Energy and Commodities Outlook 2022

Red clipboard icon

Read time: 7 minutes

The Federal Energy Regulatory Commission (FERC) is increasing its scrutiny of climate-related oversight and ramping up its emphasis on reducing greenhouse gas emissions (GHG) investigations in light of an unprecedented number of appeals-court rulings highlighting this regulatory mandate. The Commodity Futures Trading Commission (CFTC) also continues to be tough on rule-breakers, enforcing its rules for derivatives markets and trying to expand rules it can use to regulate the use of digital assets.

FERC first quarter highlights

FERC now has a full commission: Rich Glick (chair), James Danly, Allison Clements, Mark Christie, and Willie Phillips. Phillips is the most recent addition and was unanimously confirmed by the U.S. Senate on November 16, 2021. He was sworn in as a commissioner on December 3, 2021, ending the two-two split. Chairman Glick’s term will expire on June 30, 2022.

In 2021, FERC established the Office of Public Participation (OPP) to assist the public in participating in commission proceedings, and Elin Katz was appointed director. In February 2022, Nicole Sitaraman was named deputy director of OPP. According to FERC, OPP should be fully staffed by 2024.

Policy pronouncements tied up

On February 18, 2022, FERC issued two policy statements regarding its review and certification of interstate natural gas facilities: the Updated Policy Statement on Certification of New Interstate Natural Gas Facilities and the Interim Greenhouse Gas Emissions Policy Statement.

On March 3, the U.S. Senate Committee on Energy and Natural Resources held a hearing about the two policy statements. Senators Joe Manchin (D-W.Va.) and John Barrasso (R-Wyo.) expressed strong concerns that the policy statements could harm energy independence and security and impose additional costs on consumers. Additionally, dozens of parties (including 18 states) filed requests for rehearing and/or reconsideration of the policy statements. On March 24, at its monthly open meeting, FERC unanimously voted to designate the two as draft policy statements that will no longer apply to pending project applications. FERC also requested initial comments on the draft policy statements by April 25.

Appeals court decisions focus heavily on FERC’s evaluation of pipeline applications

In Food & Water Watch v. FERC, the U.S. Court of Appeals for the District of Columbia Circuit held that FERC failed to adequately consider the effects that a new natural gas pipeline and compressor station would have on downstream GHG emissions. The circuit court remanded the case, ordering FERC to conduct a supplemental environmental assessment. Notably, the D.C. Circuit did not vacate the decision or revoke the certificate, because doing so would have been “quite disruptive” to the relevant pipeline construction, which was, at the time, “either mid-construction or already operational.”

In Environmental Defense Fund v. FERC, the D.C. Circuit vacated and remanded FERC orders approving the Spire STL pipeline, stating that FERC inappropriately based a finding of project need on a single precedent agreement with an affiliated shipper in a region with flat demand for natural gas. The circuit court also held that FERC failed to analyze whether the project would result in cost savings or other economic benefits.

Following the D.C. Circuit’s decision to vacate FERC’s orders, Spire STL filed an application for a temporary certificate. Spire STL stated that its affiliate would be unable to provide adequate retail service and ensure reliability to the St. Louis region, particularly during the winter months, if Spire STL was removed from service.

Acting sua sponte, FERC granted Spire STL a 90-day temporary certificate to ensure continuity of service but noted that the temporary certificate does not indicate how FERC will address Spire STL’s request for a temporary certificate or the D.C. Circuit’s remand. Spire STL’s case is unprecedented insofar as the pipeline’s certificate was vacated after the pipeline was already built.

FERC recently terminated a proceeding over whether Algonquin Gas Transmission should be permitted to put the Weymouth compressor station in service. FERC previously issued final orders granting a certificate to Algonquin to construct and operate the compressor station but, after problems with the compressor led to emergency shutdowns, FERC requested briefs to address whether the compressor should remain in service. Here, FERC was forced to assess whether the agency could revoke a certificate that was already granted. After briefs were submitted, FERC found that it has no authority to revisit the original certificate orders.

Key takeaways
  • FERC now has a full quorum; imposes big enforcement fines
  • Appeals court reverses FERC orders restricting gas pipelines
  • FERC seeks tougher reliability standards for critical infrastructure
  • CFTC pursues greater control over digital asset trading platforms
  • Full quorum of CFTC commissioners expected soon
Download this article Download full report
Download this article
Download full report