Power & Pipes

FERC, CFTC, and State Energy Law Developments

The Federal Energy Regulatory Commission (FERC) and the US Department of Transportation’s (DOT’s) Pipeline and Hazardous Materials Safety Administration (PHMSA) released a Memorandum of Understanding (MOU) on August 31 to improve coordination throughout the Liquefied Natural Gas (LNG) permit application process for FERC-jurisdictional LNG facilities. The MOU describes FERC and PHMSA’s respective roles and responsibilities concerning siting, construction, and operation of LNG facilities pursuant to currently applicable statutory and regulatory law, and establishes a new coordination framework to streamline the approval process for those facilities. The agencies’ coordination has already helped streamline the environmental review schedules for 12 LNG export terminal applications pending before FERC. Those updated schedules were also released on August 31. The MOU supersedes and provides an updated and more concrete coordination framework than the prior iteration of the agreement between the two agencies that was signed in 1985.

The MOU explains that FERC will, upon the receipt of a proposed LNG project application, provide PHMSA with notification and a request to review that application. Previously, the mechanism and scope under which DOT evaluated and provided recommendations to FERC with respect to an LNG project’s regulatory compliance was not clearly defined and was supposed to be submitted within a 60-day timeframe. Going forward, the agencies agreed that FERC must now rely on PHMSA issuing a more formal “Letter of Determination” for the proposed LNG project as authoritative evidence that the project is able to comply with PHMSA’s siting requirement and safety standards pursuant to 49 CFR Part 193, Subpart B. The agencies have also agreed to promptly notify one another should their review processes reveal that a proposed LNG project will be unable to comply with their regulations. PHMSA will either issue its Letter of Determination no later than 30 days prior to the estimated issuance date of FERC’s final National Environmental Policy Act (NEPA) document in an LNG project application proceeding, or, within that same timeframe, notify FERC that it will require additional time to issue its formal determination.

With respect to inspection and enforcement activities, the agencies have additionally agreed “to assist one another by sharing information and inspection findings pertaining to the review of LNG operations.” The MOU provides that FERC and PHMSA will seek to keep each other informed of newly discovered or emerging safety issues to the extent permitted by law. FERC and PHMSA expect their coordination to maximize exchanges of relevant information between the agencies, avoid duplicative actions, and to increase the efficiency and effectiveness of the application review process, ultimately reducing costs associated with each of their reviews.