FERC to Change Pipeline Review Criteria

The Federal Energy Regulatory Commission is changing its assessment process for natural gas pipelines. The new process will now consider the pipeline’s emissions and impact on climate change, both at the pipeline and at its downstream destination.

The change at FERC is significant, and could lead to a drastic shift in the number of pipelines approved in the future. Per the National Environmental Policy Act, or NEPA, and the Natural Gas Act of 1938, FERC is authorized and required to conduct an environmental review analysis for proposed pipeline projects. Once a project is approved, FERC would issue a Certificate of Public Convenience and Necessity, thus allowing the project to go forward. However, previous policy did not weigh a project’s potential greenhouse gas emissions in the analysis.

Under the new policy, not only would greenhouse gas emissions from the pipeline be considered, but also the project’s indirect emissions as well. Indirect emissions, in this scope, would include emissions from where the pipeline ends downstream whether it be a natural gas export terminal, refinery, or other use.

The new policy is anticipated to lead to a reduction in the number of approved pipeline projects, a vast departure from the status quo of the last two decades. In the last 20 years, just two pipeline projects have been denied by FERC, while more than 450 have been approved. With a more comprehensive and stringent environmental impact analysis, this trend could be reversed.

The move has been both praised and contested. Proponents of the change state that a policy change as such is long overdue. Gillian Giannetti, a senior attorney with the Natural Resources Defense Council argues that the policy change is simply an evolution driven by the increase of information regarding climate change. She stated that “if climate change were understood the way it is in 2021 in 1937, it would have been assumed to be part of the Gas Act [of 1938] then”.

Opponents of the change take issue with the legality of such change, and the opaqueness of the new environmental impact standards. Former FERC Commissioner Tony Clark, who opposes the policy change, stated that the methods for emissions analysis are “fuzzy”, indicating that a constant and consistent method should be established. Other opponents, like current FERC Commissioner James Danly, argue that the Commission is acting outside the bounds of the law, stating that the change is a “drastic departure from the commission’s long-standing position”, and is “legally infirm”.

The future of pipeline development in the nation will certainly deviate from the norm from this policy change. It does not mean that no pipeline projects will be approved, though. The new standard certainly allows for the continued development of pipeline infrastructure, though the criteria for federal approval will be more stringent.