US regulators warn of delays, weaker oversight if federal shutdown takes place

Washington (Platts)--20Sep2013/344 pm EDT/1944 GMT


US natural gas industry officials and regulators expressed concern Friday that a prospective October 1 federal government shutdown would delay the review and permitting for key projects while hamstringing agencies' ability to police the energy markets.

"Taking our cops off the beat for even a few days could have disastrous impacts on these markets that consumers depend on," US Commodity Futures Trading Commission member Bart Chilton said Friday.

"Under a shutdown scenario, government regulators will be handcuffed in our ability to go after crooks who are trying to evade oversight and protection of markets," Chilton said. "You can bet the 'do-badders' are licking their chops."

President Obama and House of Representatives and Senate lawmakers are wrangling over the contents of a budget deal that would fund the government beyond the end of September, with mainstream press reports indicating that many Republicans are tying a defunding of the Affordable Care Act to the budget deal -- complicating passage of a stopgap budget measure.

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Voting strictly along party lines, the Republican-led House on Friday passed a short-term spending plan that would keep the government operating for 11 weeks beyond October 1 while eliminating funding for the Affordable Care Act, which is more commonly referred to as Obamacare. The Senate was expected to reject the package.

In terms of how a resulting shutdown could impact the Federal Energy Regulatory Commission, spokesman Craig Cano said "a limited number of FERC staff would continue work on commission responsibilities such as market monitoring, hydroelectric project inspections, and liquefied natural gas facility inspections."

While Cano declined to provide a more substantive outline of how the commission would operate during a government shutdown, statements from Chairman Jon Wellinghoff and other FERC officials in the run-up to a possible shutdown in 2011 shed more light on what FERC responsibilities would be put on hold.

Wellinghoff said that "essential employees" working on health and safety issues would remain. And Charles Schneider, FERC's then-executive director, said at the time that ongoing FERC proceedings with a deadline would be put on hold.

As such, a shutdown could slow or stop progress on the permitting and review of natural gas pipelines and LNG facilities, as well as other commission activities like the review of electricity market filings.

Bill Cooper, president of the Center for Liquefied Natural Gas, said that "any delays in the permitting process are always a concern for us," particularly when those delays are beyond the control of the applicant and the regulatory agency.

"When you defund or prevent a regulator from doing its job, you never know when a resolution is coming," Cooper said.

"We hope there isn't a federal shutdown, not only for the sake of government workers, but for the fact that delays in certificating pipelines prolong the time that much-needed infrastructure gets built," said Cathy Landry, a spokeswoman for the Interstate Natural Gas Association of America. "That, in turn, delays the benefits consumers get from access to ... natural gas at reasonable prices."

Even so, Landry stressed that if the government does close, "pipeline construction and expansion work does not stop," and the industry will continue to work on landowner and right-of-way issues and conduct environmental reviews.

--Bobby McMahon, bobby.mcmahon@platts.com; Kate Winston, catherine.winston@platts.com; Christopher Tremulis, christopher.tremulis@platts.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.com

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