The Federal Energy Regulatory Commission on Thursday began a review of its 1999 policy for approving pipeline projects.
The commission unanimously voted at its monthly public meeting to issue a draft notice of inquiry, starting a 60-day public comment period.
FERC Chairman Kevin McIntyre, a Republican, announced in December his intent to initiate a review of the pipeline policy, as the agency evaluates how to best manage the transport of bountiful shale natural gas to market, while balancing environmental and climate change concerns.
McIntyre said the Thursday action does not prejudge the outcome of the review, and he is open-minded to changes on how the committee evaluates the need for a project as well as landowner concerns.
“1999 was quite some time ago,” McIntyre said. “Much has changed since that time. Good governance calls for considering whether policies currently in place remain effective and look for opportunities for improvements. By issuing a [notice of inquiry] we are posing questions. It should not be read as a forecast of policy direction or indication of any action the commission may take. It should not suggest the current statement has been ineffective or changes will be made. I have an open mind on these issues.”
Pipeline opponents say FERC’s pipeline policy is outdated, created when climate change concerns were less dominant and the shale boom was unanticipated. They say FERC has become a “rubber stamp” for pipeline approvals because the policy statement encourages the committee to lean too heavily on economic considerations when making decisions.
A coalition of 11 environmental groups sent a letter to FERC before the meeting urging the commission to reform its natural gas pipeline review process with a “21st Century approach” that ensures “that above all else — the public interest is protected, which is consistent with FERC’s mandate under the Natural Gas Act.”
Robert Powelson, a Republican FERC commissioner, said Thursday he will heed that advice, but he refuted the “misnomer” that the commission is too liberal with pipeline approvals.
“We are taking this opportunity to look back on a 1999 document and hopefully modernize it in the landscape we face today with ever increasing gas exploration and production,” Powelson said, noting the “tectonic shift” where the U.S. recently became a net exporter of natural gas for the first time in 60 years. “Any time you take 20-year-old doctrine and review it, you usually get a 2.0 version of that doctrine and it’s in the public interest to do so.”
Currently, FERC makes decisions about pipelines based mostly on the economic need for the project, and whether developers have secured contracts with companies that want to use the pipeline to ship fuel. They are known as precedent agreements.
FERC Commissioner Cheryl LaFleur, a Democrat, has said the agency has focused too “narrowly” on the existence of precedent agreements.
LaFleur said the commission should consider the “specific end use of the delivered gas within the context of regional needs,” meaning whether consumers in a given area really need more energy to be served by a new pipeline, and if pipelines already exist nearby.
The pipeline review will evaluate the effectiveness of depending on precedent agreements.
Commissioners said Thursday they will assess whether FERC is properly weighing the impact of greenhouse gas emissions released by the products shipped through pipelines.
Last year, a group of environmental groups led by the Sierra Club successfully sued FERC to force the agency to examine the effects of pipelines on climate change. Until the ruling by the D.C. Circuit Court of Appeals, FERC had examined the environmental effects of physically building the pipeline, not the effects of using the fuel it transports.
Environmental groups have also pushed FERC to evaluate emissions occurring during the production process of the natural gas to be shipped.
FERC’s pipeline policy review also will ask if grid resilience should be a factor the agency considers on whether to approve new natural gas projects.
This issue figures prominently in New England, a region that is heavily dependent on natural gas, accounting for about half of its power generation, as coal and nuclear plants have retired.
But New England struggles to import enough natural gas from areas that produce it, such as the Marcellus shale formation in the Appalachian states, especially during the winter because of a lack of sufficient pipelines.
Pipeline backers say the current policy works fine. If anything, they are angling for fewer hurdles to development, because they say the shale industry is already facing pipeline bottlenecks, such as in New England.
“The ability to expand and modify interstate natural gas pipelines under FERC’s existing policy has served the nation well,” Don Santa, the president of the Interstate Natural Gas Association of America, said Thursday. “This pipeline infrastructure has facilitated the world’s most competitive natural gas commodity market and has enabled American consumers and industry to benefit from our natural gas abundance.”
