US energy secretary asks FERC to nix long-idling gas pipeline policy update

US Energy Secretary Chris Wright has urged the Federal Energy Regulatory Commission to rescind a long-idling proposal to revise the commission's natural gas pipeline certificate policy. Withdrawing the draft plan floated in 2022 is necessary to provide certainty to the gas sector, Wright wrote in a letter Aug. 29 urging action by the end of September.

The DOE request would have FERC rely instead on its original 1999 certificate policy statement, putting to bed a more expansive approach to examining whether projects are needed, floated under former FERC Chairman Richard Glick but not fully implemented.

The DOE's request to sway FERC's policy comes quickly after former Chairman Mark Christie's departure earlier in August and at a time when the Trump administration is expected to play a greater role in the independent commission's actions.

The DOE letter closely mirrors a dissent of former FERC member James Danly to FERC 2022 pipeline policy proposal. Danly is now deputy secretary of DOE.

"[T]he draft Updated Certificate Policy Statement continues to cast a fog of uncertainty over the development of vital natural gas infrastructure," Wright said in the Aug. 29 letter to FERC released Sept. 2. "Until the commission rescinds it, the draft Updated Certificate Policy Statement will continue to haunt the natural gas industry."

Under Christie, FERC already withdrew a related draft guidance on considering greenhouse gas emissions, also issued in 2022, to increase certainty and lower litigation risk.

Former FERC Chairman Kevin McIntyre, a Republican, launched the original policy proceeding in 2017 to explore ways to update a nearly 20-year-old policy for reviewing interstate gas project proposals. More than 35,000 public comments flowed into FERC following the 2017 notice of inquiry and a subsequent notice seeking more input in 2021.

A divided commission, under Glick, released an updated pipeline certificate policy in February 2022, but a month later converted it to draft form after blowback from the pipeline sector, Republican lawmakers and then-chairman of the Senate Energy and Natural Resources Committee, Joe Manchin of West Virginia.

The draft statement said project applicants should provide more than just precedent agreements with shippers to explain why a project is needed, suggesting FERC may consider demand projections, estimated capacity utilization rates, cost savings and other evidence.

The draft also indicated that FERC should look at all relevant factors -- including environmental impacts such as climate change, landowner and environmental justice impacts -- in performing a balancing test to decide whether a project is in the public interest.

The 2022 draft pipeline policy FERC idled for years amid challenges to reaching a bipartisan agreement.

DOE criticisms of draft policy

The DOE letter called the 2022 draft approach "bad policy" that exceeded FERC's statutory authority. It cited Supreme Court precedent to support a narrower view of what factors FERC should consider in its balancing test. Any balancing by FERC must place "front and center" the Natural Gas Act's purpose of encouraging orderly development of plentiful supplies of gas at reasonable prices, the DOE letter said.

DOE also took a more constrained position on the mitigation of environmental impacts.

"Contrary to the Updated Certificate Policy Statement, it is not necessary to ensure that environmental impacts are mitigated before one can make a finding that a proposed project is required by the public convenience and necessity," the letter said.

DOE's request included a draft final order terminating the proceeding that it urged FERC to issue by Sept. 30. In a Sept. 2 notice, the commission provided the public with one week to comment.

Section 403 of the Department of Energy Organization Act allows the secretary of energy to propose rules and policies within FERC's jurisdiction.

"I look forward to reviewing Secretary Wright's proposal with my fellow commissioners," FERC's current chairman, David Rosner, a Democrat, said in an emailed statement Sept. 3.

The pipeline sector cheered the DOE request, but environmentalists who took part in the policy proceeding criticized it.

The Interstate Natural Gas Association of America's general counsel, Joan Dreskin, said the trade group "agrees with the secretary that the 2022 Draft Certificate Policy Statement should be removed to promote regulatory certainty as our industry works to build the infrastructure necessary to support growing energy demand."

In an emailed statement, Dreskin added that the 1999 policy statement was approved by a unanimous bipartisan decision and clarifies the certification process.

"Insulting and anticlimactic step'

Gillian Giannetti, Natural Resources Defense Council director and senior attorney for fossil strategy, called DOE's request and the one-week comment period that FERC provided "an insulting and anticlimactic step in what has been a deeply important review since 2017."

"Parties representing environmental groups, the gas industry, industrial consumers and individuals spent years filing hundreds of pages of comment on this docket, outlining their thoughtful and research-based comments," leading to a commission decision in 2022 to "refresh this obsolete policy," Giannetti said in an interview. In her view, a series of recent actions by FERC show that "in the current FERC, community voices don't matter."

Emily Mallen, a partner with Akin, said she believed FERC will grant the request as it does not require a change in policy, "and the draft order proposed by the secretary is fairly benign."

However, Mallen added, "it does suggest that DOE is prepared to take a more active role in FERC policymaking, especially around pipeline infrastructure."

Former FERC Chairman Neil Chatterjee said that "any notion of FERC independence is done," even as new nominees begin the Senate confirmation process. In Chatterjee's view, the agency's policy decisions likely will need to be cleared through the White House Office of Information and Regulatory Affairs, part of the Office of Management and Budget.

President Donald Trump signed an executive order in February that would require independent agencies to submit major and draft rulemakings to the White House for review. The president has also fired members of several independent agencies, including the Nuclear Regulatory Commission, despite statutory protections from removal without cause.