FERC Proposes Revamp to Pipeline Approval Process

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FERC proposes environmental justice concerns play a larger role in federal approvals of natural gas pipelines.

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Low-income and minority communities in the United States have long suffered from the negative impacts of natural gas development.

In response, the Federal Energy Regulatory Commission (FERC) announced at its February meeting a new interim policy for addressing environmental and public-interest issues that arise from its review and approval of new interstate natural gas pipelines. For the first time, FERC stated that it would formally consider the environmental justice impacts of proposed pipelines. The agency announced it will also integrate more climate impacts into its approval process.

The Natural Gas Act authorizes FERC to approve the construction of new interstate natural gas pipelines. A company that seeks to build a pipeline must receive a certificate from FERC concluding that the pipeline will serve “public convenience and necessity.”In announcing these two policy changes, FERC revised its 23-year-old approach to issuing natural gas certificates.

Under its interim policy, FERC would consider the interests of an applicant’s existing customers, existing pipelines and their captive customers, the environment, and landowners and surrounding communities. The policy’s definition of “surrounding communities” includes communities that “have long borne a disproportionate share” of environmental harms. Using this expanded framework, FERC would balance a proposed pipeline’s benefits against a wider range of adverse impacts when deciding whether to issue a certificate.

Moreover, FERC’s approval process must satisfy the National Environmental Policy Act, which requires that federal agencies prepare environmental impact statements before taking major actions that significantly affect the environment. FERC published a separate policy statement that outlines how the agency will determine whether a proposed pipeline’s greenhouse-gas emissions represent a “significant” environmental impact, triggering additional review requirements.

For at least a decade, FERC’s environmental reviews have considered climate impacts from emissions produced directly by the construction and operation of a proposed pipeline. Project sponsors provide information on these direct emissions in their permit applications.

In 2016, FERC began using a method developed by the U.S. Environmental Protection Agency to estimate the indirect emissions from producing and using any gas carried by a pipeline. But until February’s statements, the agency did not establish a threshold for when pipeline emissions trigger an environmental impact statement.

The new policy statement provides that FERC would prepare an environmental impact statement for any pipeline that it expects to emit more than 100,000 metric tons of greenhouse gases per year. This calculation would comprise both direct and indirect emissions. FERC would also consider indirect emissions in its determinations of public convenience and necessity under the Natural Gas Act.

These policy changes respond to rulings from several federal appellate courts that scolded FERC for failing to explain how proposed pipelines would impact climate change and directed the agency to include in its approval process the consideration of downstream emissions—greenhouse gases emitted by the combustion of gas transported by a pipeline. In addition, some policymakers have criticized FERC’s old approval process for favoring pipeline companies over landowners.

The agency approved each of its new policy statements by a 3-2 vote that split along party lines. Dissenting from both rulings, FERC Commissioner James Danly warned that the new policies will hobble the American energy industry by making it difficult for developers to secure funding for new projects.

Other opponents of the policy changes echoed these worries. U.S. Senator Joe Manchin (D-W. Va.), the Chair of the Senate Committee on Energy and Natural Resources, argued that the policy statements politicize FERC and will inhibit the growth of American energy infrastructure. The Wall Street Journal’s Editorial Board claimed that the guidance increases Russian President Vladimir Putin’s leverage over global energy supplies, hurting the United States’ ability to sanction Russia for its invasion of Ukraine.

In response to this backlash, FERC voted on March 24, 2022, to designate the policy statements as drafts on which the commission will seek further public comments. The statements will not apply to pending project applications or filed applications before FERC issues final guidance.

But supporters of FERC’s policy changes responded that the agency’s recent statements merely align FERC’s approval process with what current laws require. Under its old policy, the agency earned a reputation for rubber-stamping pipeline proposals. According to a 2020 video report by a legislative subcommittee, FERC approved over 99 percent of the certificate applications it received over the past 20 years. These data suggest that FERC’s old policy failed to take seriously Congress’s instruction that the agency only grant certificates to pipelines that serve “public convenience and necessity.”

Environmental groups hope that these updated policy statements will accelerate the United States’ transition to energy sources with lower greenhouse gas emissions and continue FERC’s efforts to address how its policies impact marginalized communities. Last year, the agency created a senior staff position to coordinate its work on environmental justice and launched a new Office of Public Participation to help members of the public participate in FERC proceedings. FERC expects that its updated policies for pipeline approvals will strengthen these ongoing efforts to increase the engagement of environmental justice communities.