? The environmental advocacy group looks forward to being an "active participant" in the overhaul of the U.S. pipeline permitting process.
? The federal government needs to do more analysis of the need for pipelines, even under current policy.
? More public participation in the process would be a "win-win."

Montina Cole, senior energy advocate for the Sustainable FERC Project, joined the Natural Resources Defense Council in 2014 after 20 years at corporate law firms. Source: Natural Resources Defense Council |

Gillian Giannetti, project attorney for the Sustainable FERC Project, previously worked on pipeline and LNG export permitting and other energy issues at an international law firm. Source: Natural Resources Defense Council |
The Natural Resources Defense Council, or NRDC, believes it is time to bring fresh air to the Federal Energy Regulatory Commission's review process for U.S. natural gas infrastructure. The commission has begun a study of the almost-20-year-old policy that guides its evaluation of pipeline applications. FERC announced the effort after a decision by the U.S. Court of Appeals for the District of Columbia Circuit in August 2017 overturned a FERC certificate for the large Sabal Trail pipeline project and other parts of Southeast Market Pipelines, which showed that the commission's decisions can be checked.
Two attorneys with the group's Sustainable FERC Project talked with S&P Global Market Intelligence to discuss the effort to update the FERC pipeline process. The following is an edited transcript of the conversation.
S&P Global Market Intelligence: Why did the NRDC launch the Sustainable FERC Project? What is its mission?
Montina Cole: Traditionally, the project has focused on electric grid issues, where we were seeking to get more clean energy resources deployed onto the transmission grid and to remove barriers to the deployment of clean energy resources. But we also understand it is not as though there is not a connection between the electric and gas markets. They are not islands unto themselves. So we also have to look at the connection between the two markets.
When we look at things like FERC pipeline policy issues and see the way FERC policy operates to incentivize the overbuild of gas pipelines, we understand that can act as a barrier to getting clean energy resources used more and more deployed onto the grid, in addition to posing significant environmental risks and other risks.
Gillian Giannetti: We are at a really critical juncture here when it comes to FERC advocacy. I feel I am joining Sustainable FERC at just the right time. We have a golden opportunity to be able to talk about a more holistic approach to looking at natural gas pipeline applications and whether they should be granted and whether the pipeline is needed. Whether it is looking at the need factors within the midstream pipe or looking at the upstream and downstream effects.
What will the NRDC tell FERC as it conducts a review of its natural gas pipeline review guidelines?
Giannetti: We applaud Chairman [Kevin] McIntyre's decision to open this process. The natural gas policy statement has not been revised since 1999. Fun fact: TiVo, BlackBerry and the Apple Clamshell [laptop] were cutting-edge technologies the last time that the natural gas policy statement was reviewed. In that time, we have had 400 natural gas pipeline applications approved, with only two being rejected. There have been dramatic changes in the energy mix since 1999. It's a completely different world.
We plan to be an active participant in the proceedings.
Cole: The key is what does the law says. Under the Natural Gas Act, FERC has a responsibility to make sure the public interest is protected. We are talking about whether or not a pipeline is required for the public convenience and necessity. Overall, we are very concerned and very dedicated to making sure that the reforms that are needed to FERC's pipeline review process are ones that will ensure that the public interest is protected and that any and all gas pipelines reviewed meet the standard of showing that they are actually needed.
Have you been encouraged by the remarks of FERC commissioners and Chairman McIntyre? Do you feel they will be receptive?
Cole: It is really important that each of the commissioners have voiced support for the review. That we certainly find encouraging.
And certainly, when you look at Commissioner [Cheryl] LaFleur and Commissioner [Richard] Glick, they are right on point in identifying the issues [including] the over-reliance on precedent agreements, shortcomings in the way FERC evaluates climate impact, concerns about landowners and the use of eminent domain, which, by the way, Commissioner [Neil] Chatterjee has also voiced concern about.
But the devil is in the details. We have to make sure ... the concern and the highlighting of these issues are matched with reforms that will actually serve the public interest.
Giannetti: And commissioners LaFleur and Glick have also been right on point when it comes to the importance of incorporating and encouraging public participation, especially by those without resources. I recently wrote a blog about some of the potential changes in policy that would inhibit organizations and individuals, particularly those without the abundant resources of the law firms where Montina and I started our careers. That is the wrong approach. The right approach is to expand the net to make sure that everybody has an opportunity to have their voice be heard so we make sure this pipeline is actually needed. Public participation is a win-win.
Cole: The influence of the court, the greater outcry from people impacted by these [pipeline] proposals, the opinions of experts — I don't believe FERC is immune to those sorts of opinions, nor should it be.

A green wall grows in the Natural Resources Defense Council office in Washington, D.C. Source: S&P Global Market Intelligence |
Can you talk about pipeline companies using agreements with affiliates to support new projects?
Cole: The use of affiliate agreements is just another example of where FERC needs to look at more than just one thing. Currently, when they are looking at determining need, they have the ability under the policy statement that exists to look at many different factors, "all relevant factors." FERC has the ability to look at things like what is the long-term energy demand, what is the impact on potential customer savings, comparisons of demand with pipeline capacity that already exists. Those are just examples of the different things that they listed in the policy statement. There could be many other issues, as well.
We support the "all relevant factors" approach. But what we find when we look at how FERC is applying the policy statement in practice is that they are just basically looking at precedent agreements, which are contracts between pipeline developers and prospective customers who pledge to buy the pipeline capacity ... and that is where the analyses essentially stop when it comes to determining whether there is a need.
And that's really troubling. Precedent agreements alone are not necessarily a good proxy for market need. Plus, there may be other factors that override private contractual interests in determining need: environmental factors, other factors.
There is another level of concern when we are looking at these precedent agreements and we find increasingly they are affiliate agreements. What I mean by that is pipeline developers are increasingly acting as both sellers and purchasers of pipeline capacity. And we see this playing out in many, many cases: the Atlantic Coast pipeline is one example, the Mountain Valley pipeline, the Nexus pipeline. There is a case involving companies in the Missouri area, the [Spire STL Pipeline LLC project] case. Those are 100% affiliate contracts that are involved there.
That is a problem, when we see a pipeline company contracting with itself. How is that any sort of measure — "strong evidence," as FERC has said — of need?
Giannetti: We are still using just one of the recommended factors that a 20-year-ago FERC could come up with. So be it the social cost of carbon, the social cost of methane, the state policies [on renewable energy standards and other issues] that have been passed since 1999 ... these are things that are not squishy, that are not wishy-washy, that are clear and scientific and quantitative that FERC can incorporate into an "all relevant factors" approach without putting their need analysis on shaky footing. Right now, it is on pretty shaky footing, because increasingly a need analysis that is reliant entirely on an agreement or series of agreements between the pipeline applicant and itself.
The U.S. has a mature pipeline grid. Would the NRDC be OK with small pipeline projects?
Giannetti: At the end of the day, the determinant for whether or not a pipeline permit should be granted is whether or not the pipeline is needed. Currently, it is not disputable that there is underutilized capacity, but every project is unique. Every project has particular factors that need to be looked at: environmental, economic, long-term portfolios of energy resources. If FERC follows an "all relevant factors" approach where it looks at pipeline need as the foremost consideration, then presumably the projects that would get through would have a diverse and robust record that would demonstrate that the project was needed. We support a FERC that prioritizes need over all other factors.