Watching FERC and Watching the Courts

With the recent confirmation of Willie Phillips to serve as the fifth commissioner on the Federal Energy Regulatory Commission (FERC), utilities, advocates, and other stakeholders are waiting to see how FERC proceeds. High on the list for many are potential revisions to FERC’s 1999 policy statement that it uses to evaluate applications for new natural gas pipelines, as well as how FERC’s decisions fare in court.

FERC opened a proceeding to consider revising this policy statement in 2018, recognizing the many changes in the energy sector over nearly 20 years. At that time, attorneys general commented that FERC needed to think more broadly about the economic risk of approving more infrastructure, as well as the environmental impacts. Under the new leadership of Chairman Richard Glick in 2021, FERC sought additional comments. AGs again commented, emphasizing the need to consider a project’s greenhouse gas emissions and the environmental and racial injustices that may be associated with a proposed pipeline.

In the meantime, FERC has recently endured several court losses, including in two natural gas pipeline cases that we’ve written about before. Between the cases, the U.S. Court of Appeals for the D.C. Circuit criticized FERC’s analysis of the need for a pipeline, its consideration of greenhouse gas emissions, and its evaluation of environmental justice impacts. And this is not the first time that FERC has been rebuked for failing to adequately consider climate impacts from its pipeline authorizations; however, the sitting commissioners do not agree about how to proceed in light of this growing body of case law.

At a recent technical conference to consider greenhouse gas mitigation in natural gas infrastructure authorizations, continuing debate on these issues was on display. Chairman Glick pointed out the legal vulnerabilities associated with the Commission’s historical practice of “treat[ing] greenhouse gas emissions differently than every other environmental impact associated with the proposed pipeline.” Commissioner James Danly argued that FERC taking on this issue would cause regulatory uncertainty, raising questions about FERC’s legal authority. Commissioner Allison Clements summed up that, as a result of court decisions and the fact that “we’re in a different place than we were in 1999” the agency should “do a better job.”

In some cases, FERC challenges do not make it to a decision on the merits. The D.C. Circuit recently heard arguments over FERC’s authorization of the Jordan Cove Energy Project and the Pacific Connector Gas Pipeline, a liquefied natural gas export project and pipeline in Oregon that has been paused by its developers due to state permit denials. The court sent the case back to FERC to consider whether to pause the authorizations, and just yesterday, the project developers asked FERC to vacate the authorizations.

To follow FERC’s progress in addressing all these issues, the State Impact Center launched a new tracker looking at how FERC does in court. The data so far show that in 2021, FERC saw an increase in its losses, with petitions for review denied in full in 56% of cases; in the other 44% of cases, the court agreed, at least in part, with the petitioner. In 2020, courts denied petitions for review in full in 80% of cases. The tracker will be updated to include cases from earlier years as well as with any new cases. Stay tuned to see what the new five-member FERC can do and how it fares in court.