A divided Federal Energy Regulatory Commission on Thursday adopted a new framework for reviewing natural gas infrastructure proposals that includes expanded criteria for deciding whether the facilities are needed and how they could affect people and the environment.
FERC also issued an interim policy statement outlining how the agency will consider greenhouse gas (GHG) emissions related to the gas projects it reviews. The statement encourages project developers to take steps to offset the carbon emissions their projects may produce.
FERC has been reviewing natural gas pipelines and other gas facilities under a framework set in 1999.
"My hope is that these policy statements will provide project developers, consumers, landowners and residents of impacted communities and the commission itself with a more legally durable path forward that will provide greater certainty for everyone," FERC Chairman Richard Glick said during the commission's monthly meeting.
FERC's action was partly in response to court decisions that overturned some of the agency's approvals of gas projects for failing to adequately consider GHG emissions, whether the project was needed and potential effects on environmental justice communities, Glick said. Those cases include Sabal Trail, Birckhead, Vecinos and Spire Pipeline. The Mountain Valley Pipeline has been hit by similar legal problems, Glick noted during a media briefing immediately after the FERC meeting.
FERC's new framework for reviewing gas projects will help its decisions withstand court review, which will provide more certainty for project developers, according to Glick. It will also help speed up the process of reviewing proposed projects, Glick told the media.
"We're actually reducing uncertainty by … providing a more legally durable precedent [so] that you're not going to be playing Russian roulette every time you go to court with a particular opinion because the commission ignored what the D.C. Circuit [Court of Appeals] had to say," Glick said.
New policy expands review criteria, explains GHG reviews
In past practice, FERC judged whether a pipeline was needed solely by whether it had contracts for its supply. The agency will now consider other factors such as demand projections, estimated capacity utilization rates, potential cost savings to customers, and statements from state regulatory commissions or local distribution companies, according to agency staff.
FERC will also consider how gas infrastructure could affect the applicant's existing customers; the interests of existing pipelines and their customers; environmental interests; and, the interests of landowners and surrounding communities, including environmental justice communities, staff said during the meeting.
As part of its environmental analysis, FERC will quantify GHG emissions that are "reasonably foreseeable" and have a "close causal relationship" to the proposed project, staff said.
Any project that will likely release at least 100,000 tons of GHG a year will require an environmental impact statement instead of a less rigorous environmental assessment, according to staff.
FERC didn’t include the social cost of carbon in its GHG review framework because of a recent court decision barring the Biden administration from using it, Glick told the media.
The revised framework takes effect immediately, including on pending project applications. Comments on FERC's interim GHG policy are due April 4.
Clements, Phillips say new policy provides balanced review
Under the new policy, FERC will consider a wider array of factors when considering how a gas project may affect the public, according to FERC Commissioner Allison Clements, who supported the updated framework.
"The policy makes clear that impacts on the environment, landowners and environmental justice communities should be considered alongside economic factors in the public interest determination, and not be relegated to an afterthought," Clements said.
FERC has long considered how a project affects the environment when reviewing gas proposals, according to Clements.
"The climate change effects of a project are one more, if uniquely harmful, adverse impact that the commission must consider in balancing a project's benefits against its drawbacks," Clements said.
The new framework "appropriately balances public benefits against adverse effects, including impacts to landowners, environmental justice communities and area residents," Commissioner Willie Phillips said. "It is my hope that today's order provides the first step to act on pending proposals in a way that provides a roadmap for environmental review and minimizes the need for drawn out litigation."
Danly, Christie say policy will hurt gas development
FERC Commissioners James Danly and Mark Christie opposed the revised framework, saying it would hurt pipeline development.
The new policy is "amorphous" and undermines the goal of the Natural Gas Act, which is the delivery of gas, according to Danly. The policy will slow investment in the gas system at a time when parts of the U.S. face growing electric power reliability risks, he said.
The new policy will play into the hands of interest groups that are conducting "a national campaign of legal warfare" against proposed gas infrastructure, according to Christie.
"This new policy opens up a broad array of new avenues to attack every certificate this commission approves," Christie said. "So rather than bringing legal durability to our certificate orders, today's new policy will undoubtedly increase the cost and uncertainties associated with pursuing natural gas projects, both here at this commission during certificate proceedings, but even more so on appeal."
Also, the review framework infringes on Congress' authority to set policy, according to Christie.
Senators, gas group decry new policy
FERC's new policy is "reckless" and puts U.S. national security at risk, according to Sen. Joe Manchin, D-W.Va., Senate Energy and Natural Resources Committee chairman.
"The commission went too far by prioritizing a political agenda over their main mission – ensuring our nation's energy reliability and security," Manchin said in a statement.
Sen. John Barrasso, R-Wyo., Energy and Natural Resources Committee ranking member, said in a statement that FERC is making it impossible to access affordable energy.
The new review policy has "no value" because it was approved on a 3-2 decision, according to former FERC Chairman Neil Chatterjee.
"Neither statement provides any certainty," Chatterjee said on Twitter. "There is no guidance on balancing the factors. No guidance on mitigation. The 100,000 metric tons threshold is arbitrary. The fact that it will apply to pending applications is unfair and legally dubious. This will chill investment and ultimately hurt consumers."
The American Gas Association is "deeply concerned" about the new policy, according to a statement from the trade group. Under the new framework, FERC will look for information about the intended end use of gas to help explain why a project is needed, the group said. "This could create uncertainty because it is unclear if FERC will second guess determinations made by utilities and state commissions as to what is needed to serve retail customers," the group said.
At least one environmental group supported FERC's new review framework.
It appears the new policies offer a "rebalancing" in how FERC reviews gas pipelines and other infrastructure, Morgan Johnson, an attorney with the Sustainable FERC Project, said, noting FERC hasn't yet released the policy documents.
"From what we saw from the commission's presentations today, it was very encouraging from an environmental justice, climate and landowner rights perspective," Johnson said. "It feels like more transparent, holistic, just full, modern and legally sound pipeline reviews appear to be on the way."
The gas sector should support FERC's revised review framework, according to Johnson.
"Anyone who was genuinely interested in avoiding legally infirm and problematic orders will be pleased to see the commission move forward swiftly with these policy statements," Johnson said.
FERC seeks comments on dynamic line ratings
FERC on Thursday also issued a notice of inquiry seeking comments on whether it should require grid operators to use "dynamic line ratings" (DLR) for determining how much electricity can safely flow over power lines.
The notice builds on FERC's decision in December to require transmission owners to consider ambient conditions when setting line ratings instead of seasonal or static ratings.
Ambient ratings, which take into account near-term changes in temperature and solar heating values, allow more efficient use of transmission lines. DLR ratings may be even more efficient by considering weather conditions, such as wind, cloud cover, solar heating intensity and other factors.
DLRs could allow for greater use of the existing transmission system, which could help reduce the backlog of proposed generating facilities waiting to move through grid operators' interconnection review process, according to Glick.
Having more available transmission capacity on existing lines would reduce the need to make network upgrades to handle new generating projects, Glick said.
FERC asked for comments on various issues related to DLRs, including their benefits, costs and implementation challenges.