Technical Conference Sparks Debate Over FERC’s Legal Authority to Consider Greenhouse Gas Emissions in Pipeline Certification Review

On November 19, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) convened a staff-led technical conference to discuss methods natural gas companies may use to mitigate the effects of direct and indirect greenhouse gas (“GHG”) emissions resulting from pipeline construction and expansion projects that are subject to Natural Gas Act (“NGA”) sections 3 and 7 authorizations by FERC (the “Conference”). The Conference included three panel discussions: 1) The Level of Mitigation for a Proposed Project’s Reasonably Foreseeable Greenhouse Gas Emissions; 2) Types of Mitigation; and 3) Compliance and Cost Recovery of Mitigation.

One of the threshold questions posed by the Commissioners, and a recurring theme throughout the conference, was whether FERC has the legal authority to consider GHG emissions as part of its certification process. Chairman Richard Glick asserted that FERC has authority to mitigate GHG emissions and that doing so will provide greater certainty for the industry, and expressed concern regarding FERC’s handling of the issue to date, given the flurry of recent decisions from the U.S. Court of Appeals for the District of Columbia Circuit finding that FERC did not adequately assess emissions when determining the need for pipelines. Commissioner James Danly took the opposite position, emphasizing that the Environmental Protection Agency (“EPA”), not FERC, is the appropriate agency to regulate environmental issues. The panelists also split on the question of FERC’s authority to mitigate GHG emissions, but generally supported the concept of FERC coordinating with other agencies, particularly the EPA, to avoid duplication of regulatory efforts with respect to GHG emissions.

A recurring concern raised by panelists was FERC’s ability to accurately quantify and track GHG emissions. The inherent difficulty of quantifying GHG emissions triggered other discussions, including how FERC would impose effective mitigation measures, and ensure compliance and just and reasonable cost recovery. Some participants asked the Commission to consider the Social Cost of Carbon in any GHG assessment, explaining that FERC has experience applying technical methodologies on which there are differing expert viewpoints. However, other panelists critiqued the Social Cost of Carbon metric as “imprecise.”

Panelists also addressed potential GHG mitigation measures, including physical mitigation measures such as technology-based measures to reduce methane emissions, installation of renewable energy sources to offset gas usage, use of combined cycle or combined heat/power systems on turbine compressor units, and carbon capture and storage, and market-mitigation measures, including carbon offset purchases, renewable energy credits, and emission allowances. Environmental stakeholders raised concerns regarding the sufficiency of carbon capture and storage as a physical mitigation measure, expressing skepticism as to the durability of carbon storage technology over long periods of time. However, industry stakeholders expressed support for the use of carbon capture and storage as a mitigation tool, explaining that technology will continue to advance and that such efforts are an important piece of the overall climate effort. With respect to market mitigation measures, environmental stakeholders expressed disfavor of such measures, while industry stakeholders supported offsets while acknowledging their limitations in producing significant reductions in GHG emissions alone.

Pursuant to the Notice Inviting Technical Conference Comments, issued November 16, 2021, commenters are invited to submit post-technical conference comments by December 14, 2021.

Please contact Pierce Atwood attorney Randy Rich if you have any questions or would like to discuss how you can participate in this discussion as it continues to evolve.