US FERC Announces Major Changes To Gas Pipeline Certificate Policies

• Published date: 24 February 2022
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity
• Law Firm: Mayer Brown
• Author: Mr J. Paul Forrester and Mark C. Williams

Last week, the Federal Energy Regulatory Commission (FERC) announced major changes to its Pipeline Certificate Policy that will affect every pending and future pipeline project.¹

A pipeline certificate of public convenience and necessity ("Certificate" or "CPCN") issued by FERC under the Natural Gas Act (NGA), as amended, provides a natural gas company with a combination of operational authority and access to rights-of-way through the conferral of federal eminent domain rights and may lead to the adoption of initial rates for pipeline service.² FERC policies regarding the issuance of Certificates were last reviewed comprehensively in 1999,³ and FERC has had a notice of inquiry concerning its policies for Certificate issuance pending for nearly four years.⁴

In addition to the changes to the Pipeline Certificate Policy, FERC simultaneously released an interim greenhouse gas (GHG) policy (Interim GHG Policy) that will affect FERC's consideration of pending and proposed Certificate and related matters, further modifying FERC's long-standing Certificate policies. Both the Pipeline Certificate and GHG Policies were adopted on party-line 3-2 votes, supported by Democratic commissioners and opposed by Republican commissioners.

Both of FERC's releases are policy statements.⁵ They are not formal rulemakings. They propose no changes to FERC's implementing regulations under the NGA. FERC claims that both are merely explanatory, establishing no binding rules. But notwithstanding the procedural nomenclature, they are expected to be highly significant in that they declare how FERC will implement its existing rules.

FERC has solicited only procedure-related comments, under the Paperwork Reduction Act, on both policy statements. While FERC would have no authority to prohibit the submission of comments by members of the public, the regulatory notice forms that FERC has adopted neither invite substantive comments nor establish any deadline for their submission.

Pipeline Certificate Policy Statement

Since 1999, FERC has recognized that it "can only exercise a veto power over proposed transportation . . . when a balance of all the circumstances weighs against certification."⁶ In practice, this has involved a balancing test, taking into account the need for gas service established by an applicant for a Certificate and the potential harms to competition, customer interests and landowners that could result from the issuance of a Certificate.

Throughout the past two decades, and...