Federal Energy Regulatory Commission

1. 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

2. FERC Organizational Structure

3. OEP Organizational Structure

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

5. 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

6. Regulation of Interstate Construction Natural Gas Policy Act (NGPA) Natural Gas Act (NGA)

7. 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

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

9. Natural Gas Act • Blanket Certificate • AutomaticAuthorization • 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

10. 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

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

12. Balancing Interests

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

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

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

16. Traditional vs. NEPA Pre-Filing Process Develop Study Corridor File At FERC Announce Open Season Prepare Resource Reports Traditional - Applicant Conduct Scoping Issue Draft EIS Issue Final EIS Issue Order Traditional - FERC NOT A SHORTCUT Announce Open Season Develop Study Corridor File At FERC Prepare Resource Reports NEPA Pre-Filing - Applicant Conduct Scoping Review Draft Resource Reports & Prepare DEIS Issue Draft EIS Issue Final EIS Issue Order NEPA Pre-Filing - FERC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (months)

17. 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.

18. 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

19. NEPA Pre-Filing Process – Pending Projects • FY03 • Cheyenne Plains - CIG • Picacho Pipeline - PacTex • Grasslands Expansion - Williston Basin • Weavers Cove LNG - Dominion • Long Beach LNG Project - Sound Energy Solutions • Ruby Project - CIG • San Juan 2005 Expansion - Transwestern

20. 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

21. 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

22. 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

23. New Directions for NEPAPre-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

24. 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!

25. 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

26. 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

27. 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

28. Implementationof the Agreement • Establish Working Group • Assist in developing draft guidance for each agency • Evaluate the Agreement’s effectiveness

29. What This Means • 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

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

31. LNG Supply Stream -- From Production to Distribution Natural Gas Pipelines Dock Dock Natural Gas Production Storage and Vaporization Facility Liquefaction and Storage Facility

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

33. Benefits of theNew LNG Policy • Stimulates development of new LNG terminals • Accommodates various business models • Increases gas supplies to the U.S.

34. 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

35. 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 “Over-the-Top” route (above 68 degrees North) • Possibly - Some type of financial assistance: loans or tax credits

36. Other Gas Initiatives • Emergency Reconstruction Rule • Regional Energy Infrastructure Conferences • The “Last Mile” • Other Outreach Efforts

37. 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

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

39. Other Outreach Efforts • Southwestern Gas Storage Technical Conference, Docket No. AD03-11-000: Analysis of relevant market needs and regulatory options available to assure the appropriate development of southwestern natural gas storage facilities • Gathering Conference, Docket No. AD03-13-000: 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