In the February issue of Wiley Journal Climate and Energy, NERA Senior Managing Director Jeff D. Makholm examines the US Federal Energy Regulatory Commission’s (FERC’s) authority over natural gas pipelines.
In late 2023, Law360 Senior Reporter Keith Goldberg predicted that in 2024, the courts could play a significant role in resolving the FERC’s dilemma regarding the certification of new natural gas pipelines in the face of climate change concerns. The United States has developed a unique set of institutions—law, judicial actions, and regulations—to permit the construction, expansion, and repurposing of a competitive continental pipeline system. The veritable capstone on two decades of significant work for the FERC was its 1999 Policy Statement on Determination of Need (Docket No. PL99-3-000). The 1999 Policy Statement set the parameters for how the agency would use the eminent domain authority, extended by Congress in section 7(c) of its 1938 Natural Gas Act (NGA), to promote public interest in interstate transport of natural gas. That Policy Statement was a success—witnessing the FERC certification of more than 400 new interstate transport projects facilitating the rapid competitive entry of unconventional natural gas supplies, which have displaced coal as the main source of US electricity, encouraged exports, and kept US natural gas prices well below those anywhere else in the world.
In this article, Dr. Makholm contrasts such successes with the FERC’s 2022 draft policy statements. The recent statements signal the agency’s wish to involve itself on both production and use issues as a way to chart the greenhouse gas consequences of its actions certificating transport pipelines—issues raising a sharp partisan divide among commissioners and calls for the courts to intervene. Dr. Makholm explains the FERC’s 2022 actions essentially overlooked the limits on its jurisdiction under the NGA and created broad risks for the continued commitment of capital to the industry. He comments on the FERC’s inability to reach a consensus on the boundaries of its power defined by the law that established its authority 86 years ago. Ultimately, Dr. Makholm sees that this is a question that will likely be resolved by the courts—probably the highest court.
Makholm, Jeff D. (February, 2024). “FERC Needs Court’s Help on Pipelines in 2024,” Climate and Energy, 40/8, ©2024 Wiley Periodicals, Inc., a Wiley Company.
