CERAWeek: FERC chairman defends his agency’s operations
On Thursday afternoon of CERAWeek by S&P Global, Federal Energy Regulatory Commission Chairman Richard Glick gave a somewhat impassioned defense of his agency’s operations. He seemed to be trying to project an image of an unbiased agency that wants to make decisions strictly on the merits of an issue or project. Whether the large crowd in the Hilton Americas ballroom believed him completely might be debated.
LNG factors. Early in Glick’s session, moderator and S&P Global Vice Chairman Dan Yergin asked the FERC chairman what his agency’s is of the strategic importance of LNG, what are its energy security implications, and whether it can improve the situation in Ukraine. “The Department of Energy has authority over decisions on whether to export natural gas in each particular instance, and it really focuses on the strategic significance,” explained Glick. “Our role at FERC is we’re the siting agency. So, if we site an LNG facility, we have to determine whether it’s going to be safe, but also be operated in a benign manner, in terms of not having too many adverse impacts. But clearly, there’s no doubt, that the discussions that have occurred this week, and have occurred in previous weeks, just reinforce the geostrategic significance of LNG. And we do take that into account, when we actually examine natural gas pipelines, because we have to determine whether a project is needed. So, we take a look at that.
Latest FERC rulemaking. Yergin then asked Glick if he could summarize the new rulemaking on gas pipelines. “Well, there’s been a lot of discussion this week about that,” noted Glick. “We actually issued two policy statements, which are not necessarily rulemaking. The policy statements were designed to create a framework for setting the guidelines for how the commission, on a going-forward basis, is going to cite both natural gas pipeline facilities and LNG facilities. And in general, under the statute, the Natural Gas Act, we are required to find that a pipeline is both needed and, essentially, in the public interest. In the public interest determination, we weigh the positive impacts, we weigh the negative impacts.
“For maybe the last 20 years or so,” continued Glick, “we’ve seen a growing amount of pipleines being sited in more controversial areas. There’s been a lot more litigation---there’s been a ton of litigation. Not only at FERC, but other agencies, as well. And it’s become apparent, to me at least, that the commission (we) needed to update our approach, to how we were going to pursue these pipeline proceedings. One of the more controversial elements was that the courts over the last several years, on three different occasions, had called for us to examine the GHG implications of a pipeline. Meaning, that we have to assess what the pipeline’s level of GHG emissions is going to be, but also whether there is going to be a significant adverse impact on the environment. That’s been extremely controversial.
“So, we issued two policy statements, one of which essentially tries to update the 1999 policy statement, the second one is more of an interim policy statement, and it really focuses on how we’re going to assess GHG emissions.”
Is there an anti-gas agenda? Playing the role of deliberate contrarian, Yergin said that some critics have called FERC’s recent rulemaking and track record an anti-gas agenda, to block pipelines and LNG. “This is your opportunity to respond to that,” commented Yergin.
“That really frustrates me to a great extent,” said an obviously exasperated Glick. “I don’t have any personal agenda, my colleagues don’t have an agenda. This is more, where we’re required to do what the courts are telling us to do. The fact is, you’ve seen it on a number of occasions recently, whether it be a FERC review of a pipeline, the Interior Department, the Forest Service; we have some major pipelines—like ACP, the Atlantic Coast Pipeline,which was cancelled---because they kept getting their reviews thrown out, because the previous administration wasn’t handling their reviews right.
“We have the MVP—Mountain Valley Pipeline project---that FERC has approved,” explained Glick, “but the Forest Service and the Interior Department, their reviews were found deficient, so the courts sent these projects back to the agencies. And what that does is it takes years of additional litigation, plus years of additional review and it adds hundred of millions—sometimes billions---of dollars in costs. And you see it---every single project developer gets very frustrated, when these court cases get sent back to the agencies.
From our perspective,” he continued, “we try to provide a more legally durable approach. Yes, it might require a couple of extra months on the front end, in terms of the review of the environmental impacts of the project, and in analyzing the GHG emissions. Just because you analyze the GHG emissions, like we analyze so many other potential environmental impacts for each project, doesn’t mean the project is going to get rejected. What is does mean is that we’re actually going to do our job, cross our t’s, dot our i’s, and when the courts review them, they’re going to say, ‘you know what, they may have approved the project, but they did it the right way.’”
Congressional criticism. That explanation may put Glick at ease, but it has not silenced a number of congressional critics, one of which is Sen. Joe Manchin (D-W.V.). Over the last several weeks, Manchin has expressed his frustration with FERC and other agencies, as their approvals of projects keep getting overturned, either for incomplete environmental assessments, incomplete wording or lack of the right wording. Manchin would like to see more gas production harnessed out of the Marcellus/Utica shale plays, part of which lie in his state, West Virginia, as well as Pennsylvania and Ohio. Producing more of that gas could satisfy a supply need in Europe for more non-Russian LNG, he argues, or go toward solving energy needs in the U.S. But the Mountain Valley Pipeline, which is slated to transport some of that gas, is hung up in litigation, as Glick alluded to.
Appearing at CERAWeek the day after Glick’s session, Manchin again expressed his frustrations. “We need you to speak up and help us, Chairman Glick,” said the senator. “Can’t DOI and FERC give us some consistency? You know, I told him (Glick), ‘just do your damn job.”
