Last Thursday, the Federal Energy Regulatory Commission (“FERC”) began review of its natural gas pipeline approval policy.  FERC’s inquiry seeks information and stakeholder perspectives to help FERC explore whether, and how, it should revise its existing policies regarding review and authorization of natural gas pipelines.

FERC’s notice of inquiry cited four major topics where revisions could be considered: 1) its methodology for determining whether there is a need for a proposed project; 2) its consideration of the potential exercise of eminent domain and of landowner interests related to a proposed project; 3) its evaluation of the environmental impact of a proposed project; and 4) whether there are specific changes FERC could consider implementing to improve the efficiency and effectiveness of its certificate processes, including pre-filing, post-filing, and post-order issuance.

FERC’s current policy statement regarding evaluation of new projects proposed by pipeline companies was issued in 1999 and starts with the threshold question of whether the project can proceed without being subsidized by the pipeline’s existing customers. If it meets this threshold, FERC considers other factors, such as precedent agreements, demand projections, potential cost savings to consumers, a comparison of projected demand with the amount of capacity currently serving the market, and the effects of the project on affected interests, such as the interests of the applicant’s existing customers, the interests of competing existing pipelines, and interests of landowners and surrounding communities.

In the last decade, gas has overtaken coal as the primary source of electricity in the U.S., and new pipelines are being laid across the country. In December 2017, FERC Chairman Kevin McIntyre announced that FERC would review the pipeline policy statement. Stakeholders will have 60 days to comment on the notice once it is published in the Federal Register.