On March 24, 2022, FERC changed course and designated the two policy statements it issued last month regarding the certification of interstate natural gas pipelines (“Updated Policy Statement”) and consideration of greenhouse gas (“GHG”) emissions in natural gas project reviews (“Interim GHG Policy Statement”) as draft policy statements. The two draft policy statements will not apply to pending project applications or applications filed before FERC finalizes the policy statements. FERC also requested initial comments on the draft policy statements by April 25, 2022.
On February 18, 2022, FERC issued two significant policy statements governing how FERC will review proposals for new natural gas pipeline projects (see February 18, 2022, Troutman Pepper Insight; February 23, 2022 edition of the WER). The Updated Policy Statement described how the Commission will determine whether a new interstate natural gas transportation project is required by the public convince and necessity under Natural Gas Act section 7. Specifically, in the Updated Policy Statement, FERC, among other things, (1) found that precedent agreements between non-affiliates will remain important evidence of project need but will not be the only factor FERC considers; (2) provided that FERC will consider a wider range of impacts to landowners beyond economic impacts associated with siting the right-of-way; and (3) provided that FERC will include significant consideration of potential project-related impacts on environmental justice communities in its reviews.
In the Interim GHG Policy Statement, FERC established a rebuttable presumption that proposed projects with 100,000 metric tons of CO2e emissions will be deemed to have a significant impact on climate change, thereby triggering the preparation of an Environmental Impact Statement. FERC also said it will consider a project’s “reasonably foreseeable” GHG emissions that have a “reasonably close causal relationship to the project,” which could include upstream and/or downstream GHG emissions for certain projects (in addition to direct GHG emissions resulting from the construction and operation of the project). FERC also stated in the Interim GHG Policy Statement that it could condition approval of a project on the sponsor’s mitigation of the project’s climate change impacts. Notably, FERC stated that it would apply the Updated Policy Statement and Interim GHG Policy Statement to pending certificate applications.
On March 3, 2022, the FERC Commissioners appeared before the Senate Energy and Natural Resources Committee to discuss the two policy statements. During the hearing, certain Senators, including Senators Joe Manchin (D-WV) and John Barrasso (R-WY), criticized the policy statements, stating that the policy statements could negatively impact U.S. energy independence and security and gas/electric reliability and could impose costs on end-use consumers.
In the March 24, 2022 order, FERC reversed course and made the Updated Policy Statement and Interim GHG Policy Statement draft policy statements. Accordingly, FERC said that it will not apply the policy statements to pending certificate applications or applications filed before FERC finalizes the policy statements at a later date. Commissioner James Danly issued a separate partial dissent from the order. In his statement, Commissioner Danly concurred with the decision to redesignate the policy statements as draft policy statements, “rendering them inoperative,” but dissented in part because the order seeks comment on draft policy statements “which exceed the Commission’s legal authority and which advance bad policy.”
Comments on the draft policy statements are due by April 25, 2022, with reply comments due May 25, 2022.
The March 24, 2022 order can be found here.