US Reviewing Natural Gas Facility Authorization Procedures

On April 19, 2018, the United States Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) to examine its authorization policies of interstate natural gas facilities. The FERC issued the NOI due to changes in the natural gas industry and growing concerns from state on proposed natural gas projects.

The FERC established the authorization policies of interstate natural gas facilities in 1999. Over the past nineteen years, the FERC has rejected only two out of over four hundred natural gas facility authorization applications. Natural gas facilities built over this nineteen year period have added approximately 180 billion cubic feet per day of pipeline capacity.

Attorney Generals for Illinois, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Washington and the District of Columbia have written to the FERC that greater consideration needs to be given to environmental costs, including climate change. Massachusetts Attorney General Maura Healey stated the “FERC has disregarded the perspective of state and local governments, ratepayers, and other stakeholders, and approved new gas pipelines without a full evaluation of regional needs and advances in energy policy.” Former FERC chair Norman Bay has expressed concern of overbuilding the existing pipeline system and burdening future rate payers.

Utilities and the natural gas industry have urged the FERC to continue with the existing authorization policies. Companies have proposed that the FERC takes steps to reduce delays from state and local agencies. The deadline for comments was July 25, 2018. The FERC is now reviewing all comments and will determine what if any changes need to be made to its pipeline approval process.

In my opinion, the FERC is faced with an energy conundrum. Are there pipeline bottlenecks that restrict the supply of inexpensive natural gas to consumers? Some utilities in the northeast would argue there are pipeline bottlenecks which caused power outages during the winter months. If the FERC approves a pipeline project, a state can slowdown or stop the pipeline construction. Wouldn’t it be more efficient to include the states at the start of the authorization process? How will the FERC respond?

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