Feds Deny LNG Export Through Oregon – Developer Turns to Trump

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Feds Deny LNG Export Through Oregon – Developer Turns to Trump

A rally against the Jordan Cove Energy Project at the Oregon state capitol earlier this year. (Photo: Cascadia Wildlands)

The Federal Energy Regulatory Commission (FERC) has conclusively rejected the only remaining US West Coast plan to ship liquefied natural gas (LNG) from Canada and the Rockies to Asia. On December 9, 2016, FERC commissioners announced that they had again voted unanimously, 3-0, to refuse federal approval for the $7.6 billion Jordan Cove Energy Project export terminal and the Pacific Connector Gas Pipeline (PCGP).

Jordan Cove and PCGP are owned by Veresen, Inc., a mid-sized Canadian fossil fuel company trying to use LNG export to catapult into the ranks of the energy big-leagues. On December 15, Jordan Cove announced that they expect that Trump appointees to FERC will reverse the decision, so they intend to restructure the project and reapply for federal approval.

Here’s why Veresen thinks that could work:

FERC is chartered for five members serving five-year terms, and they must be divided between the two major parties (or unaffiliated). Two Republican appointees have completed their terms and those seats are vacant. The three remaining commissioners are all Democrats appointed by President Obama. Because of Senate GOP refusals to consider Administration appointees, the White House did not propose anyone to fill the two GOP vacancies. (Obviously, the expectation was that the Hillary Clinton administration would find two moderate Republicans, to be considered by a Senate that seemed likely to be controlled by Democrats.)

The Trump team will nominate for these two vacancies, and select one of those two to become FERC chair. Presumably, that will happen sometime in the first half of 2017. Then, one of the current Democratic commissioners completes her term June 30. When that vacancy is filled by Trump, his people will constitute a majority. By mid-2019, all five members will be Trump appointees.

FERC’s original ruling against this fracked-gas export project came March 11, 2016, in a 4-0 vote – even the last GOP commissioner opposed Jordan Cove and PCGP. The December 9 decision denied Veresen requests to reopen the federal approval process.

This is FERC’s first-ever LNG export rejection. The agency is funded through back-charging its costs as fees to the energy industry, so it is considered a zero-budget entity for the overstressed federal budget process. FERC is notorious for its easy approvals of dirty fossil fuel projects, making this two-part verdict all the more striking.

FERC’s unprecedented double denial needs to be seen through the frame of an 11-year coordinated grassroots campaign. Dozens of organizations, supporting hundreds of outraged landowners along the pipeline route, have brought together thousands of people all over Oregon to fight this LNG terminal and pipeline.

The pipeline would run 232 miles across four counties in southwest Oregon, slashing a clearcut the width of an interstate highway across two mountain ranges, five rivers, and 400-plus wetlands and waterways. It would terminate at the Pacific Ocean in Coos Bay, in a fragile estuary inlet. There, the largest dredging project in Oregon coastal history would reconstruct a sand spit for a massive industrial plant – destroying oyster beds and fisheries.

The plan FERC rejected required a massive new 420-megawatt gas-fired power plant, solely dedicated to Jordan Cove, to cool the fracked gas to minus-261 degrees Fahrenheit, liquefying it for tanker shipping across the Pacific. That plant would have been the largest single carbon emitter in Oregon.

But along with announcing that they would reapply to FERC, Veresen pulled their request to Oregon to approve the new power plant. They said that they would build gas turbines within the liquefaction plant to cool the gas. This may be cheaper for them to construct, but may emit even more carbon dioxide into the atmosphere.  We'll be watching as they put out new detailed plans.

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All this is planned for the most dangerous earthquake and tsunami zone in North America, the Cascadia subduction zone. The region is overdue for a earthquake that is guaranteed to be the largest in U.S. history. The Cascadia fault lines crack at a minimum of Magnitude 8, and can exceed Magnitude 9. The earthquake zone ruptures on an average of every 250 years; the last time was 317 years ago, in 1700. The tsunami wiped out every Indigenous coastal village from Northern California to Vancouver Island.

Veresen has presented itself to Oregon stakeholders and elected officials as an inevitable success. Financially, though, Jordan Cove and PCGP are arguably the weakest of some three dozen multi-billion dollar North American LNG export facilities, proposed, approved, or already operating.

FERC rejected Veresen’s plans because the company has no guaranteed contracts to sell the fracked gas overseas. Developers must show a so-called “public benefit” for the people of the United States, and FERC defines that to be determined by approval by the market: If a developer can sell a planned fossil fuel product, they’re good to go. FERC had warned the Calgary-based company for years that guaranteed contracts would be critical for permission to move ahead, with specific requests for progress reports – but got back only vague promises that Veresen was unable to fulfill.

That bottom line requirement was compounded by Veresen’s dismal record in negotiating construction easements from hundreds of landowners along the pipeline route. By the March 11 denial, PCGP could show FERC easements from only 10% of ranchers, farmers, and other private-sector landowners.

FERC has the power to authorize eminent domain against landowners. This controversial and destructive tool in fracked-gas pipeline development has led to bitter struggles all over the country. Developers typically have to negotiate about 80 percent consent by affected landowners before FERC is comfortable authorizing eminent domain against hold-out landowners and local communities. Forced deprivation of property rights is no small matter.

Along the PCGP route, landowners and their environmentalist supporters have fought back hard, pledging resistance. According to FERC, the refusal of this enormous majority of landowners along a pipeline route to sign on was unprecedented. In the March 11 and December 9 announcements, FERC detailed deep concern about using unheard-of levels of eminent domain against 90 percent of private landowners for a project that could not demonstrate a “public benefit.”

The most difficult public issue for project opponents has of course been jobs. The developer can claim accurately that billions of dollars of equipment manufacturing and project construction will generate thousands of temporary living-wage jobs. But jobs that ravage communities and public lands and contribute massively to climate change are not “good” jobs. So simultaneously, we consistently advocate for genuine good jobs, sustainable jobs, converting our state to clean energy and rebuilding our infrastructure for earthquake preparedness and other urgent needs.

As Veresen showed with the announcement that they will now rely on Trump, the battle is not over. It will take the company several months to assemble a new application for FERC and other agencies; that will launch a renewed environmental impact statement (EIS) process. Veresen contends that their September 2015 Final EIS from FERC is still valid, but that is public spin.  It still exists, for a project that has been denied, like an obsolete law.  They can recycle much of it for their new application, but big pieces of it are obsolete – or were environmentally-flawed when written. Oregon continues to process state permit requests, but our coalition is fighting those effectively too.

For now, some 12 years since this Canadian company came to Oregon, Veresen has no clear path to construction: FERC has taken them off the federal map. Even a Trump-controlled FERC has to follow the law – although we can expect them to push against their legal obligations. We will push back at each step in a federal process that would likely take two years to get to another FERC decision. In the meantime, we will triumph over them in local and state decision-making.

In a country filled with critically-important fights to “Keep It In the Ground,” this battle is one of the most consequential. One way or another, grassroots Oregonians are going to continue to defeat dirty, dangerous fossil fuels and build the just transition.

Ted Gleichman

Ted Gleichman is a political advisor for the Climate & Energy Program at the Center for Sustainable Economy.

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