Can Acting Chairman Phillips Return a Sense of Normalcy to FERC?

Originally published for customers January 20, 2023

What’s the issue?

Chairman Glick’s tenure at FERC was the worst period for pipeline projects in at least a decade. Now that he has departed, the question is whether acting Chairman Phillips will be any better.

Why does it matter?

Pipeline project proponents have continued to work on expansions, but over the last two years have had to get creative in attempts to essentially avoid FERC review because of the lengthening timelines for project reviews and the uncertainty caused by the issuance and then withdrawal of FERC’s certificate policy statement.

What’s our view?

With FERC split 2-2 there is zero chance that we will see a new certificate policy statement that at all resembles that issued by Chairman Glick. But acting Chairman Phillips has a lot of power to continue many of the obstructionist policies of his predecessor or move FERC back to being a functioning agency as it was during the Obama era. It is too early to tell which way he will be taking FERC but we will be watching some key indicators, including watching the monthly open meetings to discern whether the basic functioning of FERC can be restored.

 


 

Chairman Glick’s tenure at FERC was the worst period for pipeline projects in at least a decade. Now that he has departed, the question is whether acting Chairman Phillips will be any better. Pipeline project proponents have continued to work on expansions, but over the last two years have had to get creative in attempts to essentially avoid FERC review because of the lengthening timelines for project reviews and the uncertainty caused by the issuance and then withdrawal of FERC’s certificate policy statement.

With FERC split 2-2 there is zero chance that we will see a new certificate policy statement that at all resembles that issued by Chairman Glick. But acting Chairman Phillips has a lot of power to continue many of the obstructionist policies of his predecessor or move FERC back to being a functioning agency as it was during the Obama era. It is too early to tell which way he will be taking FERC, but we will be watching some key indicators, including watching the monthly open meetings to discern whether the basic functioning of FERC can be restored.

 

Summary of Yesterday’s Open Meeting

The matters to be decided at yesterday’s FERC monthly meeting with respect to the gas industry were fairly routine, with two orders on rehearing, a request for waivers to allow a capacity release between affiliates and a request to transfer three existing border crossing permits to a successor entity. There are two things to note about the meeting that bodes well for the new chairman’s tenure. First, it started on time. That is something that Chairman Glick rarely was able to do with most of his meetings starting over an hour late and often two hours late. Second, Commissioner Danly asked people to note the day, because he had no dissents on any of the decisions. Commissioner Clements noted that the lack of dissents allowed her to get a full night’s sleep and Commissioner Christie noted that the lack of dissents allowed him to attend the basketball game the night before between the University of Virginia and Virginia Tech. The meeting lasted just about thirty minutes even though it was disrupted twice by protestors.

 

What Would Normalcy Look Like?

The fact that the meeting was on time and without dissent is an auspicious beginning. However, we will be watching more than just that to see if FERC can return to a fully functioning commission under the new chairman. In Chairman Glick Fades Away and Chairman Phillips Takes Over, we compared the pace of review and approvals by the Chairman Glick-led commission to the pace under the prior two Republican chairs. But expecting a Democratic chair to act like the prior Republicans could be a stretch. So today, we compare the pace of project reviews under the Biden administration to the Obama administration.

Time from pipeline application to order

 

As seen above, the typical length of time to complete FERC's review for a pipeline expansion grew by over 66% from the Obama administration to the Biden administration. A return to the days when the typical project could expect to receive its certificate less than one year after it filed the application would be a welcome development. Chairman Glick and his defenders would assert that the longer time frames were necessary to make the FERC decisions more legally durable. But Commissioner Danly has correctly pointed out that not a single FERC decision has been overturned because FERC prepared an environmental assessment (EA) rather than a full environmental impact statement (EIS). And yet a primary contributor to the lengthened review period is Chairman Glick’s silent adoption of the GHG policy he supposedly withdrew.

 

percent of projects with ea or eis review

 

As seen above, even though nothing was different about the threat of climate change during the Obama administration and the Biden administration, the split between EA projects and EIS projects essentially reversed with almost 80% of all projects now requiring an EIS.

We will be watching for signs regarding whether acting Chairman Pillips continues to enforce the now repealed GHG policy, by watching what type of environmental report FERC requires for those that had not yet been determined by the time Chairman Glick departed. There are only two such projects, ANR Pipeline’s Wisconsin Reliability Project, which is primarily a replacement project and almost certainly would have been completed under an EA in the Obama administration, and Oneok’s Saguaro Connector Pipeline Project, which is a simple border crossing project, that also would have been completed with just an EA. Whether acting Chairman Phillips allows the staff of the Office of Energy Projects to return to the principles in place during the Obama era may be a telling sign of whether he will continue his predecessor’s practice of obstructing projects in the name of legal durability.

 

A Functioning Office of General Counsel May Also Be a Key Indicator of Normalcy

While the lengthening of the review times during the Biden administration can be primarily attributed to the change in policy about the need to prepare an EIS, there was also a key time period that more than doubled under the Biden administration as compared to the Obama administration, and that was the period from when the environmental review ended and the order was finally issued.

 

days from environmental review to order (obama v. biden)

 

As seen above, the basic act of preparing the certificate order following completion of the environmental report went from a typical 81 days during the Obama administration to over 167 days in the Biden administration. Taking half a year to draft an order is an indicator of dysfunction. However, it is not clear whether this dysfunction comes from the priorities imposed by the chairman on the office of general counsel or whether it arose from the lack of management within the office itself.

Determining the cause may be a key issue though, as the FERC General Counsel during the Biden administration is being promoted as one of the likely replacements for Chairman Glick. We will be watching to see if the acting chairman can improve this performance. There were five projects backlogged when the acting chairman was appointed, Port Arthur LNG Expansion Project, Line 200 and Line 300 Project, GTN XPress Project, Virginia Electrification Project and Regional Energy Access Expansion. In a positive development, acting Chairman Phillips issued the decision approving Regional Energy Access using the notational voting system, which meant it did not need to wait until yesterday’s open meeting for its approval. The remaining four are still pending and were not on yesterday’s open meeting agenda. But that may be a positive development in itself, because it could be a sign that a true sense of normalcy is returning and that orders will be issued when they are ready and not be held until the next open meeting date. We will be watching to see if the use of notational voting returns.

Finally, there is one project that has completed its environmental review since acting Chairman Phillips assumed his new role, Alliance Pipeline’s Three Rivers Interconnection Project. The time period it takes to issue the order in this case will be completely under acting Chairman Phillips’s control; if we see it issued by mid-April that would be a positive signpost that FERC is regaining its ability to function. If we see it slip much past that date, it would be a sign of continuing trouble.

If you would like more information about the pending projects, please contact us.

Recent Articles

November 1, 2022

Unanimous FERC Adopts New Rule Protecting Oil Pipelines From Index Rate Challenges

January 2, 2018

Magellan, Plains, Among Others, Request Marketing Affiliate Clarification

June 17, 2020

ACP Wins at the Supreme Court — Necessary But Not Sufficient for ACP and MVP