Feb 242022

Climate Change Takes Center Stage in FERC’s Updated Policy on the Certification of New Natural Gas Infrastructure

Emily P. Mallen
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On February 18, 2022, the Federal Energy Regulatory Commission (“FERC”) announced for the first time that it will consider a proposed natural gas infrastructure project’s impact on climate change as part of its public interest determination under sections 3 and 7 of the Natural Gas Act (“NGA”).  A proposed project’s environmental effects, including reasonably foreseeable greenhouse gas emissions that may be attributable to the project and the project’s impact on environmental justice communities, now will become part of FERC’s balancing test for whether a project is: (1) required by the public convenience and necessity (“PCN”) under NGA section 7; (2) or in the public interest under NGA section 3.  FERC’s prior PCN policy prioritized economic factors to define public need. Environmental effects, while considered under the NGA, were addressed primarily under the National Environmental Policy Act (“NEPA”).

FERC’s revised policy is found in the Updated Policy Statement on Certification of New Interstate Natural Gas Facilities (Docket No. PL18-1) (“Updated Policy Statement”) and the Interim Policy Statement on the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews (Docket No. PL21-3) (“Interim GHG Policy Statement”), a separate policy created to describe FERC procedures for evaluating climate impacts under NEPA and how FERC will integrate climate considerations into its PCN findings under the NGA, including considerations for climate impact mitigation (collectively, the “2022 Certificate Policy Statement”).  The 2022 Certificate Policy Statement fundamentally change how FERC will assess whether a natural gas pipeline is required by the PCN under NGA section 7 and if a liquified natural gas (“LNG”) terminal may be authorized under NGA section 3.  FERC’s prior policy was adopted in 1999.

FERC intends to apply both policy statements immediately even though the Interim Policy Statement may change following a comment period that closes April 4, 2022.  FERC also will apply the 2022 Certificate Policy Statement to the approximately 30 projects with NGA section 3 and 7 applications pending before FERC.  These pending projects, some filed over two years ago, will be further delayed as FERC provides applicants the opportunity to supplement the record to explain how their projects are consistent with the new policy statements, and provides stakeholders the opportunity to respond.

The 2022 Certificate Policy Statement was approved on party lines, with FERC’s three Democrats supporting the changes and the two Republicans dissenting on grounds that the agency overreached its statutory authority.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Emily P. Mallen

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