FERC Chairman Kevin McIntyre has hit the ground running and announced at the December 21 open meeting that FERC will take comments and review its natural gas pipeline certificate policy statement that governs how the Commission addresses new pipeline applications.
During the meeting and in a briefing with reporters afterward, McIntyre emphasized that he has not prejudged that the policy statement needs to be changed or that FERC needs to look beyond the presence of precedent agreements as an indication of need for new pipelines. “I am approaching this topic with an open mind,” and the decision to review the policy statement should not be viewed as an indication that he has a gripe with the way it is carried out, he said.
“I am open to change . . . but I am not advocating change,” he said, noting that commissioners are still evaluating what format the review will take. It could be a notice of inquiry (NOI) a technical conference proceeding or other steps, with commissioners discussing what they think will be the best approach.
Whatever form the review takes, it will be open, transparent, and thorough, said McIntyre, who presided over his first meeting as chairman since being sworn in December 7 after being confirmed by the Senate November 2.
He addressed the delay between the Senate confirmation and being sworn in during the briefing with reporters, stating that after being in private law practice at Jones Day with numerous clients that have business before FERC, he had to end those client relationships, some of which carried complexities that could not be addressed before the Senate vote confirming him and Commissioner Richard Glick.
“There really is no story here,” other than he had to withdraw as counsel for clients and transition matters to others at Jones Day before being sworn in, McIntyre said.
He also briefly addressed the grid resiliency notice of proposed rulemaking (RM18-1) about compensation for coal and nuclear generation units in organized wholesale markets, telling media members that he has not spoken with Energy Secretary Rick Perry other than through correspondence seeking more time to act on the NOPR. In that correspondence, Perry granted more time to the Commission, setting a new deadline of January 10, 2018, and McIntyre said he does not envision FERC seeking additional time from Perry.
He declined to address the substance of the proposal or whether he supports taking some sort of interim measure to improve compensation for coal and nuclear units while a long-term solution is hammered out, which has been favored by Commissioner Neil Chatterjee.
Because he represented clients who will be affected by any outcome of the NOPR, McIntyre was asked if he intends to recuse himself from any Commission action in the proceeding. He has checked with FERC’s ethics officials on a number of matters regarding recusals, but “I don’t think I’ll recuse myself” and does not believe it will be needed for a decision on the NOPR.
“We’re not focused exclusively on this matter” as the Commission has a lot of issues being addressed besides the NOPR, McIntyre said after the meeting.
In a podcast posted on the FERC website, McIntyre mentioned how as someone who represented clients with business at FERC, he would like to see the Commission improve transparency. He knows what it is like to sit and wonder when will FERC act on an application or provide feedback on where things stand in a pending proceeding. The Commission owes it to stakeholders and the public to let them know what to expect, he said.
That is one of the reasons seeking input from stakeholders on the pipeline certificate policy statement will be important, he added during the meeting.
Good governance involves examining various processes and procedures to see if they can be done better, and the policy statement was issued in 1999, with many changes in the natural gas industry since then. He expects to seek views from all stakeholders to ensure that FERC accurately and efficiently assesses applications for new pipelines.
“I am confident that we’ll have a wide range of opinions,” said Commissioner Cheryl LaFleur, who commented on pipeline certificate matters in a pair of dissenting votes on applications for the Atlantic Coast Pipeline (ACP) and Mountain Valley Pipeline (MVP). In identical dissenting statements, LaFleur said she would support a generic proceeding to gather input from the public and regulated community about how FERC evaluates the need for new pipeline facilities. She also said FERC should re-examine how it determines the need for new pipelines and look beyond the existence of precedent agreements with shippers, which is the dominant factor used from the policy statement.
“I think a broader consideration of need” might be appropriate given the changes that have taken place since 1999, LaFleur said at the open meeting.
“We don’t rubber stamp pipelines here,” added Commissioner Robert Powelson, using a term that pipeline opponents often mention when protesting FERC’s approval of new facilities. The public should have a peace of mind that FERC does not approve pipelines without sufficient examination of need for the projects, Powelson said.
Glick commented that the time has come for FERC to examine the way it reviews pipeline applications and consider whether indicators of need beyond precedent agreements with shippers are appropriate. He said he looks forward to hearing different ideas and working with commissioners on the subject.
Some constituencies have been heard loud and clear in pipeline proceedings, and other constituencies feel frustrated that their voices are not heard, said Chatterjee. “My door is always open” to hear constituencies from across the political spectrum, especially those who feel frustrated by the FERC process, he said.
Chatterjee said he is supportive of FERC’s current policy statement on pipeline certificate applications, but he agrees that it is important to seek improvements and efficiencies in the process as a matter of good governance.
The December 21 meeting was one of the few that was not interrupted by pipeline opponents, following the November meeting after which actor and activist James Cromwell and Chatterjee engaged in a social media spat.
McIntyre said he respects freedom of speech and the right of anyone to give their views about FERC or government measures they disagree with, noting that the Senate confirmation hearing with himself and Glick was interrupted several times by people speaking out against the Commission. With his three young children in attendance at the hearing, McIntyre said they had an informed discussion about people expressing their opinions and that in America, unlike other countries, those protestors were not jailed for expressing their views.
Besides LaFleur’s dissent on the ACP and MVP pipeline projects, former Commission Norman Bay issued a statement in February 2017 asserting that FERC should consider different approaches as it examines pipeline certificate applications under the Natural Gas Act.
More recently, the Natural Resources Defense Council (NRDC) funded a report by Analysis Group Senior Advisor Susan Tierney that says FERC’s policy needs to be updated. Rather than using that policy on a case-by-case basis, the Commission should open a generic proceeding to address industry trends and how they affect FERC’s analysis of a project’s need, the report said, commenting on the risk of overbuilding gas pipelines.
A collection of three other groups – Public Citizen, Oil Change International and the Sierra Club — released a report in September that raised similar issues. That report asserted that many proposed pipelines are not needed, and that FERC should stop acting on pipeline applications until it overhauls its review process.
Public Citizen looks forward to providing the Commission with feedback as it examines its pipeline certificate policy statement, which is a welcome and important review, said Tyson Slocum, energy program director for the consumer group.
“It’s great that new Chairman McIntyre, in his first open meeting, announced his desire for FERC to be more open and transparent. And reviewing the Commission’s policy statement on pipeline certificates is part of that,” Slocum said.
The Interstate Natural Gas Association of America (INGAA) also said it welcomes the opportunity to provide input once FERC starts its inquiry, but it believes that the policy statement has withstood the test of time quite well, said Don Santa, president and CEO of INGAA.
“The criteria specified in the policy statement continue to provide FERC with what remains a robust framework for evaluating the range of questions that must be addressed in determining whether a proposed pipeline meets the public convenience and necessity,” Santa said in a statement.
The policy statement has served the nation and consumers well by providing an efficient, market-responsive process for determining whether applications to construct new interstate pipelines satisfy the public convenience and necessity as required by the NGA. Following the natural gas supply growth of the shale revolution, “Americans have benefitted from this domestic energy abundance through lower heating and electricity bills, a resurgence in domestic manufacturing and a cleaner environment as natural gas displaces less benign sources of energy. This would not have been possible without pipelines connecting natural gas supplies to natural gas consumers,” Santa said.
By Tom Tiernan TTiernan@fosterreport.com
This article appears as published in The Foster Report No. 3179, issued December 22, 2017
Copyright © 2017 by Concentric Energy Publications, Inc. All rights reserved.