FERC Issues Landmark Changes to Pipeline Approval Process

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February 28, 2022
On February 17th, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued updates to its policies by which it determines whether to approve or deny an application to construct interstate natural gas pipelines. The updates are the first revisions to FERC’s policy for certification of interstate natural gas projects in over two decades. These issuances are material to new interstate natural gas pipeline development and construction.
 
The update includes two components. First, FERC issued an Updated Certificate Policy Statement (PL18-1) (“UPS”), revising how the Commission will evaluate and weigh specified factors by which it makes its determination. Second, the Commission issued an Interim GHG Policy Statement (PL21-3) (“IPS”), which is more technical in nature and provides specific guidance on how the Commission will make determinations about greenhouse gas (“GHG”) emissions from the proposed project, which are taken into account, among other factors, under the UPS.
 
The UPS describes how FERC will evaluate and weigh all factors bearing on the public interest in determining whether a new interstate natural gas transportation project is required by public convenience and necessity under the Natural Gas Act (“NGA”). The UPS adds updated and expanded considerations concerning a proposed project’s impacts on customers, landowners, climate, environmental justice communities and other stakeholders. FERC states that it will apply this new UPS to any currently pending applications for certificates.
 
The IPS explains how FERC will evaluate a proposed project’s impacts on climate change (i.e., GHG emissions). Under the IPS, any project with 100,000 metric tons per year of GHG emissions shall be treated as having a significant impact on climate change. Projects that break the threshold will require an Environmental Impact Statement (“EIS”). As part of the GHG analysis, FERC will consider emissions from the construction of the project and may also include those originating from upstream production and downstream combustion. Consequently, it is likely that a vast majority of interstate pipeline projects will require an EIS. FERC is currently seeking comment on the approach to assessing the significance of a proposed project’s contribution to climate change. While this policy is being finalized, the IPS will apply.
 
As a supplement to this alert, below are links to the UPS and the IPS. If you have any questions regarding these significant policy changes or how the UPS and IPS could impact you, please contact one of the authors of this Alert.