FERC Concludes Review Update for Gas Pipeline and LNG Proposals Policy Evaluation

FERC Ends Update to Gas Pipeline Review Policy, citing uncertainty

Washington D.C.- The Federal Energy Regulatory Commission (FERC) on Friday concluded a prolonged attempt to modernize its guidelines for evaluating proposed natural gas projects.The decision effectively maintains the existing framework, which dates back to 1999, for assessing the environmental impact, community effects, and overall necessity of new natural gas infrastructure.

Department of Energy Intervention

The move followed a directive from U.S. Department of Energy (DOE) secretary Chris Wright on August 29th, who urged FERC to finalize the process by September 30th. Secretary Wright argued that the ongoing rulemaking was creating instability within the gas industry. This intervention marks a potential shift towards increased DOE influence over FERCS policy decisions.

History of the Policy Review

Initial efforts to update the policy began in April 2018. in February 2022, FERC issued updated policy statements, but these were quickly characterized as drafts after facing criticism. Consequently, the agency never implemented these proposed changes in evaluating pipeline or liquefied natural gas (LNG) proposals. In January of a previous administration, a separate draft policy addressing climate change impacts was also rescinded.

Key Considerations in the Decision

FERC stated that the issues addressed in the draft policy statement are best handled through individualized project assessments. The Commission believes that the current 1999 Certificate Policy Statement, as it has been applied, provides a solid and legally defensible basis for reviewing new gas projects.

Legal experts at Akin Gump Strauss Hauer & Feld suggest that the DOE’s actions signal a broader intention to play a more active role in shaping energy policy within FERC’s purview.

Industry and Advocacy group Reactions

The DOE’s request to abandon the draft policy received support from industry groups including the American Gas Association, the Natural Gas Supply Association, and the American Petroleum institute. Opponents of the decision included the New Jersey Division of Rate Counsel and a coalition of ten advocacy groups, such as Earthjustice and the Sierra Club.

U.S. LNG Export capacity

This decision comes at a time when the United States has emerged as the world’s leading exporter of Liquefied Natural Gas (LNG).According to the U.S. Energy Information Administration, exports totaled 11.9 billion cubic feet per day last year.The U.S. currently operates eight LNG export terminals with a capacity of 14.5 billion cubic feet per day, and an additional eight facilities are under construction with a potential capacity of 21.8 billion cubic feet per day. FERC has also approved ten more export projects, totaling 13.2 Bcf/d,that are not currently under construction,and is actively reviewing two new applications.

LNG Export Status	Capacity (Bcf/d)
Operational Terminals	14.5
Under Construction	21.8
Approved, Not Under Construction	13.2
Under review	Varies

Did you Know? The U.S. LNG export capacity has nearly doubled in the last five years, significantly altering global energy markets.

Pro Tip: staying informed about FERC decisions is crucial for energy companies, environmental advocates, and investors in the energy sector.

What impact will this decision have on future energy infrastructure projects? How will this shift influence the balance between energy security and environmental concerns?

Understanding FERC and Gas Pipeline Regulation

The Federal Energy Regulatory Commission is the self-reliant agency within the U.S. Department of Energy that regulates interstate transmission of natural gas, oil, and electricity. Its role is to ensure the reliable, safe, and affordable delivery of these essential resources. Pipeline projects requiring federal approval must demonstrate public convenience and necessity, taking into consideration environmental impacts and potential economic benefits. The Certificate Policy Statement guides FERC’s assessment of these projects.

Frequently Asked Questions About FERC’s Decision

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Understanding the FERC Policy Statement & Recent Updates

The Federal Energy Regulatory Commission (FERC) recently concluded its review of the 1999 Policy Statement for Certificate Proceedings for Natural Gas Facilities. This policy governs the evaluation of applications for new natural gas pipelines and Liquefied Natural Gas (LNG) terminals.The update, finalized in early 2024, represents a significant shift in how FERC assesses the environmental impacts of thes critical energy infrastructure projects. This article breaks down the key changes, implications for developers, and what stakeholders need to know about the revised approach to FERC reviews, gas pipeline approvals, and LNG project evaluations.

Key Changes in the Updated Policy

The core of the update centers around a more robust consideration of a project’s potential impact on climate change and environmental justice. Here’s a detailed look:

* Greenhouse Gas (GHG) Emissions Analysis: FERC will now require a more thorough analysis of GHG emissions associated with proposed projects. This includes both direct emissions from the facility itself and indirect emissions – specifically, those resulting from the combustion of the natural gas transported. While FERC maintains it doesn’t have the statutory authority to deny a project solely based on GHG emissions, the increased scrutiny will undoubtedly influence project design and mitigation strategies.

* Environmental justice Concerns: The revised policy places a greater emphasis on identifying and addressing potential disproportionate impacts on disadvantaged communities. This involves a more complete assessment of environmental justice concerns during the NEPA review process and increased engagement with affected communities.

* Updated CEII Procedures: Changes to Critical Energy Infrastructure Information (CEII) handling procedures have been implemented to balance security concerns with openness.

* Streamlining & Efficiency: FERC also aimed to streamline certain aspects of the review process, focusing on clarifying requirements and improving coordination with other agencies. This is intended to reduce delays without compromising environmental safeguards.

Implications for Gas Pipeline and LNG Developers

These changes present both challenges and opportunities for companies seeking to build and operate natural gas infrastructure.

* Increased Scoping & Analysis: Developers should anticipate a more extensive scoping process and the need for more detailed environmental impact statements (EIS). Budgeting for comprehensive GHG assessments and environmental justice analyses is now crucial.

* Mitigation Strategies: Proactive development of mitigation strategies to reduce GHG emissions and minimize environmental impacts will be essential. This could include utilizing renewable energy sources in project operations, implementing leak detection and repair programs, and investing in carbon capture technologies.

* Community Engagement: Robust and clear community engagement is no longer optional. Developers must demonstrate a genuine commitment to addressing the concerns of affected communities and incorporating their feedback into project design.

* Permitting Timelines: While FERC aims for streamlining, the increased complexity of the review process could perhaps led to longer permitting timelines. Natural gas infrastructure permitting will require careful planning and proactive communication with FERC staff.

The Role of NEPA and Environmental Impact Statements

The National Environmental policy Act (NEPA) remains a cornerstone of the FERC review process. The updated policy statement directly impacts how FERC conducts NEPA reviews for gas pipeline and LNG projects.

* EIS Scope: Expect a broader scope for Environmental Impact Statements (EIS), encompassing a more detailed analysis of climate change impacts, environmental justice concerns, and cumulative effects.

* Alternatives Analysis: FERC will likely place greater emphasis on evaluating option routes, technologies, and project designs that could reduce environmental impacts.

* Public Comment: The public comment period will become even more critical, as FERC will be actively seeking input on potential environmental justice concerns and mitigation strategies.

Case Study: Mountain Valley Pipeline (MVP) & Policy Implications

The protracted permitting process for the mountain Valley Pipeline (MVP) serves as a stark example of the challenges facing gas infrastructure projects. While the MVP faced numerous legal challenges unrelated to the 1999 Policy Statement, the increased scrutiny on environmental impacts and community concerns highlighted the need for a more transparent and comprehensive review process. The MVP’s experience underscores the importance of proactive engagement with stakeholders and a robust environmental analysis. The updated FERC policy aims to address some of the issues that contributed to the MVP’s delays, but developers must still navigate a complex regulatory landscape.

Benefits of the Updated Policy

Despite the increased scrutiny, the updated policy offers potential benefits:

* Increased Project Sustainability: By encouraging developers to adopt more lasting practices, the policy can contribute to a more environmentally responsible energy sector.

* Enhanced Public Trust: Greater transparency and community engagement can build public trust in the FERC review process and the energy infrastructure it approves.

* Reduced Legal Challenges: A more thorough and defensible review process could potentially reduce the number of legal challenges to approved projects.

* Long-Term Project Viability: Addressing environmental and social concerns upfront can enhance the long-term viability of projects by minimizing the risk of future disruptions or regulatory setbacks.

Practical Tips for Navigating the New Landscape

* Early Engagement with FERC: Initiate pre-request meetings with FERC staff to discuss project specifics and identify potential environmental concerns.

* comprehensive Data Collection: Invest in robust data collection and analysis to support a thorough environmental assessment.

* Expert Consultation: Engage environmental consultants with expertise in GHG emissions analysis