FERC Formally Axes its Draft Policy Statement on Greenhouse Gas Emission Considerations for Natural Gas Act Projects – Akin Gump Strauss Hauer & Feld LLP

Order Terminating Proceeding on Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews

Introduction

On January 24, 2025, the Federal Energy Regulatory Commission (FERC) issued an Order Terminating Proceeding in Docket No. PL21-3, “Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews” (the Order), which formally closed a docket initiated in 2021 to reconsider and supplement the Commission’s 1999 policy statement on the certification of new interstate natural gas transportation facilities (the 1999 Certificate Policy Statement).

Background

The 1999 Certificate Policy Statement establishes the criteria and balancing test used to determine whether a natural gas pipeline project is required by the public convenience and necessity, which is the responsibility of the Commission under Section 7 of the Natural Gas Act (NGA), sometimes referred to as the “public interest” test. Prior to initiating Docket No. PL21-3, FERC had been under pressure from certain environmental organizations to formally include the greenhouse gas emissions (GHGs) of pipeline construction and operation, as well as upstream natural gas production and downstream natural gas combustion into its “public interest” test, and to apply a similar test to liquefied natural gas (LNG) terminal infrastructure approved under NGA section 3.

Commission’s Decision

The Commission explains in the Order that, upon review of the lengthy record it developed over the course of the proceeding, it has determined that greenhouse gas emissions are generally better considered on a case-by-case basis, when raised by parties to individual proceedings. While the Order was unanimous, Democratic Commissioners Phillips, Rosner and Chang filed a separate joint concurrence setting forth their views on what FERC’s current policy is on accounting for GHG emissions based on a series of Commission orders of subsequent federal court decisions.

Termination of the Interim GHG Policy Statement

The Order terminates a lengthy and controversial proceeding. On February 18, 2022, the Commission released two policy statements, the Updated Policy Statement on Certification of New Interstate Natural Gas Facilities (the Updated Policy Statement) and the Interim Policy Statement on the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews (the Interim GHG Policy Statement). Together, these policy statements significantly revised the 1999 Certificate Policy Statement.

Key Revisions

• The Updated Policy Statement required the Commission to account for a project’s impacts on environmental justice communities in determining whether a pipeline project is in the public interest.
• The Interim GHG Policy Statement established that the Commission would assess a proposed project’s contribution to climate change.
• The Interim GHG Policy Statement established an annual maximum threshold of 100,000 metric tons of greenhouse gas emissions for new pipeline and LNG projects.
• The Commission could condition its approval of a pipeline project upon mitigation of climate change impacts.

Controversy and Termination

Both policy statements were issued with strong dissents from the then-sitting Republican Commissioners on grounds that they exceeded FERC’s statutory mandate under the NGA, which did not extend to considerations of global climate change. The policies were deemed drafts in March 2022, shortly after a bipartisan Senate Committee on Energy and Natural Resources convened a hearing critical of the Commission’s actions. The termination of the Interim GHG Policy Statement reflects the priorities of the Trump administration, which has emphasized its commitments to minimizing regulatory obstacles to the development of new domestic natural gas infrastructure and rescinded Biden administration policies that required an all-of-government approach to addressing climate change.

Future Developments

It is possible that Chairman Christie will seek to close the Updated Certificate Policy Statement docket as well, given the rescission of policies related to environmental justice. Doing so would require the internal support of the other FERC Commissioners, which is currently comprised of a three-seat-to-two-seat Democratic majority. The concurrence by the three sitting Democratic Commissioners on the Interim GHG Policy Statement suggests that they are assuaged by the growing body of federal court case law dictating that the agency consider GHG emissions during natural gas infrastructure reviews in compliance with the NGA and the National Environmental Policy Act (NEPA). The concurrence may be intended to caution the remaining Commissioners from abandoning efforts to consider GHG emissions entirely in NGA proceedings if they seek their votes on future orders.

Conclusion

Akin’s energy regulatory team continues to monitor the Commission’s orders and guidance affecting natural gas infrastructure and expects to provide updates and insights on Speaking Energy as further developments are announced.

SDGs, Targets, and Indicators Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy
• SDG 13: Climate Action
• SDG 16: Peace, Justice, and Strong Institutions

The article discusses the Federal Energy Regulatory Commission’s (FERC) decision to terminate a docket that would have included greenhouse gas emissions (GHGs) in the “public interest” test for natural gas infrastructure projects. This decision has implications for affordable and clean energy (SDG 7) and climate action (SDG 13) as it determines the criteria for certifying new interstate natural gas transportation facilities. Additionally, the article mentions the involvement of Democratic Commissioners and federal court decisions, indicating the relevance of strong institutions and justice (SDG 16).

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7.2: Increase the share of renewable energy in the global energy mix
• SDG 13.2: Integrate climate change measures into national policies, strategies, and planning
• SDG 16.6: Develop effective, accountable, and transparent institutions at all levels

The article highlights the controversy surrounding FERC’s consideration of GHG emissions in natural gas infrastructure projects. By terminating the docket, FERC may hinder the integration of climate change measures into national policies and strategies (SDG 13.2). The involvement of Democratic Commissioners and federal court decisions suggests the need for effective, accountable, and transparent institutions (SDG 16.6). The termination of the docket may also impact the share of renewable energy in the global energy mix (SDG 7.2) by potentially favoring natural gas infrastructure over renewable energy alternatives.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Greenhouse gas emissions (GHGs) from pipeline construction and operation
• Upstream natural gas production and downstream natural gas combustion
• Impacts on environmental justice communities
• Contribution to climate change
• Annual maximum threshold of 100,000 metric tons of greenhouse gas emissions for new pipeline and LNG projects

The article mentions several indicators that can be used to measure progress towards the identified targets. These indicators include GHG emissions from pipeline construction and operation, upstream natural gas production, downstream natural gas combustion, impacts on environmental justice communities, and contribution to climate change. The establishment of an annual maximum threshold of 100,000 metric tons of greenhouse gas emissions for new pipeline and LNG projects is another indicator mentioned in the article.

SDGs, Targets, and Indicators Table

Source: akingump.com