Pipeline Certificate Policy Review Hits One Year Mark; No End in Sight

This article appears as published in Foster Report No. 3246

FERC began its review of the natural gas pipeline certificate policy statement a year ago, and it appears that the examination will not reach a conclusion any time soon.

That could be viewed as good news or bad news, depending on your perspective, as some groups told the Commission last year that they are hoping for significant changes to how FERC considers pipeline certificate applications under the Natural Gas Act and National Environmental Policy Act. Others, such as the Interstate Natural Gas Association of America (INGAA), have maintained that the 1999 policy statement has stood up well in a changing market, with only minor tweaks needed.

The possibility of smaller, incremental changes is looking more feasible given the dissents and concurring statements from Commissioners Richard Glick and Cheryl LaFleur on FERC’s policy regarding consideration of greenhouse gas emissions in pipeline applications and comments from Chairman Neil Chatterjee that consensus on a policy statement is important.

Speaking to reporters during a briefing after the April 18 open meeting, Chatterjee said for policy statements to be “durable,” they are best addressed when there is a full complement of five commissioners. FERC currently has one Republican commissioner spot vacant, and another vacancy is in the offing, as Commissioner Cheryl LaFleur, a Democrat, said she would not seek a third term at FERC. Her term expires at the end of June, though she can stay at the Commission until the end of the current term of Congress or a replacement is confirmed by the Senate.

LaFleur has recused herself from a few cases involving New England entities, prompting speculation that she is considering a position with a company or group from that area, where she is from.

Chatterjee said he has no role in the White House nomination process for a new Republican commissioner.

“I’m not saying that that’s going to implicate our timing of consideration” on the policy statement and comments from parties, but “obviously it would be better if we have a full complement of five” commissioners, he said.

“I think it’s also important that there be consensus” among the commissioners taking action on the policy statement, Chatterjee told reporters. “I think a split policy statement does not provide that kind of durability and clarity that stakeholders need,” he said.

Among the more than 1,000 comments filed at FERC last year on the policy statement notice of inquiry (NOI), there was very little middle ground between those that believe a major overhaul is needed and those that want to keep the existing framework in place with minor tweaks. Pipelines, producers/shippers, firms associated with pipeline construction, and large natural gas users are among those in the latter group while numerous state agencies, landowner interests, and environmental groups are in the former group.

Among the major questions posed in the NOI (PL18-1) and comments are whether there is a risk of overbuilding a pipeline network, the heavy reliance on precedent agreements that may not indicate a clear need for new facilities, changes in the gas market since the policy statement was adopted in 1999, climate change impacts that could be accounted for in analyzing GHG emissions, the public participation process, and landowner/eminent domain concerns. One of the issues debated by parties is whether precedent agreements should be a primary factor as evidence of a public interest need for pipeline additions.

Financial analysis firm ClearView Energy Partners has not ruled out a narrow modification of the policy statement where commissioners can reach agreement, said Managing Director Christine Tezak. That could be more feasible if the White House is in no rush to send nominations to the Senate for the commissioner vacancies, Tezak said when asked to comment on the NOI.

Getting a policy statement out with more limited changes this year could also allow the Trump administration to put it in the “done” category instead of leaving it in play as an election issue in the future, Tezak said.

In its July 2018 comments to FERC, INGAA suggested that the Commission could improve landowner engagement by revising its July 2015 FERC Staff Best Practices guide and approving any revisions as part of a new policy statement.

The two Democrat Senators from Virginia, Tim Kaine and Mark Warner, advised FERC to conduct regional reviews of pipelines planned in the same region and be more open to considering co-location or a single pipeline rather than case-by-case reviews of individual projects. They also said FERC should require a higher showing of public interest for companies to use eminent domain authority, improve the public notice and comment procedures for those not familiar with the Commission, and end the practice of issuing tolling orders to buy time before addressing rehearing requests.

INGAA agrees with Chatterjee about the importance of consensus and having a full complement of commissioners, a spokesperson said April 22. Because the proceeding is an NOI, the Commission has no obligation to take further action in the docket, though INGAA supports improvements to promote effective landowner participation, the spokesperson said.

“The currently effective certificate policy statement has provided a durable framework for the commission to review applications to construct natural gas pipeline infrastructure in a timely, efficient and predictable manner. Therefore, we do not believe that wholesale changes to FERC’s policy are necessary” the INGAA spokesperson said.

The Natural Gas Supply Association also sees no need for any changes to the policy statement and believes that modifications should not be considered without a full panel of five commissioners, according to Casey Gold, director of regulatory affairs for NGSA. “Given the flexibility of the policy statement and the different facts surrounding each project application, FERC has the ability to assess each project and its unique issues on a case-by-case basis under the current policy statement guidelines and requirements of the Natural Gas Act and NEPA,“ Gold said.

Other groups continue to seek modifications from the Commission, though several did not respond to questions for this story.

The Natural Resources Defense Council views the proceeding as a complex and important undertaking and is encouraged that Chatterjee recognizes that, said Gillian Giannetti, staff attorney for NRDC. “FERC needs to bring the certificate policy statement into the 21st Century” and fully consider all factors relevant to its public interest mandate, Giannetti said.

“FERC should also provide an opportunity for interested parties to reply to existing comments and consider holding a technical conference about it. Both would allow stakeholders to provide updates, especially given the passage of time, which would aid the commission in its decision making,” she said.

By Tom Tiernan ttiernan@fosterreport.com

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