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FERC is once again requesting comments regarding its 1999 policy for certification of natural gas pipelines.  Under Section 7 of the Natural Gas Act,[1] natural gas companies cannot construct or extend pipeline facilities unless they obtain a certificate of public convenience and necessity from FERC.  In 1999, FERC issued a policy statement[2] setting forth the criteria it would apply when deciding whether to issue a certificate of public convenience and necessity.  The Commission opened the 1999 policy for review and comment in a 2018 Notice of Inquiry (NOI),[3] but took no action as a result of comments received.  In February 2021, FERC renewed its request for comment, expanding the scope of issues to include a focus on the project’s greenhouse gas emissions, and environmental justice community concerns.  The new NOI reflects the Biden Administration’s Executive Order on combatting climate change, as well as FERC Chairman Glick’s consistent dissents from orders approving pipeline expansions, wherein he raised concerns about: (1) the lack of accounting for carbon/climate change in the Commission’s environmental review; and (2) the use of precedent agreements with affiliates to demonstrate need for projects.[4]

The following summarizes the considerations in play when the 1999 Certificate Policy was adopted, and the interests raised in the 2018 and 2021 notices of inquiry.

1999 Policy Statement

Under the 1999 Policy Statement, the threshold question applicable to existing pipelines is whether the proposed project can proceed without subsidies from 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 pipeline’s existing customers, on existing pipelines in the market and their captive customers, or on landowners and communities affected by the route of the new pipeline. If residual adverse effects on any of these three interests are identified, after efforts have been made to minimize them, then the Commission will proceed to evaluate the project by balancing the evidence of public benefits to be achieved against the residual adverse effects. The 1999 Policy Statement sets forth in detail the considerations that the Commission will apply to each of these steps. At the end of the analysis, the Commission will approve an application for a certificate only if the public benefits from the project outweigh any adverse effects.

FERC’s 1999 Policy Statement update was largely driven by anticipated growth in demand for natural gas in the northeastern U.S. and the effect the projected growth would have on existing pipeline capacity. The Commission considered the enhancement of competitive transportation alternatives, the possibility of overbuilding, the avoidance of unnecessary disruption of the environment, and the unneeded exercise of eminent domain.

During the formation of the 1999 Policy Statement, parties raised many issues for the Commission’s consideration, primarily focused on the Commission’s determination of need for the new or expanded project.  Those issues include whether: multiple projects or a single project should be authorized, overbuilding should be proactively minimized or left to market forces, market preference should be given to projects that do not use eminent domain, demand should be based on a showing of long-term contracts or whether more factors need to be considered, the same standard should be applied to contracts with affiliates as with non-affiliates, a different assessment should be used for approving projects in existing markets versus projects that bring service to a new customer base, and whether the Commission should retain a presumption favoring rolled-in rates.

2018 Notice of Inquiry

In April 2018, FERC issued a Notice of Inquiry (NOI) seeking information as to how FERC should revise its approach under its currently effective 1999 Policy Statement on the certification of new natural gas transportation facilities under Section 7 of the Natural Gas Act.  The NOI inquired about: (1) FERC’s existing needs test, including its consideration of precedent agreements with affiliates to support need; (2) pipeline use of eminent domain and corresponding landowner interests; (3) its evaluation of the environmental impacts of a proposed project; and (4) procedural issues that may expedite project review, including pre-filing, post-filing, and post-order processes. 

The 2018 NOI was based, in part, on a 2018 Executive Order on “Discipline and Accountability in Environmental Review and Permitting of Infrastructure Projects,” which promoted transparency and timely decision making.  However, the majority of comments received by FERC in response to its 2018 NOI were from individuals and environmental interests, which expressed concerns about the FERC process in general, concerns about the lack of consideration of carbon impacts, as well as concerns about specific pipelines and the tactics utilized to gain FERC approvals.  The Commission did not issue any change to its policies despite receiving over 3,000 comments.

2021 Notice of Inquiry

On February 18, 2021, FERC issued another Notice of Inquiry (NOI)[5] seeking additional comments as to how FERC should revise its approach to the certification of new natural gas transportation facilities under Section 7 of the Natural Gas Act.  The NOI builds on the 2018 NOI, and specifically notes that the Commission will consider the comments received in response to that NOI.  FERC notes that, subsequent to the 2018 NOI, a new Executive Order was issued, addressing the climate crisis, and new National Environmental Policy Act (NEPA) standards were issued.[6] 

In addition to seeking comments on the four issues identified in the 2018 NOI, the 2021 NOI adds a fifth broad area for examination, namely “the Commission’s identification and addressing of any disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on environmental justice communities and the mitigation of those adverse impacts and burdens.”[7]

The NOI identifies issues for comment in each of the five topics, listing twelve issues related to need, three of which are new since the 2018 NOI (NOI at P 8); six issues related to eminent domain, with one being new since the 2018 NOI (NOI at P 15); eleven issues related to environmental considerations, some of which were modified since the 2018 NOI (NOI at P 17); four issues related to process improvements, with two being new or revised since the 2018 NOI (NOI at P 19); and seven new issues related to environmental justice communities (NOI at P 22). 

Comments are due April 26, 2021.

For more information, please contact Peter Scanlon, Bhaveeta Mody, Peter Kissel, or Sylwia Dakowicz.

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[1] 15 U.S.C. 717f(e).  The Commission has similar siting authority over Liquefied Natural Gas facilities under NGA Section 3.

[2] Certification of New Interstate Natural Gas Pipeline Facilities, 88 FERC ¶ 61,227 (1999), clarified, 90 FERC ¶ 61,128, further clarified, 92 FERC ¶ 61,094 (2000) (1999 Policy Statement).

[3] Certification of New Interstate Natural Gas Facilities, 163 FERC ¶ 61,042 (2018) (2018 NOI). 

[4] See e.g., Mountain Valley Pipeline, LLC and Equitrans, L.P., Order on Rehearing, 163 FERC ¶ 61,197 (2018) [Docket Nos. CP16-10-000 and CP16-13-000], and PennEast Pipeline Company, LLC, Order on Rehearing, 164 FERC ¶ 61,098 (2018) [Docket No. CP15-558-000].

[5] Certification of New Interstate Natural Gas Facilities, Notice of Inquiry, 174 FERC ¶ 61,125 (2021) [PL18-1-000](2021 NOI).

[6]  2021 NOI at 3, Citing Exec. Order No. 14008 Tackling the Climate Crises at Home and Abroad, § 219, 86 FR 7619, and Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act, 85 FR 43304 (2020). CEQ's final rule directs agencies to propose revisions to their NEPA procedures consistent with the final rule by September 14, 2021. Further, the Commission's regulations provide that “[t]he Commission will comply with the regulations of the Council on Environmental Quality except where those regulations are inconsistent with the statutory requirements of the Commission.” 18 CFR 380.1

[7] 2021 NOI at 6.