114 FERC ¶ 61,257

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Joseph T. Kelliher, Chairman;

Nora Mead Brownell, and Suedeen G. Kelly.

Midwestern Gas Transmission Company Docket No. CP05-372-000

Order Issuing Certificate

(Issued March 10, 2006)

1.  On June 6, 2005, Midwestern Gas Transmission Company (Midwestern)
    filed an application under section 7(c) of the Natural Gas Act (NGA)
    and Part 157 of the Commission=s regulations for a certificate of
    public convenience and necessity to construct and operate
    approximately 30 miles of pipeline and related facilities, known as
    the Eastern Extension Project, in Sumner and Trousdale Counties,
    Tennessee to transport 120,000 Dth per day of natural gas to
    Piedmont Natural Gas (Piedmont). As discussed below, the Commission
    finds that Midwestern's proposed project is required by the public
    convenience and necessity and, therefore, grants the requested
    authorizations, subject to conditions.

**I. [Background and Proposal]{.underline}**

2.  Midwestern, a natural gas company within the meaning of the NGA,
    operates an existing pipeline system consisting of a 30-inch
    diameter pipeline and appurtenant facilities extending from an
    interconnection with ANR Pipeline Company located near Joliet,
    Illinois to a point of interconnection with Tennessee Gas Pipeline
    Company (Tennessee Gas) near Portland, Tennessee. Midwestern\'s
    existing pipeline system connects with multiple interstate pipeline
    systems and has the capability to provide bi-directional
    transportation service to markets in Kentucky, Indiana, Illinois,
    and Tennessee, as well as to the Chicago Hub.

    **A. [New Facilities]{.underline}**

3.  Midwestern proposes to construct and operate approximately 30.9
    miles of 16-inch diameter pipeline commencing at Midwestern\'s
    existing Compressor Station No. 2101 located near the City of
    Portland in Sumner County, Tennessee (Portland

    Compressor Station) and traversing southeasterly to two separate
    proposed new interconnections with Columbia Gulf Transmission
    Company (Columbia Gulf) and East Tennessee Natural Gas, LLC (East
    Tennessee) located near the City of Hartsville in Trousdale County,
    Tennessee. Midwestern also proposes to modify existing station
    piping at the Portland Compressor Station to accommodate the tie-in
    of the proposed facilities and enable bi-directional flow capability
    at the compressor station. In addition, Midwestern proposes to
    construct various pressure control valves and pipeline block valves,
    as well as data acquisition control and meter enclosures to house
    measurement and flow equipment at the two proposed pipeline
    interconnections.

4.  The proposed Eastern Extension Project is designed to receive and
    transport up to 120,000 Dth of natural gas per day. Midwestern
    estimates that the proposed project will cost approximately \$26.3
    million to construct and install. Midwestern proposes to place the
    facilities into service on November 1, 2006.

    **B. [Market and Service]{.underline}**

5.  Midwestern states that in response to market inquiries, it conducted
    an open season from April 23 through May 28, 2004, to solicit
    interest in extending its pipeline system. Midwestern solicited bids
    for firm transportation under either of two route options, both
    routes originating at the Portland Compressor Station. Route A
    consisted of a 30-mile extension southeasterly to potential
    interconnections in Trousdale County, Tennessee with Columbia Gulf,
    East Tennessee, and Texas Eastern Transmission Company (Texas
    Eastern). Route B consisted of a 40-mile extension in an easterly
    direction to potential interconnects with Columbia Gulf and Texas
    Eastern in Monroe County, Kentucky. Midwestern received a single bid
    from Piedmont for the transportation of 120,000 Dth per day of
    natural gas capacity on Route A with deliveries to Columbia Gulf and
    East Tennessee. No bids were received for Route B or to the Texas
    Eastern interconnect on Route A.

6.  Based on the open season, Midwestern executed a precedent agreement
    with Piedmont for 120,000 Dth per day, the full capacity of the
    proposed 30-mile pipeline extension from the Portland Compressor
    Station.[^1] The precedent agreement provides

    for Midwestern and Piedmont to enter into a firm transportation
    agreement under a proposed new incremental rate schedule, Rate
    Schedule FT-B, for a term of fifteen years, subject to certain
    conditions and the receipt of the necessary regulatory approvals,
    and sets forth a fixed, incremental negotiated rate for the service
    to Piedmont.

7.  Specifically, Midwestern will deliver 100,000 Dth per day into the
    Columbia Gulf pipeline system near Hartsville, Tennessee. Piedmont
    plans to make this natural gas available to its subsidiary,
    Nashville Gas Company (Nashville Gas), which serves residential,
    commercial and industrial customers in Cheatham, Davidson, Dickson,
    Robertson, Rutherford, Sumner, Trousdale, Williamson, and Wilson
    Counties, Tennessee. The remaining 20,000 Dth per day will be
    delivered into the East Tennessee pipeline system for ultimate
    delivery to Piedmont\'s distribution systems in North and South
    Carolina.

8.  Midwestern states that the proposed Eastern Extension Project serves
    Piedmont's needs by providing: (1) the infrastructure to transport
    additional natural gas volumes necessary to meet growing natural gas
    demand in the Nashville, Tennessee area and in North and South
    Carolina; (2) increased supply diversity, supply reliability, and
    price competition resulting from access to natural gas supplies
    originating from the Chicago Hub, i.e., the Canadian, Rocky
    Mountain, Mid-Continent, Permian and, in the future, Alaskan and
    MacKenzie Delta natural gas supply regions; and (3) increased
    reliability and flexibility in the natural gas transportation grid
    resulting from an additional transportation alternative and new
    interconnects between interstate pipeline systems.

    **C. [Rates]{.underline}**

9.  Midwestern states that firm transportation service for Piedmont on
    the Eastern Extension Project will be provided under an incremental
    negotiated rate under the proposed new firm transportation rate
    schedule, Rate Schedule FT-B, which will become a part of
    Midwestern\'s FERC Gas Tariff Third Revised Volume No. 1. According
    to Midwestern, the executed precedent agreement between Midwestern
    and Piedmont establishes a fixed negotiated rate of \$0.0804 per
    Dth, which is subject to adjustment based upon the actual
    construction costs.

10. Midwestern proposes a firm maximum monthly reservation recourse rate
    for transportation service under Rate Schedule FT-B of \$3.2854 per
    Dth, which equates to a daily reservation recourse rate of \$.1080
    per Dth. Midwestern proposes a zero commodity rate under Rate
    Schedule FT-B since it expects no variable costs attributable to the
    new incremental service. Midwestern proposes to establish an
    incremental rate for interruptible transportation service on the
    Eastern Extension Project and proposes to provide service under the
    terms and conditions of Midwestern's existing Rate Schedule IT.
    Midwestern states that the recourse rate for interruptible
    transportation service on the

    Eastern Extension Project will be \$.1080 per Dth, based upon a 100
    percent load factor derivative of the proposed Rate Schedule FT-B
    recourse rate.

11. Further, Midwestern states that the FERC Annual Charge Adjustment
    Surcharge (ACA Surcharge) set forth in Midwestern's FERC Gas Tariff
    will apply to firm and interruptible deliveries on the Eastern
    Extension Project under proposed Rate Schedule FT-B and existing
    Rate Schedule IT, respectively. In addition, Midwestern proposes to
    assess all firm and interruptible shippers transporting gas on the
    proposed Eastern Extension Project the fuel retention and loss
    quantity charge set forth on its summary of rates and charges,[^2]
    since such service will require mainline compression to deliver the
    gas to the downstream delivery points on the Eastern Extension
    Project.

    **II. [Notice, Interventions, and Protests]{.underline}**

12. Public notice of Midwestern's application was published in the
    *Federal Register* on June 22, 2005 (70 Fed. Reg. 36134). Ten
    parties filed timely, unopposed motions to intervene.[^3] Some of
    the intervenors filed comments and/or protests to Midwestern's
    application.[^4] Additionally, a number of landowners,
    organizations, and public officials or entities filed comments
    voicing strong opposition to the application.[^5] Midwestern filed
    an answer to the comments and protests on July 20, 2005. Under Rule
    213(a)(2) of the Commission's regulations, answers to protests are
    not permitted unless otherwise ordered by the decisional
    authority.[^6] We will accept Midwestern's answer because it has
    provided us with information that has assisted us in our
    decision-making process. Protests are addressed below. Comments are
    addressed in the Environmental Assessment (EA) and below.

    **III. [Discussion]{.underline}**

13. Since the proposed facilities will be used to transport natural gas
    in interstate commerce, subject to the jurisdiction of the
    Commission, the construction, acquisition, and operation of the
    facilities are subject to the requirements of subsections (c)
    and (e) of section 7 of the NGA.

    **A. [Application of the Certificate Policy Statement]{.underline}**

14. The Commission's September 15, 1999 Certificate Policy Statement
    provides guidance as to how it will evaluate proposals for
    certificating new construction.[^7] The Certificate Policy Statement
    established criteria for determining whether there is a need for a
    proposed project and whether the proposed project will serve the
    public interest. The Certificate Policy Statement explains that in
    deciding whether to authorize the construction of major new pipeline
    facilities, the Commission balances the public benefits against the
    potential adverse consequences. Our goal is to give appropriate
    consideration to the enhancement of competitive transportation
    alternatives, the possibility of overbuilding, subsidization by
    existing customers, the applicant's responsibility for unsubscribed
    capacity, and the avoidance of the unnecessary exercise of eminent
    domain or other disruptions of the environment.

15. Under this policy, the threshold requirement for pipelines proposing
    new projects is that the pipeline must be prepared to financially
    support the project without relying on subsidization from its
    existing customers. The next step is to determine whether the
    applicant has made efforts to eliminate or minimize any adverse
    effects the project might have on the applicant's existing
    customers, existing pipelines in the market and their captive
    customers, or landowners and communities affected by the route of
    the new pipeline. If residual adverse effects on these interest
    groups are identified after efforts have been made to minimize them,
    we will evaluate the project by balancing the evidence of public
    benefits to be achieved against the residual adverse effects. This
    is essentially an economic test. Only when the benefits outweigh the
    adverse effects on economic interests will we proceed to complete
    the environmental analysis where other interests are considered.

    **1. [Subsidization and Impact on Existing Customers]{.underline}**

16. The proposed Eastern Extension Project is designed to provide
    incremental service to Piedmont at incremental rates; therefore, the
    Eastern Extension Project satisfies the threshold requirement since
    it will not rely on financial subsidies from existing shippers. The
    proposed negotiated rate between Midwestern and Piedmontwill allow
    Midwestern to recover the costs associated with the Eastern
    Extension Project. Additionally, projections submitted by Midwestern
    for the first three years of service for the project show that the
    estimated incremental revenues from the Eastern Extension Project
    will exceed the incremental costs.[^8] Accordingly, Midwestern's
    existing shippers will not assume any cost responsibility for the
    proposed project. Neither will they suffer any degradation in
    service as a result of the project.

    **2. [Impact on Existing Pipelines and Their
    Customers]{.underline}**

17. The proposed Eastern Extension Project will have no adverse impact
    on existing pipelines or their captive customers. Since the service
    for Piedmont represents a new market, service on other pipelines
    will not be displaced. Columbia Gulf had contended that it had the
    facilities and available capacity which could be used to transport
    natural gas for Piedmont. However, as previously noted, Columbia
    Gulf withdrew its comments based on its agreement with the finding
    in the EA that the Columbia Gulf system does not have access to the
    supply sources at the Chicago Hub and, therefore, cannot satisfy
    Piedmont's specific requirements and criteria.[^9]

    **3. [Impact on Landowners]{.underline}**

18. The Eastern Extension Project primarily will be located along new
    pipeline rights-of-way, which will require that Midwestern negotiate
    easements with the affected landowners. Over 99 percent of the
    proposed route is located in open land, forest, or agricultural
    areas and less than one percent is located in residential areas. As
    of the time Midwestern filed its application, Midwestern had
    acquired only 32 percent of the necessary rights-of-way by voluntary
    agreement because of substantial landowner opposition. Only 59
    percent of the landowners had granted Midwestern permission to
    survey their land.[^10] Numerous individual landowners, as well as
    Sumner Trousdale Opposing Pipeline (STOP), the City of Portland
    (Portland), and the Sumner County Farm Bureau and the Tennessee Farm
    Bureau Federation (jointly, Tennessee Farm Bureau) argue that they
    will be adversely impacted by the Eastern Extension Project.

19. STOP, the Tennessee Farm Bureau, and many of the individual
    landowners argue that they object to a large, private company using
    eminent domain to take farmland and property for the purpose of
    earning large corporate profits. For example, the Tennessee Farm
    Bureau states that it objects to the use of eminent domain,
    especially by a private entity, for the taking of prime agricultural
    and forest lands when other alternatives may be available. Many
    landowners indicate that their land affected by the pipeline is not
    simply where they live, but that it is where they earn their
    livelihood and that, in some cases, the land was purchased for
    investment purposes. Other landowners state that they do not wish to
    lose land that their families have owned for generations. STOP, the
    Tennessee Farm Bureau, and other landowners also argue that the
    existence of a pipeline will have a detrimental effect on the value
    of the property directed impacted by, or near, the pipeline.

20. Before issuing a certificate of public convenience and necessity to
    a natural gas company, the Commission must find, as required by NGA
    section 7(c), that the project will benefit the public or be in the
    public interest. Under NGA section 7(h), the certificate of public
    convenience and necessity carries with it the right to obtain
    rights-of-way through the use of eminent domain, if they cannot be
    obtained through private negotiation.[^11]

21. Under the Certificate Policy Statement, the Commission will not
    authorize the construction of a project, with the concomitant right
    to obtain the necessary rights-of-way through either negotiation or
    the eminent domain process, unless it first finds that the overall
    public (not private) benefits of the project will outweigh the
    potential adverse consequences.[^12] As we discuss in the next
    section below, we find that the project provides numerous benefits
    that accrue to local distribution companies, Piedmont and Nashville
    Gas, to natural gas customers in the Nashville, Tennessee area and
    in North and South Carolina, and to the national natural gas
    transportation grid.

22. The Commission is satisfied that Midwestern has designed the
    proposed route to minimize the impact on landowners. Prior to filing
    the proposed pipeline route in its application, Midwestern evaluated
    eight route alternatives.[^13] Midwestern chose the proposed route,
    in part, because it had the least number of affected residences
    compared to the other routes examined. In addition, the route
    traverses farmland and agricultural land, rather than residential
    areas. Midwestern also attempted to keep the route as short as
    possible. Moreover, Midwestern indicates that it agreed to extensive
    modifications to the proposed route to minimize impacts to
    landowners in response to requests of approximately 23 landowners;
    however, Midwestern notes that the adjustment of the pipeline route
    resulted in an increase of 1.9 miles to the proposed pipeline
    route.[^14]

23. The Tennessee Farm Bureau and landowners are concerned that the
    pipeline will affect the future use of their land. The Tennessee
    Farm Bureau asserts that the proposed pipeline will deprive farmers
    of the economic use of their land and that the disturbance of the
    land from the installation of the pipeline will decrease crop yields
    for years and negatively impact agricultural production. It argues
    that a permanent 50-foot wide right-of-way, plus an additional 25 to
    50-foot workspace next to the permanent right-of-way during
    construction, is a sizeable disruption of farmland. The Tennessee
    Farm Bureau also raises many questions regarding the use of the
    right-of-way easement by both the landowners and by the easement
    holders. In addition, several other commenters raised similar
    concerns and questions regarding future surface activities along the
    right-of-way.

24. Midwestern has responded that a landowner may continue to use the
    surface of the permanent 50-foot easement for normal tillage and
    agricultural purposes, such as plowing, planting and combining. This
    would include traversing the pipeline right-of-way with heavy
    equipment, such as a bulldozer, and other implements necessary for
    such activities. In addition to growing crops, a landowner would
    continue to be able to pasture livestock on the easement. Midwestern
    advises, though, that a landowner may not impound water, change the
    ground elevation of the easement, or construct or permit to be
    constructed any building, structure or other improvement upon the
    easement that would interfere with its access to the easement and
    the safe operation of the pipeline. Thus, to some extent, a
    landowner will be restrained from altering the land of the easement
    for farming or other activities. However, Midwestern has stated that
    if landowners have specialized farming operations that regularly
    impact the sub-soil horizons, they should so advise Midwestern so
    that it can be considered in the negotiation of the easement.

25. The Tennessee Farm Bureau is concerned that Midwestern's mowing
    activities in maintaining the right-of-way will affect farming
    activities within the right-of-way. Midwestern states that according
    to the Commission's Upland Erosion Control, Revegetation and
    Maintenance Plan, vegetative maintenance is not normally required in
    active agricultural or grazing areas, hence, there will be minimal
    impact to farming activities within the right-of way.

26. The Tennessee Farm Bureau also inquires whether a nursery could be
    located on the right-of-way. Midwestern responds that it has not
    identified any nursery or tree farm operations that would be crossed
    by the pipeline route. However, Midwestern states that it is
    possible that easement terms might be negotiated with landowners to
    allow limited nursery operations, except that trees or shrubs with
    deep root systems could damage the pipeline and would, therefore, be
    prohibited.

27. Additionally, Tennessee Farm Bureau states concern about the depth
    of cover over the pipeline and the circumstances in which a
    landowner must call before digging in the vicinity of the pipeline.
    Midwestern states that as provided in Section 1.61 of Resource
    Report No. 1, there will be at least four feet of soil over the
    pipeline, except in bedrock areas, where there will be two feet of
    cover. Midwestern adds that surface farming activities, such as
    plowing, planting, and combining are excluded from the Tennessee
    One-Call system. On the other hand, Midwestern, suggests that
    landowners who anticipate farming operations involving sub-soil
    activities raise this subject with Midwestern in easement
    negotiations.

28. A few commenters stated that the route of the proposed pipeline
    would cross or be near planned and/or potential future home sites.
    As discussed in the EA, Midwestern has made several minor route
    variations to accommodate such concerns and would continue to
    carefully consider possible future private residential construction
    plans as identified by property owners.[^15] Property owners can
    request property-specific routing and mitigation, including
    compensation for lost development potential, during the right-of-way
    acquisition process.

29. The Commission notes that condemning private property is not in the
    pipeline's best interest. Generally, the condemnation process is a
    prolonged and expensive process that could delay construction of the
    pipeline and add significant costs to the project. Therefore,
    Midwestern has the incentive to negotiate agreements with landowners
    to avoid the condemnation process. In negotiations for an easement
    agreement, there is some flexibility to achieve minor shifts in
    alignment to accommodate individual landowner needs on their
    property. Such realignments typically do not require further
    Commission approval.

    **4. [Balancing of Public Benefits Against Adverse Effects of
    Project]{.underline}**

30. The proposed Eastern Extension Project will provide growing markets
    in the Nashville, Tennessee area and in the states of North and
    South Carolina with additional access to new sources of supply, and
    will assist in providing supply stability in the face of growing
    demand for natural gas. As stated, the Eastern Extension Project
    will allow Midwestern to deliver to Piedmont approximately 100,000
    Dth per day of natural gas into the Columbia Gulf pipeline system
    near Hartsville, Tennessee, which Piedmont plans to deliver to
    Nashville Gas Company to meet the demand growth on the east side of
    Nashville's distribution system. The remaining 20,000 Dth per day of
    natural gas will be delivered into the East Tennessee system for
    delivery to Piedmont\'s distribution systems located in North
    Carolina and South Carolina.

31. The improved infrastructure associated with the project will provide
    supply diversity, reliability, and price competition to a region
    which, for years, has been largely dependent on natural gas supplies
    from the Gulf Coast by providing access to a new source of supply.
    Specifically, the Eastern Extension Project will transport through
    the Chicago Hub natural gas originating from multiple supply sources
    including Canada, the Rocky Mountains, the Permian Basin, the
    Mid-Continent region and, potentially, from future Alaskan and
    MacKenzie Delta sources, fostering new competitive alternatives
    among supply sources and competitive transportation options for
    shippers. To the extent any of the Eastern Extension Project
    capacity is not being used by Piedmont, it can be used by existing
    shippers on an interruptible or secondary firm basis.

32. Several commenters argue that the proposed project is not needed
    because the projected demand for natural gas in Nashville, Tennessee
    upon which Midwestern relies is overstated. STOP retained a
    consultant that found, among other things, that: (1) the Energy
    Information Administration's (EIA) forecast of natural gas demand
    growth in metro Nashville is small -- only 25,000 Dth per day higher
    by 2025; (2) the demand forecast linked to Nashville's growth rate,
    while larger -- 36,000 Dth per day -- is still too small to drive
    the 120,000 Dth per day; and (3) gas usage in the northeast
    Nashville metro counties (Sumner, Trousdale, Wilson) is estimated to
    grow by less than 9,000 Dth per day by 2025.[^16] The report
    concludes that the proposed project is not needed to meet natural
    gas demand growth in metro Nashville or the northeast counties.

33. One landowner, Nikki Wallace, further concludes that given that the
    projected need for Sumner and Trousdale Counties and surrounding
    areas will be only 36,000 Dth per day at the highest, 80 percent of
    the gas Piedmont will be transporting through the proposed
    facilities will be used to benefit North and South Carolina.[^17] In
    light of the discrepancies between the amount of capacity for which
    Piedmont has contracted and the demand growth projections of STOP's
    consultant, other commenters specifically request that Midwestern or
    Piedmont be required to produce validation of Piedmont's demand
    growth data and proof of the demand increases claimed.[^18]
    Tennessee Senator Diane Black asserts that an independent review is
    required of the demand data supplied as evidence of the need for
    this project.[^19]

34. Under the Certificate Policy Statement, contracts and precedent
    agreements, while not required to demonstrate that a project is
    required by the public convenience and necessity, are still
    important evidence of demand for a project.[^20] Moreover, the
    Commission does not look behind the contracts to determine whether
    the customer commitments represent genuine growth in market
    demand.[^21] Accordingly, we find that the Piedmont precedent
    agreement for 100 percent of the proposed capacity sufficiently
    demonstrates market demand and need for the project and that further
    investigation to determine Piedmont's specific future requirements
    is not warranted.

35. Second, the parties assert that the Eastern Extension Project is not
    needed because existing pipelines can meet Piedmont's natural gas
    needs. STOP, through its consultant, Mr. William W. Wade, argues
    that the natural gas needed by Piedmont could be supplied either by
    Columbia Gulf's existing system, or by backhaul arrangements using
    the existing systems of Tennessee Gas Pipeline Company (Tennessee)
    and/or East Tennessee.

36. While Piedmont may have other supply and transportation options for
    serving its customers in Tennessee and the Carolina's,[^22] it has
    made a business decision to purchase long-term transportation
    service on Midwestern because it believes access to additional,
    competitively priced supply sources will provide it with increased
    supply reliability and increased transportation reliability and
    flexibility, and because it values these benefits. In contracting
    for the subject capacity, Piedmont seeks access to natural gas
    supply sources connecting to the Chicago Hub not simply to have
    enough transportation capacity or supply to meet its growth
    projections, or merely to secure lower-priced gas supplies than it
    already has available, but to add additional sources of natural gas
    supply to increase supply reliability and an additional
    transportation alternative to increase its reliability and
    flexibility as a service provider. The alternatives using existing
    systems do not provide access to natural gas from the Chicago Hub,
    and therefore cannot provide Piedmont with the added supply
    reliability and system flexibility that the Eastern Extension
    Project will provide.

37. Finally, some of the affected landowners oppose the project because
    they will not directly benefit from the project. However, under the
    NGA, the Commission is charged with furthering the public interest
    in authorizing the construction and operation of interstate natural
    gas pipelines. This mission includes, among other things, the
    assurance of adequate supplies of natural gas to consumers, and the
    assurance of adequate competition among suppliers to cut costs and
    improve market conditions for the benefits of consumers. We find
    that the proposed Eastern Extension Project will foster competitive
    alternatives among supply sources and service providers and enhance
    reliability and flexibility in the national natural gas
    transportation grid to the benefit of all natural gas consumers.

    **5. [Certificate Policy Statement Conclusion]{.underline}**

38. As stated, Midwestern's project can proceed without subsidies and
    will not adversely affect or degrade service to its existing
    shippers. Further, the Commission finds that Midwestern's project
    will provide benefits that outweigh any adverse impacts arising from
    the lack of negotiated easements. Notably, the Midwestern's project
    will fill an immediate market need as evidenced by the long-term
    precedent agreements for 100 percent of its design capacity.

39. Moreover, the Midwestern's project will increase the reliability and
    flexibility of the interstate pipeline grid by offering more direct
    access to existing and new gas supply sources and increased
    availability of gas from the Chicago Hub. This should also result in
    more price competition, potentially lowering natural gas prices, as
    well. Therefore, consistent with the Policy Statement and NGA
    section 7, we find approval of Midwestern's proposal to be in the
    public convenience and necessity. We will require Midwestern to
    execute a contract for the level of service and for the terms of
    service represented in Piedmont's precedent agreement prior to
    commencing construction.

**B. [Rate, Contract, and Tariff Issues]{.underline}**

40. Midwestern requests authority to implement: (1) a new Rate Schedule
    FT-B for firm transportation service on the proposed Eastern
    Extension Project, and the related pro forma service agreement; (2)
    incremental firm and interruptible recourse rates; and (3) various
    tariff revisions to accommodate the new Rate Schedule FT-B service.
    Midwestern also requests Commission acceptance of Piedmont's Rate
    Schedule FT-B Precedent Agreement which contains non-conforming
    creditworthiness provisions. We find that Midwestern's pro forma
    tariff sheets containing the new Rate Schedule FT-B service and
    recourse rates are reasonable subject to the conditions discussed
    below. We also approve the non-conforming provisions contained in
    the Piedmont Rate Schedule FT-B Agreement.

    **1. [Incremental Recourse Rates ]{.underline}**

41. Midwestern proposes new incremental firm and interruptible recourse
    rates based on the cost-of-service for the new Eastern Extension.
    For firm incremental service under new Rate Schedule FT-B,
    Midwestern proposes a recourse rate that is a \$3.2854 per Dth
    monthly reservation charge. Midwestern proposes a zero commodity
    rate, since it expects no variable costs attributable to the new
    incremental service. Midwestern also proposes to establish an
    incremental rate for interruptible transportation service under the
    terms and conditions of its existing Rate Schedule IT. Midwestern
    proposes a \$0.1080 per Dth recourse rate based on a 100 percent
    load factor derivative of the proposed \$3.2854 monthly reservation
    rate.[^23]

42. Midwestern calculates the proposed incremental rates based on a
    \$4,730,000 cost-of-service and annual design volumes of 43,800,000
    Dth (or 120,000 Dth per day). The components underlying Midwestern's
    proposed incremental recourse rates include: (1) \$26,272,000 in
    plant costs; (2) a 5 percent depreciation rate; and (3) a 9.38
    percent overall rate of return.

43. In addition, Midwestern will assess the fuel retention and loss
    quantity charge currently set forth on Seventh Revised Sheet No. 5
    for service on the Eastern Extension Project because it asserts that
    such service will require mainline compression to deliver the gas to
    the Eastern Extension. The currently effective in-kind fuel
    reimbursement is 1.00 percent of all transported volumes. Further,
    the ACA Surcharge, discussed below, will apply to all deliveries on
    the Eastern Expansion Projects' facilities.

44. Midwestern indicates that the other transportation rates under Rate
    Schedules FT-A, FT-GS, and IT will be additive to the proposed
    incremental rates for service on its new Eastern Extension Project
    for transactions involving the transportation of gas across
    Midwestern's existing certificated mainline system and the proposed
    Eastern Extension Project.

45. The Commission has reviewed the proposed cost of service and
    proposed initial recourse rates for the Eastern Extension Project
    and finds them reasonable. We direct Midwestern to maintain records
    that separately identify the costs associated with the Eastern
    Extension to comply with the requirements under section 154.309 of
    the Commission's regulations.[^24] Further, if Midwestern implements
    any other rate or tariff changes not specifically authorized by this
    order or a subsequent order prior to placing the Eastern Extension
    facilities into service, Midwestern must file an amendment to its
    application under NGA section 7(c). In that filing, Midwestern must
    provide cost data and required exhibits supporting any revised
    rates. After placing the Eastern Extension facilities in service,
    Midwestern must submit an NGA section 4 filing to change its
    recourse rates to reflect any revised construction or operating
    costs.

> **2. [Precedent Agreement, Negotiated Rates and Non-Conforming Service
> Agreement]{.underline}**

46. As discussed above, Midwestern executed a precedent agreement with
    Piedmont, the initial shipper, for the full capacity of the Eastern
    Extension Project. The precedent agreement reflects a negotiated
    rate of \$.0804/Dth, which is fixed for the term of the agreement.
    Piedmont elected to pay a \$0.0804/Dth fixed negotiated rate under
    proposed

    Rate Schedule FT-B[^25] subject to adjustment based upon the actual
    costs associated with constructing the project. Under the Precedent
    Agreement, if the actual cost of the Eastern Extension Project
    exceeds the estimated project cost, then Midwestern will increase
    Piedmont's negotiated rate to recover an amount equal to 50 percent
    of the difference between the actual cost and the estimated cost
    reflected in the levelized rate calculation under the precedent
    agreement. Conversely, if the estimated cost of the Eastern
    Extension Project exceeds the actual project cost, then Midwestern
    will reduce Piedmont's rate to reflect an amount equal to 50 percent
    of the difference between the estimated cost and the lower actual
    cost.

47. The Precedent Agreement includes an Exhibit A, the Firm
    Transportation Service Agreement that Midwestern states Piedmont
    will execute (Piedmont FT-B Agreement) prior to Midwestern's
    acceptance of the certificate in this proceeding. The Precedent
    Agreement provides for Midwestern and Piedmont to enter into a firm
    transportation agreement for a term of fifteen years commencing on
    the in-service date of the Eastern Extension Project, conditioned on
    the receipt of certain conditions precedent, including the receipt
    of necessary regulatory approvals. Midwestern also states that the
    Piedmont FT-B Agreement contains non-conforming language in Article
    16 relating to creditworthiness requirements and financial
    assurances. Midwestern states these provisions are required of
    Piedmont to enable Midwestern to recover the cost of the Eastern
    Extension Project if Piedmont's Rate Schedule FT-B Agreement
    terminates due to non-payment or Piedmont fails to maintain
    creditworthiness. Article 16 provides, among other things, that the
    parties have agreed that the amount of damages caused to Midwestern
    in the event of a default would be no less than shipper's
    proportionate share of the cost of constructing the facilities
    subject to certain mitigation.

48. Midwestern states it will file, not less than 30 days prior to
    commencement of service: (1) an executed copy of the Piedmont FT-B
    Agreement; (2) a revised tariff sheet that identifies the Piedmont
    FT-B Agreement as a non-conforming agreement, and (3) a revised
    Statement of Negotiated Rates tariff sheet providing specifics of
    the negotiated

    rate in the Piedmont FT-B Agreement[^26] (as well as in the Piedmont
    FT-A Agreement) including the name of the shipper, contract number,
    contract quantity, demand rate, commodity rate, primary receipt
    point, and primary delivery point. Midwestern also proposes to
    maintain separate and identifiable accounts for any quantities
    transported, the billing determinants, rate components, and
    surcharges related to its negotiated rate agreements, in sufficient
    detail such that negotiated rate revenues can be separately
    identified in any future NGA section 4 rate case. In addition,
    Midwestern requests that the Commission accept the Piedmont FT-B
    Agreement which contains the non-conforming language and negotiated
    rate information.

49. We find that Midwestern's proposal generally satisfies the
    guidelines for the filing and accounting requirements mandated in
    the Commission\'s Alternative Rate Policy Statement[^27]and section
    154.112(b) of the Commission's regulations regarding non-conforming
    service agreements. However, Midwestern's tariff filing must also
    state for each shipper, the applicable rate schedule for the
    service, the contract term beginning and ending dates, and a
    statement affirming that the service agreement does not deviate in
    any significant aspect from the related pro forma service
    agreement.[^28] In addition, Midwestern must disclose any other
    agreement, understanding, negotiation, or consideration associated
    with the negotiated agreements.

50. We will also approve the non-conforming provisions contained in the
    Piedmont FT-B Agreement which will provide Midwestern with the
    ability to recover the cost of constructing the facilities if
    Piedmont defaults. The Commission has previously recognized that for
    new construction projects, pipelines need sufficient financial
    assurances from initial shippers to ensure, prior to the investment
    of significant resources in the project, that it can protect the
    financial commitment to the project.[^29] We have accepted
    deviations from the pipeline's form of service agreement that
    reflect the unique circumstance involved with the construction of
    new infrastructure and provide the needed security to ensure that
    project is built.[^30] The Commission has also found that it should
    determine issues related to financial assurances for construction
    projects at the certificate stage, and that such issues should not
    ordinarily be addressed in the pipeline's tariff.[^31] We find that
    our approval of the proposed non-conforming provisions in the
    Piedmont FT-B Agreement here is consistent with these policies.
    However, Midwestern must still file, at least 30 days before the
    in-service date of the proposed facilities, an executed copy of the
    Piedmont Rate Schedule FT-B agreement and a revised tariff sheet to
    identify the Piedmont Rate Schedule FT-B Agreement as a
    non-conforming agreement, as it has agreed to do.

    **4. [Pro Forma Tariff Changes]{.underline}**

51. Midwestern proposes pro forma tariff provisions primarily to include
    the new Rate Schedule FT-B for firm service on the Eastern
    Extension, a related FT-B pro forma service agreement, and numerous
    edits to its remaining transportation rate schedules and the General
    Terms and Conditions (GT&C) to accommodate the new FT-B service. The
    pro forma Rate Schedule FT-B and related form of service agreement
    track the provisions under Midwestern's Rate Schedule FT-A for firm
    service on its existing system. The remaining pro forma tariff
    sheets reflect changes to various other rate schedules and GT&C to
    accommodate the new FT-B service. Such changes affect Rate Schedules
    IT and LMS-MA (for balancing service), service requests, credit
    evaluation, contract execution, gas quality monitoring, scheduling,
    point rights, segmentation rights, capacity releases, and nomination
    procedures.

52. We find that Midwestern's pro forma tariff changes generally comply
    with Part 284 of the Commission\'s regulations and current
    Commission policy, with two exceptions. First, Midwestern must
    revise the preliminary statement of its tariff to include the
    Eastern Extension Project.[^32] Second, Pro Forma Sheet No. 5
    reflects a \$0.0019 per Dth FERC Annual Charge Adjustment (ACA).
    Since filing its application, the Commission approved Midwestern's
    filing in Docket No. RP05-562-000 to decrease its ACA from \$0.0019
    to \$0.0018 per Dth for the current fiscal year beginning October
    1, 2005. Accordingly, Midwestern must reflect this decrease when it
    files its actual tariff sheets. In addition, Midwestern must make a
    corresponding change to footnote No. 5 of Pro Forma Sheet No. 5
    stating the maximum volumetric firm rate for capacity release, which
    includes the ACA charge. Midwestern must make these changes when it
    files its actual tariff sheets at least 30 days, but no more than 60
    days, prior to commencing service on its new Eastern Extension.

**C. [Environmental Analysis ]{.underline}**

53. Midwestern used the Commission's National Environmental Policy Act
    of 1969 (NEPA) Pre-Filing Process for its expansion project.[^33]
    The purpose of using the Pre-Filing Process is to involve interested
    stakeholders early in the project planning and to identify and
    resolve issues prior to filing the certificate application. This
    allowed more than seven months of stakeholder input prior to
    Midwestern's filing its application on June 6, 2005.

54. On January 21, 2005, the Commission issued its Notice of Intent to
    Prepare an Environmental Assessment for the Proposed MGT Eastern
    Extension Project, Request for Comments on Environmental Issues, and
    Notice of Public Scoping Meeting (NOI). In addition, Commission
    staff held a public scoping meeting and a public site visit for the
    project, on February 24, 2005 and April 26, 2005, respectively.

55. Approximately 60 comments were received during the scoping period,
    including comments made at the public scoping meeting and the filed
    written comments. The complete record of the pre-filing Docket No.
    PF05-2-000 has been received into and integrated with the record of
    this docket. An additional 31 comments were received in Docket No.
    CP05-372-000 from property owners and STOP.

56. On October 20, 2005, the Commission issued the EA for Midwestern's
    proposed project, with comments due on November 21, 2005. The EA
    addressed geology and soils, water resources, wetlands, vegetation
    and wildlife, threatened and endangered species, land use, cultural
    resources, socioeconomics, air quality and noise, safety and
    reliability, and alternatives. The EA also addressed all substantive
    comments received in

    response to the NOI and the comments related to the environmental
    aspect of the proposed project filed in Docket No. CP05-372-000.

57. Comments to the EA were filed by the U.S. Fish and Wildlife Service
    (FWS), the Tennessee Historical Commission (Tennessee SHPO), the
    Tennessee Wildlife Resources Agency (WRA), Portland, STOP, eleven
    affected property owners, Barry Sulkin, and Gregory Buppert.[^34]
    Based on the discussion in the EA, the Commission concludes that if
    constructed in accordance with Midwestern\'s application and
    supplements, and in accordance with the mitigation measures listed
    in Appendix B, approval of the proposed project would not constitute
    a major federal action significantly affecting the quality of the
    human environment.

    **1. [Environmental Impact Statement ]{.underline}**

58. Several commenters contend that the proposed project is a major
    federal action significantly affecting the quality of the human
    environment and requires a comprehensive environmental impact
    statement (EIS). Mr. Sulkin asserts that from his work with the
    local residents it is clear that the proposed project is highly
    controversial, far from insignificant, and requires the more
    in-depth EIS as required by NEPA. Mr. Buppert argues, in addition to
    the highly controversial nature of this project, an EIS is needed to
    address the unique characteristics of the karstic[^35] nature of the
    area in which the proposed pipeline is located.

59. An EA is a concise public document for which a federal agency is
    responsible that serves to provide sufficient evidence and analysis
    for determining whether to prepare an environmental impact statement
    or a finding of no significant impact.[^36] As stated, the EA
    addressed geology and soils, water resources, wetlands, vegetation
    and wildlife, threatened and endangered species, land use, cultural
    resources, socioeconomics, air quality and noise, safety and
    reliability, and alternatives. The EA also specifically addressed
    numerous issues related to potential for karst development,
    including issues related to potential impacts from blasting,
    sinkholes, caves, and springs, which are also addressed below.

60. While the existence of a public controversy over the effect of an
    agency action is one factor in determining whether the agency should
    prepare an EIS,[^37] a federal action "is controversial if a
    substantial dispute exists as to \[its\] size, nature or effect. The
    existence of opposition to a use, however, does not render an action
    controversial."[^38] A substantial portion of the objections raised
    are to the project itself, and not the environmental impacts. As
    discussed in the EA and below, the Commission has determined that
    the impacts associated with this project can be sufficiently
    mitigated to support a finding of no significant impact.

    **2. [Incomplete Environmental Review]{.underline}**

61. In opposing the proposed project, many property owners have been
    unwilling to provide Midwestern with information regarding their
    properties or have limited or denied Midwestern access to their
    properties. The EA noted that "due to the lack of access to parcels
    along the pipeline route, \[Midwestern\] has not completed the civil
    and environmental surveys of the entire route."[^39] As a result,
    several commenters question how the Commission could issue an EA
    when Midwestern has only had access to survey approximately half of
    the pipeline right-of-way.

62. Landowners cannot deny access to their property and then use this as
    a basis for claiming that the Commission's NEPA analysis is
    insufficient because all studies have not been completed. The EA
    analyzes the impact the proposed project will have on the
    environment and develops mitigation measures to address areas of
    concern, such as, among other things, the impact construction and
    blasting will have on the karst terrain. However, where access to
    property has been denied, the EA is not the end of the analysis of
    the proposed project. In such circumstances, as in this case, the
    Commission will require additional field investigations, surveys,
    studies, and plans. For example, Environmental Condition 12 of this
    order requires that Midwestern complete karst field surveys on all
    parcels crossed by the project that were previously inaccessible,
    while Environmental Condition 16 requires Midwestern to conduct
    surveys for federally listed species along those segments of the
    route that were previously inaccessible. In addition,

    Midwestern has stated that it will complete all civil and
    environmental surveys, including its karst field survey, prior to
    construction.[^40]

63. Once Midwestern completes all the necessary studies, the Commission
    reviews this information before issuing authorization to commence
    construction. If any of the final surveys raise issues that warrant
    additional environmental review, the Commission's staff will conduct
    that review before Midwestern is granted clearance to commence
    construction. Further, these post-certificate activities typically
    result in additional site-specific mitigation measures to further
    reduce the impact of the proposed project.

    **3. [Karst Terrain]{.underline}**

64. The proposed route passes over terrain underlain, in part, by
    carbonate rocks (limestone and dolomite). Carbonate rocks are the
    basis for karst terrain which is characterized by sinkholes, caves,
    and conduit-flow springs.[^41] The EA discusses the karst terrain
    and its potential impact on the proposed project.[^42] Karst
    development can potentially impact local wells and springs along the
    proposed pipeline route. The EA also analyzes the impact
    construction of the proposed pipeline on local wells and
    springs.[^43]

65. Mr. Buppert contends the unique characteristics of the karst
    landscape create unknown risks that require that the Commission
    prepare an EIS for the proposed project. Other commenters contend
    that the EA does not adequately identify and address all potential
    caves and other issues related to the karst landscape because all
    the land was not surveyed. Mr. Sulkin contends that the EA is
    incomplete because there is little mention of the documentation and
    maps that he has provided with the location of wells and springs on
    individual properties. He argues that the potential impacts to
    individual wells and springs has been dismissed as a minor issue not
    worthy of an EIS, based on incomplete inventory and a provision that
    Midwestern will conduct pre- and post- construction well monitoring.
    He states that an EIS is needed to fully evaluate all area well and
    spring locations to more accurately assess potential impacts and
    alternative routing needs. The City of Portland is concerned that
    the pipeline may impact the city's water supply. STOP and several
    landowners raise similar issues.

66. Midwestern engaged P.E. LaMoreaux & Associates Inc. (PELA) to
    investigate and assess the karstic nature of the pipeline route and
    to propose appropriate Best Management Practices (BMP's) for
    construction to minimize environmental impacts.[^44] The study
    reviewed the relevant features identified on topographic and
    geologic quadrangle maps located within a twomilewide corridor
    centered on the pipeline.[^45] PELA then conducted a review of The
    Tennessee Cave Survey files for known caves in the area, their size,
    and areal extent. No caves were previously recorded along the
    proposed pipeline corridor. PELA also conducted a reconnaissance of
    the proposed route by helicopter, road, and on foot where access to
    property was available. Although scoping comments identified that
    certain properties contain caves, survey permission has not been
    granted to those properties and these caves were not evaluated on
    the ground. To evaluate the potential impacts the proposed project
    would have on wells and springs, PELA obtained well data from the
    Tennessee DEC Water Quality Division for a four mile wide corridor.

67. PELA developed a karst hazard assessment which evaluated all of the
    components of the investigation. The sensitivity of any local
    aquifers to groundwater impacts due to their karstic characteristics
    was divided into three levels: high, moderate, and low depending on
    the degree of karst development and the potential for project impact
    on the karst and the groundwater in a given area. The PELA study of
    the proposed route indicated that about 21.8 miles (70.6 percent) of
    the corridor has no or few karstic features. These sections have
    been determined to have low sensitivity to karst and groundwater
    problems, and construction impacts would be unlikely. The remaining
    9.1 miles (29.4 percent) were classified as moderately sensitive to
    construction impacts. There were no areas along the proposed
    pipeline route that PELA determined to have a high potential for
    impact.

68. Based on the available information, the report concludes, on a
    segment-by-segment analysis of the pipeline route, that none of the
    segments were judged to have a high susceptibility to impact.
    However, as noted, due to current landowner restriction, PELA
    personnel could not view portions of the route from the ground, and
    arrived at its conclusion based on an aerial assessment of those
    areas.

69. Based on the completed surveys, the analysis in the EA, and the
    recommended Karst BMP's related to pipeline construction,[^46] we
    conclude that there is sufficient evidence to support a finding that
    the proposed project will have no significant impact on the
    environment. However, Midwestern's certificate authorization
    requires that Midwestern complete the karst field surveys on all
    lands that were previously inaccessible and file the results of the
    surveys for approval prior to construction.[^47]

70. If a landowner or Mr. Sulkin has specific information concerning
    individual properties that should be considered during these
    surveys, they should make that information available to Midwestern.
    If the Commission determines that further environmental review is
    warranted as a result of the additional surveys, it will conduct
    that review prior to authorizing construction of the proposed
    pipeline. Midwestern is also required to have a qualified geologist
    on call during construction to plan and review construction methods
    and to provide technical support to mitigate or to avoid any
    potential sinkhole locations and karst-related issues that may arise
    during construction.

71. In response to Portland's concerns about the potential impact the
    proposed project would have on its water treatment plant, Midwestern
    states that it will coordinate with the Tennessee Division of Water
    Supply's Field Office Manager and Portland during its planning and
    construction to ensure that drinking water is not affected during
    construction of the pipeline. Accordingly, we will require
    Midwestern to consult with Portland and its consultants to develop a
    site-specific construction plan for project activity near Portland's
    water treatment facilities for review before it commences
    construction.[^48]

    **4. [Blasting]{.underline}**

72. The EA states that blasting may be necessary in the areas of shallow
    bedrock along the proposed pipeline route.[^49] Due to lack of
    access to many properties along the pipeline route, Midwestern used
    the National Cooperative Soil Survey to estimate the locations where
    blasting may be necessary. If bedrock is encountered, Midwestern
    would determine the technique for removal depending on the strength
    and hardness of the rock. Attempts would be made to use mechanical
    rippers or other mechanical means to remove bedrock encountered in
    the trench. If blasting is required, Midwestern would conduct it in
    accordance with established guidelines designed to control energy
    propagation and to protect persons and property in the area. The EA
    also determines that with the use of appropriate blasting
    techniques, rock fracturing should only occur on the right-of-way,
    and, therefore, it is unlikely that groundwater systems located
    outside the construction right-of-way would be adversely
    affected.[^50]

73. Many commenters are concerned with the potential impacts of blasting
    in the vicinity of wells and springs and would prefer that a
    technique such as a rock trencher be used. They also inquire about
    the specialized construction techniques that would be implemented to
    minimize impacts on groundwater resources in areas where blasting
    may be required. Veit Spero notes that the EA recommends that
    groundwater resources be monitored within 150 feet of the proposed
    pipeline during construction, but believes that monitoring should be
    expanded to at least 0.5 mile. Mr. Sulkin is concerned that stream
    flow will be lost due to blasting. Other commenters request that the
    Commission explain what would happen if monitoring determines that
    the blasting has impacted the water supply.

74. As stated, Midwestern will primarily use mechanical rippers or other
    mechanical means to remove bedrock encountered in the trench.
    However, if blasting is necessary, it may increase the fracturing
    within bedrock in the vicinity of the trench but would not be
    expected to alter the general fracture patterns or extent of
    fracturing within the aquifer system.[^51] Moreover, because the
    trench excavation would be relatively shallow and Midwestern would
    use low-velocity charges, the properly placed and sized charges
    would not be expected to create disturbances beyond about 10 feet
    laterally from or several feet below the blast site.[^52]

75. The use of proposed mitigation measures, including the use of
    minimum or delayed charges, blasting mats, and other mitigation
    techniques to prevent rock fragments from damaging surface areas or
    blocking streams, would minimize the overall impact of blasting on
    wells and springs and would be temporary and minor. Environmental
    Condition 15 requires that Midwestern prepare construction and
    mitigation plans that would identify the streambed rock type, state
    whether or not blasting would be required, and describe the measures
    Midwestern would implement to ensure its construction does not cause
    a loss of stream hydrology. The Commission will review Midwestern's
    plan prior to granting permission to construct the facilities. If
    further surveys and studies warrant further environmental analysis,
    the Commission will also conduct that analysis prior to granting
    permission to construct the facilities.

76. To further reduce impacts, Environmental Conditions 13 and 14
    require that Midwestern conduct pre- and post-construction
    monitoring of yield and water quality for wells and springs within
    150 feet of the construction work areas, and to file a report
    discussing whether any complaints were received regarding yield or
    water quality. If post-construction monitoring determines that
    construction has impacted yield and water quality of the wells and
    springs, Midwestern will be required to mitigate the impact.

77. Finally, based on studies that indicate that specific blasting
    techniques can control fracturing in rock, such that significant
    impacts to not occur beyond 10 to 20 feet from the blast site, and
    previous experience on previous pipeline projects in similar
    geographic areas[^53], the Commission believes monitoring within 150
    feet of the construction work areas is sufficient.

    **5. [Streams and Wetlands]{.underline}**

78. The EA states that Midwestern's project would cross 94 surface
    waterbodies, which are identified as perennial, intermittent, and as
    wet weather conveyances based on U.S. Geological Survey (USGA)
    mapping.[^54] Wetland areas were determined by field delineation
    surveys using the United States Army Crops of Engineers' (COE) 1987
    Wetland Delineation Manual and through review of National Inventory
    Maps for restricted access areas. Midwestern's proposed action
    includes use of the Commission's "Wetland and Waterbody Construction
    and Mitigation Procedures" (Procedures) to ensure adequate
    protection of the resources during and after construction.

79. STOP indicates that wetland mapping used in the EA may be decades
    old, and that up-to-date information must be used in making such an
    important decision as allowing Midwestern to proceed with the
    project. Tennessee WRA states that the COE and the Tennessee
    Department of Environment and Conservation (DEC) should be consulted
    for wetland determinations when access is obtained in the
    non-surveyed areas since they have the legal authority to make these
    delineations. Also, the Tennessee WRA states that there is no
    mention of compensatory mitigation for wetland impacts as required
    by the State of Tennessee. Tennessee WRA also requests a 50-foot
    vegetated buffer on the right-of-way easement at all stream
    crossings instead of the minimum 25-foot vegetated buffer required
    by the Commission.

80. Mr. Sulkin questions the list of required permits in the EA.
    Specifically, he states that the Tennessee DEC would issue the
    permit for the Clean Water Act and if construction is permitted, the
    storm water permit should be issued as an individual permit with
    site-specific requirements, rather than the weak general permit
    usually allowed. Mr. Sulkin also states Tennessee has chosen to
    ignore the preventive aspects of section 303(d) of the Clean Water
    Act that requires individual states to develop a list of surface
    waters that do not meet state water quality standards or do not
    support their designated uses. He contends that the Commission
    should assure that all waters correctly covered by the provisions of
    303(d) are given protection and prevented from becoming degraded.

81. Prior to construction, Midwestern will conduct field delineations of
    all streams and wetlands along the pipeline route in consultation
    and accordance with the Tennessee DEC and COE requirements. It also
    needs to comply with and secure all the necessary permits from those
    agencies, including Clean Water Act compliance and permits. Both the
    Tennessee DEC and the COE, through their respective permitting
    authorities, can require more stringent mitigation measures, or
    compensatory mitigation, as necessary. While final engineering and
    alignment survey will more accurately delineate the boundaries of
    each waterbody and wetland that is crossed, they will not change the
    project-related aspects of the project described in the EA.

82. While Midwestern is required to comply with state and local
    permitting, we note, however, any state or local permits issued with
    respect to the jurisdictional facilities authorized herein must be
    consistent with the conditions of this certificate. The Commission
    encourages cooperation between interstate pipelines and local
    authorities. However, this does not mean that state and local
    agencies, through application of state or local laws, may prohibit
    or unreasonably delay the construction or operation of facilities
    approved by this Commission.[^55] Moreover, issues concerning state
    and local permits are outside of the Commission jurisdiction. Mr.
    Sulkin should raise his concern about the storm water permit with
    the Tennessee DEC.

    **6. [Alternatives]{.underline}**

83. The EA evaluated three system alternatives and seven major route
    alternatives.[^56] The system alternatives included capacity on
    Columbia Gulf and backhaul arrangements on Tennessee Gas and East
    Tennessee. The major route alternatives included three alternate
    routes analyzed to specifically address public comments. The EA
    concluded that Piedmont's specific project objectives could not
    reasonably be attained by use of existing pipeline facilities and
    that none of the major route alternatives had a significant
    environmental advantage over the proposed project.

84. Mr. Buppert contends that the EA's alternatives analysis was cursory
    and inadequate to carefully evaluate the costs and benefits of other
    pipeline alternatives. Specifically, Mr. Buppert states that the
    Commission did not explore complex technical questions regarding
    existing pipeline capacity and improperly relied on the stated
    objective of Piedmont to increase the reliability and flexibility in
    the pipeline grid. The EA's criteria for evaluating alternatives
    were: (1) technical and economic feasibility and practicality; (2)
    significant environmental advantage over the proposed project;
    and (3) achievement of the project objectives of providing a
    capacity of 120,000 Dth per day for Piedmont to meet its growth
    projections and providing access to gas sourced from the Chicago
    Hub.

85. The EA concluded that the specific objectives of Midwestern\'s
    proposed project to provide service for Piedmont cannot reasonably
    be attained by use of existing pipeline facilities.[^57] When
    Piedmont and Midwestern were in negotiations, transportation on
    Columbia Gulf was not an option because it did not have the capacity
    available to transport the additional volumes of gas for Piedmont.
    Nor does the Columbia Gulf system have access to the Chicago Hub and
    the supply sources there.[^58] The other system alternatives would
    require expansion of either East Tennessee\'s or Tennessee Gas\'
    system to accommodate the incremental volumes required by
    Piedmont.[^59] In view of these considerations, there was no basis
    to support a finding that any of the three system alternatives were
    technically or economically feasible and practical. Therefore, we do
    not agree with Mr. Buppert that the EA's alternatives analysis was
    inadequate. Further, the EA explained that, even assuming that
    expansion of either the East Tennessee or Tennessee Gas system would
    be feasible, expansion of those systems would not secure the benefit
    of an increase in reliability and flexibility in the natural gas
    transportation grid resulting from an additional transportation
    alternative and associated interconnects, a key Piedmont
    objective.[^60] The EA further explained that the Tennessee Gas
    alternative also would not meet the objective for the incremental
    volumes of natural gas to reach Piedmont\'s distribution systems in
    North and South Carolina.[^61] While Mr. Buppert asserts that the EA
    improperly relied on Midwestern\'s and Piedmont\'s objectives, the
    courts have upheld federal agencies\' use of applicants\' identified
    objectives as the basis for evaluating alternatives.[^62]

86. The EA also concluded that Midwestern\'s proposed route was
    environmentally preferable to five of the seven route alternatives
    that were studied.[^63] In addition, the EA found that two other
    alternative routes which would require use of Tennessee Valley
    Authority (TVA) powerline easements had no apparent environmental
    advantage over Midwestern\'s proposed route.[^64] Mr. Spero states
    that the Commission should reevaluate these alternative routes and
    work with the TVA and use the existing unused TVA right-of-way
    easement that crosses Sumner County. As discussed in the EA, the
    alternatives using the existing TVA rights-of-way will generally be
    longer and result in more environmental impacts than the proposed
    project.[^65] More importantly, the TVA advised Midwestern it would
    be acquiring its easements subject to the existing rights of the TVA
    and that Midwestern would have no permanent right to a location on
    the powerline easement. That is, if the TVA determined that the
    pipeline interfered in any way with its existing or future
    facilities, Midwestern would be required to relocate the pipeline on
    the TVA powerline easement or move all or part of the pipeline off
    the TVA easement, resulting in future disruption and impact to
    landowners. Thus, a reevaluation of these alternatives is not
    warranted.

    **7. [Soil, Restoration, and Maintenance Issues]{.underline}**

87. Pipeline construction could affect soils within the proposed
    construction right-of-way in several ways, including erosion,
    compaction, loss of productivity, establishment of noxious weeds,
    and contamination of leaking equipment. The EA discusses each of
    these issues and determines that for the most part, these impacts
    are short-term and are limited primarily to the construction phase
    of the project.[^66]

88. Several commenters reiterate concerns about the impact of the
    pipeline's construction affecting soils, including erosion,
    compaction, loss of productivity, establishment of noxious weeds,
    contamination from leaking equipment, and restoration. Commenters
    express concern that the pipeline would destroy farmland or prevent
    continued farming of the land. Mr. Spero asks that Commission
    require Midwestern to mow the right-of-way three times per year in
    agricultural areas to control the proliferation of weeds and to
    consult with the landowner for the appropriate seed mixes and soils
    to restore disturbed areas.

89. Midwestern will restore and revegetate all disturbed areas by
    following the Commission's Upland Erosion Control, Revegetation, and
    Maintenance Plan. As more fully discussed in the EA,[^67] Midwestern
    will segregate top soil and restore it following construction to
    minimize impacts to agricultural land and/or prime farmland soils.
    Cultivated fields and pastures would be allowed to continue over the
    permanent right-of-way. This will minimize impact on soils to the
    maximum extent possible.

90. After construction, no restrictions would be placed on the temporary
    right-of-way or extra workspaces. Property owners will be able to
    access the property and cross over the pipeline at any location
    along their property. Operation of heavy farm equipment over the
    pipeline for the purpose of normal cultivation could continue.
    During easement negotiations, property owners can request that
    specific mitigation and restoration measures be implemented based on
    their particular concerns for their properties.

91. Pipeline rights-of-way in croplands that are actively cultivated are
    not routinely maintained and mowed by the pipeline. However,
    Midwestern would be responsible for monitoring the revegetation
    success in agricultural areas, including crop yields.[^68]
    Revegetation is considered successful if crop yields are similar to
    adjacent undisturbed portions of the field. If property owners have
    concerns with the proliferation of weeds, Midwestern will monitor
    these areas and mitigate as necessary.

    **8. [Endangered Species]{.underline}**

92. The FWS, Tennessee Field Office states that "upon review of the
    \[EA\] submitted on October 25, 2005, we concur that the proposed
    Eastern Extension Project is not likely to adversely affect the
    leafy prairie clover, provided that the project is implanted in
    accordance with the protective measures contained in the
    assessment." In addition, the FWS recommends that Midwestern provide
    copies of all surveys conducted for the leafy prairie clover, a
    federally-listed species, to the Tennessee Field Office for its
    review when access is granted to Midwestern.

93. As stated, *supra*, Environmental Condition 16 of this order
    requires Midwestern to complete its surveys for federally listed
    species on properties that were previously inaccessible. Midwestern
    must coordinate with the FWS biologists to ensure that the survey
    methodology and timings are adequate, and submit the survey results
    to the appropriate FWS office. Midwestern would not be allowed to
    begin construction of the project until: (1) comments from the FWS
    are filed regarding the proposed action; (2) the Commission staff
    completes any required informal or formal consultation with the FWS;
    and (3) Midwestern has received written notification from the
    Director of the Office of Energy Projects that construction may
    proceed.

    **9. [Timber/Brush Disposal]{.underline}**

94. The EA states that timber cut from the right-of-way would be
    disposed of by: (a) stacking along the edge of the right-of-way with
    landowner approval; (b) chipping slash or brush and leaving the
    chips on the right-of-way; (c) burying, except in wetlands or
    agricultural areas; (d) burning, unless specifically prohibited in
    the area; and/or (e) offsite disposal in an approved area. Several
    commenters raised concern about burning brush and timber disposal.
    Midwestern is required to follow all local ordinances in disposing
    of brush and timber. If particular landowneshave a preference
    regarding how the brush and timber on their property is disposed of,
    they should request that method during easement negotiations.

    **10. [Environmental Inspectors]{.underline}**

95. Environmental Condition 7 requires that Midwestern employ at lease
    one environmental inspector per construction spread. Ronnie Briley
    requests information concerning who employs the environmental
    inspector. The Commission requires that Midwestern hire full-time
    environmental inspectors to monitor construction and to ensure
    compliance with all mitigation measures. The environmental
    inspectors are responsible for independently evaluating the
    construction contractor's implementation of the environmental
    mitigation measures.

96. Environmental inspectors have the authority to stop activities that
    violate the environmental conditions of a certificate, state and
    federal permit conditions, or landowner requirements. The inspectors
    identify, document and oversee corrective actions, as necessary to
    bring an activity back into compliance. Commission staff also
    conducts periodic field inspections during construction and
    restoration of the pipeline right-of-way to ensure compliance with
    the Commission's order. Midwestern will be held accountable for any
    violations.

    **11. [Right-of-Way Issues]{.underline}**

97. The EA states that construction access to the project generally
    would occur via the construction right-of-way and existing public
    and private road network.[^69] One commenter requests clarification
    that heavy equipment should be restricted to the right-of-way. All
    construction activities will occur in the right-of-way and approved
    work areas. Project-related equipment is restricted to approved
    access roads and the right-of-way.

    **12. [Cattle]{.underline}**

98. A large portion of the proposed facilities will go through active
    agricultural areas, fallow fields, and pasture. Several commenters
    have expressed concern that cattle could fall into the pipeline
    trench during construction, and that construction would prevent
    cattle from moving to drink water. Also, several commenters are
    concerned that construction activities will impact the spring from
    which they water their cattle and that the noise from construction
    activities could adversely affect cattle and calves.

99. Midwestern will install temporary fencing along the construction
    right-of-way to keep cattle out of the trench area and construct
    temporary bridges, or earthen plugs in the trench to allow cattle to
    cross the right-of-way during construction. While noise levels vary
    at any given location as construction progresses along the
    right-of-way, temporary fenced areas may be used to mitigate impact
    of construction noise on cattle. Moreover, Midwestern has an
    obligation to compensate property owners for damages caused by the
    construction of the pipeline, which may include damages to cattle.
    Midwestern will coordinate with property owners during easement
    negotiations to identify areas actively used for grazing, drinking,
    or actively accessed by cattle and implement mutually acceptable
    means to accommodate the cattle during construction.

    **13. [Forest Fragmentation]{.underline}**

100. The EA states that forest fragmentation can contribute to an
     overall decline in the suitability of the habitat to provide good
     foraging and nesting for certain bird and mammal species.[^70] STOP
     states that one registered forest consists of 29 acres and is
     surrounded on three sides by more forest. It requests a definition
     of forest fragmentation. Forest fragmentation is the process
     whereby a large patch of forest is broken down into smaller patches
     of forest, usually due to development of the land. The EA indicates
     that that forest in the project area is already highly fragmented
     due to development and agriculture and concludes that operation of
     the project would have relatively little effect on wildlife.

     **14. [Trespass and Emotional Distress]{.underline}**

101. Several commenters raise issues concerning Midwestern's agents
     trespassing on their property. Matters of trespass are mainly of
     local concern; if Midwestern's representatives are trespassing on
     property without permission, the affected persons should notify
     their local authorities.[^71]

102. In addition, a few commenters were concerned that the human aspects
     of the property owners affected by the project, including fear,
     stress, and mental anguish were not addressed in the EA. The U.S.
     Supreme Court has determined that \"if a harm does not have a
     sufficiently close connection to the physical environment, NEPA
     does not apply.\"[^72] In part, the Court based its decision on the
     difficulty in determining \"the differences between someone who
     dislikes a government decision so much that he suffers anxiety and
     stress, someone who fears the effects of that decision so much that
     he suffers similar anxiety and stress, and someone who suffers
     anxiety and stress that \'flow directly\' . . . from the risks
     associated with the same decision.\"[^73] Accordingly, the Court
     found agencies are not obliged to undertake such an inquiry.[^74]

     **15. [Environmental Conclusion]{.underline}**

103. As stated, based on the discussion in the EA and above the
     Commission has determined that if constructed in accordance with
     Midwestern\'s application and supplements, and in accordance with
     the mitigation measures listed in the Appendix B, approval of the
     proposed project would not constitute a major federal action
     significantly affecting the quality of the human environment.

104. Midwestern shall notify the Commission\'s environmental staff by
     telephone or facsimile of any environmental noncompliance
     identified by other Federal, state, or local agencies on the same
     day that such agency notifies Midwestern. Midwestern shall file
     written confirmation of such notification with the Secretary of the
     Commission within 24 hours.

     **D. [Conclusion]{.underline}**

105. For the reasons set forth herein we find, subject to the conditions
     discussed in the body of this order and listed below, that the
     public convenience and necessity requires issuance of a certificate
     under NGA section 7(c) for Midwestern\'s proposed pipeline
     facilities. Thus, we grant the requested authorization to
     Midwestern.

106. The Commission on its own motion, received and made a part of the
     record all evidence, including the application, amendment, and
     exhibits thereto, submitted in this proceeding, and upon
     consideration of the record, 

     [The Commission orders]{.underline}:

\(A\) A certificate of public convenience and necessity is issued to
Midwestern in Docket No. CP05-372-000 authorizing it to construct and
operate the Eastern Extension Project, as described and conditioned
herein, and as more fully described in the application.

\(B\) The authorization in Ordering Paragraph (A) is conditioned on
Midwestern's compliance with all applicable Commission regulations under
the Natural

Gas Act, particularly Part 154 and paragraphs (a), (c), (e), and (f) of
section 157.20 of the Commission\'s regulations.

\(C\) The certificate issued in Ordering Paragraph (A) is conditioned
upon Midwestern's compliance with the environmental conditions set forth
in Appendix B of this order.

\(D\) Midwestern shall complete the authorized construction within one
year of the final order in this proceeding.

\(E\) Midwestern must file an executed copy of the Piedmont FT-B
Agreement and a revised tariff sheet to reflect the non-conforming
agreement not less than 30 days prior to commencement of service on the
new Eastern Extension Project.

\(F\) Midwestern must file actual tariff sheets at least 30 days, but no
more than 60 days, prior to placing the Eastern Extension Project
facilities in service, with the revisions specified in the body of this
order.

\(G\) After placing the Eastern Extension Project into service,
Midwestern must make an NGA section 4 filing to change its rates to
reflect any revised construction costs or operating costs.

\(H\) Midwestern shall maintain separate books, accounts, and records
for transportation provided at negotiated rates and for transportation
provided at cost-based rates under Rate Schedule FT-B.

\(I\) Midwestern's answer is accepted into the record.

\(J\) Midwestern shall notify the Commission\'s environmental staff by
telephone and/or facsimile of any environmental noncompliance identified
by other federal, state, or local agencies on the same day that such
agency notifies Midwestern. Midwestern shall file written confirmation
of such notification with the Secretary of the Commission within 24
hours.

By the Commission.

( S E A L )

Magalie R. Salas,

Secretary.

**Appendix A**

**Interventions** **Comments**

Columbia Gulf Transmission Co. Anderson, Paul

East Tennessee Group Ashe, Joseph R.

Hodges, Billie Baker, Jean

Hodges, Harold Steven Bass, Frank A. and Mary A.

Marcum, Lorrie Black, Diane, State Senator, 18^th^ District

Nicor Gas Bredesen, Phil, Governor, Tennessee

Portland, Tennessee, City of Briley, Ronnie

Piedmont Natural Gas Co., Inc. Bullock, Fly, and Hornsby

ProLiance Energy Carr, Sue

Sumner-Trousdale Oppose Pipeline Carter, Charles

Deshler, Martha A.

> Deshler, Charles A.
>
> Dye, James W
>
> Eastern Band of Cherokee Indians
>
> Fenimore, Martha Jo Law
>
> Fowler, David
>
> Georgiades, Wayne (Doc)
>
> Hodges, Billie
>
> Hodges, Harold S.
>
> Kirkham, Calvin and Wanda
>
> Law, Robert
>
> Marcum, Lorrie
>
> Mitchell, Jodi
>
> Palmer, Jean
>
> Perry, Bonita J.
>
> Roddy, Linda
>
> Roddy, Ronald
>
> Savely, Harlan
>
> Spero, Veit
>
> Stephenson, James E.
>
> Tennessee Farm Bureau Federation
>
> Tennessee Historical Commission
>
> Tennessee Wildlife Resources Agency
>
> Wallace, Alexis
>
> Wallace, Nikki
>
> Ward, Jackie
>
> Webster, Linda
>
> Whitman, Arlin
>
> Woodward, Bill
>
> **Appendix B**
>
> As recommended in the EA, this authorization includes the following
> conditions:

1.  Midwestern shall follow the construction procedures and mitigation
    measures described in its application and supplements (including
    responses to a staff data request) and as identified in the
    environmental assessment (EA), unless modified by this Order.
    Midwestern must:

    a.  request any modification to these procedures, measures, or
        conditions in a filing with the Secretary of the Commission
        (Secretary);

    b.  justify each modification relative to site-specific conditions;

    c.  explain how that modification provides an equal or greater level
        of environmental protection than the original measure; and

    d.  receive approval in writing from the Director of the Office of
        Energy Projects (OEP) **before using that modification**.

2.  The Director of OEP has delegation authority to take whatever steps
    are necessary to ensure the protection of all environmental
    resources during construction and operation of the project.  This
    authority shall allow:

 

a.  the modification of conditions of this Order; and

b.  the design and implementation of any additional measures deemed
    necessary (including stop work authority) to assure continued
    compliance with the intent of the environmental conditions as well
    as the avoidance or mitigation of adverse environmental impact
    resulting from project construction and operation.

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3.  **Prior to any construction**, Midwestern shall file an affirmative
    statement with the Secretary, certified by a senior company
    official, that all company personnel, environmental inspectors, and
    contractor personnel will be informed of the environmental
    inspector\'s authority and have been or will be trained on the
    implementation of the environmental mitigation measures appropriate
    to their jobs **before** becoming involved with construction and
    restoration activities.

4.  The authorized facility locations shall be as shown in the EA, as
    supplemented by filed alignment sheets. **As soon as they are
    available, and before the start of construction**, Midwestern shall
    file with the Secretary any revised detailed survey alignment
    maps/sheets at a scale not smaller than 1:6,000 with station
    positions for all facilities approved by this Order. All requests
    for modifications of environmental conditions of this Order or
    site-specific clearances must be written and must reference
    locations designated on these alignment maps/sheets.

> Midwestern's exercise of eminent domain authority granted under
> Natural Gas Act (NGA) section 7(h) in any condemnation proceedings
> related to this Order must be consistent with these authorized
> facilities and locations. Midwestern's right of eminent domain granted
> under NGA section 7(h) does not authorize it to increase the size of
> its natural gas pipeline to accommodate future needs or to acquire a
> right-of-way for a pipeline to transport a commodity other than
> natural gas.

5.  Midwestern shall file with the Secretary detailed alignment
    maps/sheets and aerial photographs at a scale not smaller than
    1:6,000 identifying all route realignments or facility relocations,
    and staging areas, pipe storage yards, new access roads, and other
    areas that would be used or disturbed and have not been previously
    identified in filings with the Secretary. Approval for each of these
    areas must be explicitly requested in writing. For each area, the
    request must include a description of the existing land use/cover
    type, and documentation of landowner approval, whether any cultural
    resources or federally listed threatened or endangered species would
    be affected, and whether any other environmentally sensitive areas
    are within or abutting the area. All areas shall be clearly
    identified on the maps/sheets/aerial photographs. Each area must be
    approved in writing by the Director of OEP **before construction in
    or near that area**.

> This requirement does not apply to extra workspace allowed by the
> Upland Erosion Control, Revegetation, and Maintenance Plan, minor
> fieldrealignments per property owner needs and requirements which do
> not affect other property owners or sensitive environmental areas such
> as wetlands.
>
> Examples of alterations requiring approval include all route
> realignments and facility location changes resulting from:

a.  implementation of cultural resources mitigation measures;

b.  implementation of endangered, threatened, or special concern species
    mitigation measures;

c.  recommendations by state regulatory authorities; and

d.  agreements with individual landowners that affect other landowners
    or could affect sensitive environmental areas.

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6.  **Within 60 days of the acceptance of this certificate and before
    construction** begins, Midwestern shall file an initial
    Implementation Plan with the Secretary for review and written
    approval by the Director of OEP describing how Midwestern will
    implement the mitigation measures required by this Order. Midwestern
    must file revisions to the plan as schedules change. The plan shall
    identify:

    a.  how Midwestern will incorporate these requirements into the
        contract bid documents, construction contracts (especially
        penalty clauses and specifications), and construction drawings
        so that the mitigation required at each site is clear to onsite
        construction and inspection personnel;

    b.  the number of environmental inspectors assigned per spread, and
        how the company will ensure that sufficient personnel are
        available to implement the environmental mitigation;

    c.  company personnel, including environmental inspectors and
        contractors, who will receive copies of the appropriate
        material;

    d.  the training and instructions Midwestern will give to all
        personnel involved with construction and restoration (initial
        and refresher training as the project progresses and personnel
        change);

    e.  the company personnel (if known) and specific portion of
        Midwestern organization having responsibility for compliance;

    f.  the procedures (including use of contract penalties) Midwestern
        will follow if noncompliance occurs; and

    g.  for each discrete facility, a Gantt or PERT chart (or similar
        project scheduling diagram), and dates for:

        1.  the completion of all required surveys and reports;

        2.  the mitigation training of onsite personnel;

        3.  the start of construction; and

        4.  the start and completion of restoration.

7.  Midwestern shall employ at least one environmental inspector per
    construction spread. The environmental inspector shall be:

    a.  responsible for monitoring and ensuring compliance with all
        mitigation measures required by this Order and other grants,
        permits, certificates, or other authorizing documents;

    b.  responsible for evaluating the construction contractor\'s
        implementation of the environmental mitigation measures required
        in the contract (see condition 6 above) and any other
        authorizing document;

    c.  empowered to order correction of acts that violate the
        environmental conditions of this Order, and any other
        authorizing document;

    d.  a full-time position, separate from all other activity
        inspectors;

    e.  responsible for documenting compliance with the environmental
        conditions of this Order, as well as any environmental
        conditions/permit requirements imposed by other federal, state,
        or local agencies; and

    f.  responsible for maintaining status reports.

8.  Midwestern shall file updated status reports prepared by the head
    environmental inspector with the Secretary on a **weekly** basis
    **until all construction and restoration activities are complete**.
    On request, these status reports will also be provided to other
    federal and state agencies with permitting responsibilities. Status
    reports shall include:

    a.  the current construction status of the project, work planned for
        the following reporting period, and any schedule changes for
        stream crossings or work in other environmentally sensitive
        areas;

    b.  a listing of all problems encountered and each instance of
        noncompliance observed by the environmental inspector(s) during
        the reporting period (both for the conditions imposed by the
        Commission and any environmental conditions/permit requirements
        imposed by other federal, state, or local agencies);

    c.  corrective actions implemented in response to all instances of
        noncompliance, and their cost;

    d.  the effectiveness of all corrective actions implemented;

    e.  a description of any landowner/resident complaints which may
        relate to compliance with the requirements of this Order, and
        the measures taken to satisfy their concerns; and

    f.  copies of any correspondence received by Midwestern from other
        federal, state or local permitting agencies concerning instances
        of noncompliance, and Midwestern's response.

9.  Midwestern must receive written authorization from the Director of
    OEP **before** **commencing** **service** from the project. Such
    authorization will only be granted following a determination that
    rehabilitation and restoration ofthe right-of-way and other areas
    affected by the project are proceeding satisfactorily.

10. **Within 30 days of placing the certificated facilities in
    service**, Midwestern shall file an affirmative statement with the
    Secretary, certified by a senior company official:

    a.  that the facilities have been constructed and installed in
        compliance with all applicable conditions, and that continuing
        activities will be consistent with all applicable conditions; or

    b.  identifying which of the certificate conditions Midwestern has
        complied with or will comply with. This statement shall also
        identify any areas affected by the project where compliance
        measures were not properly implemented, if not previously
        identified in filed status reports, and the reason for
        noncompliance.

11. Midwestern shall have a qualified geologist on call during all
    pipeline construction to plan and review construction methods and
    provide technical support to mitigate and/or avoid potential
    sinkhole locations along the pipeline. The geologist shall confirm
    that any reroutes are located far enough from the sinkholes to avoid
    affecting pipeline operations.

12. Midwestern shall complete karst field surveys on all parcels crossed
    by the project that were previously inaccessible. If any caves are
    identified which have a known subsurface extent beneath the pipeline
    route, Midwestern shall identify whether it would be affected by
    construction activities and provide technical support demonstrating
    how Midwestern would mitigate and/or avoid potential impacts on
    these caves. The survey reports and findings shall be filed with the
    Secretary for review and written approval by the Director of OEP
    **prior to construction**.

[]{.mark}

13. Midwestern shall locate and field inventory all water well and
    spring locations identified for domestic and livestock water supply
    use within 150 feet of all construction work areas. Midwestern shall
    develop site-specific mitigation measures for construction
    activities in these locations and shall, with the landowner's
    permission, conduct pre- and post-construction monitoring of yield
    and water quality for these wells and springs. Midwestern shall file
    a report regarding these water well and spring measures with the
    Secretary for review and written approval by the Director of OEP
    **prior to construction**.

14. **Within 30 days of placing the facilities in service**, Midwestern
    shall file a report with the Secretary discussing whether any
    complaints were received concerning yield or water quality and how
    each was resolved, and describing any damages resulting from
    construction and how the damages were repaired.

15. Midwestern shall prepare and file site-specific construction and
    mitigation plans for the crossing of each hard-bottom stream for the
    review and written approval of the Director of OEP **prior to
    construction.** These plans should identify the streambed rock type,
    state whether or not blasting would be required, and describe the
    measures Midwestern would implement to ensure its construction does
    not cause a loss of stream hydrology.

16. Midwestern shall conduct surveys for federally listed species along
    those segments of the route that were previously inaccessible.
    **Prior to initiation of surveys**, Midwestern shall consult with
    the U.S. Fish and Wildlife Service (FWS) for appropriate survey
    methods and timing windows. Midwestern's completed survey report and
    any FWS comments on the surveys shall be filed with the Secretary,
    and contain the following information:

    a.  name(s) and qualifications of the person(s) conducting the
        survey;

    b.  method(s) used to conduct the survey;

    c.  date(s) of the survey;

    d.  area surveyed (include the mileposts surveyed); and

    e.  proposed mitigation that would substantially minimize or avoid
        the potential impacts.

> Midwestern shall **not begin construction activities until:**

a.  we receive comments from the FWS regarding the proposed action;

b.  we complete any required informal or formal consultation with the
    FWS; and

c.  Midwestern has received written notification from the Director of
    OEP that construction or use of mitigation may begin.

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17. Midwestern shall develop and implement an environmental complaint
    resolution procedure that remains active for at least 3 years
    following the completion of construction. The procedure shall
    provide landowners with clear and simple directions for identifying
    and resolving their environmental mitigation problems/concerns
    during construction of the project and restoration of the
    right-of-way. **Prior to construction,** Midwestern shall mail the
    complaint resolution procedures to each landowner whose property
    would be crossed by the project.

    a.  In its letter to affected landowners, Midwestern shall:

        i.  provide a local contact and telephone number that the
            landowners should call first with their concerns; the letter

> should indicate how soon a landowner should expect a response;

ii. instruct the landowners that, if they are not satisfied with the
    response, they should call Midwestern\'s Hotline; the letter should
    indicate how soon to expect a response; and

iii. instruct the landowners that, if they are still not satisfied with
     the response from Midwestern\'s Hotline, they should contact the
     Commission\'s Enforcement Hotline at (888) 889-8030 or at
     hotline@ferc.gov.

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b.  In addition, Midwestern shall include a table in its **weekly**
    status report containing the following information for each
    problem/concern:

    i.  the identity of the caller and the date of the call;

    ii. the identification number from the certificated alignment
        sheet(s) of the affected property and location by milepost;

    iii. a description of the problem/concern; and

    iv. an explanation of how and when the problem was resolved, will be
        resolved, or why it has not been resolved.

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18. Midwestern shall **defer construction and use** of facilities and
    staging, storage, and temporary work areas and new or to-be-improved
    access roads **until**:

    a.  Midwestern files the Tennessee State Historic Preservation
        Office's (SHPO) comments on the architectural report;

    b.  Midwestern files archaeological and architectural survey reports
        for the denied access areas and any additional areas remaining
        to be surveyed, and the Tennessee SHPO's comments on the
        reports;

    c.  Midwestner files any required Phase II evaluation report, and
        the Tennessee SHPO's comments on the report;

    d.  Midwestern files any required treatment plans, and the Tennessee
        SHPO's comments on the plans;

    e.  the Advisory Council on Historic Preservation is afforded an
        opportunity to comment, if historic properties would be
        adversely affected; and

    f.  the Director of OEP reviews and approves all reports and plans
        and notifies Midwestern in writing that it may proceed with
        treatment or construction.

> All material filed with the Commission containing **location,
> character, and ownership information** about cultural resources shall
> have the cover and any relevant pages therein clearly labeled in bold
> lettering: **"CONTAINS PRIVILEGED INFORMATION---DO NOT RELEASE."**

19. **Prior to construction,** Midwestern shall file for review and
    written approval of the Director of OEP, its final site-specific
    plan for construction activities in the vicinity of the City of
    Portland's water treatment facilities. Midwestern shall provide any
    mitigation measures that it would implement to ensure that public
    drinking water supplies are not affected during construction.

[^1]: Midwestern also held an open season in June 2004, for available
    existing capacity from Joliet, Illinois to Portland, Tennessee. As a
    result of that open season, Midwestern executed a firm
    transportation agreement with Piedmont under its existing Rate
    Schedule FT-A for 120,000 Dth of natural gas per day on Midwestern's
    existing mainline from the existing interconnection on Midwestern's
    system referred to as "Joliet" to an existing delivery point on
    Midwestern's system referred to as "Portland."

[^2]: *See* Seventh Revised Sheet No. 5. The currently effective in-kind
    fuel reimbursement charge is one percent of all transported volumes
    on Midwestern's system.

[^3]: Timely, unopposed motions to intervene are granted by operation of
    Rule 214 of the Commission's Rules of Practice and Procedure. *See*
    18 C.F.R. § 385.214(a)(3) (2005).

[^4]: Columbia Gulf initially protested Midwestern's proposed Eastern
    Extension Project on the basis that the existing Columbia Gulf
    pipeline system has the capacity available to transport the 120,000
    Dth per day of natural gas to serve Piedmont's needs. However, on
    January 4, 2006, Columbia Gulf filed a motion to withdraw its
    protest, acknowledging that, unlike the proposed project, its system
    does not have access to supply sources at the Chicago Hub. Under
    Rule 216 of the Commission\'s regulations, motions to withdraw**,**
    if not opposed with 15 days, are granted by operation of law. No
    opposition to Columbia Gulf's motion to withdraw its protest was
    filed.

[^5]: A complete list of intervenors and commenters is listed in
    Appendix A.

[^6]: 18 C.F.R. § 385.213(a)(2) (2005).

[^7]: Certification of New Interstate Natural Gas Pipeline Facilities,
    88 FERC ¶ 61,227 (1999), order on clarification, 90 FERC ¶ 61,128,
    order on clarification, 92 FERC ¶ 61,094 (2000) (Certificate Policy
    Statement).

[^8]: *See* Exhibit N to Midwestern's June 6, 2005 Application.

[^9]: *See supra* note 4.

[^10]: Midwestern states that many of the landowners are waiting until
    final Commission certification of project before entering into
    rights-of-way negotiations. Midwestern's June 6, 2005 Application at
    16, note 7.

[^11]: The courts have specifically held that the Commission may not
    deny the right of eminent domain to a certificate holder. *See FPC
    v. Tuscarora Indian Nation,* 362 U.S. 99 (1960); *Columbia Gas
    Transmission Corp. v. Exclusive Natural Gas Storage Easement,* 776
    F.2d 125 at 129, note 1 (6^th^ Cir. 1985).

[^12]: Certificate Policy Statement, 88 FERC at 61,748-50.

[^13]: *See* Resource Report No. 10 of Midwestern's June 6, 2005
    Application.

[^14]: Midwestern's June 6, 2005 Application at 15-16.

[^15]: For example, Midwestern states that it has negotiated clauses in
    easements to accommodate landowner's plans to install driveways
    across the easement. Midwestern's July 20, 2005 Answer at 10.

[^16]: *See* "Alternatives to MGT's Eastern Extension Project" filed in
    Docket No. PF05-02.

[^17]: *See* letter from Nikki Wallace dated December 14, 2005 and filed
    on January 5, 2006.

[^18]: *See, e.g.,* November 16, 2005 email from intervenor Lorrie
    Marcum to the Commission; November 17, 2005 email from STOP
    Coalition members to the Commission; and January 13, 2006 letter
    from intervenor Lorrie Marcum to the Commission.

[^19]: *See* January 10, 2006 letter of Senator Diane Black requesting
    environmental impact study.

[^20]: See Certificate Policy Statement, 88 FERC at 61,748.

[^21]: *Id.* at 61,744. *See also NE Hub Partners, L.P.,* 90 FERC ¶
    61,142 (2000).

[^22]: In fact, Piedmont states that the Midwestern service complements
    agreements it has for firm service on Columbia Gas Transmission
    Company, Columbia Gulf, East Tennessee, Dominion Transmission, Hardy
    Storage, Tennessee, and Texas Eastern. Motion to Intervene of
    Piedmont at 3.

[^23]: Midwestern's currently effective firm and interruptible
    transportation rates on its mainline system are: \$2.06 per Dth
    monthly reservation charge and \$0.0009 per Dth commodity rate, and
    \$0.0687 maximum and \$0.0009 minimum IT rates.

[^24]: See, e.g., Transcontinental Gas Pipe Line Corp., 106 FERC ¶
    61,299 at P 191 (2004).

[^25]: Midwestern's proposed Rate Schedule FT-B provides for negotiated
    rates in accordance with its negotiated rate authority granted in
    Docket No. RP97-14-000 on October 31, 1996. *Midwestern Gas
    Transmission Co.*, 77 FERC ¶ 61,096 (1996); *order on compliance*,
    78 FERC ¶ 61,042 (1997). Specifically, Section 5.8 of Rate Schedule
    FT-B provides Midwestern's customers the option to pay the recourse
    rates or a negotiated rate which may be less than, equal to, or
    greater than the cost-based maximum recourse rate.

[^26]: Midwestern explains that it will subsequently further revise such
    tariff sheet to reflect the adjusted negotiated rate based upon the
    actual costs associated with constructing the project, and that it
    will file the tariff sheet six months after the in-service date of
    the project. *See* Midwestern's June 6, 2005 Application at 10, n.4.

[^27]: Alternatives to Traditional Cost-of-Service Ratemaking for
    Natural Gas Pipelines and Regulation of Negotiated Transportation
    Services of Natural Gas Pipelines (Alternative Rate Policy
    Statement), 74 FERC ¶ 61,076 (1996), reh'g and clarification denied,
    75 FERC ¶ 61,024 (1996), reh'g denied, 75 FERC ¶ 61,066 (1996);
    petition for review denied, Burlington Resources Oil & Gas Co. v.
    FERC, 172 F.3d (D.C. Cir. 1998); Modification of Negotiated Rate
    Policy, 104 FERC ¶ 61,134 (2003), order on reh'g and clarification,
    114 FERC ¶ 61,042 (1996).

[^28]: Alternative Rate Policy Statement, 74 FERC at 61,241. See also
    NorAm Gas Transmission Co., 77 FERC ¶ 61,011 (1996).

[^29]: See, e.g., PG&E Gas Transmission, Northwest Corp., 105 FERC ¶
    61,382 at P 23 (2003); Policy Statement on Creditworthiness for
    Interstate Natural Gas Pipelines and Order Withdrawing Rulemaking
    Proceeding (Policy Statement on Creditworthiness), FERC Stats. and
    Regs. ¶ 31,191at P17 (June 30, 2005).

[^30]: CenterPoint Energy Gas Transmission Co., 102 FERC ¶ 61,222
    (2003).

[^31]: See, e.g., North Baja Pipeline, LLC, 102 FERC ¶ 61,234 at P 15
    (2003); Policy Statement on Creditworthiness at P 18.

[^32]: *See* 18 C.F.R. §154.105 (2005).

[^33]: Docket No. PR05-2-000 was established on October 27, 2004 for
    Midwestern's pre-filing proceeding.

[^34]: Mr. Sulkin's and Mr. Buppert's comments were filed by Bullock,
    Fly and Hornsby, attorneys representing STOP.

[^35]: Karst is an area of irregular limestone in which erosion has
    produced fissures, sinkholes, underground streams, and caverns.

[^36]: *See* 40 C.F.R. § 1508.9 (2005).

[^37]: 40 C.F.R. § 1508.27(b)(4) (2005).

[^38]: *Wetlands Action Network v. United States Army Corps of Eng\'rs*,
    222 F.3d 1105, 1121 (9th Cir. 2000) (citation omitted). *See also,
    LaFlamme v. FERC,* 852 F2d. 389, 400-401 (9th Cir. 1988).

[^39]: EA at 16.

[^40]: Midwestern's December 6, 2005 Supplemental Comments to the EA at
    2-3.

[^41]: A conduit-flow spring is a subsurface passage that fills with
    water under hydrostatic pressure and eventually breaks the surface
    forming a spring.

[^42]: EA at 13-17.

[^43]: *Id.* at 20-24.

[^44]: PELA states that it is nationally and internationally recognized
    as a karst specialist that performs investigations and evaluations
    for sinkhole risk assessments, source water delineation for karsts
    pings and wells, karst hydrology and geology.

[^45]: The report states that if the review indicated that there were
    potentially larger karst groundwater basins extending beyond two
    miles, it would have increased the area under review. However, the
    review of maps did not indicate a need to expand the area of review.

[^46]: *See* PELA report at 10-11.

[^47]: Environmental Conditions 12 and 13.

[^48]: Environmental Condition 19.

[^49]: EA at 16-17.

[^50]: *Id*. at 22.

[^51]: *See* Siskind, David E., and Robert R. Fumanti, *Blast-Produced
    Fractures in Lithonia Granite*, (International Society of Explosive
    Engineers, Technical Document RI 7901, 1979).

[^52]: Studies indicates that specific blasting techniques can control
    fracturing in rock such that significant impacts to not occur beyond
    10 to 20 feet from the blast site. *See* Oriard, L.L., *Vibration
    and Ground Rupture Criteria for Buried Pipelines,* (International
    Society of Explosive Engineers, 1994 General Proceedings P 243).

[^53]: Id.

[^54]: EA at 24. Steams identified by field assessment and USGA mapping
    and aerial photos for restricted access areas.

[^55]: See, e.g., Schneidewind v. ANR Pipeline Co., 485 U.S. 293 (1988);
    National Fuel Gas Supply v. Public Service Commission, 894 F.2d 571
    (2d Cir. 1990); and Iroquois Gas Transmission System, L.P., 52 FERC
    ¶ 61,091 (1990) and 59 FERC ¶ 61,094 (1992).

[^56]: EA at 64-74.

[^57]: The three system alternatives analyzed by the EA were (1) the
    delivery of gas by Columbia Gulf from its sources in the Gulf of
    Mexico to Nashville Gas Company and to Columbia Gulf\'s interconnect
    with East Tennessee Gas near Hartsville, Tennessee; (2) delivery of
    gas at Portland, Tennessee by Midwestern to Tennessee Gas, which
    would deliver an equivalent volumes to East Tennessee at an existing
    interconnect near Ridgetop, Tennessee for transport to the
    Hartsville area and/or an existing Lobelville interconnect, and (3)
    delivery of gas at Portland by Midwestern to Tennessee Gas, which
    would deliver equivalent volumes to Nashville Gas at an existing
    interconnect near Nashville.

[^58]: EA at 65.

[^59]: EA at 66-67.

[^60]: EA at 66-67.

[^61]: EA at 67.

[^62]: See, e.g., City of Grapevine, Texas v. DOT, 17 F.3d 1502, 1506
    (D.C. Cir. 1993), citing Citizens Against Burlington, Inc. v. Busey,
    938 F.2d 190, 197-98 (D.C. Cir. 1991).

[^63]: EA at 67-73.

[^64]: EA at 73-74.

[^65]: EA at 73-74.

[^66]: EA at 17-19.

[^67]: *Id*.

[^68]: *See* Commission's Upland Erosion Control, Revegetation and
    Maintenance Plan, Post-Construction Activities, Monitoring and
    Maintenance, section VII.A.2.

[^69]: EA at 9.

[^70]: *Id.* at 35.

[^71]: See Guardian Pipeline, LLC, 94 FERC ¶ 61,269 (2001); East
    Tennessee Natural Gas Company, 102 FERC ¶ 61,225 (2003).

[^72]: Metropolitan Edison v. People Against Nuclear Energy, 460 U.S.
    766 at 779 (1983).

[^73]: *Id*. at 777-778.

[^74]: *Id*. at 778.