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.
The Interim Policy Statement provides that FERC will attempt to quantify a proposed project’s reasonably foreseeable GHG emissions based on several factors. Those factors include a projection of the amount of the project’s capacity that will actually be used and whether the project will offset other GHG emissions.
In quantifying GHG emissions, the Commission will follow the Council on Environmental Quality’s regulations and consider GHG emissions that are both reasonably foreseeable and have a close causal relationship to the proposed pipeline project. FERC will attempt to quantify GHG emissions associated with construction and operation of the project. In addition, the Interim Policy Statement states that FERC will evaluate whether upstream and downstream GHG emissions are reasonably foreseeable effects of a certificate application filed pursuant to section 7 of the NGA. If the upstream and downstream emissions are reasonably foreseeable, FERC will attempt to quantify those emissions. In contrast, the Interim Policy Statement indicates that FERC will not examine upstream and downstream emissions associated with NGA section 3 export facility projects. In order to evaluate upstream and downstream GHG emissions, the Interim Policy Statement indicates that the project sponsor should provide information regarding the projected utilization rate of the proposed pipeline facilities, the projected use of the natural gas, and possible offsetting GHG emissions. The project sponsor should also submit available upstream emissions data. Finally, in evaluating certificate applications, FERC will consider project sponsor proposals to mitigate all or a portion of the proposed project’s climate change impacts.
For the first time, the Interim Policy Statement creates a “bright line” with respect to GHG emissions levels that will necessitate the preparation of an Environmental Impact Statement (EIS) rather than an Environmental Assessment (EA). The Interim Policy Statement establishes a rebuttable presumption that proposed projects with 100,000 metric tons per year of GHG emissions will be deemed to have a significant impact on climate change. As a result, FERC will prepare EISs for all proposed projects exceeding 100,000 metric tons limit, while FERC will prepare EAs for projects with emissions under that level.
The Commission notes that the Interim Policy Statement does not create binding rules, but rather explains how the Commission will assess proposed projects. The Interim Policy Statement will apply to pending and new projects under section 3 and section 7 of the NGA. Applicants of pending projects will have the opportunity to supplement their submissions to address the Interim Policy Statement.
Comments on the Interim Policy Statement are due 60 days after publication in the Federal Register.
Client Alert 2022-044
