FERC chairman asks pipelines to raise 'notice to proceed' rule concerns with Congress

Houston — Natural gas pipeline companies' concerns about a rule barring the Federal Energy Regulatory Commission from issuing notices to proceed with construction pending rehearing could be resolved by Congress, Chairman Neil Chatterjee said July 16.

Industry advocates, including the Interstate Natural Gas Association of America, fear Order No. 871 will have unintended and negative consequences for pipeline projects, including the introduction of significant uncertainty with respect to the timeline for project development and increases in overall project risk and costs. They have asked for clarification of the scope of the rule.

During a question-and-answer session with reporters after FERC's monthly meeting, Chatterjee said the commission would review the comments that have been submitted, though he did not say whether the rule would be tweaked. At the same time, he requested that people raise their concerns with Congress, which he suggested is "potentially looking at legislation in this area."

Beyond referring to his past comments, Chatterjee declined to address whether the commission should have prepared a proposed rule on the pipeline notices to proceed rather than issuing an instant final rule. A proposed rule would have a comment window for interested parties and time for FERC to mull the comments before a final rule that took into consideration those comments was issued. An instant final rule prevents that advanced feedback, but also allows faster action. In an emailed statement on Chatterjee's remarks, INGAA said clarification of the rule is still needed.

"We urge lawmakers, if they choose to pursue legislation, to provide for timely resolution of rehearing requests and a clear deadline for final commission action on the merits so that energy infrastructure projects that are in the public convenience and necessity can promptly proceed," the group said. "All parties to a commission proceeding deserve regulatory certainty."

It said it is aware of one bill in the House that would address rehearings under the Natural Gas Act.

INGAA has pressed FERC to clarify the rule was not intended to apply and stall construction in a variety of situations, such as when a pipeline developer seeks rehearing on limited issues, or in cases when no landowner has sought rehearing, or eminent domain is not implicated. It also has argued that FERC should clarify the rule is not meant to apply when FERC allows rehearing to be denied by operation of law.

The trade group worries that the rule may leave the possibility of open-ended delays in FERC 's action on the merits of rehearing, even as the rule bars notices to proceed with construction.

Chatterjee also addressed during the media call FERC's certificate authorizations for LNG export projects.

In an interview with S&P Global Platts on March 13, Chatterjee said decisions about whether new liquefaction projects in the US are commercially viable should be left up to developers, "not unelected bureaucrats in Washington." He suggested at that time that the commission should stay within its regulatory lane when issuing certificates.

The larger question is whether FERC is facilitating the development of too much LNG capacity for the market to bear — creating future stranded assets. Global oversupply based on existing infrastructure has already helped spur record low international prices, a trend that has been exacerbated by demand destruction due to the coronavirus pandemic.

Chatterjee told reporters his confidence in the future of US LNG has not changed, even as multiple developers of projects that have already received FERC certificates have delayed final investment decisions in recent months.

"The fundamentals regarding US LNG were strong before the pandemic," Chatterjee said. "The pandemic is having an impact across all sectors of the economy."

Looking ahead, he said, "We could see a rebound in that regard."