Last July 24, the five commissioners of the Federal Energy Regulatory Commission (FERC) journeyed up to the House Energy and Commerce Committee for what could have been a difficult hearing. The committee was controlled by Republicans.
The independent FERC was controlled, more or less, by the three commissioners appointed by Democrats, led by Chairman Willie Phillips. Given the Biden administration’s focus on “green” policy and the efforts of its environmentalist supporters to block pipeline construction, one could have expected Phillips, a Democrat, to be under serious Republican verbal fire.
Instead, Rep. Jeff Duncan (R.S.C.), chairman of the energy, climate and grid security subcommittee, told Phillips, “Chairman Phillips, I’d like to take a moment to commend you for your efforts to clear some of the backlog of major natural gas pipeline projects, as well as your recent vote in support of U.S. LNG exports.”
FERC has approved numerous pipeline projects, big and small, during the Biden administration. Despite bipartisan regard for Phillips, President-elect Trump is likely to appoint one of the two Republican commissioners as chairman: either Mark Christie or Lindsay See. In the past, when there has been a change of party in the White House, the chairman of the commission from the outgoing party has left the commission when another commissioner was selected as chairman.
It is possible Phillips will leave if and when Trump appoints one of the Republicans as chairman giving Trump the ability to nominate a third GOP appointee. Trump appointed Christie to the commission in 2020, so he might be a good bet for chairman.
During the Biden administration FERC has often pushed back when sued by environmental groups such as the Sierra Club alleging failed environmental impact statements which underestimated GHG impacts on communities through which a new pipeline would travel.
As recently as early November, FERC submitted a brief to the U.S. Court of Appeals for the District of Columbia in a case brought by the Sierra Club and others attempting to overturn a FERC decision permitting Kinder Morgan’s Tennessee Gas Pipeline Company, LLC’s Cumberland Pipeline project.
In its brief to the court, the FERC concluded, “Even if Sierra Club were correct that the Commission’s greenhouse gas emissions analysis contained every error alleged, those errors still would not warrant vacatur. Sierra Club cannot demonstrate prejudicial error because the Commission’s analysis of downstream greenhouse gas emissions still “went well beyond [NEPA’s] requirements.”
What is likely to change, and dramatically, during the Trump administration is federal environmental laws finalized by the Biden administration which made it easier for environmentalists and some localities to either delay construction by holding up FERC’s environmental reviews or delaying and even canceling projects via federal and state courts after the FERC’s approval. These would be laws such as the National Environmental Policy Act (NEPA), the Clean Water Act and the Clean Air Act.
“Potential changes to the NEPA will have a bigger impact on FERC than the Natural Gas Act,” said one Washington lawyer who represents pipelines. He points out that at least two NEPA cases are in federal courts and likely to reach the Supreme Court. One of those cases was decided in early November by The U.S. Appeals Court in Washington.
In a case involving tourist flights over four national parks near San Francisco (Marin Audubon Society, et al. v. Federal Aviation Administration (FAA), et al.) the federal appeals court said the Council on Environmental Quality (CEQ) did not have the authority to issue federal rules including the NEPA. The court did not throw out the Biden final rule.
But opponents of the final rule, which include the INGAA and others, now have a long leg up to stand on in convincing the Trump administration, which probably needs little convincing, to overturn the Biden rule. The NEPA dictates how federal agencies must account for greenhouse gas (GHG) emissions and its provisions have provided ample opportunity for environmental groups to tie up projected pipelines such as Cumberland during the Biden administration.
Environmentalists have also used the Clean Water and Clean Air Acts to tie the FERC – not to mention pipeline companies – up in knots. The PennEast and the Constitution pipelines were ditched because of environmental agitation. More recently, the Sierra Club convinced a federal court to temporarily stop the Cumberland pipeline because of concerns about Section 401 and 404 Clean Water Act permits. Sierra is also trying to invalidate Cumberland’s approval from FERC, whose recent brief to the Washington federal Court of Appeals is mentioned above.
The Biden administration issued anti-pipeline Clean Water section 401 and 404 rules in the last two years. The Section 401 rule effectively gives states veto power over large interstate infrastructure projects. Section 404 requires the Army Corps of Engineers to permit pipelines that cross wetlands and whose construction involves dredging of soil and discharges into water bodies qualified as Waters of the U.S. (WOTUS).
The U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency issued a final rule on Jan. 18, 2023, revising the definition of WOTUS. It represents a substantial expansion of jurisdiction over streams and wetlands. Rafe Peterson, a lawyer with Holland & Knight, said, “I believe that the Trump II Administration will take a hard look at the current rule for consistency with Sackett. I would also expect them to consider putting back definitions of what is NOT a WOTUS.”
The Supreme Court issued a 9-0 decision in May 2023 in Sackett which the Natural Resource Defense Council, a major environmental group, said resulted in the “dramatically weakening” of the Clean Water Act.
In September 2023, the EPA issued final changes to Section 401. Three months later, a coalition of state attorneys general and trade groups, including the Interstate Natural Gas Association of America (INGAA), filed a lawsuit which is working its way through the courts and may end up at the Supreme Court, as may the Section 404 changes.
The most significant revisions of the 2023 section 401 final rule expanded the scope of certifying agencies’ authority to impose conditions in water quality certifications. Briefs have been filed in that case, and lawyers for the INGAA are waiting to see if the federal District Court in the Western District of Louisiana will hold oral arguments.
Those Clean Water Act rules from the Biden administration will undoubtedly come up for possible repeal or changes by the Trump administration, as will Biden final rules on methane emissions from pipeline equipment and another rule imposing federal fees on methane emissions, which was dictated by the Inflation Adjustment Act and which goes into effect in March 2025 for emissions in 2024.
The methane emissions fee – under the Methane Emission Reduction Program (MERP) – would force interstate pipelines to pay $900 per excess emissions in 2025 with that fee increasing in future years. The EPA’s final methane performance standards (a different and separate rule) for natural gas controllers and compressors require midstream and interstate pipelines to cover wet and dry seal compressors, controllers and rod packing, and in those instances set leak detection, repair and reporting deadlines.
The EPA issued a final rule on Nov. 18, 2024, setting standards for the MERP. The Republican-controlled Congress coming to town in January 2025 will have the opportunity to cancel that final rule under the “look back” provision of the Congressional Review Act (CRA). That allows an incoming Congress to delete rules from the previous administration finalized in the waning days of the last Congress.
The Biden NEPA2 final rule forces agencies such as the FERC to give greater weight to GHG emissions when performing environmental impact statements. Environmentalists have used NEPA provisions to tie up FERC approvals for LNG plant construction as well as pipelines.
Those LNG construction permits the FERC has approved sent some companies to the Department of Energy where they need export approval after inking deals with foreign customers who are not in free trade agreement (FTA) areas. The Biden administration stopped the DOE in January 2024 from approving LNG export licenses while the department reviewed its procedures for doing so.
That thwarted the likes of Commonwealth LNG, Sempra, and Energy Transfer whose export deals have been sidelined. However, that “hold” is likely to be reversed quickly when Chris Wright, the CEO of Liberty Energy, takes over as secretary of the Department of Energy. Liberty is a major fracking player.
Lastly, the Pipeline and Hazardous Materials Safety Administration (PHMSA) has, at this writing, sent to the Biden White House for approval a wide-ranging final rule calling for performance standards for advanced leak detection programs, leak grading and repair criteria with mandatory repair timelines and much more.
The INGAA and a number of natural gas associations said in May 2023 when the proposed rule came out “the potential scope of this NPRM is the broadest regulatory initiative since the inception of the federal pipeline safety code in 1970.”
Should a final rule be published prior to Biden leaving office it would be, like the methane fee final rule, subject to the Congressional Review Act.
