FERC's Gas Reviews Are Getting Better All The Time

Part of NRDC's Year-End Series Reviewing 2021 Climate & Clean Energy Developments

It’s no secret that the Federal Energy Regulatory Commission’s reviews of gas pipelines and export facilities need an overhaul. FERC has long rubber-stamped projects that aren’t in the public interest and has failed to conduct meaningful environmental reviews. NRDC has long pressed for change; importantly, the courts now agree with us.

In 2021, partially due to court losses, FERC took several positive steps to address inequities and acknowledge prior failings. With continued pressure, and the addition of a fifth commissioner, 2022 has the potential to be transformative.

There are four key areas to watch in 2022: assessing project need, considering climate change impacts, tackling environmental justice issues, and facilitating public participation.

Assessing Project Need

Properly assessing project need is critical for meaningful FERC review. Under federal law, FERC is supposed to only approve pipelines that are “required” by the public interest. FERC’s finding of need also allows gas companies to seize private property. So, if FERC’s need finding is faulty, FERC will not only approve unneeded pipelines but will also facilitate the unlawful taking of land.

Unfortunately, that’s exactly what happened in 2018, when, in a 3-2 vote, FERC authorized the Spire STL pipeline—and then allowed Spire to build and operate the pipeline while the case was on appeal. This proved disastrous when, in June 2021, a unanimous federal court threw out FERC’s approval, characterizing FERC’s need assessment as “ostrich-like” and containing “serious deficiencies.”

But Spire wasn’t alone. In 2020, in a 3-1 vote, FERC greenlit the Jordan Cove LNG project. This boondoggle—which FERC rejected in 2016 due to a lack of need—would have taken U.S. farmers’ land to build a pipeline to transport Canadian gas to an export terminal in Oregon. There was only one problem: after nearly 10 years of searching, no one wanted the gas. Earlier this month, while facing numerous lawsuits and no buyers, Jordan Cove’s parent company announced that it was canceling the project.

Neither one of these projects ever should have been approved. But there is reason for hope. In February—shortly after assuming the FERC chairmanship—Rich Glick, who opposed both Spire and Jordan Cove, announced that FERC was reopening comment on its Natural Gas Policy Statement—its guide for assessing pipeline applications. In May, we filed comments, joined by over 50 organizations, that outline a revised approach to identifying project need. Chances are that FERC will introduce a new Policy Statement in 2022.

Considering Climate Change

After years of FERC using “logical hopscotch” to avoid the question, in March, for the first time, FERC acknowledged that it is in fact capable of identifying a project’s contribution to climate change, stating: “In previous orders, the Commission has concluded that it was unable to assess the significance of a project’s greenhouse gas (GHG) emissions or those emissions’ contribution to climate change. Upon reconsideration, we no longer believe that to be the case.”

Like project need, this decision was not organic. Rather, over the past four years, FERC’s climate reviews have faced sharp criticism in court. This continued in August when a federal court found fault with FERC’s unwillingness to use models, such as the Social Cost of Carbon, in its review of two liquefied natural gas terminals in Texas.

While welcomed, FERC simply acknowledging that it can assess a project’s climate impacts is a baby step in the greater need for reform. FERC must now take the opportunity to deploy a robust climate assessment that it incorporates into all of its reviews. Should it fail to seize the opportunity, FERC will continue to find itself losing in court.

Tackling Environmental Justice Issues

FERC has long struggled to properly assess a project’s environmental justice impacts. Fortunately, this, too, saw progress in 2021. First, FERC’s February Policy Statement inquiry included eight questions on environmental justice. Second, in May, FERC hired Montina Cole as its inaugural Senior Counsel for Environmental Justice and Equity. Third, in August, a court found error in FERC’s environmental justice review. As with climate and project need, these changes, coupled with the risk of additional litigation, form the building blocks for significant progress in 2022.

Facilitating Public Participation

After more than 40 years, in June, FERC finally established its Office of Public Participation. FERC is currently building out the office website and its inaugural director, Elin Katz, started in November. Beginning next year, the office should take “no regrets” actions, such as drafting comment templates and hosting informational webinars, to establish trust with a public that reasonably views FERC as uninterested with the concerns of ordinary people.

Great Potential Lies Ahead

2021 was a good year for FERC reform. 2022 provides a chance for FERC to unveil transformative policies that will reshape how gas projects are reviewed, approved, and explained. For those unnecessarily put in harm’s way or facing land seizures because of FERC’s ham-handedness in the past, it’s long past time for a change. After years of doing the industry’s bidding, we need balance from the commission, including a real weighing of the public interest and a project’s environmental damage. At NRDC, we will be doing all we can to ensure this happens.