July 27, 2018 by Montina Cole, Senior Attorney and Gillian Giannetti, Staff Attorney, Sustainable FERC Project
NRDC, the Sustainable FERC Project (in which NRDC is a member), and 60 other public interest organizations sent a clear message this week to the Federal Energy Regulatory Commission (FERC): it’s time for FERC to reform the way it evaluates applications for new interstate gas pipeline infrastructure.
While well-intended, FERC’s current policy for reviewing gas projects is outdated (19-years-old), incentivizes overbuilding (in fact, a recent study concludes that $32 billion worth of proposed gas pipelines may become stranded due to drops in demand), and causes unnecessary economic and environmental harms. Our joint recommendations outline a 21st century approach for America’s pipelines that cross state borders.
Specifically, the joint Comments of Public Interest Organizations respond to FERC’s April 19, 2018, Notice of Inquiry, in which FERC sought input on potential revisions to its 1999 Natural Gas Policy Statement (Policy Statement), which guides FERC’s review of new pipeline infrastructure.
A lot has changed since 1999. Since that time, FERC has approved over 400 new pipeline projects, rejecting only two. Concerns about pipeline overbuild and associated harms, including the increased use of eminent domain, are growing and clean energy resources are no longer just ascendant—they have arrived. Just as we can no longer ignore the mismatch between the 40-to-50-year lifespan of pipeline projects with the declining prospect of their long-term usefulness, we cannot ignore the mismatch between the Policy Statement as implemented and FERC’s statutory duty to protect the public interest.
In its Notice of Inquiry, FERC sought feedback on four areas: (1) FERC’s determination of whether a pipeline is needed; (2) pipelines’ use of eminent domain; (3) FERC’s consideration of a project’s environmental impacts; and (4) ways FERC can improve administratively. In response, FERC received thousands of comments. In addition to our joint comments with the other groups, NRDC also commissioned energy industry expert Dr. Susan Tierney of Analysis Group to file her own comments at FERC.
Our key recommendations are below.
Determine pipeline need through an “all relevant factors” approach. FERC currently relies exclusively on precedent agreements—long-term contracts between a pipeline developer and a prospective customer to reserve pipeline capacity—as sufficient evidence to demonstrate need. This sole measure is not a universal indicator, especially when the contracts are between the pipeline and its own affiliates. More on those issues can be found here. We call on FERC to look at all factors relevant to whether a new pipeline is needed, including state policies, energy demand projections, potential cost increases or savings, and capacity on existing or other proposed pipelines in the applicable region.
Restrict eminent domain power and clarify FERC’s important role in protecting landowners. FERC must place reasonable restrictions on pipeline developers’ exercise of eminent domain power and play a strong role in protecting affected landowners and communities. FERC must ensure that any property taken has a public purpose, given the severe impact condemnation has on public safety, homes, family farms, local businesses, and conservation lands. Because these harms are best explained by those who have experienced them directly, our joint comments include the testimony of five individuals whose lives have been impacted by pipeline projects.
Fully evaluate climate pollution and other environmental impacts. Under the National Environmental Policy Act, FERC must disclose and analyze the direct, indirect, and cumulative environmental impacts of a proposed pipeline, including, but not limited to, the disclosure and analysis of related greenhouse gas emissions. Unfortunately, FERC recently took a step backward in this regard. In addition, too often, the burdens of new gas infrastructure fall disproportionately onto communities of color, Indian tribes, and other vulnerable communities. These impacts must be acknowledged and prevented by using appropriate methodologies for assessing the burden.
Ensure meaningful opportunities for public participation. FERC must provide more meaningful opportunities for public participation in the pipeline approval process. Doing so will address some of the shortcomings that the U.S. Department of Energy’s Inspector General identified in its recent audit of FERC’s process, as well as help to rebuild public confidence in FERC’s review.
The over 60 public interest organizations who signed onto the joint comments have sent a clear message: reform is needed for the gas pipeline review process. We hope that FERC is listening and that it will act accordingly to revise the Policy Statement to meet 21st century needs.
The views expressed in this blog are those of the author, and do not necessarily represent the views of the Sustainable FERC Project or Natural Resources Defense Council.