Action, or in some cases inaction, by the Federal Energy Regulatory Commission (Commission or FERC) during its last open meeting before the start of the Biden administration sent a strong message to the natural gas industry that challenges to siting new natural gas infrastructure are likely to continue, possibly leading to insurmountable hurdles for certain projects over time.
Several natural gas pipeline project orders were brought to a vote during the FERC open meeting but failed to gain majority support and advance due in large part to Commissioner Neil Chatterjee’s decision to side with his Democratic counterparts. Commissioner Chatterjee’s term expires in June 2021, at which point FERC will have a democratic majority and mandate to require more extensive environmental reviews of new natural gas infrastructure projects, if desired.
An order that would have lifted a stop-work order that has prohibited construction along a portion of the Mountain Valley Pipeline project (MVP), which spans 303 miles from northwestern West Virginia and southern Virginia, failed to advance. MVP is approximately 92% complete and has been tied up in litigation and permitting delays. Separately, FERC declined to rule on MVP’s application to amend its certificate of public convenience and necessity (CPCN) and request for authorization to complete construction and final restoration work for a portion of the pipeline by crossing all remaining applicable wetlands and water bodies using conventional bores, rather than crossing with an open-cut method. That amendment application was met with opposition by intervenors raising issues including concerns with the adequacy of the environmental review and the exercise of eminent domain.
Additionally, an order that would have ruled on the PennEast Pipeline project’s application to amend its CPCN to authorize the construction and operation of the project in two phases was removed from the agenda prior to the open meeting. FERC granted the pipeline authorization to construct and operate its 116-mile greenfield natural gas pipeline in 2018, but the project has encountered delays in obtaining governmental authorizations and in acquiring certain real property rights for the project facilities. In support of its amendment application, the pipeline project explained that it has secured customer commitments for the first phase of the project as a standalone project.
Refusing to issue orders approving new natural gas pipeline projects was not the only cue suggesting a longer road ahead for new natural gas infrastructure. During the open meeting, the Commission also failed to approve an order finding that an already-operational liquefied natural gas (LNG) import facility was not subject to the Commission’s jurisdiction under the Natural Gas Act, leaving project developers to wonder whether they would be able to continue to operate in the future. In addition, the Commission ruled that the long-planned Jordan Cove LNG project could not move forward without a key clean water permit from the State of Oregon. FERC gave its tentative approval to the pipeline last March as long as it secured the necessary state permits, but the project developer has been unable to do so.
While it has been reported that Commissioner Chatterjee indicated that his lack of support for certain orders was tied to the specific facts of each case and should not be read to indicate a change in his point of view, the statements made by newly appointed Commissioner Clements and now-Chairman Glick at the open meeting and in prior dissents should be seen as a warning for natural gas pipeline projects. At a minimum, it is likely that FERC’s policy statement on the certification of interstate natural gas pipeline facilities will be reviewed and modernized.
During the Biden administration, when deciding whether to approve the development of new natural gas infrastructure, FERC will likely consider issues including the methodology used to determine whether there is a need for a proposed project, the adequacy of environmental reviews including a more detailed analysis of greenhouse gas emissions, the exercise of eminent domain, and landowner interests related to a proposed project. Each of these considerations could present new challenges and, at a minimum, may extend the timeline for regulatory approval.