Climate, project need at center of FERC pipeline policy review
Power and gas industry groups pushed the Federal Energy Regulatory Commission (FERC) to preserve its approval policy for natural gas pipelines in comments filed last week, while environmentalists and liberal states asked for changes.
Groups representing the natural gas and power generation sectors said FERC should not make major changes to how it considers natural gas pipeline applications, which it currently approves based on contracts signed for capacity on the pipeline.
Environmentalists, however, said FERC should more seriously consider the greenhouse gas impacts of proposed pipelines when evaluating applications and base its judgments of pipeline need on more than just signed capacity contracts. The comments are part of a policy review initiated in December by FERC Chairman Kevin McIntyre.
FERC's pipeline approval process has been friendly to companies that can meet the commission's standard for market need. In the last 30 years, the agency has only rejected two pipelines, according to a report from the Center for Public Integrity published last year.
Accordingly, companies that build pipelines and rely on natural gas for power generation urged the commission to not make any major changes to its evaluation policy, last updated in 1999.
"The fundamental architecture of the Certificate Policy Statement is consistent with the [Natural Gas Act] and remains sound," the Interstate Natural Gas Association of America, a trade group, said in comments. Groups representing electric utilities and oil and gas groups filed similar remarks.
Eight states, led by Massachusetts Attorney General Maura Healey, disagreed, arguing that FERC's policy has led to the overbuilding of pipeline infrastructure.
"Between 1999 and 2017, the Commission approved interstate natural gas pipeline capacity additions of 180 billion cubic-feet per day nationwide, a significant number that exceeds current national peak demand," the states said in comments.
The states and more than 60 environmental and public interest organizations from around the U.S. called on FERC to alter how it assesses pipeline need, taking into account not just capacity contracts — called "precedent agreements" — but also other measures of market demand.
FERC's use of precedent agreements has come under increased scrutiny in recent months as Democratic commissioners raised questions of "self-dealing" when the contracts for pipeline capacity are signed by affiliates of the same company that is building the pipeline.
"The Commission's single-minded reliance on precedent agreements is also contrary to the existing Policy Statement which directs the Commission to ‘consider all relevant factors reflecting on the need for the project,'" states wrote, "including studies of projected demand, the market to be served, and potential cost savings to consumers."
Critics also urged FERC to take climate change impacts into account when approving pipelines. The agency's current policy takes into account expected emissions from a project itself, but Democratic commissioners have pushed FERC to include broader measures of how a project will influence the production and consumption of natural gas.
"The Commission's current approach minimizes the quantitative and qualitative relevance of direct, indirect and cumulative environmental impacts, including the lifecycle GHG emissions and climate change implications resulting from its pipeline approvals," public interest groups led by the Natural Resources Defense Council wrote.
The states and green groups also pushed FERC to give landowners and states a bigger role in its evaluation process. FERC last year overruled a New York decision to reject a pipeline in the state, and last week a federal appeals court said its frequent use of procedural delays in pipeline cases can deprive landowners of "meaningful judicial review" for projects proposed for their property.
FERC is unlikely to issue a ruling on its pipeline policy review before next month, when Commissioner Robert Powelson is set to step down, Chairman McIntyre said at the agency's most recent open meeting. That will leave FERC with two Republicans and two Democrats until a replacement is confirmed by the Senate, allowing the Democrats to deadlock commission votes in proceedings like the pipeline review.
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