Comments are due by April 26, 2021.
Background
Under the Natural Gas Act (NGA), a natural gas facility such as an interstate pipeline must obtain a “certificate of public convenience and necessity” from FERC prior to construction. FERC’s Certificate Policy Statement, issued in 1999, provided guidance on FERC’s evaluation of certificate applications, and outlined a multipronged test that applicants must satisfy to demonstrate that a proposed infrastructure project “is or will be required by the public convenience and necessity,” i.e., that the public benefits outweigh the anticipated adverse impacts. In determining whether a proposed project is “required by the public convenience and necessity,” the Commission also performs an environmental review under the National Environmental Policy Act (NEPA) to evaluate a proposed project’s environmental impacts.
In April 2018, the Commission issued the 2018 NOI to gather stakeholder input on potential revisions to its 1999 Certificate Policy Statement. The 2018 NOI invited comments on four general interest areas: (i) FERC’s reliance on precedent agreements as a demonstration of a project’s need; (ii) the exercise of eminent domain and landowner interests; (iii) evaluation of alternatives and environmental effects under NEPA and the NGA; and (iv) the efficiency and effectiveness of FERC’s certificate process. FERC received over 3,000 comments on the 2018 NOI, but did not take further action—largely because it lacked a full five-commissioner panel.2
Since the 2018 NOI comment deadline, the Commission’s certificate process and numerous certificate orders have been the subject of controversy—with current FERC Chairman Richard Glick serving as one of the fiercest critics.3 Chairman Glick’s primary points of opposition have concerned the Commission’s perceived lack of attention to environmental justice and landowner interests, FERC’s refusal to consider the consequences its actions have on GHG emissions and climate change, as well as FERC’s position that the “Social Cost of Carbon is not appropriate in project-level NEPA review and cannot meaningfully inform the Commission’s decisions on natural gas infrastructure projects under the NGA.”4
To help mitigate the first of these concerns, Chairman Glick recently announced plans to create a senior-level position at FERC dedicated to “better incorporat[ing] environmental justice and equity concerns into the Commission’s decision-making process.” The new and revised questions in the NOI, as detailed below—particularly those focused on environmental justice and FERC’s evaluation of GHG emissions—foreshadow a potential change in FERC policy.
NOI & Request for Comment
The Commission invites comments on various new or revised questions related to the four areas of inquiry identified in the 2018 NOI, and adds a fifth area of inquiry, relating to environmental justice concerns. The Commission discourages stakeholders from resubmitting previous comments, which remain in the record; instead, it urges stakeholders to “submit new or modified comments that clearly explain why the Commission should or should not take a specific course of action, and, more importantly, provide precise recommendations for how the Commission could implement such changes.”5 Below we summarize notable new or revised questions that were not included in, or which build upon, the 2018 NOI.
- FERC’s “Project Need” Determination
The NOI includes two new questions: Should FERC consider the economic, energy security and social attributes of domestic natural gas production and use, as detailed in a recent letter from Sen. Joe Manchin (D-WV) to President Biden? Should FERC consider the extent to which natural gas production and/or transportation is a major source of jobs and/or tax revenues in low to middle-income communities?
- Eminent Domain and Landowner Interests
FERC’s new questions here largely concern its use of “conditional certificates,” whereby FERC issues a certificate prior to a project receiving all necessary federal permits. FERC acknowledges that courts have upheld its issuance of conditional certificates—and FERC precedent explains that failure to do so “would likely delay” project in-service dates “to the detriment of consumers and the public” and could place FERC’s administrative process on hold indefinitely until states with delegated federal authority choose to act.6 FERC also seeks new or updated stakeholder perspectives on whether it has the authority to condition a certificate holder’s exercise of eminent domain.
- Evaluation of Environmental Impacts
As the Commission explains, “[t]here continues to be stakeholder interest regarding the alternatives that the Commission evaluates in its environmental review and how the Commission addresses climate change, including the impact of [GHG] emissions.”7 New or revised questions here ask, among other things: (i) how FERC should assess the downstream end-use GHG impacts of a proposed pipeline if the gas is sent to a pooling point or to a mid-stream shipper; (ii) how FERC could and/or should determine the significance of a proposed project’s GHG emissions contribution to climate change; and (iii) whether the NGA, NEPA or other statutes authorize and/or mandate FERC to use the Social Cost of Carbon or similar alternative tools when assessing certificate applications.
- Improvements to FERC’s Review Process
The NOI includes two revised questions aimed at “improv[ing] the transparency, efficiency, and predictability of” the Commission’s certificate process:8 (i) whether and how certain aspects of FERC’s application review (i.e., pre-filing, post-filing and post-order-issuance) can be condensed or eliminated; and (ii) whether there are certain “classes” of projects that should face a more efficient process, and, if so, what that process would entail.
- Environmental Justice Considerations
Citing President Biden’s EO and “[c]oncerns raised in certificate proceedings,” the Commission poses new questions to help it “examine whether and if so how, the Commission should consider adjusting its approach to analyzing the impacts of a proposed project on environmental justice communities.”9 These questions include: (i) whether FERC should change how it identifies potentially affected “environmental justice communities,” including the criteria used; (ii) whether FERC should establish a method for evaluating mitigation for impacts on environmental justice communities; and (iii) whether the NGA, NEPA or other statutes outline specific remedies for FERC to implement based on factual findings of environmental justice metrics or defined impacts, including the potential rejection of a project otherwise deemed needed to serve the public interest.
Implications
FERC’s updated NOI serves as the first step in performing several directives in President Biden’s EO, notably with respect to embedding climate change and environmental justice considerations into federal agency decision-making. Such a move is a remarkable pivot from FERC leadership under the Trump administration, with potentially significant implications for FERC’s natural gas permitting decisions. For example, if the Commission begins incorporating a thorough GHG assessment into its NEPA review—including the use of an updated Social Cost of Carbon that could trend north of $100 ton/CO2 in 202510—projects that seemed viable under a prior administration could face greater scrutiny.
It remains to be seen whether the Commission will effectuate major changes to its decision-making process for the certification of new interstate pipeline infrastructure, or whether any reforms will be more modest. It is likely that the Commission will face significant pushback on any reform efforts that make the certificate process substantially more costly or time-consuming, including from Commissioner James Danly, who stated he “will likely oppose most of the initiatives that the Chairman is likely to embark upon.”11 With the departure of Commissioner Chatterjee later this year and the installation of a new Democratic Commissioner thereafter, however, the balance of power at FERC will change, and we expect that FERC will be issuing a revised policy statement in the relatively near future, possibly by the end of 2021.
1 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) (Certificate Policy Statement).
2 See Ltr. from Neil Chatterjee, then-FERC Chairman, to U.S. Rep. Ann McLane Kuster, Docket No. PL18-1-000 (Jan. 29, 2020) (expressing belief that “there should be consensus among a full complement of five Commissioners” before taking a “highly significant” action such as “changing the Commission’s pipeline approval process and reviewing the Certificate Policy Statement”).
3 See, e.g., FERC January 2021 Open Meeting Transcript, at 26: 22-25, https://www.ferc.gov/sites/default/files/2021-02/transcript.pdf (Remarks of R. Glick) (“I’ve been at the Commission for three years, and I’ve seen little in the way of orders that do more than give lip service to environmental justice. That needs to change.”); Comm’r Richard Glick Dissent in Part Regarding Gulf South Pipeline Company, LP (Mar. 19, 2020), https://www.ferc.gov/news-events/news/commissioner-richard-glick-dissent-part-regarding-gulf-south-pipeline-company-lp (“The Commission again refuses to consider whether the Project’s contribution to climate change from GHG emissions would be significant, even though it quantifies the direct GHG emissions from the Project’s construction. That failure forms an integral part of the Commission’s decisionmaking: The refusal to assess the significance of the Project’s contribution to the harm caused by climate change is what allows the Commission to state that approval of the Project ‘would not constitute a major federal action significantly affecting the quality of the human environment’ and, as a result, conclude that the Project is in the public interest and required by the public convenience and necessity.”).
4 See Transcontinental Gas Pipe Line Co., LLC, 171 FERC ¶ 61,032, at P 15 (2020).
5 Staff Presentation on Certification of New Interstate Natural Gas Facilities (PL18-1-000), https://www.ferc.gov/news-events/news/staff-presentation-certification-new-interstate-natural-gas-facilities-pl18-1-000.
6 NOI at P 13.
7 NOI at P 16.
8 NOI at P 18.
9 NOI at P 22.
10 For more on the Social Cost of Carbon and related social costs of other GHGs, see our alerts here and here.
11 FERC February 2021 Open Meeting Transcript, at 30:2-3, https://www.ferc.gov/sites/default/files/2021-03/transcript.pdf (Remarks of J. Danly).
