FERC Introduces Tougher Impact Assessments, New Climate Rules for Gas Infrastructure

The U.S. regulator responsible for natural gas infrastructure is taking a closer look at whether new projects are needed and how they affect people and the environment, and floating new policy to address the climate impact of fossil gas development.

The action by the Federal Energy Regulatory Commission “was partly in response to court decisions that overturned some of the agency’s approvals of gas projects for failing to adequately consider GHG emissions, whether the project was needed, and potential effects on environmental justice communities,” Utility Dive reports, citing a statement last week by FERC Chair Richard Glick.

“My hope is that these policy statements will provide project developers, consumers, landowners and residents of impacted communities, and the commission itself with a more legally durable path forward that will provide greater certainty for everyone,” Glick said during the commission’s monthly meeting. Later, he told media the changes would help FERC decisions withstand subsequent court challenges and speed up the regulatory process for all concerned. With the commission “providing a more legally durable precedent,” he said, developers and other stakeholders “are not going to be playing Russian roulette every time you go to court with a particular opinion because the commission ignored what the D.C. Circuit [Court of Appeals] had to say.”

In the past, FERC’s assessment of the need for new gas pipelines was based solely on whether the developers had contracts in place with producers, Utility Dive explains. “The agency will now consider other factors such as demand projections, estimated capacity utilization rates, potential cost savings to customers, and statements from state regulatory commissions or local distribution companies,” the industry newsletter adds, citing commission staff.

“FERC will also consider how gas infrastructure could affect the applicant’s existing customers; the interests of existing pipelines and their customers; environmental interests; and, the interests of landowners and surrounding communities.”

That assessment will include any “reasonably foreseeable” greenhouse gas emissions with a “close causal relationship” to a project, with emissions above 100,000 U.S. tons per year triggering more rigorous environmental review, Utility Dive says.

FERC Commissioner Allison Clements said the commission has given some consideration to gas projects’ environmental impacts in the past. But now, “the policy makes clear that impacts on the environment, landowners, and environmental justice communities should be considered alongside economic factors in the public interest determination, and not be relegated to an afterthought,” she said. “The climate change effects of a project are one more, if uniquely harmful, adverse impact that the commission must consider in balancing a project’s benefits against its drawbacks.”

Utility Dive captures the debate back and forth among FERC commissioners, along with immediate pushback from senior members of the Senate Energy and Natural Resources Committee.

“The commission went too far by prioritizing a political agenda over their main mission—ensuring our nation’s energy reliability and security,” said committee chair Joe Manchin (D-WV). Ranking member John Barrasso (R-WY) said the ruling would make it “nearly impossible for Americans to maintain or improve access to abundant and affordable supplies of natural gas”.

Trump-appointed former FERC chair Neil Chatterjee claimed the new policy would have “no value”, since it was approved on a split vote of 3-2.

“Neither statement provides any certainty,” Chatterjee tweeted. “There is no guidance on balancing the factors. No guidance on mitigation. The 100,000 metric tons threshold is arbitrary. The fact that it will apply to pending applications is unfair and legally dubious. This will chill investment and ultimately hurt consumers.”