The Federal Energy Regulatory Commission (FERC or the Commission) announced last month that it will review its policies governing the certification process for natural gas pipelines. The announcement was made by FERC Chairman Kevin J. McIntyre on December 21, 2017, in fulfillment of a pledge that he made during his Senate confirmation hearing in September 2017. The format and scope of the review are still being determined.
FERC’s review will focus on its Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities. When it was issued in 1999, the Policy Statement was intended to provide guidance on how FERC evaluates proposals for certificating new pipeline construction. Under the federal Natural Gas Act (15 U.S.C. § 717 et seq.), any proposed interstate natural gas pipeline construction or expansion project may proceed only upon certification by FERC that it is “required by the present or future public convenience and necessity.” 15 U.S.C. § 717f(c). The Policy Statement details how FERC analyzes the two principal criteria used to make this determination, namely:
- Whether a proposed pipeline project is financially supported without relying on subsidization from existing customers; and
- Whether the balancing of any adverse effects of the proposed project against the public benefit supports a finding that it is in the public convenience and necessity.
This announcement of FERC’s decision to review its pipeline approval policies follows on the heels of dissents issued by Commissioner Cheryl LaFleur to recent orders on natural gas pipeline projects criticizing the FERC’s review process. In the words of McIntyre, the review is to be “thorough,” will “take a fresh look” at current policy, and will involve ample opportunities for stakeholder input. Industry groups have already issued statements in support of the policy review.
FERC’s published statement announcing the review quotes Commissioner McIntyre as stating that “much has changed” since the current FERC policy was issued in 1999. Indeed, the past two decades have seen significant expansion in pipeline capacity to accommodate increased production and demand, as well as more active stakeholder participation in pipeline siting and certification decisions. Stakeholders are likely to use the review process as an opportunity to express their views on the need for more pipeline capacity, the possibility of overbuild in certain areas of the country, and the manner in which environmental and landowner impacts are evaluated in the certification process. We will provide updates on any announcements by FERC on the timing of the review and the solicitation of stakeholder comments.