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Natural gas infrastructure reviews to lose climate-focused voice next month

The Federal Energy Regulatory Commission could soon see a shift in how it issues permits for natural gas infrastructure projects, especially the role that climate plays in those evaluations, when Commissioner and former Chairman Cheryl LaFleur departs the agency at the end of August.

"When I leave, just like when other people have left, the commission will have to find its center of gravity again," LaFleur said in an interview before she steps away from her 10-year post at the commission.

LaFleur and her fellow Democrat on the commission have sought to bring FERC into the fight against global warming alongside a substantial cross-section of the public and business community. In an effort that picked up after Commissioner Richard Glick arrived in 2017, LaFleur and Glick pressed the commission to do more analysis of greenhouse gas emissions and climate change impacts in negotiations and statements on Natural Gas Act certificate approvals for gas pipelines and LNG terminals. The Democrats took different approaches, though. While Glick has dissented from most of the certificate approvals, LaFleur has voted for many of them, releasing her own calculations of greenhouse gas emissions in separate statements and reaching a compromise with the two Republican members of the commission that allowed LNG projects to move forward.

The Republican members of FERC, Chairman Neil Chatterjee and Commissioner Bernard McNamee, have stayed close to the historical position of the commission. FERC has held that calculating every climate impact of gas projects from upstream production to downstream use would be impossible when many of the connections to the projects are remote or speculative. The normally five-person commission currently holds two Republicans and two Democrats after the death of former Chairman Kevin McIntyre.

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Commissioner Cheryl LaFleur plans to make further contributions to energy and environmental efforts after she leaves the Federal Energy Regulatory Commission.
Source: Associated Press

"The infrastructure cases — the gas pipeline and LNG cases — have been the poster child for climate change being a wedge issue that has driven rifts in the commission," LaFleur told S&P Global Market Intelligence on Aug. 22. "You only have to read recent commission orders or attend meetings to see that there are very different views on how we should do our need determination, how we should do our environmental review, how we should take climate into account, especially downstream."

After LaFleur leaves the commission, "they will just have to work through that," she said. "Something that will help, although not in a neat way, is the courts are going to continue to speak."

The U.S. Appeals Court for the District of Columbia Circuit, in a 2017 decision involving the 1.1-Bcf/d Enbridge Inc.-led Sabal Trail pipeline that runs deep into Florida, told FERC to consider greenhouse gas emissions impacts of gas flowing to downstream power plants.

"The majority has chosen to interpret that in the most narrow way possible that you can still claim you're listening to it, which is, if it is precisely same situation, we'll do that," LaFleur said.

Another D.C. Circuit decision upheld a FERC approval of the Broad Run expansion project by Kinder Morgan Inc.'s Tennessee Gas Pipeline Co., but the court made it clear that the impacts of greenhouse gases can be identified and evaluated for a pipeline project that serves a gas utility, LaFleur said.

"I think the commission should listen to that, and start increasing their consideration of downstream [greenhouse gases]," she said.

"Once you start thinking hard about downstream [greenhouse gases], you have to think differently about need," she said. "Because if you think, 'Oh, this much more climate change comes from this pipeline,' well, how badly is it needed? Is there a moratorium on new gas hookups if they don't do it? Or is it an extra [underused] pipeline? ... Has the power plant been built? Is it approved by the state? You start doing an analysis of what is really going on."

This rigorous look at project impacts "is what I thought the notice of inquiry on the [Natural Gas Act] certificate policy statement was for," LaFleur added, referencing a process McIntyre initiated as chairman in April 2018. "Can we pump a little more blood into the way we look at the need for the pipeline and its impacts, so when we get this figure of greenhouse gas, we will have something to balance it with?"

McIntyre launched the inquiry to see whether FERC should update the 20-year-old policy that guides evaluations of applications to build pipeline projects. Environmental groups and other pipeline opponents welcomed the review and submitted numerous public comments, even as they expressed skepticism that things would change. Representatives of the oil and gas industry said the commission's current process works well and big changes would not be necessary. The effort then largely faded from view. In a 2019 fiscal year budget request, FERC said it would determine sometime before September what actions, if any, it would take to revise the gas certificate policy.

"The courts are signaling that they want us to do more: asking questions and looking harder," LaFleur said. "And if the commission listens to the courts, they will be forced to do it, but I think they would be well-served to pick up the notice of inquiry again and figure out a way to do it themselves and should get ahead of it."

LaFleur decided to leave the agency at the end of her second term after Senate Minority Leader Chuck Schumer, D-N.Y., who determines the Democrats' nominations for the agency, indicated that he would choose someone else. LaFleur was first nominated by President Barack Obama in 2010, and the Senate confirmed her for a second five-year term in 2014. In addition to being a commissioner, LaFleur served as acting chairman from November 2013 to July 2014 and January 2017 to August 2017, and as chairman from July 2014 until April 2015.

For the next step in her career, LaFleur said she will not take a single full-time job. "Probably a portfolio of board, academic and nonprofit [positions], and I will develop it over time," she said. Asked if they will involve energy and climate change, she said, "I hope so."

"If I have an organizing principle in the choices I'm making, it is that I want to use my expertise and my experience to help the transition to the energy system of the future," LaFleur said.

LaFleur said she hopes the Trump administration will fill her and McIntyre's seats. When she announced in January that she would leave, she said she expected the administration would have nominated someone by August, but the administration has not made its plans for the commission known. LaFleur said that the commission will be stronger if it has a diversity of members — "someone from a state commission, someone from industry, someone from the Hill, someone from the West, someone from the East."

"I don't think it is healthy for the commission to have partisan splits all the time," LaFleur said. "And then if you have a new administration, we will be like — no offense — the Federal Communications Commission," flipping from one administration to the next.

"That is not how FERC has been," she said. "FERC has had policy continuity across administrations."

Even if Commissioner Glick is left as the lone voice for climate impact analysis, he will still affect the commission's reviews, LaFleur said. "He has a clear voice and he is not shy about his opinions," she said. "Certainly, if I were chairman, I wouldn't want it to develop into a situation where many important things were going out on party lines."