Two notable developments in the past few weeks signal potential changes ahead to the policies and timeframes for pipeline approvals, particularly natural gas pipelines under Federal Energy Regulatory Commission (“FERC” or the “Commission”) oversight. These developments reflect both the increased public scrutiny of the pipeline approval process seen in recent years and the emphasis placed by the current administration on expediting review and approval of major infrastructure projects, two factors that are in some tension with each other.
- Certification of New Interstate Natural Gas Facilities (Docket No. PL18-1)
At an open meeting of the Commission on April 19, 2018, FERC voted 5-0 to approve a Notice of Inquiry (NOI) regarding review of its current policy for the certification of new interstate natural gas facilities. This is the first step in FERC’s review, announced in December 2017, of its currently-effective Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities (Policy Statement), which was originally issued in 1999. The Policy Statement guides FERC’s consideration of whether a proposed natural gas project meets the standard for certification under the federal Natural Gas Act (NGA), i.e. whether it “is or will be required by the present or future public convenience and necessity.” 15 U.S.C. § 717f. Comments in response to the NOI are due within 60 days of its publication in the Federal Register.
Specifically, the Commission seeks input as to whether and how the Commission should adjust:
- the methodology for determining whether there is a need for a proposed project, including the Commission’s consideration of precedent agreements and contracts for service as evidence of such need;
- its consideration of the potential exercise of eminent domain and landowner interests related to a proposed project;
- its evaluation of the environmental impacts of a proposed project under the National Environmental Policy Act (NEPA); and
- whether there are specific changes the Commission could consider implementing to improve the efficiency and effectiveness of the Commission’s certificate processes, including pre-filing, post-filing, and post-order issuances.
The NOI contains specific questions in each category, including whether FERC should consider (1) changing how it determines whether there is public need for a proposed project; (2) adjusting its consideration of the potential exercise of eminent domain in reviewing project applications; (3) broadening its environmental analysis to consider alternatives beyond those that are currently included in NEPA review; (4) calculating, as part of NEPA review, the potential GHG emissions from upstream activities and downstream consumption of the gas transported; (5) how the Social Cost of Carbon tool is used in the environmental review of a proposed project; and (6) changing the application review and pre-filing processes to make them more efficient and effective.
The Commission encouraged comments to specifically identify any perceived issues with the current analytical and procedural approaches and to include detailed recommendations to address any such issues. The NOI states that during the pendency of the Commission’s review process, the Commission intends to continue to process natural gas facility matters consistent with the Policy Statement, and that any determinations on the issues raised in any specific proceedings will be made on a case-by-case basis. Thus, the NOI proceeding is intended to consider generic issues and not comments related to any open contested Commission proceedings. If the Commission decides to revise its certificate policies as a result of the NOI review process, it will address at that time how and when any such changes will be implemented. Finally, the NOI states that the Commission will determine what, if any, the next steps are regarding its review of the Policy Statement after its review of the comments filed in response to the NOI.
Chairperson McIntyre indicated his support for the NOI, noting that much has changed in the natural gas industry since 1999 and that good governance calls for transparency regarding whether current policies are working and whether changes can be made to ensure pipeline applications are being reviewed in the most sensible way. He noted, however, that the issuance of the NOI should not be read as a forecast of policy direction or as an indication of any action the Commission may take. Chairperson McIntyre encouraged stakeholders to provide the Commission with as detailed comments as possible. He also discussed several issues regarding the NOI with Commission staff, including the changed circumstances since the issuance of the 1999 Policy Statement that informed the four broad categories of information sought in the NOI, how the NOI could help the Commission in implementing its role as a signatory to the Memorandum of Understanding (MOU) implementing Executive Order (EO) 13807 (discussed below), and whether the Commission should consider benefits such as resilience or reliability in determining the public need for a proposed project.
Commissioner LaFleur stated she strongly supports the NOI and the Commission’s review of the Policy Statement. Specifically, Commissioner LaFleur stated that she wished to get feedback on the type of evidence pipelines should submit to prove need for the proposed project and the Commission’s environmental review process, and that the more specific the comments received are, the easier they are for the Commission to work with. Commissioner Chatterjee indicated his support for the NOI, especially in light of the changes in the natural gas landscape, including the fact that the United States is a net exporter of natural gas for the first time since 1958. He also noted that review of the Policy Statement allows the Commission to identify areas that can be improved in addition to areas in which the process is working well. Commissioner Powelson discussed with Commission staff the role precedent agreements have traditionally played in the Commission’s certification process. Commissioner Glick indicated his support for the NOI, and stated that he was specifically interested to hear from stakeholders regarding two issues: (i) whether and how to consider evidence of need for a proposed pipeline project when there’s an affiliate relationship to ensure consumers do not get caught with the cost of a project; and (ii) how the Commission should consider the impact on the environment, including climate change, when weighing the public interest.
- Twelve Federal Agencies Enter MOU to Implement “One Federal Decision” for Major Infrastructure Projects
On April 9, 2018, twelve federal agencies entered an MOU for the timely processing of environmental reviews and authorization decisions for proposed major infrastructure projects under the One Federal Decision (OFD) policy established in EO 13807 and further developed in the “One Federal Decision Framework” Memorandum sent by OMB and CEQ to various heads of federal departments and agencies on March 20, 2018. “Major infrastructure projects” subject to the MOU include projects for which multiple authorizations by federal agencies will be required to proceed with construction; the lead federal agency has determined that it will prepare an Environmental Impact Statement (EIS) under NEPA; and the project sponsor has identified the reasonable availability of funds sufficient to complete the project.
The MOU recites the aspirational goals of EO 13807 for such projects, which include:
- the development of a single permitting timetable for necessary environmental review decisions;
- the preparation of a single EIS and Record of Decision (ROD);
- the issuance of all necessary authorization decisions within 90 days of issuance of the ROD; and
- the reduction of time for completing environmental reviews and authorization decisions to an agency average of not more than two years from publication of a Notice of Intent (NOI) to prepare an EIS.
To achieve these goals, the MOU memorializes the signatory agencies’ commitments to develop appropriate policies to ensure the use and efficient implementation of OFD for major infrastructure projects, including transmitting to CEQ and OMB a plan to facilitate the efficient implementation of OFD within 90 days. With respect to FERC proceedings, the MOU requires that each jurisdictional agency for a major infrastructure project participate as a cooperating agency in NEPA review upon request by FERC (which is designated under the NGA as the lead agency for NEPA reviews and for coordinating major federal approvals). The signatories to the MOU are the Department of Interior, Department of Agriculture, Department of Commerce, Department of Housing and Urban Development, the Department of Transportation, the Department of Energy, the Department of Homeland Security, the US Army Corps of Engineers, the Environmental Protection Agency, the Advisory Council on Historic Preservation, the Federal Permitting Improvement Steering Council, and FERC.
It remains to be seen how FERC will balance any revisions to its Policy Statement that broaden public participation opportunities and require more detailed reviews of proposed natural gas pipeline projects against its commitment under the MOU to expedited permitting and environmental review of major infrastructure projects.