FERC Federal Energy Regulatory Commission FERC s Natural Gas

FERC 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 1 Office of Energy Projects

FERC Organizational Structure 2 Office of Energy Projects

FERC OEP Organizational Structure Energy Infrastructure Policy Group Jeff C. Wright Division of Pipeline Certificates Director - Berne L. Mosley Deputy Dir. - Vacant Division of Gas. Environment & Engineering Director - Richard R. Hoffmann Deputy Dir. - Vacant Director J. Mark Robinson Deputy Director Robert J. Cupina Division of Hydropower. Environment & Engineering Director – Ann F. Miles Deputy Dir. – Lon R. Crow Assistant Director Management & Operations Thomas Dewitt Division of Hydropower Administration & Compliance Director – Joseph D. Morgan Deputy Dir. – Vacant Division of Dam Safety & Inspections Director – Constantine Tjoumas Deputy Dir. – Daniel J. Mahoney Certificates Branch 1 Michael Mc. Gehee Gas Branch 1 Robert K. Arvedlund Hydro East Branch 1 Vince Yearick Land Resources & Reg. Compliance Branch Hossein Ildari Washington Office William H. Allerton Certificates Branch 2 William L. Zoller Gas Branch 2 Lauren H. O’Donnell Hydro East Branch 2 Edward A. Abrams Engineering & Jurisdiction Branch Akbar Tahiry Atlanta Regional Office Jerrold W. Gotzmer Gas Branch 3 Lonnie A. Lister Hydro West Branch 1 Jennifer Hill Biological Resources Branch George H. Taylor Chicago Regional Office Peggy A. Harding Hydro West Branch 2 Timothy Welch New York Regional Office Anton J. Sidoti Portland Regional Office Harry T. Hall San Francisco Regional Office Takeshi Yamashita 3 Office of Energy Projects

FERC Office of Energy Projects - Functions • OEP has the engineering and environmental expertise to: • OEP focuses on: Ø certificate new gas pipeline projects, Ø authorize and monitor hydroelectric projects, and Ø analyze energy infrastructure needs and policies. Ø Ø Ø • 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 4 Office of Energy Projects

FERC 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 5 Office of Energy Projects

FERC Regulation of Interstate Construction Natural Gas Policy Act (NGPA) Natural Gas Act (NGA) 6 Office of Energy Projects

FERC 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 7 Office of Energy Projects

FERC Natural Gas Act NATURAL GAS ACT Section 7(c) Interstate Case Specific Blanket Authority Automatic 8 Section 3 Import/Export Case Specific Prior Notice Office of Energy Projects

FERC 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 9 Office of Energy Projects

FERC 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 10 Office of Energy Projects

FERC Project Evaluation How Does FERC Evaluate All Of These Major Projects? What Are The Criteria Used in This Evaluation? 11 Office of Energy Projects

FERC Balancing Interests 12 Office of Energy Projects

FERC’s Internal Review Process • Initial review for completeness (10 days) • Issue notice of application • Assign review team – Environmental – Certificates – Rates – Attorney – Markets 13 Office of Energy Projects

Environmental Review (Traditional Process) Notice of Intent FERC Public Interest Review Notice of Application Process Scoping Meetings & Site Visit Interventions LNG Protests Cryogenic Design & Data Requests Safety Review Data Requests Analysis Agency Coordination Analysis Tech Conference (Optional) Preliminary Determination (Optional) DEIS FEIS Authorization / Rejection 1 14

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

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

FERC 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. 17 Office of Energy Projects

FERC 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 18 Office of Energy Projects

FERC NEPA Pre-Filing Process – Pending Projects • FY 03 – Cheyenne Plains - CIG – Picacho Pipeline - Pac. Tex – Grasslands Expansion - Williston Basin – Weavers Cove LNG - Dominion – Long Beach LNG Project - Sound Energy Solutions – Ruby Project - CIG – San Juan 2005 Expansion - Transwestern 19 Office of Energy Projects

FERC 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 20 Office of Energy Projects

FERC 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 21 Office of Energy Projects

FERC 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 22 Office of Energy Projects

FERC 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 23 Office of Energy Projects

FERC 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! 24 Office of Energy Projects

FERC 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 25 Office of Energy Projects

FERC 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 26 Office of Energy Projects

FERC 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 27 Office of Energy Projects

FERC Implementation of the Agreement • Establish Working Group • Assist in developing draft guidance for each agency • Evaluate the Agreement’s effectiveness 28 Office of Energy Projects

FERC What This Means 29 • 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 Office of Energy Projects

FERC Gas Outreach Efforts • Ongoing • 5 th Workshop held on October 2 in Roanoke, VA • Plan to have another meeting before end of the year • Companies are taking stakeholder involvement seriously 30 Office of Energy Projects

FERC Liquefaction and Storage Facility Dock Natural Gas Production 31 Storage and Vaporization Facility Dock Natural Gas Pipelines LNG Supply Stream -- From Production to Distribution Office of Energy Projects

FERC Economic Oversight – Access to LNG Terminal Liquid to Vapor Flow Dock Natural Gas Pipelines LNG Ship 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 32 Office of Energy Projects

FERC Benefits of the New LNG Policy • Stimulates development of new LNG terminals • Accommodates various business models • Increases gas supplies to the U. S. 33 Office of Energy Projects

FERC 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 34 Office of Energy Projects

FERC 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 “Overthe-Top” route (above 68 degrees North) • Possibly - Some type of financial assistance: loans or tax credits 35 Office of Energy Projects

FERC Other Gas Initiatives • Emergency Reconstruction Rule • Regional Energy Infrastructure Conferences • The “Last Mile” • Other Outreach Efforts 36 Office of Energy Projects

FERC 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 37 Office of Energy Projects

FERC THE LAST MILE • High Pressure Needed In/Near Cities • Congestion/ In-Street Construction • Environmental Justice • State Involvement– CZMA? 401? 38 Office of Energy Projects

FERC Other Outreach Efforts • Southwestern Gas Storage Technical Conference, Docket No. AD 03 -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. AD 03 -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 39 Office of Energy Projects