FERC Complicates Natural Gas Infrastructure Application Process
The Federal Energy Regulatory Commission (“FERC”) issued two important policy statements by a 3-2 vote on February 18, 2022 regarding the construction of natural gas facilities. The policy statements make numerous changes to FERC’s process for reviewing applications to construct natural gas facilities under Section 3 and Section 7 of the Natural Gas Act (“NGA”), but two stand out in their significance:
- FERC wants to see additional evidence that a project is needed beyond precedent agreements between a pipeline and customer; and
- FERC expects applicants to propose mitigation for greenhouse gas (“GHG”) emissions from pipeline expansions, including downstream GHG emissions from gas combustion, and may include conditions in pipeline certificates that require even more mitigation.
FERC will begin applying both new policy statements immediately to both pending and future certificate applications. Pipelines with pending or planned certificate applications should immediately consider whether to revise their precedent agreements to reflect potential changes to the FERC process and, in particular, the risk of additional costs from the new GHG mitigation requirements. Pipelines must also consider whether to supplement the record in pending certificate proceedings to include additional evidence of project need, downstream GHG emissions data, and information regarding the pipeline’s efforts to minimize or mitigate GHG emissions. As a result of other changes in the new policy statements, pipelines should further consider submitting information regarding project utilization data and potential impacts on landowners and environmental justice (“EJ”) communities.
The two new policy statements are
- The Updated Policy Statement on the Certification of New Interstate Natural Gas Facilities (“Updated Policy Statement”), which revises FERC’s 1999 Certification of New Interstate Natural Gas Facilities Policy and changes the balancing test by which FERC evaluates applications to construct interstate natural gas facilities; and
- The new interim policy statement on the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews (“GHG Policy Statement”), which describes how FERC will evaluate GHG emissions under the National Environmental Policy Act (“NEPA”) and the NGA.
The new policy statements include a number of other changes to FERC’s consideration of pipeline certificate applications beyond the key changes described above. Additional detail regarding these changes and the policy statements more broadly is available in “FERC Issues Two New Policy Statements Regarding Natural Gas Infrastructure Construction.”
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.