By Michael Brooks
WASHINGTON — FERC Chairman Kevin McIntyre closed out his first open meeting Thursday by announcing that the commission would re-examine its 1999 policy statement on certifying new interstate natural gas pipeline facilities.
McIntyre said the effort is in its very early stages and that the scope and format of the review are still being considered.
“Obviously, [since] 1999 … much has changed in the industry,” McIntyre said. “So, without prejudging anything, and without intending to forecast a policy direction … we believe it’s a matter of good governance to take a fresh look at this area, and to give all stakeholders and the public an opportunity to weigh in.”
The policy statement details how the commission grants developers of proposed pipelines a certificate of public convenience and necessity — allowing them to exercise eminent domain — under the Natural Gas Act of 1938. It came at a time when the gas industry, much like the electricity industry, was being restructured, and demand in the northeastern U.S. was expected to increase — somewhat of an understatement in hindsight.
“At a time when the commission is urged to authorize new pipeline capacity to meet an anticipated increase in the demand for natural gas, the commission is also urged to act with caution to avoid unnecessary rights of way and the potential for overbuilding with the consequent effects on existing pipelines and their captive customers,” the statement concludes. “This policy statement is intended to provide more certainty as to how the commission will analyze certificate applications to balance these concerns.”
Since the statement was issued, FERC has granted a certificate to virtually every proposed pipeline submitted to it; Commissioner Richard Glick noted that the amount of new pipeline capacity approved by the commission has grown by more than 500% in the past six years alone.
This has raised the ire of environmentalists and landowners, who charge that FERC “rubber-stamps” pipelines and point to the number of former staffers who have gone on to work in the natural gas industry. Protesters interrupting commission meetings have become a regular occurrence over the past two years. (There were, ironically, no interruptions at Thursday’s meeting.) Members of Congress have also written FERC on behalf of constituents to complain about inadequate public notice for commission hearings on pipelines in their jurisdictions, or a lack of time to accommodate all who wanted to speak.
But there is also a growing concern in the energy industry about the potential for overbuilding pipeline infrastructure as renewable, distributed and storage resources are becoming increasingly relied upon for electricity generation. Just before his resignation in February, former Chair Norman Bay called on the commission to analyze its reliance on signed agreements with shippers to determine the need for pipelines. (See Bay Calls for Review of Marcellus, Utica Shale Development.)
“Overbuilding may subject ratepayers to increased costs of shipping gas on legacy systems,” Bay said. “If a new pipeline takes customers from a legacy system, the remaining captive customers on the system may pay higher rates.”
McIntyre said he did not share any of those concerns, instead citing the policy’s statement age as a factor for his decision to examine it. “The fact of my having proposed this should not be read as … a complaint about our current policy. It is not,” he told reporters after the meeting. “1999 was quite a while ago, particularly in the natural gas pipeline industry. So much has changed” across all energy industries, “but it would be hard to point to an area that has changed more than natural gas.”
His fellow commissioners — it was the first time FERC has had five commissioners in two years — all expressed support for the review.
Commissioner Cheryl LaFleur said she would like the review to focus on how FERC determines economic needs for proposed pipelines, as well as the environmental impacts.
“The policy statement … actually holds up quite well. It outlines a very broad range of factors we could look at to review need. Over time our practice has coalesced around a reliance on precedent agreements as a determiner of market need. And as I recently stated in dissents in Atlantic Coast (CP15-554, et al.) and Mountain Valley (CP16-10, et al.) pipelines, I think our review of pipeline applications would benefit from a broader consideration of need,” she said.
“Secondly, I think it’s appropriate for us to consider how we do our environmental reviews … [to consider] the downstream impacts on greenhouse gases or other downstream impacts,” she continued. “I was already looking forward to 2018 with all you fine folks, and I now am even more.”
In August, the D.C. Circuit Court of Appeals ruled that FERC’s environmental impact statement (EIS) for the Southeast Market Pipelines Project should have included “reasonable forecasting” of the project’s impact on GHG emissions.
As interim chairman, Commissioner Neil Chatterjee said in October that he didn’t expect the ruling to have a “significant” impact on the agency’s pipeline licensing. (See FERC Chair: Court Ruling Won’t Change Pipeline Reviews.)
“Although I am supportive of our current policies, I wholeheartedly agree with the chairman that it’s important the commission takes a look at how it exercises its statutory obligations,” Chatterjee said Thursday. He emphasized that he wanted input from all stakeholders. “I particularly want to speak to those who feel frustrated that their voices are not heard throughout this process. I want you to know that I empathize with that frustration.”
Commissioner Robert Powelson agreed with Chatterjee’s sentiments, but he also defended FERC’s record. “We don’t rubber-stamp interstate pipelines here,” he said. “People should have peace of mind that, one, we don’t site pipelines on speculation here at the FERC. There is due diligence. … This is about giving everybody an opportunity to be heard.”
“It’s not just that we’re approving a lot of pipeline capacity; that may be OK,” Glick said. “It’s that these pipelines are increasingly traversing populated areas, and thus have potentially greater impacts on individuals and communities, in addition to their impacts on the environment.”
McIntyre told reporters that any outcome of the review would affect the pipelines currently before the commission.
“I am approaching this topic with an open mind and want the staff and the commission to take a fresh look at all aspects of the issue,” he said.
