Announcing an unexpected policy shift, the Federal Energy Regulatory Commission (FERC) issued an Order on May 18, 2018, limiting its analysis of upstream and downstream greenhouse gas (GHG) emissions in its environmental review of natural gas infrastructure projects. The Order came out on the heels of FERC’s April Notice of Intent that requested stakeholder input on whether and how the Commission should adjust its evaluation of the environmental impacts of proposed pipeline projects. The Order’s 3-2 split signals a new standard for environmental review in pipeline certification applications, at least until FERC releases its promised updated Policy Guidelines.

The Order denied rehearing of FERC’s 2016 approval of Dominion Energy Transmission Inc.’s estimated $159 million pipeline expansion project in New York, which included the construction of two new compressor stations. The Commission majority—Chairman McIntyre and Commissioners Chatterjee and Powelson, all Republicans—relied on the National Environmental Policy Act’s (NEPA) implementing regulations to determine that where upstream and downstream effects are not indirect or cumulative, they are not environmental effects of the proposed project and thus the Commission is not required to consider them as part of its environmental review. The Commission will, however, continue to analyze upstream and downstream effects when they are “sufficiently causally connected to and are reasonably foreseeable effects of the proposed action.” The Commission acknowledged the shift in approach: “For a short time, the Commission went beyond that which is required by NEPA, providing the public with information regarding the potential impacts associated with unconventional natural gas production and downstream combustion of natural gas, even where such production and downstream use was not reasonably foreseeable nor causally related to the proposals at issue.” The Commission further determined that it was not bound to consider environmental effects outside of its NEPA analysis in its evaluation of whether a project is in the public convenience and necessity under the Natural Gas Act (NGA).

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