Reed Smith Client Alerts

On February 18, 2022, the Federal Energy Regulatory Commission (FERC or the Commission) issued two policy statements that will have significant impacts on applications for certificates of public convenience and necessity to construct pipeline infrastructure projects under sections 3 and 7 of the Natural Gas Act (NGA). The first is an updated Certificate Policy Statement, which modifies the standards FERC will apply when evaluating pipeline certificate applications. The second is a greenhouse gas (GHG) emissions Interim Policy Statement that attempts to address how FERC addresses GHG emissions associated with pipeline certificate applications.

The updated Certificate Policy Statement (Updated Policy Statement) follows FERC’s issuance of two notices of inquiry seeking public comment on its 1999 Certificate Policy Statement. The Updated Policy Statement modifies the 1999 Certificate Policy Statement in several respects. Specifically, the Updated Policy Statement clarifies that precedent agreements alone may no longer demonstrate the need for a proposed pipeline project. In addition to precedent agreements, applicants may demonstrate the need by submitting demand projections underlying the capacity subscribed, estimated capacity utilization rates, regional assessments, potential customer cost savings, and statements from state regulatory commissions or local distribution companies. The Updated Policy Statement also notes that applicants should provide information regarding the intended end use of the gas to be transported over the proposed facilities. Under the Updated Policy Statement, the Commission will also consider the impacts of a proposed project on existing pipelines and their captive customers, environmental impacts of the proposed project and the extent to which they can be mitigated, landowner impacts, and impacts on environmental justice communities.

The Updated Policy Statement provides that the Commission may deny an application if the total adverse impacts of the proposed project outweigh the benefits of the project, and if the adverse impacts cannot be mitigated or minimized. The Commission notes that the Updated Policy Statement does not create binding rules, but rather explains how the Commission will assess proposed projects. The Updated Policy Statement will apply to pending and new projects. Applicants of pending projects will have the opportunity to supplement their submissions. Stakeholders will have the opportunity to provide comment on any additionally filed information.

The GHG emissions Interim Policy Statement (Interim Policy Statement) outlines how the Commission will assess the climate impacts of proposed natural gas infrastructure projects under the NGA and the National Environmental Policy Act. FERC also seeks additional comment on the Interim Policy Statement from interested parties.