On April 19, 2018, FERC issued a Notice of Inquiry (“NOI”) seeking information regarding whether—and if so, how—to revise its policy for determining if a proposed natural gas pipeline is in the public convenience and necessity.  Specifically, the NOI requests information in four areas related to FERC’s policy for reviewing such certificate applications: (1) determining need for a pipeline project; (2) eminent domain issues; (3) evaluating environmental impacts, including greenhouse gas (“GHG”) emissions and climate change; and (4) changes that would improve the efficiency and effectiveness of FERC’s review.

In the NOI, FERC stated that, since it issued its currently effective pipeline certificate policy statement in 1999 (“1999 Policy Statement”), there have been significant changes in the natural gas industry that affect FERC’s criteria under the 1999 Policy Statement.  For example, FERC explained that it currently considers precedent agreements—agreements signed before a pipeline is operational for future service on the pipeline—as significant evidence of need for a pipeline project, but that an increase in the number of producers, as well as affiliated shippers, have raised questions about whether precedent agreements continue to be an appropriate indicator of project need.  In addition, FERC noted that there has been recent stakeholder interest regarding the alternatives that FERC evaluates in its public interest determination, how FERC addresses climate change in its National Environmental Policy Act review, and the evolving science behind GHG emissions and climate change.

Accordingly, the NOI seeks comments on several different issues related to FERC’s 1999 Policy Statement, grouped into four categories:

• Determination of need for a pipeline project, including how to treat precedent agreements or other contracts as evidence of project need;

• Eminent domain issues affecting both landowners’ rights, as well as developers’ access to survey property;

• Evaluation of environmental impacts, including considerations of GHG emissions and climate change; and

• Possible changes to FERC’s process for reviewing proposed projects that would improve the efficiency and effectiveness of FERC’s review.

FERC explained that its intention in issuing the NOI is “to appropriately consider the enhancement of competitive transportation alternatives, the possibility of over building, the avoidance of unnecessary disruption of the environment, and the unneeded exercise of eminent domain.”  Furthermore, FERC stated that it seeks information on its certificate policy and its application, as well as the scope of its environmental review.  Lastly, FERC stated that its ultimate goal is to improve the transparency, timing, and predictability of its pipeline certificate application review.

Comments on the NOI are due 60 days after publication in the Federal Register.  While the NOI proceeding is pending, FERC will continue to review certificate applications consistent with the 1999 Policy Statement and to make determinations on the issues raised in those proceedings on a case-by-case basis.

A copy of the NOI is available here.