02 June 2021

FERC Climate Change Concerns to Delay Five Pending Natural Gas Pipeline Projects

On May 27, 2021, the Federal Energy Regulatory Commission (FERC) indicated that it would increase the timeline for making a decision on five pending applications for Natural Gas Act (NGA) Section 7 certificates of public convenience and necessity when it issued notices of intent to prepare an environmental impact statement (EIS) to each of the project sponsors. Each of the applications concern pipeline expansion projects that were the subject of environmental assessments (EAs) performed by FERC staff. The notices state that the new EISs will tier off of the existing EAs and will be limited in scope to assisting FERC in its consideration of the subject projects’ contribution to climate change in the FERC decision-making process.

The initiation of a follow-on EIS for each of the projects will add significant time to their FERC approval process. The impacted projects’ EAs were published either in first quarter 2021 or during the second half of 2020. Whereas FERC typically would commit to issuing an order within 90-days of completing an EA, the pipeline operators subject to the new notices should not expect decisions on their pending applications before December 2021. However, each notice provides a project-specific timeline.

The EAs had previously determined that the proposed projects would not constitute major federal actions significantly affecting the quality of the human environment. The EAs either determined that there was no significant impact from the project to the environment or recommended that a FERC order on the application contain a finding no significant impact and include mitigation measures identified during the EA process. Under the National Environmental Policy Act (NEPA) and its governing regulations, an EIS is required only when a federal agency needs to determine whether its actions, such as the granting of a pipeline certificate under the NGA, will have a significant impact on the environment. Hence, the decisions to prepare the EISs did not arise from recommendations within the EA documents. One of the five projects came before FERC under the applicant’s blanket certificate as a “prior notice” project, indicating that projects may be subject to the EIS regardless of size.

Each of the projects that received notices of intent to prepare an EIS was for incremental expansions. In the past, FERC typically would prepare an EA for pipeline certificate applicants seeking to incrementally expand the capacity on their systems, either through the addition of compression or pipeline looping. It would prepare EISs for projects that proposed to lay significant miles of new pipelines and add significant new pipeline capacity.

At FERC’s May 18, 2021, open meeting, Chairman Richard Glick and Commissioner Allison Clements issued partial dissents for two pipeline incremental expansion projects on grounds that FERC should have prepared an EIS to assess the risks related to climate change. Their dissents stated that NEPA required an EIS for any environmental impact that was “arguably significant” and that FERC’s EAs did not satisfy FERC’s NEPA obligations with respect to climate change. The projects at issue were fairly minor from a FERC expansion project perspective. One added incremental capacity of 45,693 Dth/d, while the other added 15,000 Dth/d. Their certificate orders have included CO2e emissions estimates related to the project and determined that construction had the potential to increase CO2e emissions in 2021 based on 2019 levels by 0.00013% and 0.00001%, respectively, while operation had the potential to increase emissions by 0.016% and 0.0052%, respectively. The orders also concluded, based on the analysis in the EA, that construction and operation of the projects would not constitute a major federal action significantly affecting the quality of the human environment.

Last week, FERC received comments from hundreds of industry participants and stakeholders that addressed whether and, if so, how it should be assessing the “significance” of a project’s contribution to climate change. The recent notices of intent to prepare an EIS to address the emissions question suggests that FERC is willing to go much deeper than it has in the past. Regardless of the EIS outcome, this action indicates that FERC is prepared to increase the time required to obtain approvals for proposed pipeline projects.