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Energy Regulators Revamp Much-Criticized Gas Review Policy (2)

March 24, 2022, 4:53 PMUpdated: March 24, 2022, 8:46 PM

U.S. energy regulators walked back a much-debated policy that would take a harder look at natural gas infrastructure projects, inviting further public comment and promising to enforce it only on projects proposed after a policy is finalized.

The backtrack comes amid opposition from the gas industry and some members of Congress as the Russian invasion of Ukraine roils energy markets. It was the subject of a blistering hearing on Capitol Hill earlier this month, and Senate Minority Leader Mitch McConnell (R-Ky.) wrote Thursday the policy would cause a “chilling effect” on the industry as energy prices surge.

“I generally have heard the policy statements raised additional questions that could benefit from further clarification,” said Richard Glick, the Federal Energy Regulatory Commission’s Democratic chair, during the panel’s monthly meeting on Thursday.

“We are re-engaging in inviting stakeholders to comment, on top of the 38,000 comments we’ve already received,” Glick said. “In addition, the policy statements, when they are finalized, will apply only to subsequently filed applicants.”

Glick said he and his colleagues have had conversations with pipeline and LNG companies over the last month about the policy. He denied he acted because of political pressure, but he acknowledged the issue was “fully encompassing the agency” when other important issues exist.

“I think we’re getting bogged down a bit on this,” Glick told reporters after the meeting.

Debate Over Gas Projects

Last month, the commission issued—by a 3-2 vote split along party lines—new policies that would scrutinize applications for new interstate natural gas pipelines, pledging to look harder at a project’s economic justification and its impact on climate change.

FERC also established a 100,000 tons-a-year greenhouse gas emissions threshold for pipelines and liquefied natural gas terminals to determine whether it will automatically initiate a more stringent environmental impact statement.

Those policies took immediate effect, applying to pending applications that had already gone through environmental review, the commission said at the time.

The Democratic majority argued they needed to update the 23-year-old policy to provide legal certainty after recent court rulings ordered the commission to redo gas project reviews.

Republicans said the policy oversteps the commission’s legal authority and would harm the country’s energy security and unfairly change the rules for project developers.

Praising Public Comment

The gas industry, which had filed a slew of requests for rehearing in recent days, applauded the commission’s move to get more public comment.

“Left unrevised, the 2022 Policy Statements will actively discourage the development of pipeline infrastructure, reduce reliability, raise consumer costs, and create deep uncertainty that will destabilize the competitive markets,” the American Gas Association said in a statement.

The commission’s action coincided with President Joe Biden’s meeting with European leaders to identify “ways that we can help provide much-needed U.S. LNG to our allies, including greater regulatory certainty around the permitting of LNG infrastructure,” said Charlie Riedl, executive director of the Center for LNG.

James Danly, a Republican commissioner who had decried the February policies, said the revisions “are case studies in why it is that every stakeholder should participate in the dockets.”

“It was because, in large measure, of the participation of the affected parties that we find ourselves in the position we do,” Danly said. “They matter, they count, we read them.”

Neil Chatterjee, a Republican who chaired the commission under former President Donald Trump, said he “can’t emphasize enough what a big-time win this is.”

“Pipeline companies thinking about filing new applications,” Chatterjee wrote on Twitter, “should expedite and move forward ASAP before the commission finalizes the statements.”

Sen. John Barrasso (Wyo.), the top Republican on the energy committee, demanded the commission “start over” on the policy. He introduced legislation Wednesday that would delay the commission’s policy from going into effect until prices fall or gas supplies are deemed sufficient to power the electric sector.

Green Critics

But environmental groups, who viewed the policies as a long-sought win, urged the commission to stay the course.

Gillian Giannetti, senior attorney for the Sustainable FERC Project at Natural Resources Defense Council, said the commission was “going out of its way to address the complaints of the gas industry.”

“FERC needs a gas policy that takes into account greenhouse gas emissions, environmental justice effects, and landowner concerns,” Giannetti said. “We look forward to continuing to make that case in comments and elsewhere.”

The Sierra Club, which has challenged pipelines and LNG terminals in court, criticized the commission’s approval of three pipelines Thursday.

“The fossil fuel industry and the politicians they finance are pitching a fit because they’re worried FERC’s modest proposed policy changes might mean they no longer have free rein to build as many polluting pipelines as they want,” said Kelly Sheehan, senior director of energy campaigns for the Sierra Club.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

Commissioner Allison Clements, a Democrat, said “stronger agreement” is needed on the policy statement but worried that another round of comments would burden landowners and others.

The decision “gives us time to try to reach a more bipartisan solution,” Willie Phillips, a Democrat and the commission’s newest member, said at an event hosted by the American Council on Renewable Energy.

Comments on the now-draft policy statements are due by April 25, with reply comments due May 25.

Three Pipelines

The commission also approved three gas pipeline projects in the Northeast and Southeast, including one that will route new gas capacity to an export terminal in Louisiana.

Even under the now-revoked policy, Glick said, he would have found that greenhouse gases emissions are less than significant in those cases.

One of the projects, Iroquois Gas Transmission System’s Expansion by Compression project in New York State, would reduce greenhouse gas emissions because natural gas capacity would replace oil, Glick said.

The other two projects are Kinder Morgan’s Evangeline Pass in Louisiana and Mississippi and TC Energy’s East Lateral Express, which will push gas to Venture Global’s Plaquemines LNG export terminal, which was approved by FERC in 2019.

(Updates with comment from FERC commissioner Willie Phillips.)

To contact the reporter on this story: Daniel Moore at dmoore1@bloombergindustry.com

To contact the editors responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com; Zachary Sherwood at zsherwood@bgov.com