FERC issues policy statements on Natural Gas Act implementation

U.S. regulators of interstate natural gas pipelines have issued a pair of policy statements, describing how the Federal Energy Regulatory Commission will consider natural gas projects. The Commissions says its updated Certificate Policy Statement and Interim Greenhouse Gas (GHG) Policy Statement "are intended to improve the legal durability of the Commission’s natural gas certificate and LNG decisions following a series of court decisions raising concerns about the Commission’s prior approach."

In the updated Certificate Policy Statement (PL18-1), the Commission reaffirmed reaffirms many of the goals and objectives of its preexisting policy statement issued in 1999 governing certification of new interstate natural gas projects under section 7 of the Natural Gas Act (NGA). At the same time, the updated Certificate Policy Statement clarifies how the Commission will execute its public interest obligations under the NGA.

The updated Certificate Policy Statement describes a framework under which "the Commission intends to consider all impacts of a proposed project, including economic and environmental impacts, together", and to include "a robust consideration of impacts to landowners and environmental justice communities" in the Commission’s decision-making process. It also provides new guidance that applicants "should provide more than just precedent agreements, to help explain why a project is needed, such as the intended end use of the gas", which the Commission may consider along with other evidence of need, including demand projections, estimated capacity utilization rates, potential cost savings to customers, regional assessments and statements from state regulators or local utilities.

In the Interim GHG Policy Statement (PL21-3), the Commission clarified how it will address GHG emissions under the NGA and National Environmental Policy Act (NEPA) for proposed pipeline and LNG projects. The Interim GHG Policy sets a threshold of 100,000 metric tons per year of GHG emissions. If a project under consideration will have emissions above that level, FERC will require the preparation of  an Environmental Impact Statement (EIS). The Interim GHG Policy Statement provides that the Commission will consider proposals by project sponsors to mitigate all or part of their projects’ climate change impacts, and that the Commission may condition its approval on further mitigation of those impacts.

According to Interim GHG Policy Statement, in quantifying GHG emissions, FERC will consider emissions that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action. This will include GHG emissions from construction and operation of the project, and may include GHG emissions resulting from the upstream production and downstream combustion of transported gas.

The Commission is now seeking comment on the Interim GHG Policy Statement.