FERC Tries to Clear Pipeline Project Backlog, but Republican Commissioner Says No

During the tenure of former Chairman Glick, FERC processing of pipeline expansion projects slowed to a crawl. Since he was appointed to replace Chairman Glick, Acting Chairman Phillips has returned FERC processes to those that existed when Democrats controlled FERC during the Obama administration. At last week’s open meeting it appeared that Acting Chairman Phillips was planning to essentially eliminate a backlog of projects that he had inherited from his predecessor. But it appears that a Republican commissioner, Commissioner Danly, thwarted that effort by apparently voting against a significant number of projects that were on the agenda, but which were then deleted prior to the meeting. A reliable and efficient process for reviewing and approving projects is vital to any infrastructure development. Perhaps after Commissioner Danly departs at the end of this year, or sooner, the Commission will be able to move those projects forward and return to historical norms for project review. A more timely review process may encourage more project developers to undertake FERC-regulated projects going forward.

The current list of pending projects shows that Acting Chairman Phillips is returning FERC to a process that will allow a project to be reviewed and approved within one year after it is first filed at FERC, which would be a vast improvement over the time periods during his predecessor’s tenure and even those during the Trump administration.

Historical Norms

During the tremendous growth of natural gas pipeline projects that facilitated the country’s shift to shale basins as the primary source of natural gas, FERC, under the Obama administration, was able to maintain an efficient and timely process for acting on an historic number of proposed projects. In the last four years of the Obama administration, FERC was able to issue certificates for 156 pipeline and LNG projects over that period. In the four years of the Trump administration, FERC issued certificates for only 104 such projects. During the first two years of the Biden administration with former Chairman Glick in charge, the number of projects fell to just seventeen.

Despite the much lower number of projects seeking FERC approval, the average time to process those applications worsened dramatically from the Obama to the Trump era and then slowed to a crawl in the first two years of the Biden administration as Chairman Glick revoked FERC staff authority over almost every major decision regarding the review of projects.

As seen above, despite processing a far greater number of projects, FERC, while controlled by Democrats under the Obama administration, was typically able to process such applications within about one year after they were formally filed. This typical time frame grew by 100 days to over 15 months under the Trump administration. Then, despite having almost no projects to process compared to these prior eras, the typical time to process such applications in the first two years of the Biden administration slowed to a crawl of almost sixteen months.

Clowns to the Left, Jokers to the Right, Here I Am Stuck in the Middle

When the agenda was issued for last week’s open meeting, it looked like the Acting Chairman was finally in a position to clean up the mess that had been left to him by former Chairman Glick’s refusal to trust FERC staff’s judgment on the proper level of environmental review. The agenda listed six projects that had been held up by the former chairman’s methodology. However, when the open meeting was actually held five of those projects were pulled from the agenda and only Transcontinental Pipeline’s Southside Reliability Enhancement project (Southside Project) received a vote and was approved, but just barely.

In FERC Open Meeting Once Again Demonstrates a Functioning Commission, issued soon after Chairman Glick’s departure, we noted our view that the current Commission was not a 2-2 split between Democrats and Republicans, but “more of a 1-2-1 split between the two pragmatists in the middle and ideologues on each extreme.” Well the ideologue on the right apparently has decided it is more important to be philosophically pure than to ensure that projects are promptly reviewed and approved. In a scathing partial dissent in the Southside Project decision, Commissioner Danly accused the two centrists of changing their positions on fundamental issues from open meeting to open meeting, allowing the issuance of environmental documents that include language that runs contrary to Commission orders, ignoring Congressional enactments, ignoring arguments that they do not want to address, and selectively omitting language reflecting recent issuances. He essentially laid out a roadmap for the environmental opposition groups to attack that decision.

In response, the two centrists, Republican commissioner Christie and Acting Democratic Chairman Phillips issued a pointed concurrence. They noted what they thought had been a compromise reached in an earlier case, Driftwood Pipeline’s Line 200 and 300 case to calculate social cost of carbon of the downstream GHG, but then to simply not make a significance assessment because there is no reliable method for using that calculation to inform the decision. Only Commissioner Clements had dissented in that case in April. Yet in the Southside Project, apparently the only way that they could get Commissioner Danly to vote in favor of the project was to remove the calculation language from the order and put it in their concurrence. It would seem they were willing to do this for only one project, but not the others that were up for decision. Without that concession, Commissioner Danly apparently refused to approve any projects, which meant the Acting Chairman did not have the majority of votes he needed on any of the projects.

It would appear that Commissioner Christie and Acting Chairman Phillips were willing to make the required concession in just the one case to make Commissioner Danly’s ideologically pure but practically damning position public. The frustration of both commissioners comes through in the concurrence but even more so in Acting Chairman Phillips’s press conference after the open meeting (watch the minute and a half starting at 2:35).

What this stalemate means for the other five projects that were originally set to be approved at last week’s open meeting is unclear. While the method of addressing GHG emissions seems to be the most prominent concern, Commissioner Danly’s broadside attack on the Southside Project decision may mean those others would best wait for his departure.

Commissioner Danly’s term officially ended at the end of June. He has not indicated when he might be leaving the Commission but has to do so by the end of this year when Congress adjourns or when his replacement is confirmed by the Senate. For the five projects that were pulled from last week’s agenda, and two more, the Appalachia to Market II and Southeast Energy Connector projects, which received their final environmental review before some of the projects that were on the agenda, it may be best to just wait for Mr. Danly to leave. At least then, the Acting Chairman would have a majority of 2-1 to approve these projects and the decisions would not be subjected to Commissioner Danly’s attacks.

Projects That Have Been Benefited by Acting Chairman Phillips

Early in Acting Chairman Phillips’s tenure, we noted in Timing of Restarts for Keystone, El Paso and Freeport and Some Good News for MVP, that he seemed to have reversed former Chairman Glick’s requirement that every project be subjected to the preparation of a full environmental impact statement. By returning to FERC staff the authority to determine the appropriate level of environmental review, we anticipated that this would allow for an improvement in the review time for projects. We even had the audacity to hope that this action would return FERC to a level of functioning that we have not seen since 2017.

Early indications are that this audacious hope may be proven to be true. There are currently five projects on FERC’s docket that were not caught up in the prior chairman’s environmental requirements. FERC has issued the final environmental report for one of the five and has issued an expected date for the other four. If it holds to those dates and then issues a certificate about three open meetings after the environmental report is issued, the average time period for full review and approval would be just 308 days. That would represent an almost 40% reduction in the review period projects were subjected to under Acting Chairman Phillips’s predecessor. This would be truly good news for the industry and may encourage others who were seeking other ways to build major projects to once again return to FERC for approval. However, Commissioner Clements is vehemently opposed to this process and reiterates in her “concurrence” in the Southside Project that an EIS is likely required for every pipeline expansion project because of the GHG emissions associated with such projects. As Commissioner Danly says in his dissent in the Southside Project, “[t]hese certainly are interesting times.”