Spire STL Pipeline can keep operating for now despite court ruling on ‘self-dealing’

The company said in a court filing Monday that it would appeal the case to the U.S. Supreme Court

By: - September 14, 2021 12:04 pm

The Spire STL Pipeline can keep operating through this winter under a temporary certificate from the Federal Energy Regulatory Commission. (Getty Images)

The embattled Spire STL Pipeline can keep operating for up to 90 days while federal regulators weigh its fate over the coming months. 

The order, issued Tuesday morning by federal regulators, saves the pipeline from a court order that was expected to shut it down.

Spire STL Pipeline is a 65-mile natural gas pipeline running from Illinois to the St. Louis area to serve Spire Missouri customers in the eastern part of the state. It began operation in 2019. 

But this summer, a panel of the U.S. Court of Appeals for the D.C. Circuit struck down federal regulators’ authorization of the pipeline, saying the Federal Energy Regulatory Commission failed to adequately scrutinize the project and ignored evidence of self-dealing since the pipeline was built to serve Spire Missouri. 

The court declined Spire’s request to hear the case again and was expected to issue a mandate Tuesday shutting down the pipeline. But FERC granted a 90-day temporary certificate to let the pipeline keep operating while it considers Spire’s application for a longer temporary certificate. That longer authorization would let the pipeline keep operating until FERC makes a permanent decision on the fate of the pipeline. 

Spire STL’s general counsel, Sean Jamieson, called FERC’s decision a “great first step” and said it gives stakeholders an “opportunity to breathe” without worrying about whether the company can meet demand for service. 

But the 90-day extension would not get Spire through the coldest winter months. Without the pipeline, Spire has warned up to 175,000 customers could lose service when temperatures dip below 9 degrees.

There’s a risk that people in eastern Missouri could go without reliable gas service. Nobody wants that, and I’m very pleased that the commission acknowledged that in issuing its order.

– Sean Jamieson, Spire STL's general counsel

“What the FERC did is they acknowledged that there’s a risk here in how the region is currently configured,” Jamieson said. “There’s a risk that people in eastern Missouri could go without reliable gas service. Nobody wants that, and I’m very pleased that the commission acknowledged that in issuing its order.” 

In the event that Spire STL isn’t allowed to operate after this 90-day certificate, Jamieson said Spire Missouri was doing “everything in its power” to ensure reliability this winter. 

“The problem is…that there is not another pipeline you can go to to replace the STL pipeline,” he said. 

Spire has said repeatedly that the pipeline increases reliability in the St. Louis area and helped prevent outages during severe winter weather that forced blackouts in Kansas City and wreaked havoc in Texas. 

Gillian Giannetti, an attorney for the Natural Resources Defense Council’s Sustainable FERC Project, said all parties want to ensure Missouri customers have reliable service.

“The concern here is that Spire is an unreliable narrator,” she said. “…The facts of the case raise suspicions about the motivations for building the pipeline and that the pipeline’s true intention was to make Spire money at the expense of competitor pipelines as opposed to actually serving and diversifying the St. Louis market.”

Spire’s pipeline first won approval in 2018 from FERC, which then denied a request from the Environmental Defense Fund for a rehearing. The nonprofit appealed FERC’s approval in January 2020, saying the agency had not rigorously studied the need for the pipeline. 

Under the Natural Gas Act, for FERC to issue a certificate for a gas company to build, it must find that the pipeline “is or will be required by the present or future public convenience and necessity.” 

But Spire STL and Spire Missouri, which are affiliates, entered a contract for 87.5% of the pipeline’s capacity, which the court said was “plausible evidence of self-dealing.” 

Giannetti said the problem with building a pipeline that may not actually be needed is that eventually customers pay for it. 

“If a pipeline isn’t actually needed, that means that Spire is essentially profiting off their customers and incorporating into their rates higher charges that shouldn’t be there,” Giannetti said. 

Giannetti said FERC’s decision Tuesday indicated that it didn’t want to “blindly” trust Spire that it needed a longer temporary certificate to operate. 

“If (FERC) thinks it needs more time, then that potentially could make sense,” she said. 

The U.S. Court of Appeals vacated FERC’s approval and sent the pipeline back to the agency for further review. 

In a statement, EDF’s senior director and lead counsel for energy markets and utility regulation, Natalie Karas, said the order would allow FERC more time to evaluate Spire’s application. The situation, she said, highlights the need for FERC to better scrutinize pipeline applications.

“Failure to rigorously review applications ignores or minimizes project harms, which can include unnecessary lock-in of greenhouse gas emissions, massive use of eminent domain to condemn private property, and increased costs for ratepayers,” Karas said. 

Spire filed a motion with the court of appeals asking the court to hold off for 90 days on issuing the mandate that was expected Tuesday. In it, the company also indicated that it planned to appeal the case to the U.S. Supreme Court. 

“We’ve committed from the beginning that we would pursue all legal and regulatory paths to secure reliable energy supply for the people of eastern Missouri,” Jamieson said, “and we are still going to do that…This morning’s order from the FERC was a great first step towards that end, but it doesn’t achieve energy security for the people who live in the St. Louis region.”

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Allison Kite
Allison Kite

Allison Kite is a data reporter for The Missouri Independent and Kansas Reflector, with a focus on energy, the environment and agriculture. A graduate of the University of Kansas, she previously covered City Hall for The Kansas City Star, as well as state government in both Topeka and Jefferson City.