Alert 03.17.22
Alert
03.31.22
In order to construct an interstate natural gas transportation project, a developer must obtain a certification from the Federal Energy Regulatory Commission (FERC) that the new transportation project is required by the public convenience and necessity under section 7 of the Natural Gas Act. FERC has issued policy statements which outline its process for making such a determination and explain how FERC considers the impacts of a new project.
In February 2022, FERC issued two new policy statements addressing its process for approving future natural gas pipeline projects. In the first (Updated Policy on Certification of New Interstate Natural Gas Facilities), FERC updated its 1999 certificate policy to expand the impacts considered in approving new natural gas transportation projects to include non-economic impacts to landowners, environmental impacts of climate change, and environmental justice concerns. In the second (Interim Policy regarding the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews), FERC issue a draft interim policy concerning consideration of greenhouse gas emissions under the National Environmental Policy Act (NEPA). Both policy statements were intended to take immediate effect and stood to substantially impact the approval process for pending and future gas pipeline and infrastructure projects.
Last week, however, FERC voted to reclassify both policy statements as “drafts.” FERC will not apply these draft policy statements to pending infrastructure project applications in the interim. This suspension of the policy statements comes after FERC faced criticism from the gas industry and its supporters, including requests for clarification regarding the requirements imposed by the policy statements, such as the assessment of downstream greenhouse gas emissions.
Why this matters: In addition to reclassifying the policy statements as drafts, FERC voted to reopen the comment period as to both statements in order to further engage stakeholders and develop the administrative record. FERC initially requested comments on its 1999 certificate policy statement in February 2021. While FERC received numerous comments, there were only very minimal comments conveying the interests of the hydrogen industry. Since then, it has become more apparent that FERC is likely to play a role in the growth of the hydrogen economy, particularly as FERC has recently asserted jurisdiction over pipelines carrying natural gas blended with hydrogen.
Positive consideration by FERC of a proposed pipeline’s ability to carry natural gas/hydrogen blends or ability to be converted to hydrogen could play a large role in a pipeline developer’s willingness to incorporate hydrogen into its plans and help spur growth of hydrogen transportation infrastructure. Thus, reopening of the comment period presents a significant opportunity for the hydrogen industry to provide FERC with input on the important issues presented by these statements. The hydrogen industry should urge FERC to reference its jurisdiction over blended natural gas hydrogen transportation and storage infrastructure in the revised certificate and to mandate consideration of the positive environmental impacts of hydrogen.
The comment period is now scheduled to run through April 25, 2022. Pillsbury attorneys have been carefully tracking the developments concerning FERC’s treatment of hydrogen pipelines and are well-equipped to assist with the preparation of comments to FERC regarding the revised policy statements. Please contact the authors of this alert if you are interested in submitting comments to FERC.