to the U.S. Supreme Court but a decision on whether to hear the case isn’t expected until mid-2020, and even if the court takes the case, a ruling is unlikely before early 2021.

PennEast will be unable to resubmit its failed applications for water-quality and other permits to the New Jersey Department of Environmental Protection until any Supreme Court ruling on whether the pipeline can be built on state land.

Other permitting challenges

The troubled project must also obtain permits from the Delaware River Basin Commission, which is reviewing its application but has not scheduled required public hearings.

The continuing legal and regulatory requirements hanging over the project make it highly unlikely that it will be able to meet its desired new deadline of Jan. 19, 2022 even if FERC grants the extension, critics said.

“I think it’s very unrealistic to go two years,” said Tim Duggan, an attorney for several local government entities and about 45 individual landowners who oppose the project. He estimated that any Supreme Court review would take six to nine months and even if PennEast wins its appeal, it will then have to face both the DEP — where permit applications can take a year to be decided — and the DRBC.

Faced with that timetable, Duggan said the company may be planning on asking for a further two years after the currently sought period expires. “They’re going to get the two years but I don’t think it’s enough time,” he said.

He argued that the chances of the pipeline being built are further limited by the environmental policies of the Murphy administration, which aims to create a 100% clean-energy economy by 2050, and would be undermining that goal if it approved a major piece of fossil fuel infrastructure like PennEast.

The $1 billion pipeline would carry natural gas about 120 miles from the Marcellus Shale of northeastern Pennsylvania, crossing beneath the Delaware River, and ending in Mercer County. The company says the project would bring low-cost natural gas to consumers in New Jersey but critics including the New Jersey Division of Rate Counsel, a watchdog for utility ratepayers, say it’s an unnecessary and environmentally damaging plan.

The project has aroused strong community opposition in New Jersey, especially from landowners who fear their private water wells will be contaminated by construction. Many have denied PennEast access to their land for surveying.

In Pennsylvania, PennEast is seeking permits from regulators, and has modified its route in four places.

What gas shortage?

Popular resistance is the main reason for the delays, argued Jeff Tittel, director of the New Jersey Sierra Club. “PennEast said they needed the pipeline in 2015 because of the shortage of gas in the region. Here we are five years later and there is still no shortage and PennEast is looking to delay the project even longer.”

In its two-page request to FERC, PennEast said it is “considering available remedies” to address the DEP’s “unfounded claim” that it could not move forward with the permit application because the Third Circuit Court of Appeals said the company could not build on the state lands.

The company, whose investors include a unit of New Jersey Resources, said postponement of the in-service date would have no impact on FERC’s findings that the project is in the public interest, and therefore that the company has the right to take private land under eminent domain.

“PennEast remains committed to constructing this important energy infrastructure project and placing the project into service as soon as possible,” it said.

Company spokeswoman Pat Kornick declined to say what legal remedies the company might pursue against the DEP, but said PennEast will appeal to the Supreme Court over the September appeals court decision by early February. FERC declined to comment.

In October, the DEP denied PennEast’s application for a water-quality permit for the second time, saying the Third Circuit’s ruling means the company “no longer has the legal authority to perform activities” on the 49 parcels.

The court ruling stands in the way of any further movement, said Tom Gilbert, campaign manager for the New Jersey Conservation Foundation, an outspoken opponent of the project.

“At this point, given that Third Circuit decision, they are unable to move this project forward,” Gilbert said. “They don’t have legal authority over properties that they are depending on to build their pipeline in New Jersey, and unless and until they can find some way to resolve that issue, this project is going nowhere.”

Rather than planning for another extension, PennEast is likely looking at the end of the road for its project, Gilbert said. “If the Supreme Court refuses to take the case up, they are pretty much out of options.”