FERC launches inquiry into natural gas pipeline certificate policies

The Federal Energy Regulatory Commission on April 19 launched an inquiry that seeks information and stakeholder perspectives to help the Commission explore whether, and if so, how, to revise existing policies regarding its review and authorization of interstate natural gas transportation facilities under section 7 of the Natural Gas Act.

Specifically, FERC issued a Notice of Inquiry (NOI) to examine its policies in light of changes in the natural gas industry and increased stakeholder interest in how it reviews natural gas pipeline proposals since the Commission adopted its current policy statement on pipeline certification (Docket No. PL18-1-000).

The Commission issued its current policy statement, “Certification of New Interstate Natural Gas Pipeline Facilities – Statement of Policy” (Docket No. PL99-3-000), in September 1999. The policy governs how the Commission evaluates natural gas pipeline proposals that come before it.  FERC Chairman Kevin McIntyre on Dec. 21 said that the federal agency intended to review the 1999 policy, and the NOI represents the first step in that review.

FERC staff noted in a presentation at the Commission’s monthly open meeting on April 19 that the NOI seeks input on whether, and if so how, the Commission should adjust:

  • Its methodology for determining whether there is a need for a proposed project, including the Commission’s consideration of precedent agreements and contracts for service as evidence of such need;
  • Its consideration of the potential exercise of eminent domain and of landowner interests related to a proposed project; and
  • Its evaluation of the environmental impacts of a proposed project.

The Commission is also asking for comment on whether there are specific changes FERC could consider implementing to improve the efficiency and effectiveness of its certificate processes including pre-filing, post-filing, and post-order issuance.

The NOI encourages commenters to identify, with specificity, any perceived issues with the Commission’s current analytical and procedural approaches and to provide detailed recommendations to address these issues.

The NOI notes that, during the pendency of this proceeding, the Commission intends to continue to process natural gas facility matters before it, consistent with the current policy statement, and to make determinations on the issues raised in those proceedings on a case-by-case basis.

Also, the NOI states that, in the proceeding, FERC will consider only generic issues, and will not consider any comments that refer to open, contested Commission proceedings. Should the Commission decide to generally revise its procedures as a result of this proceeding, the NOI notes that the Commission will address at that time how and when those changes will be implemented.

In addition, the Commission will decide any next steps with regard to the review of the policy statement after the Commission has reviewed the comments filed in response to the NOI.

“I emphasize that by issuing the NOI, we are posing questions to stakeholders,” said McIntyre at the FERC meeting. The issuance of the NOI “should neither be read as a forecast of a policy direction, nor as an indication of any particular action the Commission may take,” he said.

Also, the NOI “and my remarks should not be read to suggest that I believe that the current policy statement” or the application of it “has been ineffective or that any changes are necessarily going to be made,” the FERC chairman went on to say.

Rather, by issuing the NOI, FERC is “seeking information and stakeholder perspectives to help the Commission to explore whether, and if so how, it should revise its approach” under the current policy statement.

Among the questions that McIntyre asked of FERC staff was how considerations of resilience and reliability are reflected in the NOI.

Caroline Wozniak, with FERC’s Office of Energy Market Regulation, noted that the 1999 policy statement recognizes that the public benefits of a proposed project are diverse and could include increasing electric reliability.

She said that since issuance of the policy statement, natural gas demand has increased to 27.1 Tcf in 2017 and the U.S. Energy Information Administration forecasts that domestic natural gas demand will continue to rise to more than 31.4 Tcf by 2035, driven largely by growth in gas-fired electric generation.

In the NOI, FERC seeks input on what benefits the Commission should consider in determining the public need for a proposed project including resilience or reliability, Wozniak pointed out.

Commissioner Cheryl LaFleur said that among the areas that she is “extremely focused on is how we do our environmental review. I’m very interested in receiving stakeholder input regarding how the Commission conducts our environmental reviews of proposed pipeline projects.”

LaFleur said, “I really would like to take a hard look in this area. How should we consider upstream and downstream GHG emissions in determining whether a project is in the public interest? Whether and how we should use the social cost of carbon – whether that’s an appropriate measurement standard for climate impacts that we can use in our dockets.”

A recent order issued by FERC reinstating certificate and abandonment authority for a set of natural gas pipeline projects in the southeastern part of the country fell short in the estimation of LaFleur and Commissioner Richard Glick because it failed to adequately address greenhouse gas emissions issues, they said. Glick issued a dissent in response to FERC’s March 14 decision, while LaFleur issued a partial dissent.

At the April 19 FERC meeting, Glick said that he is particularly interested in hearing from stakeholders on two issues. “The first is whether and how we should consider evidence beyond” precedent agreements to demonstrate the need for new pipelines, “especially when there’s an affiliate relationship.”

The second issue involves “how the Commission, when weighing the public interest, considers impacts on the environment including climate change.”

Comments will be due within 60 days of publication of the NOI in The Federal Register.