December 18, 2017 at 5:00 am ET
With the filing of a single lawsuit, the Sierra Club, emboldened by the #resistance of the Trump era, sent shockwaves throughout the energy infrastructure industry last month. Gone were the days when environmental groups would let the staid bureaucratic process of the Federal Energy Regulatory Commission play out slowly, a change that presents major risks for unsuspecting and unprepared companies.
The unprecedented tactic by the Sierra Club is part of the group’s legal strategy to stop construction of the 257-mile Nexus pipeline through Ohio to Michigan, which would carry natural gas from Appalachian shale fields to the Midwest and Canada. FERC issued a certificate for the Nexus pipeline in August. Following that decision, a coalition of environmental groups led by the Sierra Club filed a rehearing request on behalf of affected landowners. The agency has 30 days to respond to such a request, although it sometimes issues “tolling orders” extending the timeline without ruling on the issue. If the rehearing is denied, the parties may then head to court regarding the matter. This process has been the accepted sequence for years, but the Sierra Club’s lawsuit – filed before FERC decided on the rehearing request – marks a new and more aggressive approach by environmental activists.
Construction on Nexus began in October, the same month FERC delayed a decision regarding the rehearing request. The Sierra Club’s legal challenge not only seeks to halt construction until FERC issues a decision, but goes further, arguing the agency’s issuance of “tolling orders” is invalid due to current law requiring it to act promptly and have commissioners themselves, rather than FERC staff, issue the orders.
This push for quicker legal action pressures pipeline companies to get shovels in the ground on their projects sooner, increasing the likelihood for real confrontations like those witnessed during the Dakota Access Pipeline protests. There is a reason why PBS NewsHour named the anti-DAPL protests the biggest story of 2016 after the presidential election: What we saw at Dakota Access is a harbinger of what is to come.
My firm had a team on the ground in North Dakota in support of local law enforcement, and we have been following the broader trends of activism – including the new tactics used by some elements within the environmentalist movement – for some time. What we are witnessing are professionalized, savvy energy activists who have learned lessons and adapted to the new reality of an administration that is no longer a partner in their policy agenda, but a major obstacle to it, due to rollback of Obama-era regulations and practices.
This targeting of energy infrastructure projects through the agency that regulates them is one of the sophisticated tactics marking the adaptation of environmental groups’ playbook in the Trump era in response to the administration’s clearly demonstrated support for fossil fuel development and infrastructure. These activist tactics further politicize parts of our government oversight, like midstream energy projects, that were once non-controversial. The result is new political, financial and reputational risks for energy companies and investors who finance their projects.
Last month, the Sierra Club dropped its legal challenge after losing the support of local landowners who ultimately sold their land to Nexus. Yet that is not likely the end of activists’ challenges for Nexus or other energy infrastructure projects. The director of the Sierra Club’s Beyond Dirty Fuels campaign made the view of her organization clear: “Regardless of the legal filings…the Nexus pipeline remains a dirty and dangerous proposal that will threaten clean air, clean water and communities,” and anti-pipeline activists will “continue to explore all legal options to ensure that this pipeline never gets built.” In this new age of activism, that threat does not ring hollow.
Jeff Berkowitz is founder and chief executive of Delve, a Washington-based competitive intelligence firm that has worked on a number of energy projects.
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