FERC natural gas pipeline policy under inquiry

U.S. energy infrastructure regulators have launched an inquiry to examine how they review and authorize interstate natural gas transportation facilities under federal law. The process before the Federal Energy Regulatory Commission could lead to changes to the Commission's policies on certification of new natural gas pipelines.

Section 7 of the Natural Gas Act requires any person seeking to construct or operate a facility for the transportation of natural gas in interstate commerce to obtain a certificate of public convenience and necessity from the Commission. The law directs the Commission to issue a certificate to any qualified applicant upon finding that the construction and operation of the proposed project—whether pipeline, storage, or liquefaction facilities—“is or will be required by the present or future public convenience and necessity.” Other laws, such as the National Environmental Policy Act, prescribe additional processes and criteria for environmental review.

The Commission has developed regulations implementing its certification process. In 1999, it issued its current Policy Statement on the topic, “Certification of New Interstate Natural Gas Pipeline Facilities – Statement of Policy” (Docket No. PL99-3-000). As recently described in a statement by Commissioner Chatterjee, "the Certificate Policy Statement has provided a flexible, effective framework for the Commission’s evaluation of natural gas pipeline projects." Proponents cite the value of regulatory predictability, with specific additional benefits including reduced energy prices and increased opportunities in gas production and manufacturing.

But the ensuing 19 years have brought changes to the natural gas industry, as well as increased stakeholder interest in how the Commission reviews proposed new natural gas pipelines. The Commission cites a list of significant changes including "a revolution in natural gas production technology leading to dramatic increases in production"; new areas of major natural gas production and changes in the direction of pipeline system flows; "customers routinely entering into long-term precedent agreements for firm service during the formative stage of potential projects and the use of those precedent agreements as applicants’ principal evidence of the need for their projects"; increased use of natural gas for electric generation; increased concerns about siting and greenhouse gas impacts, and about the Commission's environmental review process.

New commissioners have also taken office. In December 2017, new Chairman McIntyre issued a statement suggesting the Commission would reexamine the 1999 policy statement as part of commitments he made during his Senate confirmation process.

Now, the Commission is following through on that promise. Its April 19, 2018 Notice of Inquiry seeks input on whether, and if so how, the Commission should revise its policies on how it evaluates whether there is a need for a proposed project, and its evaluation of a proposed project's environmental impacts and issues related to eminent domain and landowner interests. Finally, through the inquiry the Commission seeks input on potential procedural improvements to the certification process.

The Commission noted that while the inquiry is pending, the Commission intends to continue processing natural gas facility matters before it consistent with the 1999 policy statement, and to make determinations on the matters raised in those proceedings on a case-by-case basis.