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Power & Pipes

FERC, CFTC, and State Energy Law Developments

Nearly 200 comments were filed in response to FERC’s February 18, 2021 Notice of Inquiry (NOI) that sought new information and perspectives on whether it should revise its policy statement on the certification of new interstate natural gas transportation facilities (Policy Statement). As we discussed in our February 19 LawFlash, FERC sought comments on several areas, including potential adjustments to its determination of need, the exercise of eminent domain and landowner interests, FERC’s considerations of environmental impacts, and its consideration of effects on environmental justice communities. Commenters provided a wide range of perspectives, which we discuss below.

Potential Adjustments to FERC’s Determination of Need

Many commenters oppose changes in how FERC determines public need. They stated that FERC’s current case-by-case approach for determining the need for new transportation facilities appropriately defers to the market and provides FERC the flexibility it needs to adapt to changing markets and technological advancements. Many commenters also supported FERC’s continued use of precedent agreements to establish public need and saw no reason to distinguish between precedent agreements with affiliates and nonaffiliates, as in both cases the agreement is binding and represents a significant financial commitment.

On the other hand, some commenters support changes to FERC’s determination of need. They argued that FERC should evaluate energy demand projections, reliance on other energy sources to meet future needs, and any other factors that may be relevant in determining whether a proposed facility is required by the public convenience and necessity. In addition, some commenters argued that FERC should modify its current dependence on precedent agreements and should not treat affiliate contracts as sufficient evidence of need where the other evidence presented fails to demonstrate need.

Commenters generally agreed that FERC should consider all benefits of a proposed project when determining need.

Exercise of Eminent Domain and Landowner Interests

Commenters offered diverging positions on the consideration of the use of eminent domain in reviewing project applications and whether FERC can condition a certificate holder’s exercise of eminent domain. Some commenters believe that FERC’s current process adequately protects landowners by aligning their interests with those of certificate applicants, while others urged FERC to consider more robust approaches to protecting landowner rights. Commenters who felt that FERC is not currently doing enough to protect landowner interests largely agreed that FERC should defer issuing a certificate until the applicant obtains all necessary authorizations for construction.

FERC’s Consideration of Environmental Impacts

Regarding FERC’s consideration of environmental impacts in the certification process, much of the debate concerned whether FERC has the authority under NEPA or the Natural Gas Act (NGA) to use the Social Cost of Carbon (SCC) analysis. Several commenters also questioned the accuracy of the SCC analysis and highlighted FERC’s past statements to this effect.

FERC’s Consideration of Effects on Environmental Justice Communities

Numerous commenters strongly support FERC’s consideration of the impacts of new projects on environmental justice communities and offered a variety of measures that FERC can take to ensure meaningful participation by environmental justice communities in the certificate review process. Many comments focused generally on FERC’s engagement with affected communities in the certification process and improving the transparency of that process. Some comments provided more concrete suggestions, including that FERC should wait until the environmental review stage before it assesses the public benefits of a project.

However, despite agreeing that FERC’s certification process should consider impacts on environmental justice communities, some commenters expressed concern that any changes to FERC’s process in this regard would be premature. Noting that the White House, the Environmental Protection Agency, and the Council on Environmental Quality’s ongoing policymaking efforts touching environmental justice communities have yet to provide federal agencies any guidance, these commenters raised concerns that any immediate changes FERC makes will result in inconsistency across the federal government.

Separately, Chairman Richard Glick has made clear his focus on better incorporating environmental justice and equity matters into all FERC decisions. Earlier this year, he stated that FERC should more aggressively fulfill its responsibilities to ensure that FERC’s decisions do not unfairly impact historically marginalized communities. Chairman Glick has since created and filled a new position, Senior Counsel for Environmental Justice and Equity, that is charged with working with experts in all FERC program offices to integrate environmental justice and equity matters into FERC decisions.

Summer associate Timothy Birchfield contributed to this post.