FERC Says it Will Consider Greenhouse Gas Emissions and ‘Environmental Justice’ Impacts in Approving New Natural Gas Pipelines

The Federal Energy Regulatory Commission has issued new policy statements saying its approval process for natural gas pipelines and liquified natural gas facilities will take greenhouse gas emissions and “environmental justice” impacts into consideration in determining whether the infrastructure projects are in the public interest. 

The policy statements issued last month are non-binding but could have a significant impact on how natural gas pipelines will be approved by the commission. Under its new approach, the commission would  be required to determine whether a project is actually needed to meet the energy demands of a given region and whether it is in the public interest, with its benefits outweighing its potential adverse impacts, such as air pollution or threats to groundwater. 

The interim guidelines, which went into effect on April 4, but are open to public comment until April 4, before being finalized require environmental impact statements from all projects that emit more than 100,000 metric tons per year. 

Many methane is released into the atmosphere from liquified natural gaz facilities and pipelines, either because of accidents or during routine maintenance and repairs. Over a 20-year time period, methane is 80 times more powerful than carbon dioxide.  

While climate advocacy groups have welcomed FERC’s policy statements, opponents argue that they may have damaging impacts on industry’s ability to transport natural gas and export liquified natural gas, which is produced through an energy-intensive process that requires cooling natural gas to -259 degrees Fahrenheit. 

U.S. Sen. John Barraso (R-Wyo.), a leading advocate for the natural gas industry, took aim at the new FERC policy during a March 3 Senate Energy and Natural Resources Committee hearing. 

“These policies are going to make it next to impossible to build any new natural gas infrastructure or upgrade our existing facilities in the United States,” he said.

Senator Joe Manchin (D-W. Va.), shared a similar view during the hearing. “There is an effort underway by some to inflict death by a thousand cuts on the fossil fuels that have made our energy reliable and affordable,” he said. 

But Richard Glick, FERC’s chairman, said that the policies came in response to various court decisions in which the commission’s pipeline approvals were vacated because the commission had not sufficiently determined the pipelines were needed by consumers to provide heat and electricity. 

Glick said the commission’s approach had evolved into one in which developers’ proposals “were treated as conclusive proof of the need for a proposed project.”  

David Wochner, area leader in the law firm K&L Gates’ global policy and regulatory practice, said the heart of FERC’s new policy is its consideration of the climate change impacts from projects’ greenhouse gas emissions. 

“They give very little guidance in the interim policy statement on how they are going to go about doing that,” said Wochner. 

He and others also raised concerns at the hearing about a lack in clarity for developers about how to reduce emissions and what mitigation methods they can use.  

But Ted Kelly, a senior attorney for energy markets and regulation at the Environmental Defense Fund, said that the commission’s decision to require mitigation without specifying an exact set of strict rules or emissions reduction methods provides developers with more flexibility based on the nature and scale of a particular project. “My suspicion is they would be much less happy if FERC had put in a very restrictive requirement that said you can only mitigate in this one particular way,” he said.

Although the commission’s new policies do not retroactively apply to already approved projects, they could apply in some cases in which a project may require significant changes. 

The Spire STL pipeline, a 66-mile natural gas pipeline in Illinois and Missouri that connects St. Louis to natural gas fields in the Appalachian Basin, received FERC’s approval in 2018 and has been partly operational since. But Spire’s approval was vacated by the U.S. Court of Appeals for the D.C. Circuit in June 2021. Spire is America’s fifth largest natural gas company publicly traded. 

The court found that the commission didn’t adequately decide whether the Spire STL pipe was needed on the market or was in public interest. The pipeline, which is fully built and transporting natural gas, must now undergo a review under the commission’s new policies.

Kelly stated that he believes that there is at least a possibility that the commission could find that the pipeline should never have been approved. “That’s going to be a very complicated situation because the pipeline is already in the ground,” he said. 

But he said that it could take months for the commission to complete its review of the pipeline, and even longer for its policies’ larger impact on natural gas infrastructure to come into play.