The Federal Energy Regulatory Commission's mid-February revision of its framework for reviewing proposed natural gas pipelines and liquefied natural gas (LNG) facilities will stifle gas development in the United States, some senators and two agency commissioners said Thursday during a hearing held by the Senate Energy and Natural Resources Committee.
The new framework, issued after a series of court rulings found FERC's reviews to be flawed, includes an expanded analysis of whether a facility is needed, a review of a project's greenhouse gas (GHG) emissions and a possibility for companies to mitigate those emissions. Although FERC is taking comments on its "interim" GHG review process, it has taken effect.
"You all took the direction from the court and applied it far more broadly than you needed to, setting in motion a process that will serve to further shut down the infrastructure we desperately need as a country and further politicize energy development in our country," Committee Chairman Joe Manchin, D-W.Va., said.
The policies "suggest a political agenda," Manchin added.
"These policies are going to make it next to impossible to build any new natural gas infrastructure or upgrade our existing facilities in the United States," Ranking Member John Barrasso, R-Wyo., said, calling FERC's Democratic members who voted for the new policies "radical, extreme and dangerous."
"This committee should be prepared to use every tool available at our disposal to clean up this mess," Barrasso said.
Congress should consider abolishing FERC, according to Sen. Mike Lee, R-Utah. "Perhaps we'd be better off without FERC, which having been created by Congress can be eliminated by Congress," Lee said.
FERC commissioners Mark Christie and James Danly, who voted against the new policies, told the committee the new framework created regulatory uncertainty, would drive up costs and threatened grid reliability.
"It will undeniably act as a deterrent to building the facilities this country will need to keep our electric grid reliable, to heat people's homes in the winter, to provide manufacturers with the energy supply they need," Christie said, adding it provides an array of avenues to challenge natural gas pipelines and other facilities.
The new policies "have thrown the entire process of planning, financing and applying for a natural gas pipeline certificate or approval for an LNG terminal into disarray," Danly said.
The Natural Gas Association, a trade group for gas utilities, said FERC's new policies will make it more expensive and difficult to build pipelines, according to a March 1 letter to Manchin and Barrasso.
Glick: thorough reviews create certainty
FERC's revised framework for reviewing gas infrastructure was in response to recent court decisions that found the agency's reviews were inadequate, according to Glick. Having a review process that can withstand court scrutiny will provide certainty and in the long-run speed up the process for building gas infrastructure, Glick told the committee.
Those cases include Sabal Trail, Birckhead, Vecinos and Spire Pipeline. Courts have recently found other federal agencies failed to adequately review projects such as the Mountain Valley Pipeline and Dakota Access, Glick said.
NextEra Energy last month took an $800 million impairment charge on its investment in the Mountain Valley Pipeline after an appeals court vacated a biological opinion issued for the project by the U.S. Fish and Wildlife Service. "The continued legal and regulatory challenges have resulted in a very low probability of pipeline completion," NextEra said in a Feb. 18 filing with the Securities and Exchange Commission (SEC).
Pipeline company executives have been complaining about how project permits prepared during the Trump administration have been overturned by courts, according to Glick.
"They know that the previous administration didn't do the proper analysis," Glick said. "They know that that needs to be done right."
Glick said he is meeting with pipeline company CEOs next week. "Now, whether they agree with specifically what we're proposing, we can certainly talk about it and we will talk about it," Glick said. "If they want clarification, we'll further clarify."
Some elements of FERC’s new framework, such as the GHG analysis, are "ambiguous" so clarification would be helpful for project developers, according to Clay Lightfoot, senior manager, America gas research, for Wood MacKenzie.
"FERC wants there to be clarity, because they want to keep this out of the courtroom," Lightfoot said Friday. "I think the direction of travel is positive. The level of detail needed is just not there yet. There's still ample time for that to happen."
FERC's more robust review criteria "gold-plates" the certification process, making it more likely gas projects will survive legal challenges, according to Lightfoot. However, the process will likely be more expensive, he said.
Some companies are already addressing environmental concerns through third-party certification of "responsibly sourced" natural gas, according to Lightfoot. "You're seeing quite a bit of movement from the industry itself on this topic, so that's moving towards those FERC regulations," he said.
Pointing to so-far successful legal challenges to a power line project between Wisconsin and Iowa, Christie noted how energy infrastructure projects are vulnerable to challenges under the National Environmental Policy Act (NEPA) and the Administrative Procedure Act.
"As a country we have a problem," Glick said. "We know we need more infrastructure as we transition into the energy future, whether it be pipelines, LNG, whether it be electric transmission, whether it be generating facilities. It's very difficult [to build them.] I understand that completely. But the answer is not to ignore the law."
Pipeline capacity approvals surge under Glick
There has been a jump in FERC's approval of natural gas pipeline capacity since Glick became the agency's chairman in January 2021.
Despite delays in reviewing some projects to conduct more thorough GHG reviews, FERC approved 334 miles of gas pipelines that can deliver 20,177 MMcf/d in the first 11 months of 2021 compared with 973 miles of pipeline that can deliver 9,341 MMcf/d in same period the year before, according to the agency's most recent monthly infrastructure report.
In addition, pipeline companies brought online 137 miles of gas pipeline in the United States with 2,829 MMcf/d of capacity in the first 11 months of 2021, up from 134 miles of pipeline with 1,695 MMcf/d of capacity in the first 11 months of 2020, according to the report.
FERC has approved 18 LNG export projects, but only nine have been built, Glick told the committee.
Since FERC revised its framework for reviewing gas infrastructure proposals, at least three pipeline and LNG companies have included the issue in annual reports filed at the SEC.
Cheniere Energy, an LNG company, said it didn't expect the new policy to have "a material adverse effect."
Equitrans Midstream, which is co-developing the Mountain Valley Pipeline, said it is studying FERC's new policy and it is impossible to predict how it could affect the company.
Williams Companies noted FERC's new review framework but provided no comment on it.